State AGs In The News - 5 June 2014

Hot News

Alabama Primary Election Results

• Incumbent AG Luther Strange (R) and Joe Hubbard (D) received their respective party's nomination after both ran unopposed in the primary.

California Primary Election Results

• Incumbent AG Kamala Harris (D) will face Ronald Gold (R) in November's general election after the candidates received 53.1 percent and 12.7 percent of the vote, respectively.
• California has a nonpartisan blanket primary in which the top two candidates, regardless of party affiliation, receive the nomination for the general election.

Iowa Primary Election Results

• Incumbent AG Tom Miller (D) received his party's nomination after running unopposed.  After failing to field a nominee for the primary, the Iowa Republican Party will nominate a candidate at the party's state convention on June 14. Adam Gregg (R) is currently seeking the nomination.

New Mexico Primary Election Results

• Susan Riedel (R) will face Hector Balderas (D) in November's general election after both ran unopposed in the primary.

Kansas Primary Election Candidates

• The Kansas filing deadline passed on June 1. The candidates for the primary election are incumbent AG Derek Schmidt (R) and A.J. Kotich (D).

Massachusetts Primary Election Candidates

• The Massachusetts filing deadline was on June 3. The candidates for the primary election are Maura Healey (D), Warren Tolman (D), and John Miller (R).

Minnesota Primary Election Candidates

• The Minnesota filing deadline was on June 3. The candidates for the primary election are incumbent AG Lori Swanson (D), Sharon Anderson (R),Scott Newman (R), Brandon Borgos (I), Andy Dawkins (G), and Mary O'Connor (L).

Wisconsin Primary Election Candidates

• The Wisconsin filing deadline was on June 2. The candidates for the primary election are Susan Happ (D), Ismael Ozanne (D), Jon Richards (D), Brad Schimel (R), and Thomas Nelson, Sr. (L).

We will continue to provide updates on AG-related elections. For breaking news, please follow us on Twitter @StateAGMonitor.

2014 Election

District of Columbia Court of Appeals Hears Arguments on Attorney General Election

• As we previously blogged, Paul Zukerberg, a potential AG candidate for the District of Columbia (DC), sued to place the DC AG position on the ballot in 2014. The DC Superior Court granted a motion to dismiss and Zukerberg filed an appeal with the DC Court of Appeals. Zukerberg argues that the DC Charter, which reads, "[t]he first election for the position of Attorney General shall be after January 1, 2014," prohibited the DC Council from delaying the election. A three-judge panel recently heard arguments on the appeal.
• It was reported that two of the three judges said at oral argument that they believed that the "after January 1, 2014" language was ambiguous and were skeptical that it permitted a delay.
• If the appeals court rules in favor of Zukerberg, it may still remand the matter back to the trial court for further proceedings and the city may still be able to seek review by the full appeals court.

Antitrust

West Virginia Attorney General Settles Allegations of Antitrust Violations With Bank

• West Virginia AG Patrick Morrisey settled antitrust allegations with JP Morgan Chase for $400,000. Those allegations included bid rigging, price fixing, and manipulation of the municipal derivatives market. The money will go to state agencies that invested in municipal derivatives.
• JP Morgan was one of 22 banks and financial companies sued by the AG's office. Royal Bank of Canada, Bank of America, and Morgan Stanley had already settled with the AG. Lawsuits against other banks are still ongoing.
• JP Morgan Chase denied the allegations during the lawsuit and denied wrongdoing in the settlement.

Charities

Arizona Attorney General Sues School Allegedly Misrepresenting Itself as a Non-Profit

• Arizona AG Tom Horne sued Rise and Shine Exceptional Services, LLC and its owners for allegedly misrepresenting the school as a non-profit in violation of the state consumer fraud act.
• Rise and Shine allegedly misrepresented to some parents and donors that the school was tuition-free while it charged some students, including recipients of state scholarships, tuition ranging from $2,000 to over $26,000 per year. Rise and Shine allegedly received donations of goods, services, and money because of these misrepresentations.
• The suit seeks a permanent injunction prohibiting the school and its owners from unlawful acts and practices, restitution for parents and donors, disgorgement of profits gained through any illegal acts, civil penalties, costs, and attorney fees.

