Each week, Crowell & Moring’s State Attorneys General team highlights significant actions that State AGs have taken. Here are this week’s updates.
March 22, 2021
- Massachusetts Attorney General Healey announced that her office reached a $1.25 million settlement with home health care company Lifod Home Health Care LLC and its owner to resolve allegations that they falsely billed the Massachusetts Medicaid Program for services that a physician did not properly authorize.
- Minnesota Attorney General Ellison announced that the Minnesota House passed HF844, which makes price gouging illegal during emergencies and gives the Attorney General’s Office enforcement authority. The state Senate has not yet voted on companion bill SF965. The new law forbids all parties in the chain of distribution from selling essential consumer goods and services for unconscionably excessive prices during a state of emergency and 30 days after it ends. Minnesota currently has an executive order forbidding price gouging during the COVID-19 pandemic, but the new law will remain in place for future declarations of emergency.
March 23, 2021
- North Carolina Attorney General Stein announced that he will not oppose the combination of Atrium Health and Wake Forest Baptist Health. According to the press release, Attorney General Stein stated, “I will not take action against this deal at this time. My office conducted a thorough review into the potential antitrust and charitable corporation law implications. We did not find reasons to intervene, but my office will continue to monitor how this transaction affects competition in the North Carolina market.”
- Arizona Attorney General Brnovich announced the enactment of new state legislation, HB2116, which allows victims of human trafficking to take civil action against their perpetrators in Arizona court. Previously, only criminal action was available in the state. Among other things, the new law provides that criminal acquittal is not a defense to liability and subjects corporations, partnerships, and associations to liability.
- U.S. District Judge Denise Cote of the Southern District of New York declined to grant a temporary restraining order against New York City’s enforcement against price gouging. The court’s denial order does not include any reasoning, instead stating that the reasons are on the record from a March 23, 2021 conference.
March 24, 2021
Consumer Financial Protection Bureau
- The Consumer Financial Protection Bureau (“CFPB”) provided the Consumer Response Annual Report for 2020 to Congress, which reflects an almost 54% increase in consumer complaints in 2020 from those received in 2019. The press release states that credit and consumer reporting complaints accounted for over 58% of complaints received, “followed by debt collection (15%), credit card (7%), checking or savings (6%), and mortgage complaints (5%).”
- A coalition of 13 attorneys general filed a lawsuit against the Biden administration for its moratorium on future oil and gas leasing and drilling permits on federal land. The coalition is arguing that the moratorium violates the Administrative Procedure Act and will negatively impact several industries.
- New York Attorney General James issued guidance to banks, creditors, and debt collectors, clarifying that stimulus payments are exempt from garnishment under state and federal consumer protection law. In connection with the guidance, Attorney General James stated, “This official guidance makes clear that banks and debt collectors cannot freeze or seize stimulus funds that are intended for New Yorkers, especially those most in need during this time. My office remains committed to protecting New Yorkers’ rights, and ensuring that any institution that violates this guidance will be held accountable to the fullest extent of the law.”
- A three-judge Third Circuit panel reversed a New Jersey federal court decision denying debt resolution firm National Legal Center’s motion to compel arbitration against a proposed class action lawsuit claiming that it engaged in illegal debt adjustment and similar activities. The panel based its reversal on an arbitration provision in the parties’ legal services agreement from 2013, which it found valid and applicable.
- New York Attorney General James applauded the state Legislature’s repeal of a nursing home immunity provision from the 2020 state budget.
State AG News
- California Governor Newsom nominated Rob Bonta, a state assemblyman who is known for advocating for criminal justice reform, as California’s next attorney general. If Bonta is confirmed, he will be the state’s first Filipino attorney general and will hold the position until 2022 when he will need to run for election.
March 25, 2021
- Acting Federal Trade Commission (“FTC”) Chairwoman Slaughter announced a new rulemaking group within the FTC’s Office of the General Counsel. According to the press release, the creation of the new group will allow the FTC to strengthen its existing rules and generate new rulemakings that prohibit unfair and deceptive practices and unfair methods of competition.
