Week Adjourned: 9.15.17 – PepsiCo, LensCrafters, BofA

Top Class Action Lawsuits

PepsiCo losing credit on this one… A subsidiary of PepsiCo is facing a employment class action lawsuit filed by a job applicant who alleges violations of the Fair Credit Reporting Act.

Specifically, plaintiff Altareek Grice alleges that during the job application process he was engaged in with Bottling Group LLC in August 2016, the company accessed his consumer credit report via Carco Group Inc., without making the necessary disclosures required by the FCRA.

According to the PepsiCo lawsuit, employers must provide a disclosure “in a document that consists solely of the disclosure,” if they wish to access a potential employee’s consumer report.

“Pepsi either knew or recklessly failed to know the disclosure requirements of [the FCRA] and that its acts in procuring or causing to be procured a consumer report regarding plaintiff and other class members without providing the required disclosure to them was facially contrary to the express language of [the act] and all administrative guidance available and violated the law,” the complaint states.

Grice seeks to represent a nationwide class of all individuals whose consumer reports were procured by Bottling Group LLC for employment purposes in the last two years and to whom the company did not provide a clear disclosure. The estimated size of the class could exceed 1,000 people, according to the complaint.

The case is Grice v. Pepsi Beverages Co. et al., case number 3:17-cv-01842, in the U.S. District Court for the Southern District of California.

Not exactly crystal clear… LensCrafters got hit with a proposed consumer fraud class action lawsuit alleging it falsely claimed that its prescription eyeglasses are made with pupillary distance measurements that are five times more precise than traditional measurements.

According to the LensCrafters complaint, filed by Kathleen Infante, LensCrafters, advertises its Accufit Digital Measurement System measures the distance between pupils to the tenth of a millimeter. Infante states that the defendant claims this system allows it to produce prescription glasses with more accurate lenses that put “the prescription exactly where you need it to see your best.” However, she asserts that this technology doesn’t, in fact, result in more accurate eye wear products.

“Because LensCrafters’ manufacturing process uses the same decades-old traditional methods, the end-product sold to customers cannot and does not have PD measurements that are ‘five times’ more accurate than traditional methods,” the complaint states.

According to the proposed lawsuit, the manufacturing equipment that LensCrafters uses doesn’t measure more precisely than 1 millimeter, which is the same precision as a standard ruler. Even if the Accufit system measures within a tenth of a millimeter, the manufacturing technology is incapable of actually producing glasses with that much accuracy, the complaint states.

“Even assuming the Accufit technology is, as advertised, five times more accurate than manual measurements, LensCrafters cannot and does not translate the measurements taken from the Accufit system into its manufacturing process,” the lawsuit asserts.

According to the complaint, while LensCrafters employees allegedly were aware of the equipment’s shortcomings, they were discouraged from discussing the manufacturing process with customers.

Infante seeks to represent a class of California residents who purchased prescription glasses from LensCrafters since September 5, 2011. The complaint states that LensCrafters introduced the Accufit system around 2011.

The case is Kathleen Infante v. Luxottica Retail North America, case number 3:17-cv-05145 in the U.S. District Court for the Northern District of California.Top Settlements

Top Settlements

BofA Interest & Fees for Military Servicemembers… No stranger to lawsuits, Bank of America (BoFA) has had a $41.9 million class action settlement preliminarily approval – without admitting any wrongdoing – (surprised?) potentially ending a consumer banking class action brought by military families who alleged that BoFA overcharged them on interest and fees related largely to mortgage and credit card accounts and then tried to conceal those violations. Seriously.

If final approval is granted, restitution will be made to more than 125,000 military members who alleged BoFA’s actions are in violation of the Servicemembers Civil Relief Act.

Under the terms of the settlement BoFA would, for a five year period, refrain from using a method for calculating interest subsidy that the service members contend could lead to higher costs for class members.

According to the deal, Class members will be divided into four groups, depending on the types of accounts they held. They will receive payments accordingly, with the first $15.4 million going to class members who did not previously receive or deposit payouts from Bank of America.

“After the class wide distribution, the value of any uncashed distribution checks will be redistributed further to the class, if the value is sufficient to make it economically feasible, or else such residual funds will be distributed as cy pres to a non-profit organization providing services to military service members and veterans,” court documents state.

The case is Childress et al. v. Bank of America Corporation et al., case number 5:15-cv-00231, in the U.S. District Court for the Eastern District of North Carolina.

Ok – That’s a wrap for this week. See you at the bar!

Week Adjourned: 9.8.17 – Ford, Victoza, Honda Airbags

Top Class Action Lawsuits 

Got a Ford? How are your lug nuts? The automaker got hit with a defective automotive class action lawsuit this week, alleging it sold vehicles with defective lug nuts that swell and delaminate to such an extent that drivers cannot remove them with a lug wrench provided by Ford. This results in drivers being forced to pay a professional to replace the parts.

The Ford vehicles involved include the Ford Fusion, Escape, Flex, Focus, F-150 and F-350. According to the complaint, while the drivers might reasonably expect to be able to replace a flat tire using the wrench that is supplied by Ford with these vehicles, in practice, they cannot because the wrench no longer fits over the lug nuts if they swell or delaminate.

Here’s the skinny: according to the Ford lug nut complaint, filed by Ford drivers from seven states, the lug nuts that secure the wheels to Ford’s Fusion, Escape, Flex, Focus, F-150 and F-350 vehicles are made with a steel core and a chrome, aluminum or stainless steel cap that improves the product’s appearance but swells and delaminates. This purported defect renders the Ford-provided wrench useless, making drivers pay more than $30 per wheel, plus labor, to replace the parts and often stranding the drivers on the side of the road with a flat tire.

Consequently, drivers who have a flat tire can become stuck on the side of the road they are unable to fix themselves, putting them in a “precarious and dangerous place,” the lawsuit states. When drivers do make it to a repair facility, they typically have to pay for the labor of removing the defective lug nuts as well as new parts, the complaint states.

Further, the drivers claim that Ford doesn’t replace the faulty lug nuts, even if the parts fail within the new vehicle warranty period. This forces the affected vehicles owners to “spend hundreds of dollars for new lug nuts and the labor to install them,” the lawsuit states.

Ford customers have submitted “numerous complaints” to the National Highway Traffic Safety Administration, which Ford monitors, the complaint states. Therefore, the automaker is aware of the problem, according to the lawsuit.

The drivers seek to represent a nationwide class of consumers who purchased or leased an affected vehicle as well as classes of drivers in each of the 50 states. It is estimated that millions of vehicles have been affected.

The drivers are represented by Steve W. Berman and Thomas E. Loeser of Hagens Berman Sobol Shapiro LLP and E. Powell Miller and Sharon S. Almonrode of The Miller Law Firm PC.

The case is Josh Wozniak et al. vs. Ford Motor Company, case number 2:17-cv-12794 in the U.S. District Court for the Eastern District of Michigan. 

