Consumer Protection

BAKERSFIELD – Attorney General Edmund G. Brown Jr. today announced that his office has secured back pay for more than 200 workers who were “routinely denied” fair wages and overtime pay by Charles Evleth Construction, Inc., a Bakersfield-based drywall company.

“To boost its profits and underbid competitors, Charles Evleth Construction routinely denied its hardworking employees a fair wage and overtime pay,” Brown said. “Today’s judgment secures back pay for more than 200 employees and prohibits this company from violating workers’ rights.”

In addition to providing back wages for more than 200 construction workers, today’s settlement prohibits Charles Evleth Construction from:

• Denying fair wages and overtime pay for workers;
• Paying employees in cash to avoid state and federal taxes; and
• Permitting supervisors to take kickbacks from their employees’ paychecks.

Today’s settlement follows a January 2009 suit Brown filed in Kern County Superior Court against Charles Evleth Construction to recover unpaid wages for workers who were denied full paychecks and overtime pay.

Brown’s office initiated its investigation in late 2008 and found nearly 1,200 violations of California law. In addition to wage violations, the investigation found that the company had failed to pay unemployment insurance, make state disability fund payments and pay state and federal taxes.

These practices allowed the company to gain an unfair advantage over its competitors and underbid them for construction jobs.

In the complaint filed in January 2009, Evleth was sued for violations of:

• California Labor Code section 510 for denying overtime pay;
• California Labor Code section 226 for failing to provide itemized statements detailing rate of pay, hours worked, deductions and pay period;
• California Labor Code section 1197 for failing to pay minimum wage;
• California Industrial Welfare Commission Wage Order 16 (8)(b)) for requiring workers to bring their own tools without paying at least twice the minimum wage;
• California Labor Code section 221 and 223 for allowing supervisors to take kickbacks in exchange for being allowed to work; and,
• California Labor Code section 221 and 223 for allowing employees to split paychecks in cash.

Worker’s Story

Juan Manuel Avalos of Bakersfield worked for Charles Evleth Construction for five months in 2005. Avalos was hired with a verbal agreement to work five days a week for $750 per week in pay. However, when Avalos started, he was required to work six days a week and often worked 12-hour shifts without overtime pay. Avalos was paid in cash every week, but discovered two months into the job that a site supervisor had been cashing his paychecks and taking up to $500 every week from his pay, leaving Avalos what remained in cash.

Last month, Brown filed two other lawsuits against companies that failed to pay workers and subjected employees to potentially dangerous workplace conditions, including:

• A lawsuit filed March 10 against Juan Munoz, a farm labor contractor in Southern California, for failing to provide rest breaks, potable drinking water or shade to field workers.
• A lawsuit filed March 3 against Livermore-based Country Builders after the company falsified payroll records to hide underpayments, deliberately misclassified workers to reduce the company’s workers’ compensation premiums and violated state prevailing wage laws.

A copy of the settlement, filed in Kern County Superior Court, is attached.

Los Angeles—As tax day approaches, Attorney General Edmund G. Brown Jr. today urged Californians to avoid “phony tax-relief companies” that charge taxpayers up to $3,000 in up-front fees to reduce or eliminate back taxes owed to the Internal Revenue Service (IRS), but provide no actual relief.

“Every tax season, phony tax-relief companies emerge to exploit cash-strapped Californians who owe back taxes to the IRS,” Brown said. “Taxpayers should be on high alert, avoid paying up-front fees to these companies and never ignore notices from the IRS.”

Throughout the tax season, tax-relief companies advertise on the radio, television and internet promising help for taxpayers in distress. For an up-front fee ranging from $2,000 to $3,000, these companies claim to reduce or even eliminate tax debts to the IRS and stop back-tax collection.

However, soon after collecting up-front fees, these companies typically inform taxpayers that they do not qualify for a relief program or that the IRS has rejected their attempt to reduce or eliminate the back-tax debt. Often these companies never even contact the IRS directly. Rather than reduce or eliminate the amount owed in back taxes to the IRS, these companies increase taxpayers’ debt burden.

Brown offered the following tips to taxpayers who owe back taxes and are having trouble paying:

• Don’t ignore notices from the IRS. Call and ask about collection alternatives, as you may be eligible for a monthly payment plan. In some cases, it is possible to pay less than the total amount you owe.
• Don’t trust promises from companies that imply that you are “qualified” or “eligible” for an IRS program to resolve your back-tax debt. Only the IRS can make that determination.
• Don’t pay up-front or advance fees for tax-debt relief services.

