Lawsuits & Settlements

SACRAMENTO -- Attorney General Kamala D. Harris today announced that claim forms will be sent to approximately 432,584 California borrowers who lost their homes to foreclosure between January 1, 2008 and December 31, 2011 and may be eligible for a settlement payment under the $25 billion national mortgage foreclosure settlement.

Borrowers receiving the claim forms had mortgages serviced by Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo, the servicers that agreed to the settlement with the federal government and attorneys general of 49 states and the District of Columbia.

The settlement, which was signed by the Court in April 2012, earmarked approximately $1.5 billion in payments for 2 million borrowers nationwide. The actual payment amount will depend upon the total number of borrowers who decide to participate. Payment checks are expected to be mailed in mid-2013.

Last week, the national settlement administrator mailed notification postcards to eligible borrowers across the nation. In California, packets containing a letter from the California Department of Justice, a claim form and answers to frequently asked questions are being mailed to eligible borrowers starting this week and continuing through October 12.

Eligible California borrowers should complete the claim form and return it as soon as possible in the envelope provided, or file the claim form online at www.nationalmortgagesettlement.com. The deadline for all claims is January 18, 2013.

The one-page claim forms are simple to complete. Borrowers who have questions or need help filing a claim should contact the settlement administrator, toll-free, at 866-430-8358, or send questions by email to administrator@nationalmortgagesettlement.com. The information line is staffed Monday through Friday from 5 a.m. to 5 p.m. PST.

Eligible borrowers do not need to prove financial harm to receive a payment, nor do they give up their rights to pursue a lawsuit against their mortgage servicer or to participate in the Independent Foreclosure Review Process being conducted by federal bank regulators. More information about that program is available at www.independentforeclosurereview.com.

Eligible borrowers may receive payment from this settlement even if they participate in another foreclosure claims process. However, any payment received may reduce payments that a borrower may be eligible to receive in any other foreclosure claim process or legal proceeding.

Borrowers who believe they may qualify for a payment, but did not receive a notice because they have moved, should contact the settlement administrator, toll-free, at 866-430-8358, or send an updated address by email to administrator@nationalmortgagesettlement.com. The line is staffed Monday through Friday from 5 a.m. to 5 p.m. PST.

Attorney General Harris also is warning all homeowners to be aware of settlement-related scams. Do not provide personal information or pay money to anyone who calls or emails and claims to provide settlement-related assistance. The official claim form does not ask for personal financial information. If you believe someone is conducting a settlement-related scam, please file an online complaint with the Attorney General’s Public Inquiry Unit at http://oag.ca.gov/consumers/general.

The national settlement followed state and federal investigations, which alleged that the five mortgage servicers routinely signed foreclosure-related documents outside the presence of a notary public and without personal knowledge that the facts contained in the documents were correct. This civil law enforcement action also alleged that the servicers committed widespread errors and abuses in their foreclosure processes.

The settlement resulted in broad reform of the mortgage servicing process, as well as financial relief for borrowers who are still in their homes via direct loan modification relief, including principal reduction.

SACRAMENTO -- Attorney General Kamala D. Harris today announced a $323.67 million settlement with a Los Angeles-based health maintenance organization over excess Medi-Cal and Medicare payments.

The settlement with SCAN Health Plan, Senior Care Action Network, and Scan Group (collectively known as SCAN), which provides health care and support services in Southern California to the elderly and disabled, constitutes the largest Medi-Cal recovery in the state’s history.

“Californians have lost millions of dollars that should have been going toward the health care of our most vulnerable citizens,” said Attorney General Harris. “This settlement will bring a significant amount of those funds back to the state when it is dearly needed, and I commend all of those involved in this action.”

The matter was initially investigated by the State Controller's Office.  The state Attorney General’s Bureau

of Medi-Cal Fraud and Elder Abuse then commenced its own investigation in cooperation with the United

States Attorney’s Office in Los Angeles. The investigation was conducted with the assistance of the California Department of Health Care Services (DHCS), which administers the Medi-Cal program.

A small component of the settlement resolves certain federal Medicare allegations brought by James M. Swoben in a lawsuit filed in July 2009 in federal court in the Central District of California. Mr. Swoben is a former employee of SCAN.  The lawsuit was filed pursuant to the federal and state False Claims Acts, which provide that any person with information about a false claim can file a sealed lawsuit on behalf of the government to recover the government’s losses.

