Former Minnesota Attorney General Lori Swanson’s office handled over 5,000 cases per year during her tenure in office. The purpose of this website is to highlight approximately 50 cases handled by former Attorney General Lori Swanson that helped to shape and develop the law, not just in Minnesota but throughout the nation. We hope that this website is a useful resource to advocates throughout the country.
A laptop containing data on over 23,000 patients of Fairview Health Services and North Memorial Health Care was stolen from the car of an employee of Accretive Health, a hospital revenue management company. Accretive was engaged in debt collection from hospital patients. Lori Swanson filed a lawsuit against Accretive alleging violations of state and federal health privacy laws. The lawsuit alleged that Accretive failed to prevent, detect, contain and correct the theft of laptops that contained protected health information (PHI); failed to encrypt PHI on laptops; allowed employees to take laptops with PHI out of health care facilities; failed to limit access to PHI only to individuals who needed access to such information; failed to prevent employees from downloading PHI onto laptop computers and/or storage media without adequate safeguards and procedures; and failed to implement a business associate agreement as required by HIPAA.
National Arbitration Forum (NAF) in 2009 was the largest U.S. arbitrator of consumer credit disputes. NAF represented to consumers that it was an independent arbitration company. Swanson sued NAF because, unbeknownst to consumers and debtors, it has financial ties through common control over Axiant, the largest collection agency in the country, and Mann Bracken, one of the largest collection law firms in the country. The matter was settled when NAF agreed to cease any further involvement in consumer arbitrations. Swanson’s work was recognized with the “Champion of Justice” award by the National Consumer Law Center.
The case was highly contentious, with over five law firms from Minnesota, Washington D.C., Chicago and Houston engaged in the litigation. The litigation took almost eight years and involved the production of over 27 million pages of documents, 2,600 court filings, over 100 witness depositions, and over 100 judicial hearings.
On the morning of trial, the parties settled the matter with 3M agreeing to pay $850 million, with the money to be used to create clean drinking water in the east metropolitan area. The lawsuit represents the largest environmental recovery in Minnesota history and the third largest environmental recovery in the history of the United States.
THE CHALLENGE TO DACA
In September of 2017 President Trump suspended the entire DACA program, telling DACA recipients that their exemptions will not be renewed. This suspension took the form of a memorandum issued by his Homeland Security Secretary rescinding the earlier Napolitano memorandum that created the program. In that month, two lawsuits challenging the President’s authority to unilaterally rescind the DACA program were filed. In federal court in New York, 16 Attorneys General filed a lawsuit to enjoin the Trump order. In federal court in the Northern District of California, four Attorneys General, including Attorney General Swanson, filed a similar lawsuit. On January 9, 2018, the federal district court in California temporarily blocked the rescission of the DACA program, finding that the Department of Homeland Security provided no basis to conclude that the Napolitano memo was unlawful, and further ordering the government to renew DACA applications. On January 13, 2018, the federal government stated that it would immediately resume the approval of DACA renewal applications. On February 26, 2018, the U.S. Supreme Court declined to hear the Trump administration's request for it to review the lower court order that the administration must continue to accept DACA applications. On April 24, 2018 the D.C. District Court Judge ruled that the Homeland Security Memorandum issued by Trump did not justify its finding that the Napolitano Order was unlawful. Thereafter, the U.S. Supreme Court referred the matter back to the Ninth Circuit Court of Appeals. The effect of this ruling was to delay any change in the DACA program until at least October 2018.
Strategic Litigation. Swanson learned as a young lawyer from breast cancer litigation in the 1990s that the executives of large companies (be they insurance companies or Fortune 500 companies that were self-insured) didn’t care about the cost effectiveness of treatment. They were willing to spend substantially more money on a defense lawyer to deny a claim even if it exceeded the cost of the treatment. The rationale was always the Same: if they paid for the new treatment, the floodgates would open and there would be a cascade of claims. It was far easier for the executives to ignore new treatments that were effective.
It is important for a lawsuit to have a public “face.” The only “face” for the issue of children’s’ mental illness were the families who were in such despair. Five families agreed to do participate in the litigation, but only if their identities were kept from the public. This did not make for an easy lawsuit.
Swanson sued BCBSM on October 3, 2000.