Taxpayers with problems paying back taxes can also contact the Taxpayer Advocate Service, an independent organization within the IRS dedicated to providing free assistance to individuals who are experiencing financial difficulties, need help resolving IRS problems, or believe the IRS is not working as it should.

Taxpayers can call the Taxpayer Advocate Service at 1-877-777-4778 or contact a local office directly in the following cities:

• Laguna Niguel at 949-389-4804
• Los Angeles at 213-576-3140
• Oakland at 510-637-2703
• Sacramento at 916-974-5007
• San Jose at 408-817-6850

Taxpayers can also seek help from local Low Income Taxpayer Clinics, which represent low income taxpayers before the IRS; assist taxpayers in audits, appeals and collection disputes; and can help taxpayers respond to IRS notices and correct account problems. To learn more about these local services and the Taxpayer Advocate Service, visit: http://www.irs.gov/advocate.

If you are a taxpayer who has been scammed by a company or individual offering tax-debt relief services, you can contact Brown’s office at 1-800-952-5225 or file a complaint online at: www.ag.ca.gov/consumers/general.php.

The IRS Office of Professional Responsibility oversees enrolled agents, attorneys, certified public accountants, enrolled actuaries, and appraisers. To report practitioner misconduct, email the IRS at: opr@irs.gov.

Last month, Brown issued an alert to taxpayers seeking tax-refund anticipation loans, commonly marketed as early tax refunds, warning them about deceptive advertisements, numerous fees and triple-digit interest rates. This alert followed two successful lawsuits against tax preparers who deceptively marketed refund anticipation loans:

• In June 2009, Brown won a $1.3 million lawsuit against Liberty Tax Service that bars the company from using false or misleading advertising to sell tax refund loans.
• In January 2009, Brown won a $4.85 million settlement with H&R Block, which prohibits the company from marketing refund anticipation loans as early tax refunds.

Santa Ana, Calif.—Attorney General Edmund G. Brown Jr. today shut down two fraudulent foreclosure-assistance companies and secured a court judgment that prohibits three individuals from working in the real estate industry and provides more than $1 million in restitution for victims left with “false hope” after paying upfront fees for nonexistent loan-modification services.

“George Escalante, Cesar Lopez and Adrian Pomery used their loan-modification companies to sell false hope to hundreds of Californians facing foreclosure,” Brown said. “This judgment shuts their companies down, locks them out of the real estate industry and pays back more than $1 million to the victims.”

On July 7, 2009, Brown filed suit against two affiliated companies based in Orange County, U.S. Foreclosure Relief Corp. and H.E. Servicing, Inc., as well as their executives, George Escalante and Cesar Lopez, and legal representative Adrian Pomery. The suit was filed jointly with the Federal Trade Commission (FTC) and the State of Missouri as part of “Operation Loan Lies,” a massive federal-state crackdown on loan-modification fraud.

The joint investigation, initiated in March 2009, found that the defendants used aggressive telemarketing tactics to convince distressed homeowners to pay $1,800 to $2,800 in upfront fees for loan-modification services that included reductions in principal and lower interest rates. In sales calls, H.E. Servicing, for example, claimed it had successfully negotiated 10,000 loan modifications. However, a full review of internal records found the company opened only 2,960 loan-modification files and completed only 311. It is estimated that California homeowners accounted for 15 to 20 percent of the company’s opened loan-modification files.

Brown’s judgment permanently shuts down U.S. Foreclosure Relief and H.E. Servicing and prohibits the defendants from ever working in the real estate and loan-modification industries again.

Additionally, the judgment will provide more than $1 million in relief to victims paid through frozen company funds and the sale of Escalante’s jewelry, 2007 Mercedes SUV, 2007 Mercedes sedan and 2009 Toyota Tundra. Separately, Lopez declared bankruptcy in June 2009 and relinquished possession of a 2007 Cadillac Escalade SUV and 2008 BMW S Series sedan as part of those proceedings.

Under the judgment, a court-appointed independent receiver will oversee the repayment program. Victims can access more information about this program by visiting the receiver’s website at www.heservicingreceiver.com, by calling: 1-866-243-8101 or by emailing: info@heservicingreceiver.com.

