New York Attorney General and Uber Announce Agreement to Cap Pricing During Emergencies and Natural Disasters
- New York AG Eric Schneiderman and Uber, the provider of a mobile application that connects riders with for-hire vehicles, have announced an agreement to cap prices for all services within the state during abnormal disruptions of the market, such as an emergency or natural disaster.
- Uber uses a dynamic rate model that allows rates to rise and fall with demand rather than setting a single, fixed price. Pursuant to the agreement, Uber will limit its pricing during abnormal disruptions of the market to the range of prices it charged in the preceding 60 days, excluding the three highest prices charged on different days during that period. Uber is expected to announce a national policy that incorporates changes to its pricing model similar to those in this agreement.
- The AG celebrated the agreement, stating that it “serves as a model for the kind of effective collaboration that should exist between government and technology companies like Uber.” The chief executive officer and co-founder of Uber similarly said, “This policy intends to strike the careful balance between the goal of transportation availability with community expectations of affordability during disasters. Our collaborative solution with [AG] Schneiderman is a model for technology companies and regulators in local, state and federal government.”
Washington Attorney General Sues Company for Allegedly Misleading Solicitations
- Washington AG Bob Ferguson sued Mandatory Poster Agency, doing business as Corporate Records Services, and its officers (collectively, Mandatory Poster) for allegedly unfair and deceptive business practices in violation of the state Consumer Protection Act.
- Mandatory Poster allegedly mailed forms that were preprinted with the recipients’ company name, labeled “important,” listed several state laws, and requested $125 dollars from each company to satisfy annual minutes requirements. There is no state requirement for corporations to prepare minutes of their shareholder meetings.
- AG Ferguson requests restitution totaling $362,500, civil penalties of $2,000 per violation, and any available additional penalties for violations of a prior agreement that the AG and Mandatory Poster entered into in 2008 after Mandatory Poster allegedly made similar solicitations. That agreement prohibited any misleading words or terms that implied that the solicitations were from a government agency or required immediate or mandatory responses.
Wyoming Attorney General Fines Company for Alleged Violations of Telephone Solicitation, Promotional Advertising, and Consumer Protection Laws
- Wyoming AG Peter Michael and FHNC, Inc., doing business as Silver King International, entered into an assurance of voluntary compliance that requires FHNC to pay a civil penalty of $15,000 to resolve allegations that it violated state telephone solicitation, promotional advertising of prizes, and consumer protection laws.
- FHNC allegedly called consumers on federal and state do-not-call lists and used misleading surveys and prize offers to arrange in-home solicitations without providing the required disclosures.
- In addition to the penalty, FHNC must offer restitution to consumers who purchased the company’s product through an in-home solicitation by allowing them to indefinitely exercise the three-day right to cancel purchases. FHNC denies that it violated any laws.
Rhode Island Attorney General Settles With Gym for Allegedly Deceptive Practices
- Rhode Island AG Peter Kilmartin filed a lawsuit against Gable Fitness, Inc., doing business as Gold’s Gym, and its owner (collectively, Gable Fitness) for alleged violations of the state Deceptive Trade Practices Act and the state Health Club Act.
- Gable Fitness closed one of their Gold’s Gym locations and allegedly offered customers membership to another of their locations, which was within 15 miles of the original location. State law does not require refunds of prepaid gym memberships if there is another gym within 15 miles that will accept the contract. A little more than a month later, Gable Fitness sold the Gold’s Gym at the replacement location. The new owner allegedly began charging maintenance fees for membership.
- The AG alleges that, in violation of state law, Gable Fitness solicited and accepted membership fees for services that they could not and would not provide.
Kansas Elder Abuse Law Goes Into Effect
- Kansas AG Derek Schmidt announced that a new state law that protects the elderly from financial abuse went into effect on July 1.
- Senate Bill 256 makes mistreatment of an elder person a crime. Among other things, the law makes it illegal to take the personal property or financial resources of an elderly person, including through a violation of the state Power of Attorney Act or the Uniform Trust Code.
- “In the past, the penalties for taking financial advantage of a senior did not fit the crime. If cases were able to be prosecuted at all, the punishment was usually very small. That is about to change,” stated AG Schmidt.