The Minnesota School of Business and Globe University are for-profit corporations providing postsecondary education services and private student loans in Minnesota. The schools misled prospective students into believing their two-year and four-year criminal-justice programs provided the means to become police officers in Minnesota, and that enrolling in the two-year criminal-justice program would lead to a job as a Minnesota probation officer. The cost of the schools’ criminal justice program ranged from $39,150 to $78,300. As a result of the schools’ misrepresentations, many students were saddled with large amounts of student loan debt and no jobs as police or probation officers.
Payday Loans never die, and they never lose interest.
A “payday loan” is a short-term loan for a small amount, typically $500 or less, that is typically due on your next payday, along with fees. Payday loans may go by different names — cash advance loans, deferred deposit loans, check advance loans or postdated check loans — but they typically work the same way.
These loans may be marketed as a way to bridge the gap between paychecks or to help with an unexpected expense, but the federal Consumer Financial Protection Bureau says that payday loans often become “debt traps.” https://www.consumerfinance.gov/ask-cfpb/category-payday-loans//. This is because many borrowers can’t afford the loan and the fees, so they end up repeatedly “rolling over” or refinancing the debt until they end up paying much more in fees than the amount they borrowed.
Many retired people and disabled military veterans, strapped for cash, will sell part or all of their pensions to pay monthly bills. The companies that hustle these transactions advertise “cash advances” in exchange for a portion of their pension. Some companies argue that they are simply buying the future income of pensioners, a transaction not regulated by state law. In fact, these are loans which are secured by the pension and involve extremely high interest rates.
The transactions, known as “pension advances,” may charge annual percentage rates (“APR”) of 200 percent or more and extend for as long as 10 years.
Several veterans and pensioners complained to Lori Swanson about the activity. One veteran signed an agreement to receive a onetime payment of $1,500. In exchange, the veteran assigned $18,000 in pension benefits payable over the next five years. This worked out to an annual interest rate (“APR”) of 200%. Another veteran signed an agreement to receive $3,000; in turn, he assigned $30,000 of pension benefits payable over the next five years at an APR of 200%.
Under Minnesota law, companies that make loans generally must be licensed. Lenders are also capped in the interest they may charge.
This case is the only one of the cases on this website that involved a pre-litigation settlement. The resolution of this case occurred when Lori Swanson was Deputy Attorney General in charge of addressing issues involving compliance conduct of Minnesota hospitals.
In May of 2015, Swanson filed a lawsuit against Savers, pointing out that the donations directed by donors to a particular charity had no relationship to the revenue received by the particular charity. As important, Swanson pointed out that a one-pound suit would sell for $100 in a Savers store and the company may only make a 50-cent donation to the affiliated non-profit. As to household goods, Swanson’s lawsuit said no money was paid to the charities, even though donors were led to believe their donations of household goods would benefit the charities. The company could sell a $200 television set and keep all the money.
Swanson described the business model as a triple schme: "The donor donates clothing thinking it's going to a community nonprofit at a community neighborhood donation center. But only a sliver ... goes to the nonprofit and the rest is pocketed by the for-profit fundraising company and its executives," Swanson said as she announced the suit. She also said that Savers doesn't give proceeds to the charities it identifies at collection points and doesn't forward proceeds for donations that aren't clothing.
In 2017, Swanson again encountered a barrage of consumer complaints, this time with Century Link. In May of 2017, Swanson filed a lawsuit, pointing to experiences where the customer was given one quote for a base monthly fee but then charged up to double the amount when the bill arrived. In discovery, Swanson found records quoting CenturyLink’s own employees who claimed they received many complaints and less than one in five customers were given an accurate quote. In October of 2017 CenturyLink agreed to a consent order regarding future price quotes. As to refunds, the litigation remained pending at the time Swanson left office.
The “suitability rule” is commonly used in the securities industry but less so in the insurance industry. The “suitability rule” is pretty simple: an agent should not sell investment products to an investor that are not appropriate for the investor’s age and financial needs. A necessary corollary of the rule is that the agent must use reasonable diligence in deciding that a financial product is suitable for the investor.
Until 2007, the government in Minnesota frequently applied the “suitability rule” to brokers and insurance agents but had never applied the rule to an insurance company which issued annuities. The problem with this was that individual insurance agents had less incentive than an insurer to comply with the rule and to give restitution by the time they were caught.