The FTC’s enforcement division will monitor the defendants’ compliance with the judgment, and if they are found to have misrepresented their financial condition and inability to pay, the judgment, in full, will become due immediately. The full judgment requires total payment of $8.6 million from Escalante, US Foreclosure Relief and H.E. Servicing as well as $3.3 million from Lopez and $3.4 million from Pomery.

While in operation, H.E. Servicing spent $70,000 a week on radio and television advertising in 100 media markets nationwide and had plans to spend an additional $10,000 to $30,000 a week with the goal of bringing in an estimated $270,000 a week in new business. A report prepared by an outside accountant found that in the first six months of 2009 alone, the company made $4.5 million in net income.

To learn more about how these companies operated, visit: http://ag.ca.gov/newsalerts/release.php?id=1774&.

The original lawsuit alleged that US Foreclosure Relief, H.E. Servicing and their executives violated:

• FTC Act, 15 U.S.C. § 45(a) for false or unsubstantiated loan modification and success claims;
• TSR, 16 C.F.R. § 310.2(a)(2)(iii) and (a)(4) for making false or misleading statements;
• TSR, 16 C.F.R. § 310.4(b)(l)(iii)(B) for violations of the National Do Not Call Registry;
• TSR, 16 C.F.R. § 310.8 for failure to pay national Registry fees;
• California Business and Professions Code § 17500 for making untrue or misleading statements;
• California Business and Professions Code § 17200 for unfair competition;
• Missouri Merchandising Practices Act § 407.020 for unlawful merchandizing practices; and
• Missouri Merchandising Practices Act § 407.938 and § 407.940 for unlawful foreclosure consulting.

Earlier this month, Brown filed an amended complaint naming Brandon L. Moreno and his law firm, Cresidis Legal, as additional defendants in the case. This comes after investigators found that Moreno served as the legal affiliate for H.E. Servicing after Pomery departed. These defendants are not part of the judgment announced today, and Brown will continue to prosecute the case against them.

By law, all individuals and businesses offering mortgage-foreclosure consulting, loan-modification and foreclosure-assistance services must register with Brown’s office and post a $100,000 bond. It is also illegal for loan-modification consultants and businesses to charge up-front fees for their services.

Non-profit housing counselors certified by the U.S. Department of Housing and Urban Development provide free help to homeowners. To find a counselor in your area, call 1-800-569-4287.

Brown has sought court orders to shut down more than 30 fraudulent foreclosure-relief companies and has brought criminal charges and obtained lengthy prison sentences for dozens of deceptive loan-modification consultants.

For more information on Brown’s action against loan-modification fraud visit: http://ag.ca.gov/loanmod.

A copy of the court-approved stipulated judgment, filed in U.S. District Court for the Central District of California, is attached.

Los Angeles--Attorney General Edmund G. Brown Jr. announced today that the California Supreme Court has granted the state's petition to review the Second Appellate District Court of Appeal’s ruling in the Saleem case, a decision last year that threw out a law banning convicted felons from possessing body armor. For more than ten years, the law served as a deterrent and arguably saved many lives. The Attorney General urges the Supreme Court to override the lower court’s ruling and restore this vital tool to the men and women who bravely protect our communities.

"This is a clear victory for police officers everywhere. Allowing criminals and gang members to arm themselves with body armor makes no sense, and I'm confident the Supreme Court will reverse this wrong-headed decision,' Brown said.

Brown filed a petition to the California Supreme Court on January 22, 2010 after the Second Appellate District Court of Appeal struck down the statute, ruling that the law was too vague.

Brown’s petition argued that the Court of Appeal’s Opinion:

• Failed to follow the test for determining whether a statute is vague;
• Contradicted the Legislature’s intent in enacting a body armor statute; and
• Needlessly abrogated the entire body armor statute.

In 1998, the California Legislature enacted the James Guelff Body Armor Act to prohibit felons convicted of a violent crime from possessing body armor.

Los Angeles—Attorney General Edmund G. Brown Jr. today filed a lawsuit against an Imperial Valley farm labor contractor Juan Munoz for failing to pay minimum wage and overtime, as well as committing “potentially deadly” worker safety violations by neglecting to provide rest breaks, potable drinking water or shade to field workers.

Juan Munoz supplied field workers to onion farms in Kern County and in the Coachella Valley and Mojave Desert.