New Indiana Consumer Protection Law Goes Into Effect and Offers “Security Freezes” to Protected Consumers
- Indiana AG Greg Zoeller announced that a new state law that extends “security freezes” to protected consumers went into effect on July 1. Security freezes, which have been in place for years, allow consumers to register with credit reporting agencies to prevent identity thieves from opening lines of credit in the consumers’ names, even if the consumers’ identifying information was stolen.
- Senate Enrolled Act 394 extends the protection of security freezes to children 16 years old or younger and disabled adults. A parent or legal guardian can register the protected consumer.
- “Parents must recognize that their children—even those too young to obtain credit cards—can fall victim to identity thieves who can ruin their credit for years to come, so a security freeze is a sensible precaution,” stated AG Zoeller.
Washington Attorney General Settles With Online Training Provider
- Washington AG Bob Ferguson settled with eFoodhandlers, Inc., to resolve allegations that it sold invalid food handling certificates to food service workers.
- Washington requires all food service workers to obtain a food worker card from their local health department. The AG alleges that eFoodhandlers misled workers to believe that its online training and certification satisfied these state requirements when they did not.
- The consent decree requires the company to pay approximately $120,000 in restitution to more than 11,000 consumers and $40,000 to the state in costs and fees. It also prohibits the company from writing about compliance with state laws on its website.
Colorado Attorney General Obtains $1 Million in Criminal Fines Against Asbestos Abatement Companies
- Colorado AG John Suthers obtained over $1 million in fines against two asbestos abatement companies and their owner. Tri State Environmental Group, Aftermath Cleanup & Remediation Services, LLC, and their owner, plead guilty to the felony crime of Causing and Contributing to a Hazardous Substance Incident. The behavior that was subject to criminal charges also allegedly violated state regulations regarding illegal storage of asbestos containing waste matter.
- The companies and their owner allegedly illegally deposited hazardous asbestos containing waste material and caused or contributed to hazardous substance instances.
- Each company was sentenced to a fine of $500,000. The owner was sentenced to 500 hours of community service and six years of probation. He also agreed to pay $2,538 in restitution.
New York Attorney General Settles With Health Insurer Regarding Behavioral Health Claims
- New York AG Eric Schneiderman settled with health insurer EmblemHealth, Inc., to resolve claims that it allegedly wrongly denied mental health and substance abuse treatment in violation of state mental health parity laws.
- EmblemHealth allegedly denied 64 percent more behavioral health claims than medical case claims. According to the AG, this is his office’s third settlement this year involving enforcement of mental health parity laws and this matter was part of a broader, ongoing investigation of these issues.
- Pursuant to the settlement, the insurer will submit previously denied claims for independent review, which according to the AG could result in the return of more than $31 million to insureds. The settlement also requires the insurer to pay a $1.2 million civil penalty, reform its behavioral health claims review process, cover residential treatment, charge the lower primary care copayment for outpatient visits to mental health and substance abuse treatment providers, be monitored by an external entity, and file an annual parity compliance report.
Massachusetts Attorney General Settles With Motorcycle Insurer for Over $14.9 Million
- Massachusetts AG Martha Coakley settled with Commerce Insurance Company for more than $14.9 million to resolve allegations that it overcharged customers for motorcycle insurance policies.
- The settlement resulted from a larger investigation that led to settlements with 19 insurance companies. This settlement was the largest of these settlements. Commerce Insurance allegedly overcharged certain customers by using inflated or undepreciated motorcycle values to calculate insurance premiums.
- Under the agreement, the company will pay $14.6 million in refunds to its customers and will pay $325,000 to the state.
Idaho Attorney General Files Petition for Writ of Certiorari With U.S. Supreme Court
- Idaho AG Lawrence Wasden, on behalf of the Idaho Department of Health and Welfare and Idaho Medicaid, asked the U.S. Supreme Court to consider its appeal of a lawsuit that challenges the Medicaid reimbursement rates paid to providers.