Top Settlements 

Victoza Settlement… Sitting down? Good, now strap yourselves in. A $60 million deal has been agreed between Novo Nordisk Inc., and federal agencies who alleged the pharmaceutical company engaged in misleading marketing practices concerning its best selling type 2 diabetes drug Victoza.

The US Department of Justice (DOJ) charged that the company misled physicians and insurers about the associated risk of cancer associated with Victoza, specifically that the drug has been linked to a rare cancer called medullary thyroid carcinoma. 

According to the DOJ, the allegations go back to 2010, when the US Food and Drug Administration (FDA) initially approved the drug. The FDA had required Novo Nordisk to modify its FDA-mandated risk evaluation and mitigation strategies, or REMS, after a 2011 survey revealed that half of primary care doctors polled were unaware of the potential cancer risks associated with the drug, according to the DOJ. The drug has been linked to a rare cancer called medullary thyroid carcinoma, the DOJ said.

According to the terms of the deal, Novo Nordisk will pay over $43 million to the federal government and about $3.3 million to state Medicaid programs. The deal will resolve claims made the by agencies under the False Claims Act. Additionally, Novo Nordisk has agreed to turn over $12.15 million in profits to resolve claims made that it knowingly violated the federal Food, Drug and Cosmetic Act from 2010 to 2012.

The deal also resolved seven whistleblower lawsuits filed between 2010 and 2016. Eleven whistleblowers were involved in bringing the lawsuits, and at least one, made by Peter Dastous, a Novo Nordisk sales representative who was responsible for selling Victoza to endocrinologists in South Carolina and northern Georgia, alleged Medicaid fraud against private commercial health insurers, and the deal brings the aggregate settlement amount the company will pay to $60 million.

You couldn’t make this stuff up – even if you wanted to.

The federal lawsuit is United States et al. v. Novo Nordisk Inc., case number 1:17-cv-01820, in the U.S. District Court for the District of Columbia. The whistleblower suit filed by Dastous is United States et al. ex rel. Dastous v. Novo Nordisk Inc., case number 1:11-cv-01662, in the U.S. District Court for the District of Columbia.

More About Airbags… Here’s another whopper. Honda has agreed to pay $603 million to exit the defective Takata air bag multidistrict litigation. This will hasten the removal of the exploding airbags from about 16.5 million Honda vehicles.

According to Honda, a $200 million fund will be established to expand the Takata air bag inflator recall in an effort to reach owners of affected Honda vehicles who have not been located or have not responded to recall notices.

If approved, the preliminary Honda airbag settlement would make Honda the sixth automaker to be exit the litigation, following Toyota, Subaru, Mazda and BMW who agreed to pay a combined $553.6 million. Nissan has also settled for $98 million. If Honda’s deal is approved, Ford would be the only remaining automaker in the lawsuit.

According to the terms of the deal, class members will be provided with rental or loaner vehicles while they deal with fixing their cars. Remaining funds will be distributed to class members in amounts up to $250.

The lawsuit was originally filed in 2014, claiming that Takata air bags contained volatile ammonium nitrate that when inflated, can misfire, especially in humid conditions, blasting chemicals and shrapnel at passengers and drivers. Takata’s air bag inflators have been linked to at least 11 deaths in the US and the company has faced massive global recalls.

Prior to filing for bankruptcy in June of this year, Takata pled guilty to wire fraud, agreed to pay $1 billion in fines and restitution, and acknowledged that it ran a scheme to use false reports and other misrepresentations to convince automakers to buy air bag systems that contained faulty, inferior or otherwise defective inflators.

The case is In re: Takata Airbag Products Liability Litigation, case number 1:15-md-02599, in the US District Court for the Southern District of Florida.

Ok – That’s a wrap for this week. See you at the bar!

Week Adjourned: 9.1.17 – Wells Fargo, TD Bank, Wild Planet Tuna

Top Class Action Lawsuits

Does the term “Rate Lock Fees“ mean anything to you? Well, read on. Wells Fargo is facing a consumer banking class action lawsuit over charging improper mortgage-related fees to its customers. Specifically, the Wells Fargo mortgage loan lawsuit claims that home loan borrowers were being charged extra fees when their applications were delayed, even if the bank was the cause of the delay. Your first clue.

Filed in federal court in San Francisco, the lawsuit centers around fees known as rate-lock extension fees. These fees are charged, according to the allegations, when a borrower applies for a mortgage for which the lender promises a set interest rate, as long as the loan is approved within a certain time period, typically between 30 and 45 days. If the loan takes longer to approve, the borrower must pay a fee to keep the previously promised rate. Seriously.

As with most lenders, Wells Fargo is supposed to waive the fee if it is responsible for holdups. Borrowers only pay the fee if they are responsible for the delays by, for instance, failing to submit documents on time.

According to the allegations in the lawsuit, Victor Muniz, a Las Vegas security guard, was charged a rate lock extension fee by Wells Fargo of $287.50, despite the delays in his mortgage approval being caused by the bank and despite Muniz being told by a Wells Fargo banker that he would not have to pay the fee.

Muniz asserts that Wells Fargo was responsible for the delays approving his application partially because they hired an appraiser who was out of the country while Muniz’s mortgage application was being processed. Muniz has brought the suit on behalf of himself and all other borrowers who may have paid improper fees. 

Top Settlements 

TD Bank Penny Arcade Update… There’s a settlement – it’s received preliminary approval. So get your pencils out – time to file a claim. Of course, TD Bank denies any liability or wrongdoing, and the Court has not decided which side is right. However, to settle the case and avoid the costs and risks of litigation, TD Bank has agreed to a settlement.

Here’s the skinny: consumers who used a Penny Arcade machine at a TD Bank store between April 11, 2010 and July 12, 2017, may be entitled to a cash payment from the class action settlement.

Reportedly, TD Bank will calculate the amount each TD Bank customer would receive by using its records to determine the amount of Penny Arcade usage by those consumers. TD would multiply that sum by 0.26 percent to determine a customer’s distribution, or payment.

If you conducted a Penny Arcade transaction during the Class Period at a time when you did not hold a TD Bank Account, you must submit a Claim Form by October 27, 2017 to be eligible to receive a Settlement Payment based on such transaction(s).

If you conducted a Penny Arcade transaction during the Class Period at a time when you held a TD Bank checking, savings, personal loan, or business loan account (“Account”), you do not have to do anything to receive any Settlement Payment to which you are entitled.

Got Wild Planet and Sustainable Seas tins of Tuna? Well, heads up folks – a settlement has been reached in a consumer fraud class action lawsuit pending against Wild Planet and Sustainable Seas alleging their tinned tuna products were deliberately under-filled to below the 5-ounce weight stated on the product labels.