“In the scorching summer months, farm work can be dangerous if workers aren’t given rest breaks, shade and drinking water,” Brown said. “We have no tolerance for contractors like Munoz who deny their workers a fair wage and subject them to potentially deadly working conditions.”

In 2009, Brown’s office conducted a routine field visit at a Southern California onion farm. During the visit, Brown’s office interviewed more than ten workers hired by Munoz.

According to the workers, Munoz gathered workers from throughout Southern California and delivered them to an onion field that was often far from their home. Once at the fields, they worked split shifts throughout the day and night, slept in the fields and bathed in a nearby reservoir.

The workers were not given rest breaks or potable drinking water, and the employees were not provided with training on how to recognize and prevent heat exhaustion.

Growers paid Munoz a set price per piece, such as a four-gallon onion sack, and Munoz determined the rate of pay for the field workers. The workers were typically paid $1.23 for each four-gallon sack of onions they harvested.

Employees worked split shifts totaling approximately 70 hours a week, but were not provided premium pay. Under state law, workers are entitled to an additional hour of pay if they have less than an eight-hour break between shifts. Workers were also denied overtime pay. State law requires employers to pay overtime (time and a half) to employees who work more than ten hours a day.

In addition, many of the workers were paid in cash below the minimum wage without a written statement of hours worked, rate of pay or deductions taken, also a violation of state labor laws. After working long hours in the fields, workers were often forced to wait up to two hours for their paycheck.

Stories of the Field Workers

Feliciano Sepulveda and his wife Sonia worked between 14 and 16 hours a day and, like other workers, slept in the fields. He and his wife regularly worked split shifts without premium pay or overtime, despite the long days. When the Sepulvedas collected their wages at the end of the day, Munoz rounded down to the lower dollar amount. During the 2009 harvesting season, neither of the Sepulvedas received training on the warning signs of heat exhaustion and often found the water cans empty during the hottest part of the day.

Mario Gomez and his wife, Araceli Ramos, worked on the same wage ticket, a violation of California labor laws, which require the work done by two individuals to be reported for each worker. Both worked approximately 15 hours a day, but neither of them received overtime or premium pay for split shifts. When calculated, Gomez’s and Ramos’ earnings totaled less than $8 an hour with no deductions or taxes withheld from their wages.

Nicolas Salinas worked 12 to 14 hours a day, 7 days a week, but was never paid overtime or premium pay. At the end of the day, Salinas waited more than two hours to be paid and often received only between $4 and $7.50 an hour. On Salinas’ paystub, his hours worked were often incorrect, and no deductions were taken out for taxes.

The federal minimum wage is $7.25/hour, and the state minimum wage is $8.00/hour.

Today’s lawsuit alleges that Munoz violated California’s unfair competition laws. The lawsuit seeks:
• A permanent injunction;
• Civil penalties;
• Restitution to the field workers; and,
• Other legal costs.

A copy of the complaint is attached.

Sacramento—Attorney General Edmund G. Brown Jr. today announced that last year, his office recovered more than $209 million in “hard-earned taxpayer dollars” and secured 139 criminal convictions by aggressively investigating and prosecuting Medi-Cal fraud cases.

Brown also reported that in 2009, his Bureau of Medi-Cal Fraud and Elder Abuse returned more than $12 million to victims of elder abuse and secured 47 criminal convictions in elder abuse cases.

“In these tough budget times, the state can’t afford to lose millions in hard-earned taxpayer dollars from people who try to cheat and steal from the system,” Brown said. “Thanks to the tireless work of DOJ investigators, we protected our most vulnerable citizens and recovered critical public health dollars.”

Brown’s Bureau of Medi-Cal Fraud and Elder Abuse (BMFEA) investigates and prosecutes those who cheat taxpayers out of millions of dollars each year and divert scarce healthcare resources from the needy. The Bureau also protects patients in nursing homes and other long-term care facilities from abuse and neglect.

Combined, Brown recovered more than $221 million in Medi-Cal fraud and elder abuse cases. The amount recovered last year is more than six times the BMFEA’s $33.1 million operating budget. This represents a recovery of $36 for every $1 expended from the state's general funds.

The recoveries stem from restitution obtained in Medi-Cal fraud, elder abuse, and patient fund cases. Patient fund cases occur when a disabled person's finances are being controlled by a trustee who steals from the patient's trust account. Annually, the BMFEA conducts more than 1,500 investigations.