Swanson observed that because securities brokers knew they were liable for violations of the suitability rule, they were quite motivated to train their agents to comply with the law. In contrast, insurance companies were not being held liable for the suitability violations of their agents, who were “independent contractors.”
This extensive litigation took more than five years to resolve. During this time, Swanson compiled her own inventory of the patients. One study by the State found that 50 randomly sampled patients had an average number of 17 victims. Over 40 percent of committed patients used a weapon in at least one of their offenses. 14 percent were charged or convicted of murder or attempted murder in addition to their sex crimes. Almost 10 percent were sexual sadist and nearly 50 percent were pedophiles. Nearly 2/3 had a high degree of psychopathy.
The essence of this case is whether a guardian should get a court order before removing life sustaining equipment from a ward. Swanson believed that if the due process clause requires a court order before a home is searched, then due process should require a court order before the taking of someone’s life.
The collapse of the I-35W bridge was a tragedy that we should never forget. 13 people were killed, and over 100 people were injured. In the aftermath of the collapse, numerous lawsuits were filed, many of which involved the State government. These lawsuits made substantial changes in public construction law.
A Minnesota Supreme Court decision changed the law as it relates to retroactive application of amendments to the statutes of limitation and retroactive application of indemnity statutes. The court also created new law as it relates to government impairment of contracts.
A second Supreme Court decision established parameters for design-build construction contracts, a bid process authorized by a statute enacted the year of the bridge collapse.
It is important that an Attorney General maintain a reputation of taking cases only based on the law and the impact to the people of her state and not for political purposes. It is noteworthy that most of the Democratic Attorneys General who got involved in the travel ban lawsuit intervened in all three Travel Bans (Travel Ban 1.0, Travel Ban 2.0, and Travel Ban 3.0) and lost. It is noteworthy that the Republican Attorneys General did not try to enforce the law on travel ban 1.0.
Attorney General Swanson is the only Attorney General in the country who called the cases in a manner consistent with the U.S. Supreme Court. She was one of only two Attorneys General on Travel Ban 1.0, and she won. She did not intervene in Travel Ban 2.0 and Travel Ban 3.0, which the federal government won.
Ehlena Fry was born with spastic quadriplegic cerebral palsy, which significantly impairs her motor skills and mobility. Ehlena, originally an orphan in Calcutta, India, was adopted by Stacy and Brent Fry. In 2008, her pediatrician prescribed a service dog for Ehlena, and the community ran a fundraiser so that the Fry family could purchase a service dog. Wonder, the service dog, assisted Ehlena to open doors, turn on lights, pick up dropped items, remove her coat, and help balance while she transferred from her walker onto a chair or the toilet.
The administration of Ezra Eby Elementary School told the Fry family that Wonder could not come to school with Ehlena. Under the Individuals with Disabilities Education Act, schools are obligated to provide children with disabilities an Individualized Education Program (IEP) to provide them free appropriate public education (FAPE). The school district argued that a human aide could provide the necessary help so that Ehlena could get FAPE. The school's decision to prohibit Wonder was upheld in the meeting held in 2010 related to Fry's IEP. The Fry family maintained that the service dog was necessary as a bridge to the child’s independence, and that the right to bring her service dog is covered by the Americans with Disabilities Act (ADA).
Say something interesting about your business here.
In reaction to Citizens United, Minnesota enacted a new law in 2010 to permit corporate independent expenditures. The new law was challenged by James Bopp, Jr., the attorney behind the Citizens United case, as part of a nationwide effort to disrupt state election laws on the eve of the November 2010 election. The plaintiffs MCCL and The Taxpayers League claimed that Minnesota’s disclosure requirements violated their First Amendment free speech rights.
Plaintiffs also claimed that Minnesota’s ban on direct corporate contributions was no longer constitutional.
Swanson’s lawsuit sought to recoup money lost by Minnesota taxpayers as a result of the company’s conduct. Modeled after successful efforts to sue tobacco companies for the harm cigarettes caused, Swanson made it clear at the outset that she wanted and funds recovered from the lawsuit to fund addiction treatment.
Swanson accused the pharmaceutical company of promoting “fake research” which declared that OxyContin had a very low addiction rate. She also criticized Purdue for bankrolling self-serving seminars and for paying physicians to promote the message that Oxycontin was a miracle painkiller with a low addiction rate.