Under terms of the tuna settlement, Wild Planet will create a settlement fund of $1.7 million, part of which will be distributed to Class Members eligible to claim benefits, which include all US residents who between November 5, 2011 and May 12, 2017 who purchased a can of tuna under the Wild Planet or Sustainable Seas brands.

Eligible class members can claim a cash payment of up to $29. This amount could be lower depending on the number of timely and valid claims received. The settlement payout could also be reduced if the cost of the claims administration is more than $350,000.

The case is Ehder Soto v. Wild Planet Foods Inc., Case No. 5:15-cv-05082, and Heney Shihad v. Wild Planet Foods Inc., Case No. 1:16-cv-01478, in the U.S. District Court for the Northern District of California. 

Ok – That’s a wrap for this week. See you at the bar!

Week Adjourned: 8.25.17 – Goldman Sachs, Talc Powder, Sony

Top Class Action Lawsuits

Did they not get the memo? Goldman Sachs Group (GSG) Inc, got hit with a discrimination class action lawsuit filed by a black female banker working in GSG’s personal wealth management unit. Specifically, plaintiff Rebecca Allen alleges GSG steered top clients to her Caucasian colleagues and denied her promotions because of her race. Seriously?

Allen states in the Goldman Sachs discrimination lawsuit that Goldman’s senior leadership team is virtually all-white and favors white bankers for promotions and lucrative accounts, resulting in their earning more than their black colleagues.

“Simply put, Goldman Sachs does virtually nothing to hire, promote or develop black talent, instead focusing its efforts on retaining and promoting white employees to positions of leadership,” the complaint states.

Allen was hired by GSG in 2012. According to the complaint, in 2016 she was removed from an account she had worked on for three years by a Goldman partner, Christina Minnis, who is also named as a defendant in the lawsuit. Allen says her supervisor met with Minnis about the decision and said she made racist and anti-Semitic comments about Allen, who is also Jewish.

Well, that about covers all the bases. See you in court!

The case is Allen v. Goldman Sachs Group Inc, U.S. District Court for the Southern District of New York, No. 1:17-cv-06195. 

Top Settlements

Big award for talcum powder cancer lawsuit … California just handed down a $417 million verdict to the plaintiff who claimed she developed terminal ovarian cancer after using the company’s talc-based products such as Johnson’s Baby Powder. The talc cancer case is the first to be heard in California against Johnson & Johnson (J&J). It is brought by California resident Eva Echeverria who alleges the company failed to provide adequate warning about the risk for cancer linked to the use of its talc-based products.

The Los Angeles Superior Court jury found in favor of Echeverria, awarding $70 million in compensatory damages and $347 million in punitive damages. This is the sixth trial against J&J to go to court, following five previously heard in Missouri state court which resulted in more than $307 million in damages against J&J. Prior to the Echeverria verdict, the largest single award was $110 million.

During the trial, Echeverria’s attorney’s alleged that despite J&J’s knowledge of years of studies that show a link between ovarian cancer and death and the use of genital talcum powder products, the company continued to encourage women to use those products.

Talcum powders are made of talc, a mineral comprised of bits of magnesium, silicon and oxygen that absorbs moisture. Some talc contains asbestos, a known carcinogen, in its natural form. While J&J is likely using in court information that commercial products sold in the US have been asbestos-free since the 1970s, some women used talc before the 1970s. Echeverria is 63 years old, and claims she used J&J products all her life. Feasibly, she used talc containing asbestos for more than a decade.

The case, which J&J said it plans to appeals, is Echeverria et al v. Johnson & Johnson, Los Angeles Superior Court, No. BC628228.

A bit water-logged over at Sony? Sony has agreed a preliminary settlement potentially ending a class action lawsuit alleging the company designed, manufactured, distributed, advertised and sold certain Mobile Devices that were alleged to be misrepresented as “waterproof.” The consumer fraud lawsuit asserts that the phones are, in fact, “not waterproof and are not designed for or capable of ordinary underwater use.”

The class action also claimed that “Sony exploited certain international water resistance ratings in order to launch a deceptive marketing campaign promoting the Devices.”

The Plaintiffs seek certification of a nationwide class of all persons who purchased the devices as well as Illinois and California subclasses, excluding certain persons and entities who/which, by way of example, purchased the devices for resale.

The proposed Sony settlement has received preliminary approval and would settle class claims in the United States of US customers only. The final Fairness Hearing is scheduled for December, 2017.

Those included in the class purchased, own(ed), received as a gift or received as a customer service exchange the Mobile Devices manufactured, marketed, sold and/or distributed by Sony Mobile Communications (USA), Inc. in any of the 50 States, the District of Columbia and Puerto Rico.

The settlement provides for: (1) a warranty extension; (2) changes to packaging, labeling and advertising; and (3) a claim process relating to prior water-related warranty claim rejections.

Eligible class members may submit claims for prior water-related warranty claim rejections by Sony for their in-warranty Mobile Devices. This is the only way to be reimbursed for 50% of the at-issue Manufacturer’s Suggested Retail Price (“MSRP”) for the applicable Mobile Device. 

Ok – That’s a wrap for this week. See you at the bar!

Week Adjourned: 8.18.17 – Lyft, Carnival, Mylan EpiPen

Top Class Action Lawsuits

Lyft may need to raise their game. They got with an employment class action lawsuit this week, alleging the ride-hailing service uses a calculation method for wages that results in drivers making less than the amount they are actually owed. How novel.

Filed in federal court in New Jersey, the lawsuit alleges that Lyft contracts state that its drivers will receive a portion of the fare charged to riders, which is based on an estimation of the time and distance it will take to complete the ride. However, according to the complaint, drivers’ pay is actually based on a separate fare calculation reflecting actual miles and minutes driven. Therefore, the drivers are receiving less than they are contracted to receive.

The proposed nationwide Lyft class action lawsuit consists of drivers who entered into contracts with Lyft to provide transportation services to customers in exchange for a portion of the fare Lyft charges riders, plus tips if applicable and minus service fees, cancellation fees, damage fees, tolls, surcharges and taxes. The class would include drivers who opted out of Lyft’s arbitration agreement.

Named plaintiff Keara Nieves, a Long Branch, New Jersey, resident, has worked as a Lyft driver since 2016. Nieves alleges that the Lyft driver’s contract sets forth, in part, that “all fare payments are subject to a Lyft commission …You will also receive any tips provided by riders to you, and the tips will not be subject to any Lyft commission.” Lyft also reserves the right to set and change prices for services and commission, the complaint states.

Nieves claims that she understood she would be paid an amount equal to the fare charged to the rider plus applicable tips and minus Lyft’s commission of 20 percent to 25 percent, depending on the time of day, and service fees, cancellation fees, damage fees, tolls and other surcharges for rides she successfully completed, the complaint states.

