Consumer Legal Protections

A lawsuit filed in an Ohio state court takes aim at pharmacy benefit managers (PBM), accusing them of driving up prescription drug costs for patients. The suit, filed by Ohio Attorney General Dave Yost, accuses the industry of employing tactics designed to reduce competition and keep prices high.

In a statement, Yost didn’t mince words. Noting that PBMs are supposed to be “middlemen” between the drug companies and the pharmacies, he said the desired competition has never materialized.

“PBMs are modern gangsters,” Yost said. “They were designed to protect and negotiate on behalf of employers and consumers after Big Pharma was criticized for overpricing medications, but instead they have absolutely destroyed transparency, scheming in the shadows to control drug prices on all sides of the market.”

Three major players

The suit claims that consolidation in the industry has led to “collusion” on prices. Currently, three companies – Express Scripts, Humana, and Cigna – reportedly control more than 70% of the PBM market. So far, none of those companies have commented on Yost’s lawsuit.

Yost’s suit seeks to stop the PBMs named in the complaint from carrying out “secret and anti-competitive conduct and strong-arm tactics” preventing the marketplace from determining prices for prescription drugs. It also seeks statutory fines and “disgorgement of the ill-gotten profits.”

PBMs are key players in the healthcare system. Many employers and unions, as well as local and state governments, contract with PBMs to manage their payments for prescription drugs. Among the services a PBM provides, it processes payments to pharmacies and determines which drugs it will pay for. Critics, like Yost, have claimed a lack of transparency has worked against consumers.

Insulin costs

Yost says the high cost of insulin has been an example of how drug prices have inflated in recent years, noting more than one million people in his state are diabetic and need the drug. In recent weeks three major drug companies have announced reductions in insulin prices.

“Medications shouldn’t cost an arm and a leg, metaphorically or literally,” Yost said. “Insulin is just a symptom of the problem; PBMs are the disease.”

In the background, the U.S. Senate is considering legislation to place limits on what PBMs can do and to increase industry transparency. Last week the Senate Commerce Committee approved the PBM Transparency Act of 2023, sending the reform legislation to the full Senate. 

Even in a deeply divided Congress, chances of approval appear good since the measure enjoys rare bipartisan support.

“It’s a win-win and warrants swift approval in Congress,” said Sen. Chuck Grassley, (R-Iowa), a co-sponsor of the legislation.

The District of Columbia’s Attorney General, Karl Racine, has filed a lawsuit against Grubhub over allegations that the company offered consumers delivery services from more than 1,000 Washington, D.C., restaurants without getting those restaurants’ consent.

On top of that, Racine claims that Grubhub charged consumers higher prices than what the restaurants did, then misrepresented the number of fees consumers were charged.

If Grubhub had been watching Racine’s previous moves against delivery companies, it likely knew that a lawsuit like this was possible. The attorney general has previously filed lawsuits against DoorDash and Instacart.

He accused DoorDash of misrepresenting how tips paid by consumers would be distributed to couriers. Instacart faced a separate lawsuit over its check-out screen, which Racine claimed was designed to deceive customers about the reasons behind a service fee.

Grubhub responds to lawsuit

In comments emailed to ConsumerAffairs, Grubhub refuted that it defied District of Columbia laws.

“We work hard to support DC restaurants and diners, and we continually review and enhance our operations to better serve them and meet their expectations," a Grubhub spokesperson said. 

“During the past year, we've sought to engage in a constructive dialogue with the DC Attorney General’s office to help them understand our business and to see if there were any areas for improvement. We are disappointed they have moved forward with this lawsuit because our practices have always complied with DC law, and in any event, many of the practices at issue have been discontinued. We will aggressively defend our business in court and look forward to continuing to serve DC restaurants and diners.” 

One of the lines that Racine claims Grubhub crossed was related to a promotion called “Supper for Support” – an offer made to consumers “as a way for them to save money, while at the same time supporting local independent restaurants that had been affected by the decline of business due to the Covid19 pandemic.”

The issue Racine has with the promotion was that it didn’t actually support restaurants at all. In fact, he said the restaurants were responsible for paying Grubhub commissions on the full, non-discounted price of the food total.

The Grubhub spokesperson said the Supper for Support promotion is no longer running but that it did, in fact, do “many things to support residents and restaurants in DC and across the country throughout the pandemic.”

“The terms of the Supper for Support program were clearly disclosed to restaurants, and they could decide if they wanted to participate or not,” Grubhub told ConsumerAffairs.