In addition, Swanson was highly critical of Purdue for falsely claiming that the drug worked for 12 hours. She also criticized Purdue for blaming patients rather than the drug itself for their addictions.
The lawsuit was pending at the end of Swanson’s term.
In May of 2018, Swanson filed a lawsuit against Insys Therapeutics, an Arizona manufacturer of fentanyl using the brand name Subsys. In 2012, Subsys was approved by the FDA for one purpose: to treat breakthrough pain in cancer patients who have grown tolerant of other opioid treatment. Because fentanyl is life threatening, the FDA approval was limited: It was not to be used until the prescriber, the patient and dispensing pharmacy were familiar with the medication’s Risk Evaluation and Mitigation Strategy (REMS).
In addition to proposing such legislation, Swanson participated in many multi-state antitrust lawsuits against pharmaceutical manufacturers, resulting in a recovery of over $100 million for the public in Minnesota. Different than other states, Swanson undertook efforts to get the recoveries distributed to the people who purchased the medication.
After the Connecticut matter was filed (see “Girls Night Out), the lawsuit was expanded. In June of 2018 the states filed a lawsuit in Pennsylvania against another dozen manufacturers, including Mylan, Novartis, and Teva, for price fixing involving more than 16 generic drugs. Five of the drugs are used to treat cardiac conditions, and the others treat a variety of medical issues ranging from depression to multiple sclerosis.
The price fixing included conversations and meetings at various industry conferences and association dinners. This case was pending in Pennsylvania federal court at the end of Swanson’s tenure.
Living trust sales are a type of consumer fraud in which con-artists make millions of dollars selling unnecessary trusts. Each year, thousands of consumers lose anywhere from $500 to $5,000 from these schemes. On some occasions, families end up facing potentially greater costs after the senior’s death due to problems associated with the use of a poorly-executed living trust.
From StarTribune on April 13, 2013:
Sunday’s hearing on the proposed Sanford Health/Fairview Health Services merger lasted more than two hours, right up to the point where state Capitol staffers were likely getting anxious about closing the historic building on time.
The tense hearing covered a lot of ground. But Minnesota Attorney General Lori Swanson summed our sentiments perfectly when she said at the hearing’s close that we’ve “barely scratched the surface” when it comes to evaluating the merits of a proposed merger between the South Dakota-based Sanford and the metro’s Fairview hospitals and clinics, which includes the University of Minnesota’s teaching hospital.
News of merger talks surfaced publicly about two weeks ago, when Swanson called for public hearings to weigh the proposed deal.
Swanson deserves credit for putting a spotlight on the under-the-radar talks. One question deserving of a high-profile answer at the next hearing, slated for April 21: When did any of the three key players — Sanford, Fairview, the U — intend to publicly disclose that control of the Twin Cities’ second-largest hospital system was up for grabs?
Fairview’s nonprofit status — its $1.2 billion net worth was nurtured for decades with tax exemptions, charitable donations and volunteerism — means the public is a stakeholder in the proposed transaction.
On Sunday, Sanford executives’ sometimes testy testimony only heightened concerns about the South Dakota organization. They failed to adequately address concerns raised by Swanson’s staff about Sanford’s business ties to its namesake donor’s banking/subprime credit card empire.
Sanford also was not served well by the executives’ evasive answers about their involvement with Sanford subsidiaries and their responses to queries about Minnesotans’ presence on a merged organization’s board.
In addition, Sanford’s paltry one-page response to a previous Swanson request for information about its operations suggested an unflattering disregard for Minnesota authority.
A newly published interview with Sanford CEO Kelby K. Krabbenhoft, which appeared in the Sioux Falls, S.D., Argus Leader, raised further concerns about the loss of Minnesota control over homegrown institution.
Krabbenhoft said it was “likely” he’d be the CEO if the merger went through. He also said he had an obligation to discuss the possible merger with the governors of North and South Dakota, but he neglected to mention Minnesota Gov. Mark Dayton.
Neither Krabbenhoft nor U President Eric Kaler appeared at Sunday’s hearings. They need to be front and center at the next one. Fairview interim CEO Charles Mooty also needs to put in another appearance.
It’s still unclear why Fairview has been without a permanent CEO for almost a year at such a turbulent time in health care. Had one been in place, would this Minnesota institution be a takeover target or would it instead be calling the shots?