However, in practice, Lyft pays its drivers based on a calculation of distance and time actually driven, according to the complaint. This results in a discrepancy between the fare charged and the “improper” basis Lyft uses to pay its drivers is concealed from drivers, the plaintiffs assert. “Specifically, defendant Lyft has retained a larger portion of the passenger fare than they promised they would retain in the [driver agreement],” the complaint states.

The case is Nieves v. Lyft Inc., case number 3:17-cv-06146, in U.S. District Court for the District of New Jersey. 

Top Settlements

Hey—you might be taking that cruise after all! Well, sort of. Did you get a call? If so, you could be in the money, honey. This week Carnival, Norwegian, and Royal Caribbean Resort cruise lines, in conjunction with Resort Marketing Group (RMG), agreed to settle a Telephone Consumer protection Act (TCPA) class action lawsuit alleging they made illegal telemarketing calls to consumers offering promotions with those cruise lines.

The Carnival lawsuit was filed by plaintiff Philip Charvat who claims he received the pre-recorded cruise line telemarketing calls which allegedly offered promotions from Carnival, Norwegian, and Royal Caribbean cruise lines. He further claims that he never provided prior express written consent to receive these calls. Without his consent, the lawsuit alleges, the defendant’s cruise line telemarketing violated the TCPA.

According to the Carnival cruise settlement deal, a settlement fund worth between $7 million and $12.5 million will be created depending on the number of claims filed. This fund will cover payments to qualifying Class Members, an incentive award for Charvat, and other related costs.

Eligible class members include people who received pre-recorded telephone calls between July of 2009 and March of 2014 on their residential or cellular telephone lines initiated by RMG during which RMG offered a free cruise with Carnival, Royal Caribbean, or Norwegian cruise lines as a promotion.

The settlement agreement specifically limits Class Members to those persons whose phone numbers are listed in Resort Marketing Group’s database.

Eligible class members may receive a potential award of up to $900 per telephone number.

A final hearing is set for April 2018.

The case is Philip Charvat v. Resort Marketing Group Inc., et al., Case No. 1:12-cv-05746, in the U.S. District Court for the Northern District of Illinois.

Mylan may need a life-saving injection after this is over. The drug maker has agreed to pay $465 million to settle fraud claims that it underpaid rebates for the EpiPen, which amounts to stealing from the government federal authorities claimed. The EpiPen lawsuit, alleging violations of the False Claims Act, was possible due to Sanofi acting as a whistleblower by alerting the federal government to the scam.

According to the terms of the now finalized agreement, Sanofi will receive $38.7 million for its role in alerting the government, together with a share of monies the states will receive as part of the financial recovery by state and federal health programs.

The lawsuit stemmed from Mylan’s deliberate misclassification of the EpiPen as being generic, which meant it paid lower rebates to the government than it should have. According to government regulations, drug makers must pay Medicaid in the form of rebates to avoid price gouging. Further, drug makers must pay a higher rebate to the government for drugs that are only available through a single source, which would be the difference between the current price and the price the drug would have cost if it had only increased by the rate of inflation. In 2009, an EpiPen two pack, which contains live saving medication used to treat people who are going into anaphylactic shock, a potentially fatal allergic reaction, rose in price by $500, from $100 to $600.

Sanofi became aware of Mylan’s alleged The False Claims Act rebate violations when it was allegedly developing its own version of an epinephrine injector, Auvi-Q. Sanofi claimed Mylan tried to block its Auvi-Q by forcing insurance companies to not cover it or to put it at a disadvantage on drug formularies. Mylan did not admit liability in the settlement.

The case is United States ex rel Sanofi-Aventis US v. Mylan Inc. et al, case number 16-cv-11572, in the U.S. District Court for the District of Massachusetts.

Ok – That’s a wrap for this week. See you at the bar!

Week Adjourned: 8.11.17 – CVS, Nissan, Mesh Implants

Top Class Action Lawsuits

Drug Co-Pays too much? CVS got hit with a proposed consumer fraud class action lawsuit this week, alleging it has engaged in a massive fraudulent scheme with third parties to increase generic prescription drug costs for consumers who buy them using their insurance. The goal of the scheme is allegedly to increase profits. Of course.

According to the lawsuit, filed in the U.S. District Court for the District of Rhode Island, CVS knowingly colludes with third-party pharmacy benefit managers (PBMs) to raise the prices of generic drugs, charging consumers what it calls a “co-pay.” However, a significant portion of this amount in fact goes back to PBMs. CVS also earns more money from the transaction compared to customers who don’t use insurance.

Using their leverage with pharmacies, the PBMs negotiate lower prices that the insurance companies have to pay to pharmacies, the complaint asserts. In turn, pharmacies, benefit from having enrollees in the insurance plan come to their stores to have their prescriptions filled.

According to attorneys for the plaintiffs, “when customers go to CVS to fill their prescription, they assume they should use insurance to buy their drugs. In fact, pharmacists often insist on getting customers’ insurance information, even if the customers don’t want to use it. Now we know why – pharmacies are making more money from insurance purchases than cash purchases because of the secret deals they reached with PBMs.”

The CVS pharmacy lawsuit alleges CVS engages in is a two-pronged drug pricing scheme and has done since at least 2010. This scheme allegedly violates the Racketeer Influenced and Corrupt Organizations (RICO) Act and federal ERISA laws.

In the first part of the scheme, customers who use their insurance to fill prescriptions at CVS are actually charged a higher price for the same medication than those who pay with cash or don’t use their insurance, according to the suit. CVS does not informs customers that they can save money by not using insurance, the complaint claims.

Megan Schultz, named plaintiff in the lawsuit, alleges she used her insurance to purchase a certain generic drug at her local CVS. Under her plan she paid $165.68, but if she had paid cash, without using her insurance, she would have paid only $92, a 45 percent difference that CVS never told her about. Seriously?

Further, the second part of the scheme involves CVS overcharging customers by collecting “co-pays” that exceed the pharmacists’ price and profit, again unbeknownst to the customer, according to the complaint. CVS gives this extra cash back to PBMs, again part of an undisclosed agreement between the PBMs and CVS, the complaint alleges.

These contracts between CVS and the PBMs are sealed from public view under strict confidentiality agreements, barring consumers from ever learning the true source of their drug cost.

Customers who used their insurance at CVS or another pharmacy to buy one of the following generic prescriptions may be affected, this list includes some but not all of the affected prescriptions: Acyclovir, Albuterol, Alprazolam, Amoxicillin, Amphetamine, Azithromycin, Cephalexin, Benzoyl Peroxide, Clindamycin, Clonazepam, Clonidine, Diazepam, Flonase, Hydrocodone, Ibuprofen, Lantus, Levocetirizi, Levofloxacin, Levothyroxine, Lexapro, Lorazepam, Oxycodone, Penicillin, Percocet, Prednisone, Restasis, Sertraline, Simvastatin, Singulair, SMZ/TMP, Tamiflu, Viagra, Vitamin D.