“In addition, diner-facing promotions for Supper for Support in no way stated or implied that participating restaurants were not financially obligated for the discounts. In promotions moving forward, Grubhub will disclose to diners when a diner promotion is funded by the restaurant.”

Arkansas Attorney General Leslie Rutledge has accused Walgreens of failing to halt suspicious prescription orders at Arkansas locations, thereby “substantially” contributing to the opioid crisis in the state. 

In a lawsuit filed Monday, Rutledge claimed the drugstore giant’s lack of action in reporting orders that didn’t appear to be medically legitimate exacerbated "the oversupply of such drugs and fueling an illegal secondary market.”

The lawsuit noted that Walgreens distributed more than 142 million dosage units of oxycodone and hydrocodone in Arkansas from 2006 to 2014. A majority of counties in the state -- 66 out of the 75 -- have higher opioid prescribing rates than the national average. 

“This high volume of opioids alone should have alerted Walgreens to the fact that suspicious orders were being placed, as the amount of opioids that were sent into Arkansas far exceeded what could be consumed for medically legitimate purposes," the lawsuit said. "Yet, Walgreens failed to report and halt those orders and instead increased the number of pills distributed."

Walgreens intends to fight back

Rutledge said the lawsuit seeks "to force Walgreens to act responsibly and follow federal and state laws and damages for fueling the epidemic,” and to impose "civil penalties for each violation of Arkansas’s consumer protection laws.” 

While the suit can’t reverse the damage already done, the attorney general said the suit may be able to bring “desperately needed assistance to devastated families and communities" in the state. 

In a statement to various media outlets, Walgreens said it plans to "vigorously defend itself against this litigation.” A company spokesperson said that Walgreens’ key focus has always been the health and safety of patients. 

The spokesperson added that Walgreens pharmacists "always evaluate the patient, the prescriber, the drug, the applicable law, and the surrounding circumstances prior to making an appropriate professional decision whether to fill a prescription for a controlled substance."

Twitter has filed a lawsuit against Texas attorney general (AG) Ken Paxton over an investigation into its content moderation practices. The platform claims that the AG misused his power by starting an investigation as revenge for the social media platform’s suspension of former President Donald Trump.

Paxton’s investigation began on January 13 -- six days after Twitter banned Trump from its platform -- when the AG’s office issued civil investigative demands to Google, Facebook, Twitter, Amazon Web Services, and Apple. It asked each of those companies for their policies and practices regarding content moderation. 

Scrutiny was apparently placed on the platforms’ First Amendment rights to determine if private companies have the latitude to remove public officials from their platforms as they deem appropriate. 

Paxton claimed at the time of the investigation’s launch that “the seemingly coordinated de-platforming of the President of the United States and several leading voices not only chills free speech, it wholly silences those whose speech and political beliefs do not align with leaders of Big Tech companies.”

A meeting of the minds went nowhere

In each case, Paxton asked the individual companies to “meet and confer … in order to discuss compliance and to address [an] attempt to resolve all issues.” Twitter took issue with that request and its implications.

“Twitter seeks to stop AG Paxton from unlawfully abusing his authority as the highest law-enforcement officer of the State of Texas to intimidate, harass, and target Twitter in retaliation for Twitter’s exercise of its First Amendment rights,” Twitter wrote.

According to Politico’s coverage of the story, Twitter claims it tried to work out an agreement with the AG to limit the scope of his office’s request, but the two parties weren’t able to pull that off.

“Instead, AG Paxton made clear that he will use the full weight of his office, including his expansive investigatory powers, to retaliate against Twitter for having made editorial decisions with which he disagrees,” the company said.

Twitter and Paxton have history

Paxton has tangled with Twitter before over its content moderation policies, claiming in a Fox News opinion piece in May 2020 that Twitter’s fact checkers were politically biased against Trump.

While Twitter wasn’t alone in taking action against Trump, it is the only hold-out among the group not to have reinstated the former president’s accounts. It was also the first to retaliate against Paxton’s investigation. While the company is alone in that department for the moment, Politico’s Benjamin Din says there is still some angst between the major social media companies and conservatives.

“The court filing is the latest development in an ongoing battle between social media companies and those on the right, who have viewed attempts to fact-check content and de-platform conservative accounts as indicative of a societal cancel culture intent on silencing Republican voices,” Din said.

“Conservatives latched on to accusations against Big Tech as a rallying cry in the aftermath of the [January 6 Capitol Hill] riots, with some predicting that it could be a key GOP issue for the midterm elections and in 2024. The anti-Silicon Valley sentiment is now a defining theme of the Republican Party, which has in recent years hauled in CEOs for hearings. Last fall, Trump appointees filed two major antitrust suits against Google and Facebook.”