The federal government will be receiving $3.82 million for the Medicare portion of the settlement. For the Medi-Cal portion of the settlement, $319.85 million will be split between the federal government and California, with the federal government receiving $129.38 million and the state $190.47 million. 

The settlement resolves the state’s allegations that SCAN failed to provide contractually required financial information to DHCS, thereby impairing the department from revising capitation rates for SCAN.

“This settlement is a victory for the Medi-Cal beneficiaries we serve,” said DHCS Director Toby Douglas.

“Using the scarce resources available in the most efficient way possible is a top priority for the state. We will continue our ongoing efforts to strengthen programs that protect the integrity of Medi-Cal.”

A copy of the Third Amended Complaint and copies of the settlement agreement; Joint Notice of Election to Intervene in Part; and the Notice of Dismissal and Order Thereon are attached to the online version of this release at www.oag.ca.gov.

RIVERSIDE -- Attorney General Kamala D. Harris yesterday filed a civil lawsuit seeking the removal of officers and directors of Help Hospitalized Veterans, a California charity. The complaint alleges that those running the organization engaged in self-dealing, paid excessive executive compensation and engaged in fraudulent fundraising and other unlawful activities.

The lawsuit also seeks to recover more than $4.3 million in funds improperly diverted from Help Hospitalized Veterans. Those funds were meant to support several programs serving veterans and active-duty military, including providing arts and craft kits to hospitalized veterans. Instead, they were used to enrich the organization’s officers and fundraisers.

“The officers of Help Hospitalized Veterans improperly diverted money that hard-working and patriotic Americans donated to support injured vets,” said Attorney General Kamala D. Harris.  “We must protect veterans, active-duty military and donors from scam artists who see them as little more than prey for their financial frauds.”

The lawsuit alleges that the directors and officers of Help Hospitalized Veterans breached their fiduciary duty by wasting its charitable assets on such things as golf memberships and a condominium (for use by officers), and authorizing excessive executive compensation to the group’s former President (Roger Chapin) and its current President (Michael Lynch). 

The suit alleges Chapin received more than $2.3 million in excessive compensation during the final seven years of his tenure and excessive compensation to Lynch totaled over $900,000.  Chapin is additionally charged with self-dealing as a result of substantial diversions of the charity’s funds to entities in which he had a financial interest. Those diversions include loans Help Hospitalized Veterans made to a firm called American Target Advertising, which was making substantial payments to Chapin. American Target Advertising is a for-profit business (founded by Chapin’s close friend Richard Viguerie) that directs Help Hospitalized Veterans’ vast direct-mail fundraising operation.

The lawsuit further alleges that the nonprofit used increasingly-common accounting gimmicks to inflate the amount of income purportedly spent on providing veterans’ services while artificially minimizing the amount reportedly spent on fundraising. For example, Help Hospitalized Veterans’ use of one of these gimmicks resulted in decreasing its reported fundraising costs from 65 percent of total costs to less than 30 percent. As a result, the filings to both the IRS and the Attorney General’s office were substantially false. Donors and charity watchdog groups rely on both of those reported expenditure categories in evaluating a charity’s efficiency. 

Controversy around the performance of veteran’s charities like Help Hospitalized Veterans was brought to the public’s attention in 2007 by Rep. Henry A. Waxman who, as Chairman of the House Oversight and Government Reform Committee Hearings, held hearings into their fundraising practices and overhead.   

The lawsuit seeks general and punitive damages, restitution, civil penalties and the removal of those officers and directors named in the lawsuit.

Named defendants in the lawsuit include: Help Hospitalized Veterans; its former president Roger Chapin (California); former employee Elizabeth Chapin (California); current president Michael Lynch (California); the following officers or directors of the charity: Robert Beckley, Jr. (Arizona), Thomas Arnold (Florida), Leonard Rogers (Florida), and Gorham Black (Florida); accountant Robert Frank and the company Frank & Company, PC (Virginia); and direct-mail professional fundraiser Creative Direct Response, Inc. (Maryland).