The lawsuit states that this hidden fraud violates federal racketing laws. The suit also brings claims of fraudulent concealment, fiduciary conflicts of interest, lack of adequate care and violations of state consumer rights laws.

Under ERISA, CVS has an obligation as a fiduciary to act “solely in the interest of the participants and beneficiaries,” according to the suit. Plaintiffs believe that by engaging in this alleged fraudulent scheme, CVS has failed to uphold this duty. Further, by basing its profits in this collusion with a third party, it has created a blatant conflict of interest that harmed its customers.

Top Settlements

And then there were two… It’s the scandal that keeps on giving. Nissan stepped up this week, agreeing to pay $97.7 million to settle allegations of consumer fraud regarding defective Takata Corp air bags. If this goes through, Nissan will be the fifth automaker to exit the multidistrict litigation (MDL), joining Toyota, Subaru, Mazda and BMW who have jointly ponied up $553.6 million to end their liability in the litigation.

Under the terms of the Nissan airbag deal, $87M would be set aside for the consumers’ settlement fund for reimbursement of all costs, ranging from child care payments and towing fees to lost wages. Nissan would also create a free rental vehicle program.

If the settlement does receive court approval, the only two remaining automakers named as defendants in the MDL would be Honda and Ford. Lawyers for the plaintiffs said they would continue to pursue their case against them.

The first consumer lawsuit was filed in 2014, alleging the Takata airbags, which contained volatile ammonium nitrate inflator, can misfire, especially in humid conditions. This sends shrapnel and fumes into the vehicle cabin at high velocity. Nissan recalled more than 52,000 vehicles as a result of the airbags. At least 11 deaths in the US are linked to the defective airbags, and Takata has faced enormous global recalls.

Under the terms of the agreement, an estimated 4.4 million Nissan vehicles will be covered. Nissan will inform the owners about the dangers of the Takata air bags and provide class members with coverage for repairs, including parts and labor. The plan also opens the possibility of a residual distribution payment of up to $500 per class member. The settlement does not involve claims of personal injury or property damage.

The case is In re: Takata Airbag Products Liability Litigation, case number 1:15-md-02599, in the U.S. District Court for the Southern District of Florida.

Endo seeing the end of AMS litigation… Finally, and end is in sight—at least for the litigation. This week, Endo International PLC announced that it will settle “virtually all known” AMS transvaginal mesh product liability lawsuits. This includes lawsuits in the US and internationally.

In a statement issued by the Irish-based maker of transvaginal surgical mesh, Endo stated it will end the known US claims at “reasonable values” and will make installment payments starting in the fourth quarter of 2017 and continue making payments until the end of 2019. It will set aside $775 million to cover roughly US 22,000 mesh implant claims as well as all known international mesh product liability claims and other related matters.

The company stated that it at this time it isn’t aware of any claims that won’t be covered by the $775 million.

In April 2014, Endo said that it had reached settlements with several of the remaining plaintiffs suing American Medical Systems (AMS) Inc. over allegedly harmful vaginal mesh products, resolving “substantially all” of the claims in the case without admitting any liability or fault.

Then, in March 2016, Endo said it was winding down its Astora Women’s Health unit, formerly AMS Women’s Health, to reduce the potential for product liability claims related to future mesh implants. At that time it was facing numerous lawsuits alleging health complications caused by a number of vaginal mesh devices. AMS, based in Minnesota, was a major manufacturer of transvaginal mesh medical devices, which are support systems designed to correct pelvic organ prolapse, (POP) and stress urinary incontinence (SUI).

Ok – That’s a wrap for this week. See you at the bar!

Week Adjourned: 8.4.17 – Wells Fargo, Benicar, California Overtime

Top Class Action Lawsuits

Not all well at Wells? These folks just cannot stay away from the court room. This week, Wells Fargo & Co got hit with a consumer fraud class action lawsuit brought by customers who allege the bank forced them into paying for unnecessary auto insurance, which, in some cases, drove customers so far into a financial difficulty their vehicles were repossessed. Nice

Here’s the back story: According to the proposed nationwide class action, the bank fraudulently collected millions of dollars from “unsuspecting customers who were forced to pay for auto insurance they did not need or want,’’ pushing almost 250,000 of them into delinquency and resulting in almost 25,000 vehicle repossessions.

Filed by Indianapolis consumer, Paul Hancock, the Wells Fargo lawsuit claims Wells Fargo received kickbacks from National General Holdings Corp., through shared commissions on the policies. According to The New York Times, Wells Fargo stopped sharing in commissions from the insurance sales in February 2013.

The lawsuit alleges that when customers took out Wells Fargo loans to purchase vehicles, the bank and the insurance company either didn’t check whether clients already had coverage or ignored the information. The bank then created collateral protection insurance policies for customers, and Wells Fargo then added premium charges to customers’ auto loan bills, often without notifying them, according to the lawsuit.

According to Bloomberg, Wells Fargo has said it may have pushed thousands of car buyers into loan defaults and repossessions by charging them for the unwanted insurance. The bank said an internal review of its auto lending found more than 500,000 clients may have unwittingly paid for protection against vehicle loss or damage while making monthly loan payments, even though many drivers already had their own policies.”

Wells Fargo discontinued the insurance program in September 2016 after finding errors. Hancock alleges Wells Fargo placed a CPI loan on a vehicle he bought in February 2016, charging him $598. Hancock “repeatedly contacted Wells Fargo to inform them that he had the required insurance through an auto insurance policy from Allstate,’’ according to the complaint.

Not only did Wells Fargo fail to credit Hancock’s account for the improper charge, they also failed to refund the money. In fact, Wells Fargo kept charging him for the policy and he was charged a late fee, Hancock claims.

The lawsuit is Hancock v. Wells Fargo & Co., 17-cv-04324, U.S. District Court, Northern District of California (San Francisco).The lawsuit is Hancock v. Wells Fargo & Co., 17-cv-04324, U.S. District Court, Northern District of California (San Francisco).

Top Settlements

Benicar Settlement. This should lower the collective blood pressure a wee bit. This week a $300 million settlement was agreed potentially ending multi-district litigation (MDL) against the makers of the Benicar, Forest Laboratories Inc., and Daiichi Sankyo Inc., and about 2,300 plaintiffs. The lawsuits alleged the blood pressure drug caused gastrointestinal injuries.

The settlement addresses claims filed collectively in state and federal court. The plaintiffs alleged personal injury stemming from defective design of Benicar (known generically as olmesartan), which is also in blood pressure products Benicar HCT, Azor and Tribenzor. 

The hypertension drug is used to lower high blood pressure. It is in a class of drugs known as angiotensin II receptor blockers (ARB). In 2013, the US Food and Drug Administration (FDA) issued a warning for patients stating that Benicar could cause sprue-like enteropathy, a condition that includes severe and chronic diarrhea. The agency mandated that Benicar warning labels be changed to include the condition. According to the FDA, sprue-like enteropathy has not been linked with other ARB medications.