Medi-Cal Fraud

Last year’s $209 million recovery stemmed from civil lawsuits Brown’s office filed against companies and individuals that billed the state’s Medi-Cal fund for unnecessary services or for services that were never performed.

In one such case filed in October 2009, Brown’s office arrested the former manager of a Mount Shasta-based medical clinic after she billed Medi-Cal $2.2 million for services never performed. Denise Fairhurst, 57, of Redding, filed false Medi-Cal claims with the state to help cover the medical clinic’s operations and management costs. In addition, she used $33,492 of the funds to pay personal credit card bills. Fairhurst is scheduled to be sentenced on March 24 in Siskiyou County Superior Court.

Some of the fraud is perpetrated by criminal fraud rings. In May 2009, Brown filed criminal charges against six individuals who paid healthy seniors to be admitted into a hospice for the terminally ill and then billed state healthcare programs more than $1 million for procedures never performed. Some of the individuals used the proceeds of the scheme to purchase expensive cars, designer clothing, and luxury homes. Four of the defendants have pled guilty, and the state has recovered the $1 million.

A number of Medi-Cal fraud cases are institutional. In December 2009, Brown reached a $21.3 million settlement with pharmaceutical giant Schering-Plough Corporation, resolving allegations the company deliberately inflated the price of Albuterol and other drugs, overcharging Medi-Cal millions of dollars in pharmacy reimbursement.

Most of the funds recovered go back into the state’s Medi-Cal fund, which provides medical payments for nearly 20 percent of California’s children, lower income individuals and families, the elderly and disabled.

Elder Abuse

Although elder abuse can take many forms, the majority of cases involve abuses at California’s skilled nursing facilities. Brown’s office uses its civil, administrative and criminal enforcement powers to bring poorly performing care facilities into compliance with federal and state laws.

A few elder abuse cases Brown’s office prosecuted include:
• Mary Louise Wilson, who was sentenced to nineteen years and four months in prison for setting multiple fires at Southern California nursing homes, including the beds of elderly patients who were unable to get out of bed without assistance;
• Pamela Ott, who was charged with eight felony counts of elder abuse in September 2009 for allowing staff to forcibly administer psychotropic medications to patients for their own convenience, rather than for their patients' therapeutic interests; and,
• Leander Jackson, who was sentenced to three years, eight months in prison for identity theft and grand theft for operating several unlicensed skilled nursing facilities and neglecting to provide the proper care to the residents. Jackson used the identities of the patients to obtain cash loans and car leases.

A copy of the BMFEA Annual Report is attached.

Oakland—In an ongoing crackdown on companies that take advantage of workers, Attorney General Edmund G. Brown Jr. today filed a lawsuit against Livermore-based Country Builders, Inc. after the company “cheated workers out of wages,” falsified the company’s payroll records to hide underpayments, deliberately misclassified workers to reduce the company’s workers’ compensation premiums and violated state prevailing wage laws.

The company has won several public works contracts that required it to pay the prevailing wage.

“Country Builders cheated its workers out of wages and falsified payroll records,” Brown said. “This is an outrageous case about a company that took public money and then cooked its books to shortchange the state’s workers’ compensation fund.”

In late 2008, Brown’s office launched an investigation into Country Builders to determine why some workers reported receiving a lower rate of pay than what was shown on their paystubs. The investigation found that the company inflated the pay rate of some workers to lower its workers’ compensation premiums, while paying others below the $32 to $34 an hour, the rate required under the prevailing wage laws of California.

The state’s prevailing wage laws require workers on public work projects to be paid at rates equal to the wage and benefit rates established by the Department of Labor Standards Enforcement. The public works projects covered by law are construction projects performed by priviate contractors for state or local governments to further a public purpose.

Some of Country Builders’ public works contracts included:

• The Fairways multi-family apartments in San Jose
• Classics at Keystone in San Jose
• Pioneer Heights student housing for California State University, East Bay
• University Village student housing for University of California at Berkeley
• Giant Road Family Apartments in San Pablo
• Jubilee Senior Housing in Berkeley
• Seven Directions Apartments in Oakland

Despite its collective bargaining agreement with workers that set the prevailing wage, the company hired workers to work on the public projects for significantly less per hour than the union rate. Between 2005 and 2008, timesheets reveal that 124 employees received less than the hourly rate on at least one occasion. Some employees were regularly paid less than the prevailing wage.

