1st Amendment Win for Credit Card Surcharges| Texas Sues over Electricity Bills | Dodgy COVID Fees
Blog The State AG Report

Cozen in the News

Meghan Stoppel, Former Nebraska Consumer Protection Division Chief, Joins State Attorneys General Group

• Former Nebraska Consumer Protection Division Chief Meghan Stoppel joined Cozen O’Connor’s State AG Group as a Member. She is a Certified Information Privacy Professional.
• Prior to her work in the Nebraska AG’s office, where she handled investigation and enforcement of state and federal laws related to deceptive and unfair trade practices, data privacy and security, antitrust, nonprofits, tobacco regulation, and charitable trusts, Stoppel served as an assistant AG in Kansas, where she handled consumer protection matters.
• Lori Kalani, Co-Chair of Cozen O’Connor’s State AG Group, was interviewed in a Reuters article about the expansion of the Cozen O’Connor team in light of the increasing coordination between state AGs and federal agencies in the Biden era. Kalani noted that Cozen O’Connor recruits lawyers with highly specialized expertise in state attorney general matters. She also said that she anticipates increased enforcement activity relating to the COVID-19 pandemic, including for disbursed funds-related fraud and compliance with pandemic-related laws and regulations.

Cozen O’Connor’s State AG Group Notches First Amendment Win for CardX over Credit Card No-Surcharge Law

• Cozen O’Connor State AG Group Co-Chair Bernie Nash and Associate Keturah Taylor obtained an important judgment on behalf of Chicago-based payments technology company CardX, LLC in its suit challenging Kansas’s law prohibiting credit card surcharging (“no-surcharge law”), in which the court declared that the no-surcharge law is unconstitutional as applied to CardX’s surcharging model.
• The complaint alleged that the no-surcharge law violated CardX’s rights under the First Amendment by prohibiting CardX from communicating a credit card surcharge to consumers via its patent-pending software while allowing merchants to offer “cash discounts,” thereby controlling the manner in which prices are communicated to consumers, among other things.
• Judge John Broomes of the U.S. District Court for the District of Kansas ruled that the law unjustifiably restricts CardX’s commercial speech in violation of the First Amendment and issued a declaratory judgment to that effect.

2022 AG Elections

Former South Dakota Attorney General Steps Back into Contention for AG’s Office

• Marty Jackley, who formerly served as U.S. Attorney for South Dakota, South Dakota AG, and President of the National Association of Attorneys General, announced he will seek the Republican nomination for South Dakota AG. The nominee will be selected by party delegates at the 2022 Republican State Convention.
• Jackley’s announcement comes while current South Dakota AG Jason Ravnsborg is the subject of an investigation for his role in a crash that killed a pedestrian last year.
• For more AG election news, insights, and polls visit Cozen O’Connor’s State AG Election Tracker.

Campaign Finance

Google Sued over Alleged Failure to Keep Track of Campaign Ad Spending on Its Advertising Networks

• Washington AG Bob Ferguson sued Google, Inc. over allegations that it failed to maintain appropriate records of political advertising revenues in violation of Washington’s campaign disclosure laws.
• The complaint alleges that Google failed to retain and make available to the public legally mandated information, including the cost of advertisements, and the names of the persons or organizations sponsoring and purchasing them. The complaint further alleges that in response to a similar suit by the AG’s office in 2018, Google announced that its advertising networks would no longer accept political advertisements for state or local elections, but political advertisements continued to be run on Google’s platform.
• The complaint seeks injunctive relief, civil penalties, and attorneys’ fees and costs.
• As previously reported, in 2020, AG Ferguson reached a settlement over similar allegations with Twitter, Inc., in which Twitter paid $100,000 to the state.

COVID-19

California Attorney General Warns Consumers About Proliferating COVID Fees

• California AG Xavier Becerra warned consumers about so-called “COVID fees” that some healthcare providers are reportedly charging patients to purportedly cover additional expenses such as more frequent cleanings and disinfections and greater use of personal protective equipment.
• According to the AG’s office, healthcare providers may not charge a COVID fee to patients enrolled in certain state and federal healthcare programs, such as Medi-Cal and Medicare, and the AG’s office further recommends that patients enrolled in these programs file a complaint with the AG’s office if they have been charged COVID fees.
• The AG’s office also notes that patients with private health insurance have the right to ask their insurers whether their healthcare providers are allowed to charge a COVID fee under their insurance plan rules.

False Claims Act

Companies Settle Allegations They Marketed Medical Devices for Unapproved Pediatric Use

• California AG Xavier Becerra reached settlements with medical device company Medical Device Business Services, Inc., a subsidiary of Johnson & Johnson (“MDBS”), and private equity firm The Gores Group (“Gores”) to resolve allegations that the two companies used improper marketing practices and submitted false claims to state Medicaid programs.
• According to the AG’s office, the complaint, which stems from a whistleblower suit, alleged that MDBS and Gores improperly marketed prescription medical device systems for the treatment of skin problems associated with cutaneous T-cell lymphoma to pediatric patients, even though the systems were not approved by U.S. Food and Drug Administration for pediatric use. The systems were developed by Therakos Inc., a company which MDBS and Gores each owned at separate times.
• Under the terms of the settlements with MBS and Gores, MDBS will pay over $73,000 and Gores will pay nearly $61,000 to the state. These settlements are part of global settlements into which the companies entered with all 50 states and the U.S. Department of Justice, under which MDBS agreed to pay $10 million and Gores agreed to pay $1.5 million to settle allegations under federal and state false claims acts.

Utilities

“Wholesale” Electricity Company Sued by Texas Attorney General over Astronomical Consumer Bills

• Texas AG Ken Paxton sued electricity company Griddy, LLC over allegations that it used false, misleading, and deceptive advertising practices to market its services to consumers in violation of the Texas Deceptive Trade Practices Act.
• The complaint alleges that Griddy promised consumers cheaper, wholesale prices that would consistently be less than the prices charged by traditional energy companies, but in reality, in the aftermath of the February 2021 storm that caused extensive power outages in the state, many Griddy customers’ bank accounts were auto-debited for hundreds of dollars per day, resulting in overdrawn accounts, overdraft fees, and inability to pay other bills.
• The complaint seeks injunctive relief to bar Griddy from advertising false or misleading electricity rates and requiring it to provide accurate information about the likelihood and extent of price fluctuations, among other things. The complaint also seeks civil penalties, restitution, disgorgement, and attorneys’ fees and costs.
• As previously reported, the AG’s office recently issued Civil Investigative Demands under the Texas Deceptive Trade Practices Act to twelve power companies, seeking information, documents, and communications relating to the statewide power outages in the wake of the February 2021 storm.