- Minnesota Attorney General Ellison announced a lawsuit against PNW C2C Marketing, LLC and its owner for violating state charitable solicitation and consumer protection laws. The company allegedly misrepresented that it was a nonprofit organization soliciting donations for care packages to be sent to servicemembers overseas, and then its owner instead used the donations for personal gain.
- A coalition of 16 consumer advocate groups sent a letter to the Consumer Financial Protection Bureau (“CFPB”) arguing that an April 2020 relief measure that allows credit reporting agencies and similar companies to extend 30-day dispute investigation deadlines is no longer necessary and has potentially resulted in increased consumer complaints.
- Nebraska Attorney General Peterson announced that his office reached a settlement with Pivot Concierge Health, LLC and Banyan Medical Systems, LLC to resolve claims that they violated the Nebraska Consumer Protection Act and the Uniform Deceptive Trade Practices Act through their advertising of COVID-19 antibody tests. The companies allegedly failed to provide necessary disclosures to consumers and made deceptive and misleading statements about the ability of the antibody tests to identify a current or prior COVID-19 infection. The settlement includes injunctive relief and a $25,000 payment.
- West Virginia Attorney General Morrisey sent a letter to U.S. Securities and Exchange Commission (“SEC”) Acting Chairwoman Allison Lee arguing that an SEC disclosure initiative that would compel companies to make policy statements unrelated to their financial performance, such as statements about environmental and social matters, could violate the First Amendment.
- The California Department of Justice announced a settlement with Artichoke Joe’s Casino, including a $5.3 million penalty, for allegedly misleading gambling regulators and violating the Bank Secrecy Act by failing to accurately and timely report a Financial Crimes Enforcement Network investigation. The settlement represents the largest agreed-upon penalty in the history of the state’s gambling regulation.
March 26, 2021
Consumer Financial Protection Bureau
- U.S. District Judge Maryellen Noreika of the District of Delaware dismissed a Consumer Financial Protection Bureau (“CFPB”) lawsuit over student loan trusts’ collections practices, agreeing with an argument that the CFPB did not have the authority to bring the action when its structure was unconstitutional. The CFPB must amend its complaint by April 26, 2021.
- Massachusetts Attorney General Healey announced that her office filed a lawsuit against driving school North Andover Auto School, LLC and its owner. The school allegedly closed after the arrest of its owner and failed to provide refunds to over 1,500 students. The lawsuit is seeking over $1 million in restitution.
- During a panel for the American Bar Association’s spring antitrust meeting, Federal Trade Commission (“FTC”) acting Chairwoman Slaughter stated that there are other avenues the FTC may pursue if the Supreme Court takes away its ability to seek restitution. First, the FTC may ask Congress to intervene to address a “misunderstanding.” Second, the FTC may allege rule violations that extend beyond the FTC Act or bring more cases through the administrative law process rather than in court.
- New Jersey Attorney General Grewal announced that the Bureau of Securities within the Division of Consumer Affairs reached a settlement with broker-dealer firm FCG Advisors, LLC to resolve an investigation related to financial misconduct by a former agent of the firm, whom the firm allegedly failed to properly supervise. The settlement includes a $250,000 payment, which encompasses both a civil penalty and restitution.
- A proposed class brought a lawsuit against debt collector Monarch Recovery Management Inc. in New Jersey federal court, alleging that the business violated the Fair Debt Collection Practices Act when it sent collection letters saying consumers could verbally dispute debts, even though the communications must be in writing for the debt to be verified.
- New York Attorney General James announced that two auto repair shops, Broadway Towing, Inc. and Broadway Auto & Towing, Inc., and their owner pleaded guilty to criminal tax fraud for underreporting over $8 million in taxable sales over a 10-year period. The guilty pleas include a payment of over $900,000 in penalties, restitution, and interest.