The Complaint alleges seven causes of action:  (1) breach of fiduciary duty (against Help Hospitalized Veterans directors and officers); (2) aiding and abetting a breach of fiduciary duty (against Frank and Frank & Co.); (3) engaging in self-dealing transactions in violation of Corporations Code section 5233 (against Chapin); (4) excessive executive compensation in violation of Corporations Code section 5235 (against Chapin and Lynch); (5) wrongful acquisition of property/unjust enrichment (against Chapin and his wife Elizabeth); (6) misrepresentations in solicitations to donors in violation of Government Code section 12599.6 (against Help Hospitalized Veterans, its directors and officers, and Creative Direct Response); and (7) unfair business practices (against all defendants other than Elizabeth Chapin and Creative Direct Response).

More than 2 million of the nation’s 22 million veterans live in California, the highest number for any state. Protecting these veterans, and active-duty military, from financial scams has been a priority for Attorney General Harris. This focus resulted from a survey of veterans who work in the Department of Justice that was undertaken to inform Department efforts on the matter.  Attorney General Harris and Holly Petraeus of the Consumer Financial Protection Bureau recently spoke at Travis Air Force Base to warn of financial scams that target military members.

SAN FRANCISCO -- Attorney General Kamala D. Harris announced today that California joined 28 other states in a $151 million settlement with one of the nation’s largest drug wholesalers to resolve allegations the company inflated the price of prescription drugs by as much as 25 percent, causing the states’ Medicaid programs to overpay millions of dollars in pharmacy reimbursements.

California’s recovery of the settlement with San Francisco-based McKesson Corporation is $23,585,849.

“In these difficult budget times, it is crucial that California’s scarce public resources support the urgent needs of our state,” said Attorney General Harris. “We cannot allow dollars meant for patients to be diverted to inflate corporate profits.”

Today’s settlement resolves allegations that McKesson Corporation deliberately inflated the Average Wholesale Prices (AWPs) it reported to First Data Bank, a publisher of drug prices, causing California to overpay on branded prescription drugs from August 1, 2001 through December 31, 2009. Medi-Cal sets the reimbursement rates for pharmacies for many of the drugs dispensed to Medi-Cal patients based on the AWP.

The Medicaid program, which is known as Medi-Cal in California, is funded jointly by the federal government and the State of California.

The settlement is based on a 2005 qui tam case filed under the false claims statutes of the federal government, as well as California and other states.  In April 2012, the federal government settled the federal portion of the lawsuit for more than $187 million.

A team of attorneys and investigative auditors from the California Attorney General’s Office and the New York Attorney’s General Office were appointed by the National Association of Medicaid Fraud Control Units to investigate and conduct the settlement negotiations with McKesson on behalf of the participating states.

Joining California and New York in the settlement are the District of Columbia and the following 27 states: Arkansas, Colorado, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Maine, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Pennsylvania, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia and Wyoming.

The Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse investigates and prosecutes claims of Medi-Cal civil and criminal fraud, as well as allegations of elder abuse, such as physical assaults or financial theft.

A copy of California’s settlement agreement is attached to the online version of this release at http://oag.ca.gov/.   

LOS ANGELES -- Attorney General Kamala D. Harris today announced defendants who ran a national loan modification scam were ordered to pay more than $4 million in penalties and restitution, including $2 million to consumers who were falsely promised modifications of their mortgage loans.

More than 1,000 customers paid more than $2 million for loan modification services to Statewide Financial Group, Inc., which did business as US Homeowners Assistance and Webeatallrates.com, and was based in Orange County. In July 2009, the Attorney General’s office shut down the business, which had been in operation since January 2008.

“These defendants took advantage of vulnerable people in extremely difficult circumstances, including many who faced imminent loss of their homes,” said Attorney General Harris. “The significant financial penalties imposed by the court let scammers know that severe consequences will flow to those who defraud California consumers.”

The Orange County Superior Court ordered that every US Homeowners Assistance loan modification customer should receive a full refund upon request.  The defendants were also permanently enjoined from engaging in the conduct that led to the lawsuit and were ordered to pay $2 million in civil penalties.  It is unclear, however, how much money will be recovered and available to pay refunds or penalties.

The prosecution of this action took nearly three years, culminating in a multi-week bench trial in March 2012. The business’ owners, Zulmai Nazarzai and Hakimullah Sarpas and Fasela Sheren (who went by the name Sharon Fasela), were all found liable for violating California’s Unfair Competition Law and False Advertising Law.

