February 14, 2022

State Attorneys General Updates From Arkansas, Washington, California & Texas

In this edition of Faegre Drinker’s State Attorneys General Update, we discuss:

  • A nearly $8 million settlement related to allegedly false Medicaid submissions in Arkansas
  • Criminal charges filed under Washington’s Water Pollution Control Act against a hydroelectric company and its chief operating officer in his individual capacity
  • A civil action filed by the California AG alleging Walmart improperly disposed of hazardous waste and personal customer data
  • A pair of lawsuits the Texas AG brought against Google alleging deceptive trade practices
  • A $2.25 million settlement between Washington and Amazon relating to alleged price fixing

Arkansas AG Enters Into False Claims Settlement With Medicaid Provider

Empower Healthcare Solutions, LLC, agreed to pay nearly $8 million to settle alleged violations of the Arkansas Medicaid False Claims Act. According to the Arkansas AG, Empower reported an inflated Medical Loss Ratio (MLR), which is the portion of customer premiums used to pay for clinical services or for quality improvement, because it improperly booked funds it received from the U.S. Department of Health and Human Services (DHS). The AG also alleged that Empower rolled over excess capitated Medicaid funds into 2021 without prior DHS approval. The AG acknowledged that Empower fully cooperated with the investigation and denied any wrongdoing. The investigation leading to this civil settlement was a joint effort by the DHS Office of Inspector General and the Arkansas Medicaid Fraud Control Unit. A copy of the AG’s press release and the settlement are available.

Washington AG Files Criminal Charges Against Hydroelectric Company and Its Chief Operating Officer

Washington AG Robert Ferguson filed a criminal information against Electron Hydro, LLC, and its chief operating officer (COO) for alleged breaches of the state’s Water Pollution Control Act, Shoreline Management Act and the local county code. The charges relate to a 2020 improvement project at a hydroelectric dam. During that project, Electron built a bypass channel and diverted the Puyallup River through it. The channel had a turf base layer that contained crumb rubber covered with a plastic liner. After the river was diverted, the liner broke and turf and crumb rubber were released into the river, which allegedly resulted in chemical pollution. According to the AG, Electron did not have permission to use the turf or crumb rubber on the project. The COO allegedly had been identified during the permitting process as the individual responsible for the project and allegedly ignored a warning from a subordinate that the liner was at risk of rupturing. The maximum sentences for each of the 36 counts against him range from 90 to 364 days’ incarceration and fines between $1,000 and $10,000 per count. The company faces potential penalties of $250,000 per count. The AG’s press release and affidavit of probable cause and the criminal information are available.

California AG Alleges Walmart Breached a Variety of California Laws by Allegedly Disposing of Hazardous Waste and Customer Records Improperly

California AG Rob Bonta filed an action against Walmart for alleged violations of California’s Hazardous Waste Control Law, Medical Waste Management Act, Customer Records Law and, through its alleged violation of those laws, the Unfair Competition Law. The lawsuit is premised on alleged improper disposal of hazardous materials contained in such items as batteries, cleaning supplies, pesticides and LED light bulbs. Further, the AG alleges inspectors found unspecified customer records in Walmart’s trash compactors and that those records contained Personal Information, which had not been rendered indecipherable prior to disposal as required by the Customer Records Act. (Personal Information is broadly defined in California “as any information that identifies, relates to, or is capable of being associated with a particular individual,” such as a person’s name, signature, address, telephone number, medical records, employment history or credit card numbers. Cal Civ. Code § 1798.80(e)). The suit seeks injunctive relief and substantial civil penalties. Walmart denies any wrongdoing and noted that its trash compactors contain at most 0.4% hazardous materials, while the state average is 3%. The AG’s press release and complaint are available.

Texas’s AG Files Two Suits Against Google Alleging Deceptive Trade Practices

Texas AG Ken Paxton filed two lawsuits against Google in January alleging violations of the state’s Deceptive Trade Practices Act. In the most recent action, the AG alleges that Google tricked consumers into believing that they had disabled their phones’ ability to share the user’s location and then used that information to target advertisements to them. Specifically, the AG alleges Google deceives consumers by not disabling tracking conducted through Google-affiliated websites or products accessed through a user’s phone when the user disables a device-specific location tracking setting. This allegedly allows Google to track a user’s location even after they believe they disabled location tracking. Washington, Indiana, the District of Columbia and Indiana have filed similar actions. Copies of the AG’s press release and complaint are available.

In a separate suit, the AG alleges that Google paid iHeartMedia DJs to record endorsements of a new Pixel phone without giving the DJs an opportunity to use the phones they were endorsing. The suit particularly focuses on personal attestations allegedly made by the DJs, such as those about the quality of photographs allegedly taken at night. Copies of the AG’s press release and complaint are available.

Amazon Enters Settlement With Washington Resolving Alleged Price Fixing

The Washington AG and Amazon entered into a consent decree that resolved the AG’s antitrust concerns related to Amazon’s “Sold by Amazon” program, which was discontinued prior to entry of the consent decree. Under the program, Amazon sold products on behalf of third parties. It guaranteed those third parties a minimum price for each product sold, while Amazon took responsibility for the actual sale and pricing of the product to customers. If the product sold for more than the agreed-upon minimum, Amazon and the third-party seller would split the amount received over the minimum. The AG alleged this practice artificially inflated prices and, in some instances, drove customers to purchase cheaper, competing products offered directly by Amazon. Pursuant to the settlement, Amazon paid $2.25 million and agreed not to restart the Sold by Amazon program anywhere in the United States. Amazon denied any wrongdoing. The AG’s press release and the consent decree are available.

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