The FDA’s action was based on adverse event reports of serious cases of late-onset diarrhea associated with Benicar use. Court documents state that an estimated 1.9 million patients received a prescription for Benicar or a similar drug in 2012 alone.

The litigation had been underway for more than two years. The plaintiffs alleged that not only did Daiichi design the drug in a defective manner but also that it failed to warn users that it could cause chronic diarrhea, nausea, malnutrition, dehydration and weight loss. Daiichi and Forest were jointly accused of promoting Benicar.

According to the terms of the Benicar agreement, the funds will be triggered when 95 percent of all eligible litigants and claimants opt in to the settlement under certain conditions. Patients who have not yet filed a claim and wish to be eligible to receive settlement funds, must have a retainer agreement in place with an attorney by August 23, lawyers told the court.

The case is In Re: Benicar (Olmesartan) Products Liability Litigation, case number 2606, in the U.S. Judicial Panel on Multidistrict Litigation.

Here’s a nice little payday… to the tune of 3.75 million. Yup, this week, Kellogg Brown & Root LLC agreed to settle a California overtime and labor law class action lawsuit brought by construction workers who allege the company shorted them on meal periods as well as wages. 

The 137 plaintiffs had worked on the Molycorp Mountain Pass rare earth facility in Mountain Pass, California. Under the terms of the proposed settlement, each class member will receive roughly $138 per qualifying work week of they worked during the class period of June 16, 2010, to Friday July 27, 2017. If all potential class members participate in the settlement, the average payout will be $3,100. The proposed settlement requires KBR to pay at least 50 percent of a $3.75 million settlement to participating claimants.

Named plaintiff David L. Totten will receive an award of $20,000. According to the construction worker overtime settlement, another $25,000 will be distributed to plaintiffs.

In the complaint Totten alleged that he and other nonexempt workers at the Molycorp facility who worked on a project to build a salt recovery plant were required to park their vehicles in a designated lot and take company vehicles to and from the work site without being paid for that travel time. Further, the suit alleged the workers were not paid overtime or for second meal periods for workers’ scheduled on 10-hour shifts. The project wrapped up in January 2014.

A final settlement hearing is scheduled for December. The case is David L. Totten v. Kellogg Brown & Root LLC et al., case number 5:14-cv-01766 in the U.S. District Court for the Central District of California.

 

 

Ok – That’s a wrap for this week. See you at the bar!

Week Adjourned: 7.28.17 – Groupon, Nissan, Celgene

Top Class Action Lawsuits

Is Groupon discriminating? Someone thinks so. Andrew Huzar has filed a proposed discrimination class action lawsuit, alleging the discount promotion website discriminates against people with disabilities by not offering tickets for accessible seating at events. Further, the allegations state that Groupon does not provide booking options for disability-accessible hotel rooms. Hmm. Not good.

FYI – The lawsuit seeks to represent two nationwide classes, specifically classes of customers made up of those who were not successful in their attempts to either 1) buy tickets to events or 2) find disability appropriate travel accommodations through the Groupon website. Huzar states in his complaint that he has been unsuccessful in securing both tickets and accommodations.

According to Groupon lawsuit, in 2015, Huzar allegedly tried to purchase a “Groupon Getaway” deal to the Red Lion Hotel in Harrisburg, Pennsylvania. However he was unable to find any option to book an accessible room through the Groupon site. The complaint states that Hazar emailed Groupon about the likelihood of booking a wheelchair-accessible room with the offer, however the response he received allegedly stated, “I’m sorry, unfortunately handicap-accessible rooms are not available.”

“Since July 30, 2015, Mr. Huzar has been deterred from attempting to purchase accessible hotel rooms and Groupon Getaways from defendant as he knows such an attempt would merely be a futile gesture,” the complaint states. “Mr. Huzar continues to desire to purchase hotel rooms and Groupon Getaways from defendant, but fears that he will experience serious difficulty doing so as a result of the complete lack of accessible options.”

With respect to purchasing tickets for events, the complaint notes that in the summer of 2016 Huzar received an email advertisement from Groupon about a deal for New York Jets tickets at MetLife Stadium. When he tried to purchase them through Groupon’s website, he discovered the “complete absence” of any accessible-designated tickets in the stadium, he asserts.

“Mr. Huzar has personal knowledge that accessible-designated seating exists at the MetLife Stadium,” the complaint states. “Mr. Huzar is presently aware that if he tried to try to purchase accessible tickets on defendant’s website, he would be unable to do so.”

“Defendant continues to discriminate against … the classes by failing to make reasonable modifications in policies, practices or procedures, when such modifications are necessary to afford persons with disabilities the ability to purchase tickets; and by failing to take such efforts that may be necessary to ensure that no individual with a disability is excluded, denied goods and services, segregated or otherwise treated differently than other individuals,” the complaint states.

Huzar alleges Groupon has violated the 1990 Americans with Disabilities Act, which “prohibits discrimination on the basis of disability in the activities of places of public accommodations.”

The case is Andrew Huzar v. Groupon Inc., case number 1:17-cv-05383, in the U.S. District Court for the Northern District of Illinois.

Top Settlements

It’s not only the brakes that failed– it was Nissan. That’s what a jury found in a recent Nissan SUV had a defective braking system lawsuit.

A $25 million settlement was awarded to surviving family who suffered the loss of their mother and her two daughters who were killed in 2012 when a Nissan Infiniti QX56 SUV crashed into the family’s minivan in a Hollywood intersection.

Nissan faced claims from both the driver of the SUV, Solomon Mathenge, and the family of Saida Mendez, and her two children, Hilda and Stephanie Cruz. The jury returned a verdict finding the fatal accident was 100 percent attributable to the defective Nissan braking system in the Infiniti SUV. Further, the jury found that Nissan had been negligent in not recalling the vehicle.

Although Mathenge was charged with manslaughter after the crash, the charges were dropped following the Nissan defective brake system class action lawsuit filed against Nissan. That class action alleged the software braking system in certain of Nissan’s vehicles was prone to sudden failure, and inspection of Mathenge’s QX56 revealed it had suffered that very same software error, according to the plaintiffs’ trial brief.

The trial consolidated the claims made by the deceased children’s father, Hilario Cruz, the deceased mother’s surviving daughter, Araceli Mendez, and her mother, Juana de la Cruz Bernardino, with Mathenge’s claims.

The jury awarded Hilario Cruz $14 million in non-economic damages for the deaths of his daughters, and $7 million to Araceli Mendez for the loss of her mother and a further $431,000 for the loss financial support, gifts and household services she would have received from her mother had she not been killed. Mathenge was awarded $3.5 million in damages.

The award was significantly less than the amount plaintiffs’ attorneys were seeking. They had asked the jury to find Nissan guilty of malice, as the company was aware of the defect and its danger, but refused to recall the affected vehicles. However, the jury found Nissan did not act with malice.