In a separate proceeding in late 2010, Attorney General Harris successfully prosecuted Nazarzai for contempt of court for his refusal to turn over $360,000 unlawfully taken by defendants as ordered by the court. He has been incarcerated in the Orange County jail since December 2010 because of his continued refusal to comply with the court’s order.

Attorney General Harris formed the Mortgage Fraud Strike Force in May 2011 to investigate and prosecute crimes and wrong-doing related to mortgages, foreclosures, and real estate. The prosecution of this action is part of Attorney General Harris’ ongoing efforts to protect homeowners, which also includes the national mortgage settlement and the California Homeowner Bill of Rights.

Copies of the court’s judgment and statement of decision are attached to the online version of this release at www.oag.ca.gov.

SAN FRANCISCO - Attorney General Kamala D. Harris today announced that her office, along with the offices of seven other attorneys general, has reached settlements totaling $571 million with three manufacturers that engaged in price fixing of flat screen LCD (Liquid Crystal Display) panels found in monitors, laptops and televisions. 

The settlements announced today apply to Toshiba Corp.; LG Display Co., Ltd.; and AU Optronics Corporation (and several subsidiaries), which have collectively agreed to pay $543.5 million toward damages claims, plus $27.5 million in civil penalties.  This follows $538.5 million in settlements reached in December 2011 with seven leading LCD manufacturers, plus $14.7 million in civil penalties, bringing the total recovery to more than $1.1 billion, which will be divided among twenty-four states and the District of Columbia.

 “The price-fixing by these ten companies broke the law and short-changed California consumers,” said Attorney General Harris.  “This settlement brings justice to our consumers, protects companies that follow the law, and ends the pernicious practice of price-fixing by these manufacturers.”

In October 2010, the Attorney General's office filed a lawsuit against ten companies for engaging in price fixing of LCD panels from 1999 to 2006 that resulted in higher prices for California residents and businesses, as well as government agencies.

As part of the settlements, the ten companies that engaged in price fixing will provide a fund for injured consumers and businesses. The settling companies have also resolved claims brought by Attorney General Harris for civil penalties under California’s Unfair Competition Law, as well as restitution for government agencies that purchased products containing the flat screen LCD panels.

Attorney General Harris is joined in these settlements by the attorneys general of Arkansas, Florida, Michigan, Missouri, New York, West Virginia and Wisconsin, as well as a class action brought on behalf of private claimants in the United States District Court for the Northern District of California.

The three defendants who settled today join the seven who settled in December, which included Chimei Innolux Corp., Chi Mei Optoelectronics USA, Inc., Chi Mei Optoelectronics Japan Co., Ltd, HannStar Display Corporation, Hitachi, Ltd., Hitachi Displays, Ltd., Hitachi Electronic Devices, USA, Inc., Samsung Electronics, Co., Ltd., Samsung Electronics America, Inc., Samsung Semiconductor, Inc., Sharp Corporation, and Sharp Electronics Corporation.

The Attorney General’s case was originally filed in San Francisco Superior Court.

In 2008, two companies – LG Display Co., Ltd. and LG Display America, Inc. – pleaded guilty to federal charges for price fixing TFT-LCD panels and paid $400 million in federal fines. Defendants AU Optronics Corporation and AU Optronics Corporation America, along with several employees, were convicted on federal charges of price fixing in March 2012 in the United States District Court for the Northern District of California.

California consumers and government entities will receive a significant portion of the more than $1 billion settlements, with an exact percentage to be determined in coming months. Following completion of the litigation, California consumers and businesses can file claims for monetary relief. Information about how to file a claim will be available at the Attorney General's website or at www.lcdclass.com.

SAN FRANCISCO -- Attorney General Kamala D. Harris, joined by other attorneys general and the U.S. government, today announced a $3 billion settlement with GlaxoSmithKline (GSK) to resolve allegations the company engaged in various illegal schemes related to the marketing and pricing of drugs it manufactures. 