Consumer Protection

Missouri Attorney General Obtains Verdict Against Telemarketer in First "No Call" Trial

• Missouri AG Chris Koster obtained a verdict against Pure Air, Inc. and its president for alleged violations of the state "no call" and telemarketing laws. The judge ordered Pure Air to pay $35,000 in fines and cease telephone solicitations in the state. If Pure Air fails to comply with the order, the fines could increase to up to $350,000.
• According to AG Koster, this is the first "no call" case brought to trial in the state and he believes it is the first brought to trial by any state AG in the nation.

New York Attorney General Applauds State Assembly for Passing Consumer Credit Fairness Act

• New York AG Eric Schneiderman applauded the state assembly for passing the Consumer Credit Fairness Act, which offers due process protections for consumers against debt collectors attempting to collect on debt using the judicial process.
• The legislation will establish a three-year statute of limitations, establish requirements for a complaint, and require notice to the consumer of their rights in the initial debt collection correspondence and any lawsuit. According to AG Schneiderman, the act will "provide important notice to consumers that a suit has been filed against them, and require collectors to prove that the debt is legally owed to them based on statutes of limitations and other requirements."
• The state assembly passed the bill and referred it to the state senate judiciary committee, where it is now pending review. "I urge the Senate to take up this measure and help put an end to the abuse of consumers by debt collectors in our state," stated AG Schneiderman.

Contingency Fee Counsel

Louisiana Passes Legislation Prohibiting Attorney General's Use of Contingency Fee Counsel

• Louisiana recently passed legislation prohibiting the state attorney general from hiring attorneys on a contingency fee basis.
• House Bill 799 prohibits the attorney general or any state agency, board, or commission (excluding public postsecondary education institutions), from hiring attorneys on a contingency fee basis absent express statutory authority. The bill also requires that preference be given to attorneys licensed in the state and caps attorney fees at $500 per hour.
• The bill creates an exception to these provisions for attorneys that are retained for purposes of defending the state in tort litigation or matters involving the state self-insurance fund.
• Both the state house and senate passed the bill and the house recently concurred in senate amendments. The bill has now been sent to the governor for approval.

Employment

Illinois Passes Bill Protecting Workers Paid Through Payroll Cards

• The Illinois legislature passed a bill crafted by Illinois AG Lisa Madigan, with the assistance of the state department of labor and sponsored by State Representative Arthur Turner and State Senator Kwame Raoul, which protects workers who are paid using payroll cards.
• House Bill 5622  will:
  • Require employee voluntary consent;
  • Prohibit most fees including those for account balances and point of sale transactions;
  • Prohibit linking of account to any form of credit, including overdraft fees and loans against future pay;
  • Require employer to offer other methods of payment;
  • Require employers to disclose the terms and conditions of the card; and
  • Require employers to give notice that third parties may assess transaction fees.
• "People shouldn't have to pay to get their pay," stated AG Madigan. The bill is now being sent to the governor for approval.

Energy

Attorneys General Respond to Environmental Protection Agency's Proposed Rule to Cut Carbon Emissions

• Several attorneys general commented on the Environmental Protection Agency's recently proposed rule to cut carbon emissions. The proposed rule would cut carbon emissions from power plants by 30 percent from the 2005 levels by 2030.
• Attorneys general opposing the proposed rule so far include those from Oklahoma, Texas, and West Virginia. Attorneys general who applauded the proposed rule are those from Massachusetts, New York, Rhode Island, Washington, and Illinois.
• The agency is now taking public comment on the proposed rule. It anticipates releasing a final rule in June 2015. States would likely then be given another year from the release of the final rule to submit compliance plans or apply for extensions.

Environment

Allegations of Transporting Waste From Unregistered Facilities Settled by Massachusetts Attorney General

• Massachusetts AG Martha Coakley settled with Safety-Kleen Systems, Inc., a company that transports waste in the state, to resolve allegations that it transported waste from unregistered facilities and submitted inaccurate reports to the state environmental protection department.
• The state requires facilities that generate hazardous waste to obtain an identification number from the U.S. Environmental Protection Agency or the state. Companies transporting hazardous waste must only accept waste from facilities with a valid identification number and must submit monthly operating reports to the state environmental protection department detailing each shipment of hazardous waste. Safety-Kleen allegedly failed to meet these state requirements.
• The settlement requires Safety-Kleen to pay a penalty of $100,000, of which $40,000 will be suspended if the company complies with environmental laws as outlined in the agreement. The company must also take steps to ensure future compliance, including training employees and instituting penalties and reporting for those employees who do not comply with state environmental laws.