The case is Cruz v. Nissan North America, et al., case number BC493949, in the Superior Court of California for Los Angeles County.

It’s a healthcare fraud whopper… but a stopper? Possibly. $280M should provide incentive to stop promoting off-label drugs. It likely will be for Celgene, which has agreed to pay $280 million to settle allegations made by a California Whistleblower under the False Claims Act that the biotech company promoted off-label uses for two of its cancer drugs.

The lawsuit, brought by a former sales rep for Celgene, Beverly Brown, alleged the company promoted two bone cancer drugs, Thalomid and Revlimid, for other cancers they weren’t approved to treat. As part of the promotion, Celgene paid kickbacks to physicians to promote the drugs’ off-label use. The lawsuit also alleged these actions were in violation of laws in no less than 28 states and the District of Columbia, in addition to False Claims Act.

Under the terms of the agreement, the United States will receive the majority of the settlement, $259.3 million, with $20.7 going to 28 states and the District of Columbia. California, where the suit was filed, will receive $4.7 million, the largest amount of any state.

According to documents from the Celgene whistleblower case, which was initially filed in 2010, and Celgene had a massive off-label promotion scheme in place for Thalomid and Revlimid. The documents, which were unsealed in 2014, further reveal that Brown alleged that the two drugs were only narrowly approved to treat multiple myeloma, a form of cancer that affects the bone marrow, however they were routinely marketed to treat other forms of cancer, including breast cancer and leukemia.

According to Brown, the off-label use of these drugs was paid for through government programs which, she contended, Celgene marketed by paying doctors speaker fees and other charitable donations in exchange for promoting Thalomid and Revlimid.

The case is United States of America et al. v. Celgene Corporation, case number 2:10-cv-03165 in the U.S. District Court for the Central District of California.

Ok – That’s a wrap for this week. See you at the bar!

Week Adjourned: 7.21.17 – Ford, Ashley Madison, Speeding Cameras

Top Class Action Lawsuits

Bigger not necessarily better? Possibly…Ford has been hit with a proposed consumer fraud class action lawsuit alleging the company sold car jacks with sports vehicles that are too small to fit their lifted trucks, so that car owners are unable to change their tires.

Filed in Oklahoma federal court, by lead plaintiff Matthew W. Leverett, the proposed national class action alleges the Ford’s trucks have a manufacturer’s window sticker that indicates that the vehicles come equipped with a jack and spare tire. However, the sticker doesn’t disclose that the jack and spare tire are only compatible with so-called stock trucks of the same model, and not with the higher lifted trucks, the plaintiff contends.

According to the Ford complaint, Leverett’s 2017 Ford F-250 Super Duty Truck came with a jack that isn’t compatible with his vehicle because the tires on his truck are larger and the ride heights are higher than so called stock trucks. Leverett asserts Ford failed to inform him of the car jack’s deficiencies when he purchased the truck.

“Each person who has purchased or leased a lifted truck during the time period relevant to this action was injured by overpaying for a vehicle that did not come equipped with a functioning jack and spare tire, as Ford represented, and as each purchaser would have reasonably expected,” the lawsuit states. “These jacks cannot safely be used on, and are not compatible with, the relatively higher frames of the lifted trucks,” the complaint states.

Further, Leverett asserts that before buying the 2017 Ford F-250 Super Duty Truck, he was told the lift kit and larger tires were covered under a vehicle service agreement he purchased through Ford Motor Credit Company LLC, a division of Ford Motor Co. However, after buying the truck, he discovered the lift kit and larger tires were not covered by Ford’s manufacturer’s warranty.

Leverett seeks to represent a class of car users who have had similar experiences. The proposed class action claims violations of the Oklahoma Consumer Protection Act and breaches of the implied warranties of merchantability under the Uniform Commercial Code. Leverett is seeking damages and equitable and declaratory relief on behalf of himself and a nationwide class and a statewide class of individuals who purchased or leased one or more new Ford trucks equipped with a lift kit and larger-than-stock tires.

Last week it was Ford Transit vans making class action headlines, this week it’s Lift Kits. What next, I wonder?

The case is Leverett et al. v. Ford Motor Co., case number 5:17-cv-00751, in the U.S. District Court for the Western District of Oklahoma.

Top Settlements

Shhhh—it’s a secret! Well, actually, it’s just not finalized. What, you ask? An $11.2 million settlement has been reached in the data breach multi-district litigation (MDL) pending against the dating site Ashley Madison, formerly known as Avid Dating Life Inc., and its parent company Ruby Life Inc. There may be millions of plaintiffs seeking compensation from the settlement, as the 2015 data breach affected some 37 million users.

The MDL joins multiple lawsuits filed against the dating website, which catered to married people. Ruby has stated that since the data leak it has enhanced its measures to protect client data.

According to the allegations made after the Ashley Madison data breach, Avid not only failed to secure customers’ confidential information, but also advertised a “full delete removal” service that in fact didn’t eradicate user account information from the website’s database. Further, the complaints claimed that Avid used artificial intelligence to fool men into believing they were interacting with women when they were in fact chatting with “bots.”

According to the terms of the proposed settlement, funds will be available to reimburse customers who paid for “full delete” services, reimbursements for credits on the website they may have pre-purchased and any losses caused by the data breach of up to $2,000. Class members may receive a maximum of $3,500 each, according to settlement documents.

The proposed program to notify potential class members will ads in People magazine, Sports Illustrated and more than 11 million targeted digital banner ads. That will probably be the best exposure the now defunct website ever receives.

The proposed settlement requires court approval.

The case is In Re: Ashley Madison Customer Data Security Breach Litigation, case number 4:15-md-02669 in the U.S. District Court for the Eastern District of Missouri.

And while we’re talking scandals… This week, Chicago Mayor Rahm Emanuel and his administration said they’d pony up $38.75 million to settle an unfair business practices class-action lawsuit alleging the city failed to provide motorists with adequate notice regarding red light camera and speed camera operations within Chicago.

The windy city’s red light camera system consists of over than 350 cameras and has raised more than $500 million in $100 tickets since 2002. Ok, they’re not fooling around. But…

The lawsuit was brought by attorney Jacie Zolna in 2015, claiming the city violated its own rules by failing to send a second notice of a violation before guilt was determined, and by doubling the fine for late payment of tickets sooner than allowed.

Several lawsuits were brought and the attention they received unearthed a massive scandal and corruption in Chicago’s city hall. A Chicago Tribune investigation exposed a $2 million City Hall bribery scheme that brought the traffic cameras to Chicago as well as tens of thousands of tickets that were unfairly issued to drivers.

According to the terms of the settlement, more than 1.2 million people could be eligible to receive payment for half of the costs of their tickets. Zolna said those who qualify will receive letters in the mail in upcoming months notifying them they were part of the lawsuit, the Chicago Tribune reports.