Today’s action is the largest healthcare fraud settlement in history. California will receive more than $46 million. The $3 billion settlement includes $2 billion in damages and civil penalties to compensate state and federal healthcare programs, including California’s Medi-Cal program, for harm allegedly suffered as a result of the illegal conduct. In addition, GSK has agreed to plead guilty to federal criminal charges related to drug labeling and FDA reporting and pay a $1 billion criminal fine. 

“Californians have the right to expect that their health and well-being – and not profit – drives decisions about their care,” said Attorney General Harris. “This settlement protects consumers and puts an end to unscrupulous marketing practices, kickbacks and illegal labeling of prescription drugs.”

California, along with 44 other states and the federal government, alleged that GSK engaged in a pattern of unlawfully marketing certain drugs for uses for which they were not approved by the Food and Drug Administration (FDA); making false representations regarding the safety and efficacy of certain drugs; offering kickbacks to medical professionals; and underpaying rebates owed to government programs for various drugs paid for by Medicaid and other federally-funded healthcare programs.

Specifically, the government alleged that GSK engaged in the following activities:

• Marketing the depression drug Paxil for off-label uses, such as use by children and adolescents; 
• Marketing the depression drug Wellbutrin for off-label uses, such as for weight loss and treatment of sexual dysfunction, and at higher-than-approved dosages;
• Marketing the asthma drug Advair for off-label uses, including first-line use for asthma;
• Marketing the seizure medication Lamictal for off-label uses, including bipolar depression, neuropathic pain, and various other psychiatric conditions;
• Marketing the nausea drug Zofran for off-label uses, including pregnancy-related nausea;
• Making false representations regarding the safety and efficacy of Paxil, Wellbutrin, Advair, Lamictal, Zofran, and the diabetes drug Avandia;
• Offering kickbacks, including entertainment, cash, travel, and meals, to healthcare professionals to induce them to promote and prescribe Paxil, Wellbutrin, Advair, Lamictan, Zofran, the migraine drug Imitrex, the irritable bowel syndrome drug Lotronex, the asthma drug Flovent, and the shingles and herpes drug Valtrex; and,
• Submitting incorrect pricing data for various drugs, thereby underpaying rebates owed to Medicaid and other federal healthcare programs. 

As part of the settlement, GSK has also agreed to plead guilty to criminal charges that it violated the federal Food, Drug, and Cosmetic Act (“FDCA”) in connection with certain activities.  The government alleges that GSK introduced Wellbutrin and Paxil into interstate commerce when the drugs were misbranded, meaning containing labels that were not in accordance with their FDA approvals, and that GSK failed to report certain clinical data regarding Avandia to the FDA.

The settlement is based on four qui tam actions brought by private individuals pursuant to state and federal false claims acts and filed in or transferred to the United States District Court for the District of Massachusetts, as well as investigations conducted by the U.S. Attorney’s Office for the District of Massachusetts and the Civil Frauds Division of the U.S. Department of Justice, and a team of attorneys from the Medicaid Fraud Control Units of California (a unit within the Attorney General’s Office), Colorado, Massachusetts, New York and Ohio.

SAN FRANCISCO -- Attorney General Kamala D. Harris announced today that she, along with 44 other attorneys general and the Federal Trade Commission, has reached a $40 million settlement with Skechers USA, Inc. to resolve allegations the company made unsubstantiated claims about the health benefits of its rocker-bottom shoes, including the Shape-ups, the Tone-ups, and the Skechers Resistance Runners.

The lawsuit, which was filed today along with the settlement, alleges that Skechers advertised that its rocker-bottom shoes caused consumers to lose weight, burn calories, improve circulation, fight cellulite, and firm, tone or strengthen thigh, buttock, and back muscles. As part of the settlement, Skechers is prohibited from making such claims without adequate substantiation and consumers may be eligible for partial refunds.

“Consumers shouldn’t be duped into paying more for products with false promises of weight loss and other benefits,” said Attorney General Harris. “This settlement ensures that Skechers will not make any claims regarding their rocker-bottom shoe products without adequate substantiation for those claims.”

As part of the $40 million settlement, Skechers will pay the states $5 million, of which California will receive $290,000 or the second largest of the individual state payments. The company will also provide partial refunds to customers who purchased Shape-Ups, Tone-Ups, or the Skechers Resistance Runner.

Consumers may visit www.ftc.gov/skechers or call (866) 325-4186 for information about how to obtain a partial refund.