Brown’s investigation further revealed that Country Builders, Inc.’s officers falsified company payroll records to various public entities to cover up the underpayments.

Brown’s office estimates that in 2007 and 2008, Country Builders was able to save approximately $1 million in wages by failing to pay workers the prevailing wage and the pay rate set forth in the collective bargaining agreement. In 2007, the company’s gross revenues were $21 million.

In addition, Country Builders, Inc. intentionally misclassified lower-wage workers as higher-wage workers to its insurance carrier, the State Compensation Insurance Fund.

The hourly pay rate is used as a basis to calculate workers’ compensation insurance premiums for businesses. By falsifying payroll records and inflating the hourly rate of pay of its workers, Country Builders, Inc. illegally lowered its insurance premiums.

The investigation found that Country Builders, Inc. underpaid its premiums to the State Compensation Insurance Fund by at least $136,000. Premium fraud is the most costly type of workers’ compensation fraud.

Brown’s office filed the civil lawsuit in Alameda Superior Court alleging violations of labor laws and citing unfair business practices. The lawsuit seeks a permanent injunction against the company, restitution for the workers and the State Compensation Insurance Fund, and civil penalties.

A copy of the lawsuit is attached.

Los Angeles—Attorney General Edmund G. Brown Jr. today announced that his office has secured an agreement with Santa Fe Natural Tobacco Company, Inc., the manufacturer of American Spirit tobacco products, that requires the company to clearly disclose that its organic tobacco is “no safer or healthier” than other tobacco products.

Attorneys general from 32 other states and the District of Columbia signed onto today’s agreement.

“Stamping an organic label on tobacco products is ultimately a distinction without a difference—organic or not, cigarettes are bad for your health,” Brown said. “Today’s settlement with Santa Fe Natural Tobacco Company ensures that all future advertisements make it clear that organic tobacco is no safer or healthier.”

Today’s agreement follows Brown’s contention that Santa Fe Natural Tobacco Company may have misled consumers in advertising its “organic” or “100% organic” Natural American Spirit cigarettes and roll-your-own tobacco and pouches, leading consumers to believe these products were less harmful than other tobacco products. There is currently no competent or reliable scientific evidence to support this conclusion.

Under the terms of the agreement, all advertisements will clearly and prominently feature the following warnings:

• For Natural American Spirit organic cigarettes: “Organic tobacco does NOT mean safer cigarettes.”
• For Natural American Spirit organic roll-your-own or pouch tobacco: “Organic tobacco does NOT mean safer tobacco.”

Santa Fe Natural Tobacco Company has until April 1, 2010 to meet these requirements in the placement of future advertising. All tobacco retailers selling these products must be contacted and instructed to dispose of old advertisements that do not feature these disclosures once updated advertisements and point of sale materials are received.

Organic tobacco is certified under the U.S. Department of Agriculture’s National Organic Program. To receive organic certification, tobacco farmers have to follow a strict, labor-intensive growing regimen. Certified organic tobacco is grown without the use of pesticides and fertilizers prohibited under the program.

Thirty-two other attorneys general signed onto Brown’s agreement today from the following states: Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, South Dakota, Vermont, Washington, West Virginia and Wisconsin. Additionally, the attorney general of the District of Columbia signed onto the agreement.

Brown’s agreement with Santa Fe Natural Tobacco Company, Inc. is attached.

Los Angeles—Attorney General Edmund G. Brown Jr. today announced that his office has reached an agreement with Toyota Motor Sales USA, Inc. to provide California Toyota owners with at-home pickup and vehicle return and cost-free alternative transportation while their recalled vehicles are being repaired.

“This agreement goes a long way towards easing the burden caused by Toyota’s massive recall,” Brown said. “It will now be much easier for Toyota owners to get to work and take their kids to school while critical safety repairs are made on their cars.”

Under the terms of today’s agreement, Toyota will provide owners of recalled vehicles the following services:
• Pick-up and return of vehicles by the dealership;
• Transportation to the dealership and/or to the owner’s place of work;
• Alternative transportation, such as a rental car, loaner vehicle or taxi reimbursement for a reasonable period that the customer is unable or unwilling to use his or her car; and
• Expedited scheduling for repair services.

