July 11, 2023

State AG Updates: Oregon, Connecticut, California, New York and Multistate Coalitions

At a Glance

  • Multistate coalition of AGs enters $102.5 million settlement with Suboxone manufacturer
  • Oregon AG announces investigation of Fox Corporation’s board of directors
  • Connecticut AG opens investigation into automobile anti-theft technology
  • Coalition of AGs submits comment on artificial intelligence accountability standards
  • California AG obtains $3.8 million settlement in anti-kickback and False Claims Act investigation
  • New York AG sues four nursing homes for financial fraud and resident neglect
  • New York AG recovers $1.7 million from cryptocurrency platform operating illegally

Multistate Coalition of AGs Enters $102.5 Million Settlement With Suboxone Manufacturer

On June 2, 2023, the AGs of 41 states and Washington, D.C., filed a stipulation to resolve claims stemming from a 2016 lawsuit in which the AGs alleged that Virginia-based drug manufacturer Indivior had used anticompetitive tactics to illegally keep generic manufacturers out of the market and extend its monopoly on the opioid medication Suboxone. Specifically, the AGs alleged that Indivior had engaged in a practice known as “product hopping” by switching to an oral film version from a tablet version just as generic manufacturers were poised to begin marketing their own tablet versions.

The stipulation imposes disclosure requirements on Indivior when filing a citizen petition, filing a new drug application for a follow-on drug, beginning to market an FDA-approved drug, or for any change in corporate control. The stipulation also forbids certain practices during a status quo period after Indivior begins marketing a follow-on drug when competitors have filed certain new drug applications for which Indivior’s original drug is the reference listed drug. Judge Goldberg of the Eastern District of Pennsylvania entered an order approving the stipulation on June 13.

A link to the stipulated final judgment is here.

Oregon AG Announces Investigation of Fox Corporation’s Board of Directors

The Oregon AG’s office opened an investigation of the board of directors of Fox Corporation (Fox), the corporate parent of Fox News, and announced it was considering bringing a stockholder derivative action on behalf of the Oregon Public Employees Retirement Fund, a Fox investor. Specifically, the AG alleges that Fox’s board of directors allowed Fox News to broadcast false claims about Dominion and Smartmatic voting machines relating to the 2020 presidential election, statements it alleges harmed investors by incurring a liability of $787.5 million to settle defamation claims.

A copy of the AG’s press release is here.

Connecticut AG Opens Investigation Into Automobile Anti-theft Technology

The Connecticut AG’s office, which has previously highlighted problems with theft of certain models of Hyundai and Kia vehicles manufactured between 2011 and 2022, announced it has opened a consumer protection investigation and issued civil investigative demands relating to the companies’ alleged failure to equip several vehicle models with industry standard anti-theft technology. Specifically, the AG alleges that the companies’ decision not to include engine immobilizers as standard equipment led to a rash of thefts after how-to videos on hotwiring the vehicles began appearing on social media. Last year, a coalition of AGs had demanded that the companies take action beyond issuing software upgrades, which the AGs allege are not compatible with all vehicles.

A copy of the AG’s press release is here.

Coalition of AGs Submits Comment on Artificial Intelligence Accountability Standards

On June 12, 2023, a group of 23 state attorneys general submitted a comment to the National Telecommunications and Information Administration (NTIA) advocating for independent standards for transparency, testing, assessments and audits in AI governance. The NTIA, which sits within the U.S. Department of Commerce, advises the president on telecommunications and information policy.

Stressing the need to develop a risk-based approach similar to the European Union’s AI Act and the framework of U.S. privacy laws, the AGs: called for governmental oversight including federal legislation; urged guardrails such as human review of AI-driven decisions in certain high-risk use cases; recommended aligning AI governance standards with state privacy rights; and advocated for the federal government and state attorneys general to share concurrent enforcement power.

The full comment is available here.

California AG Obtains $3.8 Million Settlement in Anti-Kickback and False Claims Act Investigation

An investigation by the California AG’s Office for the Central District of California, the U.S. Department of Justice, and the California Department of Justice’s Division of Medi-Cal Fraud and Elder Abuse led to a settlement of allegations that a Riverside, California, skilled nursing facility, Alta Vista Healthcare & Wellness Centre (Alta Vista), and its management company, Rockport Healthcare Services (Rockport), engaged in a decade-long practice of paying illegal kickbacks in the form of cash, gifts and salaries to induce doctors to refer Medi-Cal and Medicare beneficiaries.

In announcing the $3.8 million settlement — of which California will receive $596,700 — the California AG asserted that “kickbacks “jeopardize[ ] the health and well-being” of patients and “ultimately waste valuable taxpayer dollars.”

A copy of the press release is here.

New York AG Sues Four Nursing Homes for Financial Fraud and Resident Neglect

The New York AG filed a lawsuit against the owners, operators and landlords of four nursing homes for years of alleged fraud and misuse of more than $83 million in taxpayer money, which allegedly resulted in significant resident neglect, harm and humiliation. The nursing homes, owned and operated by Centers for Care LLC, doing business as Centers Health Care, include Beth Abraham Center for Rehabilitation and Nursing (Beth Abraham Center) in Bronx County, Buffalo Center for Rehabilitation and Nursing (Buffalo Center) in Erie County, Holliswood Center for Rehabilitation and Healthcare (Holliswood Center) in Queens County, and Martine Center for Rehabilitation and Nursing (Martine Center) in Westchester County. Residents at these facilities were allegedly forced to sit for hours in their own urine and feces; suffered from severe dehydration, malnutrition and increased risk of death; developed infections and sepsis from untreated bed sores and inconsistent wound care; sustained life-changing injuries from falls; and died.

Following an investigation by the Medicaid Fraud Control Unit, the lawsuit alleges that the nursing homes’ owners and operators converted more than $83 million in Medicaid and Medicare funds to enrich themselves, their families and business associates through an elaborate network of related companies and collusive, fraudulent transactions, rather than use the funds for their intended purposes of providing sufficient staffing and required resident care. The lawsuit seeks to prohibit the nursing homes from admitting new residents until staffing meets appropriate standards, to implement a financial monitor and a health care monitor, and to disgorge any and all wrongfully received government funds.

A copy of the complaint can be found here.

New York AG Recovers $1.7 Million From Cryptocurrency Platform Operating Illegally

The New York AG recovered more than $1.7 million from cryptocurrency platform CoinEx, for allegedly failing to register as a securities and commodities broker-dealer and falsely representing itself as a crypto exchange. The agreement resolves the AG’s lawsuit against the company and requires the company to refund thousands of New York investors more than $1.1 million and pay more than $600,000 in penalties to the state. As part of the consent order, CoinEx is banned from offering, selling, or purchasing securities and commodities in New York and is prohibited from making its platform available in the state.

A copy of the AG’s press release can be found here.

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