Attorney General Harris is joined in this settlement by the attorneys general of Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Vermont, Virginia, Washington, West Virginia and Wisconsin. The settlement also includes the Federal Trade Commission, the District of Columbia, Hawaii’s Office of Consumer Protection, and the Georgia Governor’s Office of Consumer Protection.

Supervising Deputy Attorney General Daniel A. Olivas and Deputy Attorney General Judith Fiorentini handled the case for Attorney General Harris’ Consumer Law section.

Copies of the complaint and judgment submitted to the court for approval are attached to the online version of this release at www.oag.ca.gov

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced two historic settlements with Abbott Laboratories over the illegal off-label marketing of its Depakote drug.

California joined other states and the federal government in a $1.5 billion civil and criminal settlement with Abbott Laboratories. The second largest recovery ever from a pharmaceutical company, this settlement resolves false claims made by Abbott Laboratories to Medicaid and other federal healthcare programs. The second settlement, a $100 million civil consumer protection settlement, is the largest consumer protection settlement ever reached with a pharmaceutical company.

As a result of the settlements, Abbott Laboratories will be restricted from marketing the drug for off-label uses not approved by the U.S. Food and Drug Administration.

“This company put people in harm’s way through the deceptive off-label uses of its drug,” Attorney General Harris said. “Californians should be able to trust the companies that produce pharmaceuticals and the magnitude of this settlement shows the seriousness of the offenses.”

As part of the $1.5 billion settlement, Abbott Laboratories will pay the states and the federal government $800 million in civil damages and penalties to compensate Medicaid, Medicare, and various federal healthcare programs for harm suffered as a result of its conduct. The California gross share recovery is $52 million plus 2.5 percent annual interest, which will be split among various parties, including the U.S. Department of Health Care Services, the whistleblowers the California Department of Health Care Services and the California False Claims Act Trust.

Abbott Laboratories also pled guilty this morning to a violation of the Food, Drug, and Cosmetic Act (FDCA) and agreed to pay $700 million in criminal fines. Further as a condition of the settlement, Abbott Laboratories will enter into a Corporate Integrity Agreement with the United States Department of Health and Human Services, Office of the Inspector General.

“We are pleased that this settlement retrieves scarce Med-Cal funds that should be used for the care of vulnerable Californians,” said California Department of Health Care Services Director Toby Douglas. “Protecting the fiscal integrity of Medi-Cal remains a top priority for this department.”

The $1.5 billion settlement includes 49 states and the District of Columbia and is based on four qui tam cases filed under federal and California false claims statutes. A team appointed by the National Association of Medicaid Fraud Control Units participated in the investigation and conducted the settlement negotiations with Abbott on behalf of the participating states. Team members from the Attorney General Harris’ Bureau of Medi-Cal Fraud and Elder Abuse include Investigative Auditor Martha Valdez, Special Agent Supervisor Cynthia Bentley and Deputy Attorneys General Matt Kilman and Carlotta Hivoral.

The second settlement announced today included 44 other states and the District of Columbia. The $100 million consumer protection settlement included $6.7 million for California, the largest share of any state.

In the complaint filed today with the settlement agreement, the states alleged that Abbott engaged in unfair and deceptive practices when it marketed Depakote for off-label uses. Depakote is approved for treatment of seizure disorders, mania associated with bipolar disorder and prophylaxis of migraines, but the attorneys general alleged Abbott marketed the drug for treating unapproved uses, including schizophrenia, agitated dementia and autism.

As a result of the states’ investigation, Abbott has agreed to significantly change how it markets Depakote and to cease promoting off-label uses.

Under the consumer protection settlement, Abbott Laboratories is:
-Prohibited from making false or misleading claims about Depakote
-Prohibited from promoting Depakote for off-label uses
-Required to ensure financial incentives on sales do not promote off-label uses of Depakote

In addition, for a five-year period Abbott must:
-Limit responses to requests by physicians for non-promotional information about off-label uses of Depakote
-Limit dissemination of reprints of clinical studies relating to off-label uses of Depakote
-Limit use of grants and continued medical education
-Disclose payments to physicians
-Register and disclose clinical trials

Joining California in the consumer protection settlement are the Attorneys General of the District of Columbia and the following states: Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia and Wisconsin.