False Claims Act

Medical Center Settles False Claims Act Allegations for $40.9 Million

• Kentucky AG Jack Conway, the U.S Department of Justice (DOJ), the Federal Bureau of Investigation, and the U.S. Department of Health and Human Services, announced a settlement of $40.9 million with King's Daughters Medical Center (KDMC) to resolve allegations that it falsely billed federal and state Medicare and Medicaid programs for heart procedures that were not medically necessary in violation of the federal False Claims Act. Kentucky will receive $1,018,380, which is its share of the Medicaid funds recovered as part of this settlement.
• The federal False Claims Act only allows reimbursement to providers for procedures that are deemed medically necessary. KDMC allegedly billed for unnecessary coronary stents and diagnostic catheterizations performed by its physicians.
• The settlement also resolves allegations of violations of the Stark Law, which is intended to limit monetary influence on physicians by prohibiting financial relationships between hospitals and referring physicians unless the relationship meets certain exceptions. KDMC also agreed to enter into a Corporate Integrity Agreement, which requires internal compliance reforms and third-party review of its claims for five years.
• The DOJ is calling this a "landmark settlement" because it represents the largest federal health care fraud claims settlement involving a hospital in the history of the eastern district of Kentucky.

For-Profit Colleges

South Carolina Attorney General Issues Opinion Regarding Purchase and Licensing of Private Law School

• South Carolina AG Alan Wilson issued an opinion, in response to a request from a state representative, stating that the state Commission on Higher Education, which licenses nonpublic postsecondary institutions, has no discretion to deny a license to a properly qualified applicant. Specifically, the commission lacks authority to consider licensing criteria outside the criteria articulated under South Carolina law, particularly the criterion of whether granting a license is in the best interest of the state.
• The opinion implies that the commission erred in voting last month against approval of a license application filed by InfiLaw, which is trying to purchase Charleston Law School.
• The opinion states that it is especially important that the commission, "make its decisions only upon criteria authorized by law because fundamental due process rights of the applicant are at stake. Any licensing decisions based upon criteria outside the law would, of course, be subject to judicial review and possible reversal."

State AGs in the News

District of Columbia Attorney General Sues Management Company for Allegedly Improperly Diverting Charter School Funds

• District of Columbia AG Irvin Nathan sued Community Action Partners and Charter School Management LLC and its CEO alleging that they contracted for management services with a non-profit charter school and improperly distributed operating profits from the school to themselves for their own benefit.
• The complaint alleges that the management company and its owners violated the district's Non-Profit Corporation Act by distributing the charter school's operating profits to themselves and causing the charter school to act contrary to its non-profit purpose. The complaint further alleges that these acts caused charter school funds to be diverted from the lawful purpose of providing education and other services to the students of that school so that the funds could be used to benefit and enrich the management company and its owners.
• The AG seeks a temporary or preliminary injunction to preserve the assets of the management company and a constructive trust for any improperly distributed funds. The AG also seeks to rescind the management agreements, enjoin any further payments, and enjoin any further allegedly improper actions.
• An attorney for the CEO of the management company responded that the business agreements were legal.

States v. Federal Government

Massachusetts Attorney General Sues Federal Agency and Mortgage Providers Over Alleged Refusal to Engage in Foreclosure Buyback Programs

• Massachusetts AG Martha Coakley sued the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac for alleged violations of the state foreclosure law.
• The complaint alleges violations of the state non-profit buyback provision of the foreclosure law, which prohibits creditors from conditioning a sale to a legitimate buyback program on the program agreeing not to resell or rent the property to the former owner, and the state unfair and deceptive business practices law.
• We recently blogged about a letter AG Coakley sent to the director of FHFA encouraging the agency to direct Fannie Mae and Freddie Mac to permit buybacks of homes by non-profits. The complaint requests declaratory judgment, preliminary and/or permanent injunction, penalties of up to $5,000 for each unfair or deceptive act, attorney fees, and costs.

Unclaimed Property

Washington Attorney General Files Charges Against Former State Employee Alleging Theft of Unclaimed Property

• Washington AG Bob Ferguson filed charges against a former Washington Department of Social and Health Services employee who allegedly used confidential state databases to steal more than $150,000 in unclaimed property.
• The former employee allegedly used confidential state vital records to create false claims on the state unclaimed property website managed by the state Department of Revenue.
• The former employee was charged with first degree computer trespassing, money laundering, eight counts of first degree theft, three counts of second degree theft, 16 counts of first degree identity theft, and an unrelated count of unlawful possession of a firearm. He is scheduled to be arraigned on June 11 at the King County Superior Court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.