These services will be provided by Toyota through the dealers at no cost to either the owners or the dealer.

The following Toyota vehicle recalls are covered by today’s agreement:
• September 29, 2009 for floormat entrapment;
• January 21, 2010 for sticking accelerator pedals;
• February 8, 2010 for anti-lock brake system issues; and
• February 12, 2010 for drive-shaft failure.

The following vehicles are involved in the recent Toyota and Lexus vehicle recalls: 2005-2010 Avalon, 2007-2010 Camry, 2009-2010 Corolla, 2007-2010 ES 350, 2008-2010 Highlander, 2006-2010 IS 250 and IS350, 2009-2010 Matrix, 2004-2009 Prius, 2010 Prius, 2009-2010 RAV4, 2008-2010 Sequoia, 2005-2010 Tacoma, 2007-2010 Tundra, 2009-2010 VENZA, and 2010 HS 250h.

More information on the specific vehicles affected by the recalls can be found at www.nhtsa.dot.gov and www.toyota.com/recall.

Californians are encouraged to contact their local Toyota and Lexus dealers if they believe they are eligible for these accommodations. Consumers can also contact Toyota’s customer service center at 1-800-331-4331 or Lexus at 1-800-255-3987.

This agreement will remain in place until all Toyota vehicles subject to the recall have been repaired. If additional safety recalls arise, an extension of this agreement or other appropriate provisions will be pursued.

Toyota Motor Sales USA, Inc. is based in Torrance, CA.

A copy of Toyota's letter to Brown is attached.

Los Angeles—Attorney General Edmund G. Brown Jr., who has an ongoing investigation into possibly illegal practices by some California health insurers, today subpoenaed financial records and other documents from California’s seven largest health insurance companies.

“We have been looking at these companies for a number of months and are very concerned that some of them are unjustly raising premiums and denying payment of legitimate claims,” Brown said. “Not only are the rate increases devastating to Californians strapped by the economy, but in some cases, they are possibly illegal.”

“Our best attorneys are going to get to the bottom of this, and where we find violations of California’s unfair business laws, we intend to stop them,” Brown added.

Brown subpoenaed records from Aetna Health, Anthem Blue Cross, CIGNA, Health Net, Blue Shield of California, Kaiser Permanente and PacifiCare. Today’s subpoenas cover pay-for-service health plans, which are health plans that reimburse doctors and hospitals for services performed instead of a health maintenance organization (HMO) approach. Brown revealed that his office served subpoenas to those same companies last month regarding their managed care plans, known as HMOs.

Brown said the insurance companies have 30 days to hand over their financial and other records.

Brown began an official inquiry last September into HMO practices of reviewing and paying insurance claims submitted by doctors, hospitals and other medical providers. The investigation was prompted by reports that California’s five largest health insurance providers were denying insurance claims at rates of up to 39.6 percent.

Recently, Anthem Blue Cross announced to its members that it planned to hike premium rates by as much as 39 percent. Brown’s investigation will probe whether the other health plans are planning similar rate hikes and will consider whether Anthem’s steep rate increases for individual California consumers are fair under California law.

The investigation will include an examination of how much the plans are spending on health care versus non-healthcare costs such as marketing, administration and profits. The plans have been asked to provide detailed information on how they spend policy-holders’ premiums and how they review claims and decide whether and how much to pay the doctor or hospital for the service.

The investigation also will examine:
• Member and medical provider complaints against the health plans describing payment delays, reduced payments and denials of payment claims, and the health plans responses to those complaints;
• How health plans determine doctor and hospital rankings and whether those rankings mislead customers on quality;
• Whether the health plans intend to raise premiums, and, if so, whether the plans disclosed the amount and frequency of the premium increases at the time of enrollment;
• Whether the health plans offer alternative policies to members when they increase premiums and whether the plans may deny enrollment in the alternative policies based on preexisting conditions.

Brown’s investigation will look for violations of law, including California’s Unfair Competition Law (Business & Professions Code section 17200) and False Advertising Law (Business & Professions Code section 17500.) These laws prohibit “any unlawful, unfair or fraudulent business act or practice” and the use of “false or misleading statements” to the public.

The attorney general is authorized to prosecute violations of the Unfair Competition Law criminally or file a civil law enforcement action to obtain an injunction forcing the company to stop the business practices, restitution of money to affected consumers and civil penalties beyond those available to private parties.