- Five providers brought the lawsuit, alleging that the Medicaid rates paid by the state were too low. A federal district court ruled against the state and the Ninth Circuit U.S. Court of Appeals affirmed the decision. The Ninth Circuit held that precedent and the Supremacy Clause of the U.S. Constitution gives the private party providers the right to enforce Medicaid Act funding conditions against states, even where Congress did not create an enforceable right to do so.
- AG Wasden argues that the Ninth Circuit erred in allowing providers to rewrite the Medicaid Act and the state’s agreement with the federal government regarding the terms of federal funding. In addition, AG Wasden argues that the Ninth Circuit is the only circuit to require that rates bear a relationship to provider costs.
- “We’re asking the Supreme Court to take up this case because the 9th Circuit’s decision incorrectly permits private parties to interfere with the administration of the state’s Medicaid program and the Legislature’s choices regarding that program,” stated AG Wasden.
New York Attorney General Settles Allegations of Misleading Solicitations Regarding Reverse Mortgages
- New York AG Eric Schneiderman settled with New View Mortgage Corp., requiring it to pay a penalty of $12,500 to resolve allegations that it used misleading direct mail solicitations.
- The AG alleges that New View advertised reverse mortgages that were designed to look like official government notices from the Federal Housing Administration and only listed the benefits associated with reverse mortgages in its solicitations, but none of the alleged risks.
- In addition to assessing the penalty, the settlement prohibits New View from making any misrepresentations about reverse mortgages in any of its solicitations.
North Carolina Attorney General Appeals Utility Rate Increase
- North Carolina AG Roy Cooper appealed the North Carolina Utilities Commission’s approval of a proposed rate increase by Aqua North Carolina, Inc., the largest private water utility in the state. The Utilities Commission used an accelerated process for the approval, which is permissible under state law if the rate case for that utility is in the public interest.
- In the notice of appeal, AG Cooper argues that the rate increase is not in the public interest. He also argues that an accelerated approval in this case would deny public hearings and discovery. Consumers “deserve a chance to weigh in” and the “Utilities Commission should have all the information before making a decision to raise rates,” stated AG Cooper.
Illinois Attorney General Opposes Rate Increases by Utilities
- In filings with state regulators, Illinois AG Lisa Madigan opposed rate increases by Peoples Gas, Integrys, and Commonwealth Edison.
- Peoples Gas, the primary natural gas company for Chicago, requested a $129 million rate increase, which would allegedly increase monthly consumer bills by $5 per month, or by 22 percent. AG Madigan argued that the proposed increase should be reduced by $74 million because the company was overestimating the cost of a pipe replacement project and not maximizing efficiencies in its operations.
- Integrys requested a $7.1 million increase, which would allegedly increase monthly consumer bills by $2.50 per month. AG Madigan argued that instead of a rate increase, current rates should be cut by about $1 million.
- AG Madigan also asserted that Commonwealth Edison’s attempts to recoup $87.9 million in employee bonuses from consumers through a rate increase is illegal, but according to a news report the company believes that the law supports including employee compensation incentives in its rates.
States AGs in the News
Legal Developments in Kansas and Massachusetts on Casino Issues
- Kansas AG Derek Schmidt announced that the U.S. Department of the Interior has denied the Wyandotte Nation of Oklahoma’s application to convert its land into a federal trust, which would allow casino gaming on that land.
- In a federal district court, AG Schmidt defended the state’s legal interest in not allowing a tribal casino. The district court ruled in favor of Kansas on the tribe’s request to force the Department of the Interior to rule in its favor, but urged the Department of the Interior to make a decision on the tribe’s land-into-trust application. In response, the Department of the Interior denied the application in a letter to the tribe.
- “If there are later efforts by the tribe or others to contest the Department’s denial of the application, we will continue to vigorously defend our state’s legal interests,” stated AG Schmidt.
- In another state casino matter, the Massachusetts Supreme Judicial Court recently ruled unanimously that voters would decide whether a law allowing casinos in the state should be repealed through a ballot question on the November ballot. The court’s decision overturned a finding by Massachusetts AG Martha Coakley that the proposed ballot question is unconstitutional because it causes casino developers to lose property without compensation.