The next time you’re bargain shopping at Dollar General, Dollar Tree, or Family Dollar, you might want to pay a little more attention to see if a product’s expiration date hasn’t passed.

The New York Attorney General’s office paid considerable attention to those cautionary flags and has now ordered those bargain stores to pay $1.2 million in fines and damages as a result of selling expired over-the-counter drugs, obsolete motor oil, and more.

“It’s a tough pill for New Yorkers to swallow that the over-the-counter drugs they were buying may have been expired,” New York Attorney General Letitia James said in a news release. 

“New York consumers have a right to expect that products on store shelves are safe, fresh and suitable for their advertised use. These settlements will ensure that Dollar General, Dollar Tree, and Family Dollar will not only pay both a substantial fine and damages, but, more importantly, update their business practices to comply with the law so that no expired over-the-counter drugs are sold to a New York consumer again.” 

Motor oil?

While finding the expiration dates on grocery items is pretty easy, it’s not the same for other products. For example, fake UL labels have been slapped on low-cost items such as power strips, extension cords, mobile-phone chargers, and batteries, which could lead to fire and shock hazards.

The interesting twist in this case is that the fine involves motor oil. Investigators found several Dollar General stores selling one company-branded motor oil that isn’t suitable for most automobile engines built after 1930; another oil was found to be unfit for engines built after 1988. 

Adding to the investigators’ dismay, the descriptions of those motor oils were strikingly close to more well-known brands and placed on the same shelves without any signage warning consumers about the mismatch of the oils with today’s car engines.

The New York Attorney General’s office says that customers who bought the old motor oil can file a complaint online. 

A good reminder to pay attention

While the settlement is centered on Dollar General, Dollar Tree, and Family Dollar stores in New York, it’s still a reminder that, no matter where you live, there are reasons why a product is sold for as low as a dollar -- and some of those reasons wind up being bad for the consumer.

A core of ConsumerAffairs reporting is about recalls, and the Consumer Product Safety Commission has dozens of pages of recalls and warnings about various consumer products. Before you buy something that might cost you mightily in another regard like health or safety, it might be wise to do a quick search to see if that product is safe and dependable.

Young athletes from across the country go through high school hoping to catch the eye of a college scout, but New York Attorney General Eric Schneiderman charges one scouting company with preying on those hopes and making false promises.

National Scouting Report, Inc. (NSR) – a major high school athletic scouting and college recruiting business based in Alabaster, Alabama – has agreed to settle charges that it misled prospective clients and made false claims in its advertising. As part of the settlement, it has agreed to revise practices and pay $20,000 in penalties.

“Preying on the hopes and aspirations of New York’s young, devoted athletes is incredibly cynical,” said Schneiderman. “Students who are attempting to use their athletic promise to further their educational opportunities should not have to worry about being exploited by those seeking to make a profit, without any consideration for their success.”

Deceptive practices

The New York AG’s investigation found that NSR made several unsubstantiated claims about the success of its recruiting program, such as calling itself the “highest rated scouting company” that was “resourced by more college coaches than all other scouting services combined.”

Additionally, recruiters often relayed false statistics to high school players and their families, including that 90% of its prospective athletes received offers from schools and that a quarter of them went on to play in NCAA Division I programs, the AG charged. The truth for college athletes is much bleaker than that, however, with only 3.4% of high school athletes making it to the collegiate athletic level and only 1% going on to play at Division I schools.

Regardless, Schneiderman found that NRS agents told certain families that they were “100% sure” they could get their son “into a good school,” claims that turned out to be patently false.

Officials say that NRS also claimed to have scouts that were well-trained and experienced, but the investigation revealed that many of these agents only received one week of training on sales techniques and how to evaluate more than a dozen sports.

Settlement terms

Schneiderman says these agents often approached high school athletes at competitions with the hopes of selling the company program to their families, which cost $3,000 to enroll in.

Families who signed up were promised that the scout would stay actively and personally involved in their athlete’s recruiting process, but many consumers complained that their calls were never returned and that the scout and other company officials simply disappeared.

Under the settlement, NSR has agreed to change the way it advertises and reform its training and sales practices. The company will also pay $20,000 in penalties, costs, and consumer restitution and remove any language on its website that cannot be substantiated.

Affected New York consumers will also be provided with an applicable notice of cancellation requirements when they sign up for the service, and NSR has promised to tell clients in the future if their scout leaves NSR.