SAN FRANCISCO – California Attorney General Kamala D. Harris today announced a settlement with Arbitron Inc., the nation’s dominant provider of radio audience ratings, over allegations that the method it used to collect ratings information discriminated against radio stations with predominantly African-American and Latino audiences. The settlement is the result of a consumer protection lawsuit filed jointly by the State of California and the cities of Los Angeles and San Francisco.

Attorney General Harris, Los Angeles City Attorney Carmen A. Trutanich and San Francisco City Attorney Dennis Herrera alleged that Arbitron Inc.’s implementation of “Portable People Meters” (PPM) to measure radio station listenership in California beginning in 2008 violated the state’s Unfair Competition Law, False Advertising Law and Unruh Civil Rights Act by dramatically undercounting minority audiences, causing sharp declines in advertising rates and revenue for many broadcasters.

“This settlement ensures that California’s diverse audiences will be fully counted by Arbitron’s ratings systems and that broadcasters serving these communities will have the opportunity to compete fairly in the marketplace,” said Attorney General Harris. “I am pleased that Arbitron will be revising its practices in the state and thank my partners in this effort, City Attorneys Carmen Trutanich and Dennis Herrera.”

Arbitron’s ratings are based on information provided by sample groups of listeners. In deploying a new system that relied on electronic metering devices in place of personal listenership diaries, Arbitron’s listener recruitment methodology failed to reflect the diversity of broadcast audiences in California markets, according to the complaint filed in San Francisco Superior Court.

The settlement mandates that Arbitron meet concrete metrics in its efforts to ensure that its audience sampling methods are fair and representative of California’s diverse media markets. Specifically, Arbitron will improve its sample-audience recruitment by increasing address-based outreach to 65 percent of its total recruitment activity by December 31, 2012. Previously, recruitment was conducted primarily via land-line telephone, a survey method that failed to adequately include minority households. Arbitron will also take all reasonable steps to increase minority participation in their sample audience panels in five California major media markets. Additionally, Arbitron will begin incorporating country of origin as a standard demographic characteristic collected from participating Hispanic households—an additional benefit to Spanish-language media outlets. The Columbia, Md.-based media research firm also has agreed to pay a total of $400,000 to the plaintiffs: $150,000 each to the State of California and City of Los Angeles and $100,000 to the City and County of San Francisco.

Radio stations serving primarily African American and Latino audiences were disproportionately affected by the sample audience recruitment methods Arbitron began using with its switch to the PPM ratings scheme in 2008. Of the 18 stations serving minority audiences in Los Angeles, 16 experienced ratings decreases in excess of 30 percent under the initial PPM system. Three of these fell by over 70 percent. One Los Angeles radio station whose audience is mostly African-American, was rated 0.0 for a significant portion of the day immediately after implementation of the new PPM ratings. One Spanish- language radio station that had previously enjoyed a number one ranking in the Los Angeles market saw its ratings plummet by more than 50 percent under Arbitron’s PPM ratings for September 2008.

Arbitron’s PPM methodology was criticized by minority broadcasters and the Media Ratings Council, the independent industry body that accredits media ratings systems, which has found problems with minority representation in Arbitron’s sample audiences in the past.

“Through this settlement, Arbitron has agreed to take important steps to ensure that minority radio stations are reasonably treated in order that they may fairly compete in the California marketplace,” said Los Angeles City Attorney Carmen A. Trutanich. “In a city as diverse as Los Angeles, it is important that all of our residents and our businesses be equally represented and able to compete in our field of commerce. Only then will all Californians have a voice.”

“Assuring the integrity of broadcast rating methodologies is essential to protect media outlets that serve California’s diverse communities,” said San Francisco City Attorney Dennis Herrera. “These measures set all-important ad rates and revenue, and largely determine the success or failure of media outlets in a competitive industry. I’m grateful for the hard work and expertise of my co-counsel in this case, Attorney General Kamala D. Harris and L.A. City Attorney Carmen Trutanich. I am also appreciative to Arbitron and its legal team for their cooperative approach and willingness to negotiate with us in good faith.”

The case is the People of the State of California v. Arbitron, Inc., San Francisco Superior Court.

A copy of the settlement is attached to the online version of this release at www.oag.ca.gov.