So if you got a ticket—you’ll be hearing from them. A victory for the little people. And on that note…

That’s a wrap for this week. See you at the bar!

Week Adjourned: 7.14.17 – Ford, Blue Shield, Wells Fargo

Top Class Action Lawsuits

Heads Up Ford Transit Van Owners – a consumer fraud class action lawsuit has been filed against Ford Motor Co, alleging Ford knew of the Transit van flex disc defect long before it issued the recall of some 402,000 Ford Transit vans.

The recall affects 2015, 2016 and 2017 models of Ford Transit vans that have a defect in the flex disc, which is a type of rubber joint connecting the transmission to the driveshaft. The defect can allegedly cause vehicle damage in addition to being a safety hazard, the complaint asserts.

All Care Transport is a family-owned business that provides non-emergency medical transport. It owns several of the Transit vehicles. The plaintiff states in the complaint that two of his Transit vans’ flex discs failed in November 2016. In one case, the driver lost control of the steering and breaks while driving on a freeway. “Had another vehicle been near the van at the time, a crash would have been likely,” the complaint states. The repair cost in excess of $3,200.

According to Ford’s recall announcement, the flex disc cracks after about 30,000 miles, possibly causing the driveshaft to separate from the transmission. The cracking can result in a loss of power while driving or the unintended movement of parked vehicles not anchored by a parking brake. Such separation can also damage surrounding components, including brakes and fuel lines.

The Ford Transit lawsuit claims that Ford’s recall notice doesn’t indicate that the automaker has a permanent fix for the defect, as it recommends vehicle owners repair the disc every 30,000 miles. Further, the notice does not indicate any plans by Ford to reimburse customers such as All Care for lost business opportunities from disc-related repairs.

“In short,“ the complaint states, “as the safety recall notice makes clear, Ford’s recall fails to fix the underlying problem and falls well short of fully compensating plaintiffs and class members for the harm caused by the defective class vehicles.”

The plaintiff and All Care assert that Ford had knowledge of the defect as early as 2014, based on vehicle evaluations and testing, field data, replacement part sales data and consumer complaints made directly to Ford and collected by federal regulators at the National Highway Transportation Safety Administration.

The plaintiffs state in the proposed class action: “Yet despite this knowledge, Ford failed to disclose and actively concealed the defect from class members and the public, and continued to market and advertise the class vehicles as ‘tough,’ ‘safe,’ ‘durable’ vehicles ‘designed to do its job all day, every day and for many years to come,’ which they are not.”

“All Care Transport expected the class vehicles to be of good and merchantable quality and not defective,” the complaint states. “It had no reason to know of, or expect, that the vehicles were equipped with a defective flex disc that would catastrophically and dangerously fail, nor was it aware from any source prior to purchase of the unexpected, extraordinary and costly repairs the defect would cause them to incur.”

The proposed class includes anyone who leased or purchased a 2015-2017 Transit in California for purposes other than personal or household use.

The case is All Care Transport LLC et al. v. Ford Motor Company, case number 5:17-cv-01390, in the U.S. District Court for the Central District of California.

Bad Blue Shield? Once again, Blue Shield of California and its claims administrator Magellan Health Services, are in the news—this time facing a bad faith insurance class action lawsuit alleging it wrongly restricted patients’ access to outpatient and residential mental health treatment.

The complaint was filed in Northern California by two parents who allege their teenage children were denied coverage, repeatedly, under the parents’ employer-based health insurance plans. The children required medical assistance for serious mental and substance abuse problems, according to the lawsuit.

The Blue Shield lawsuit received class-action status in June, enabling patients whose claims were rejected under similar circumstances to join as plaintiffs.

According to the complaint, Blue Shield and Magellan Health Services of California, which handles the insurer’s mental health claims, developed criteria that violate accepted professional standards and the terms of the health plan itself. Further, the plaintiffs claim the defendants are in violation of the Employee Retirement Income Security Act, a federal law that regulates employee benefit plans. (Californiahealthline.org)

The class action alleges specifically, that the insurers authorized residential patients care only if less intensive treatment in the previous three months was unsuccessful. This “fail-first” approach is inconsistent with standards established by professional groups such as the American Psychiatric Association or the American Society of Addiction Medicine, the complaint states.

The plaintiffs seek to change Blue Shield’s and Magellan’s policies to be consistent with the law, generally accepted professional standards and the terms of its own plans, according to the lawsuit. Further, they seek to have the thousands of mental health and substance-use benefit denials reprocessed by the defendants.

The lawsuit is Charles Des Roches, et al. v. California Physicians’ Service, et al. 

Top Settlements

If First You Don’t Succeed, Wells… do as the judge tells you and revise that settlement deal! And guess what—it worked. A revised $142 million settlement has received preliminary approval potentially ending the Wells Fargo consumer bank account fraud class action lawsuit.

The back story is that Wells Fargo employees were involved in a fake bank account scam that saw them set up unauthorized accounts and transfer customers’ funds from legitimate accounts to the newly-created ones without customer knowledge or consent. And the point? Additional bank fees of course—and it enabled the employees to hit their sales targets. Wells Fargo customers were then charged fees for insufficient funds or overdrafts, because they didn’t have enough money in their legitimate accounts. How do you spell illegal?

In March, Wells Fargo announced it had reached a preliminary $110 million settlement resolving 12 putative class actions making similar allegations of fraud. According to the Consumer Financial Protection Bureau (CFPB), which shared in a $185 million fine brought against Wells Fargo for the fraud, bank employees set up more than two million deposit and credit card accounts without customer authorization between January 2011 and September 8, 2015. Some 14,000 of those accounts earned over $400,000 in fees for the bank, including annual fees, interest charges and overdraft-protection fees, CNN Money reported.

US District Judge Vince Chhabria has now given the revised settlement deal the go-ahead after the plaintiffs and defendants resubmitted the agreement with several revisions, as requested by the judge. Those revisions include a simplified opt-out process, a more comprehensive class notification procedure and an expanded anticipated scope of credit-impact damages.

Under the original settlement proposal, the class consisted of Wells Fargo bank customers that had unauthorized accounts opened in their names, were enrolled in a product or service or had an application submitted for a product or service in their name without consent between January 1, 2009, and the execution of the settlement. Wells Fargo subsequently agreed to extend the claims to 2002, adding an additional $30 million to the settlement fund in April.

“[T]he parties negotiated a revised settlement that guarantees classwide compensation for actual damages, supplements compensation for noncompensatory damages and provides a better process for claimant input and court oversight prior to final approval,” Judge Chhabria wrote. 

The case is Jabbari et al. v. Wells Fargo & Co. et al., case number 3:15-cv-02159, in the U.S. District Court for the Northern District of California. 

Ok – That’s a wrap for this week. See you at the bar!