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Legal News Report 7-31-15
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Lawsuit Accuses CVS of Overcharging for Generic Drugs
Jul 30, 2015 | NBC
By Associated Press
At issue in the lawsuit is CVS's "Health Savings Pass" program, which offers discounts to customers who do not have insurance or choose not to use insurance on hundreds of generic prescription drugs, including generic versions of the antibiotic Penicillin and the antidepressant Prozac, according to the suit. -
Fines and litigation costs at Deutsche Bank are 'unacceptably high
Jul 30, 2015 | Business Insider
By Ben Moshinsky
Litigation costs weighed heavily on Deutsche Bank profits this quarter. -
Man Takes on Uber in Possible Class Action Lawsuit
Jul 30, 2015 | NBC Los Angeles
By Jessica Rice and John Cádiz Klemack
A Southern California man has filed a lawsuit against Uber for the ride-sharing app's price claims and regulation of free ride vouchers, which he hopes to make a class-action lawsuit. -
RBS £153m first-half loss after more litigation costs
Jul 30, 2015 | BBC
Royal Bank of Scotland has reported a half-year loss after setting aside more money for repaying customers and potential legal settlements.
Legal News
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Lawsuit Accuses CVS of Overcharging for Generic Drugs
Jul 30, 2015 | NBC
By Associated Press
CVS Health Corp. deliberately overcharged some pharmacy customers for generic drugs by submitting claims to their insurance companies at inflated prices, according to a lawsuit filed Thursday in federal court in San Francisco.
The suit says those inflated prices led to higher co-pays for customers that exceeded what they would have paid for the drugs if they had no insurance and participated in a CVS discount program.
"We've seen people who pay $20 for a 30-day supply as their copayments on a drug that was $11.99 for a 90-day supply had they been in the (discount program)," said Kristen Broz, an attorney with Hausfeld, the firm that filed the suit.
The lawsuit seeks class-action status, a court order prohibiting CVS from engaging in the behavior, and unspecified damages.
Broz estimated that hundreds of thousands of people may have been affected since 2008.
CVS Health spokesman Michael DeAngelis said the Rhode Island-based company had not been served with the lawsuit, so it couldn't comment on it. He said co-pays are determined by a patient's prescription coverage plan and added that a similar suit in Massachusetts was dismissed.
At issue in the lawsuit is CVS's "Health Savings Pass" program, which offers discounts to customers who do not have insurance or choose not to use insurance on hundreds of generic prescription drugs, including generic versions of the antibiotic Penicillin and the antidepressant Prozac, according to the suit.
Instead of presenting insurance companies with that discounted price, CVS reported the higher price that a normal retail customer not in the Health Savings Pass would pay, the lawsuit alleges.
Customers were then charged co-pays according to those higher prices.
"Not only was the HSP program a means by which CVS could maintain and increase its market share by fending off discounted prices from its competitors, but importantly, CVS also intended that the HSP program would serve as a mechanism to hide CVS's true usual and customary prices from third-party payors," the lawsuit says.
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Fines and litigation costs at Deutsche Bank are 'unacceptably high
Jul 30, 2015 | Business Insider
By Ben Moshinsky
Litigation costs weighed heavily on Deutsche Bank profits this quarter.
The lender balanced out a 17% revenue rise with a hike in legal expenses to €1.2 billion from €757 million last year.
John Cryan, the brand new CEO who took over at the start of the month, made a damning assessment in a statement, calling costs "unacceptably high."
“Solid revenue growth underscores the fundamental strengths of our businesses and the commitment of our people. However, our challenges are also evident in the unacceptably high level of our costs, our continuing burden of heavy litigation charges, a balance sheet that must be more efficient, and the poor overall returns to our shareholders.”
Here are the main points:Profit before income taxes was €1.2 billion in the second quarter, compared with €917 million last year.
Group net revenues were €9.2 billion, an increase of €.3 billion, or 17%. Around €570 million of the revenue growth was down to "favorable foreign exchange movements."Provision for credit losses was €151 million, a decrease of €98 million, or 39%, compared with last year.Cryan, who took over when previous CEO Anshu Jain was ousted earlier this year, hinted he'd make big changes inside the bank.
"We must be disciplined in how, where and with whom we do business. We must critically review any countries, business lines, products, and relationships that are unattractive. We must shrink our balance sheet, focusing on our many low-return assets."
And there may be bad news for middle managers coming down the line:
"We must reduce organizational complexity, which inhibits effective decision making, blurs accountability and embeds wasteful cost."
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Man Takes on Uber in Possible Class Action Lawsuit
Jul 30, 2015 | NBC Los Angeles
By Jessica Rice and John Cádiz Klemack
A Southern California man has filed a lawsuit against Uber for the ride-sharing app's price claims and regulation of free ride vouchers, which he hopes to make a class-action lawsuit.
Sennett Devermont is the creator of Mr. Checkpoint, an app that notifies its users of DUI checkpoint locations. He said he has taken nearly 500 rides with Uber in the last two years, and regularly recommends the service through his app to encourage drunken drivers to get home safely.
"I personally use Uber every day. I think it's a good service that can benefit people," Devermont said. "They just need to not mislead people and do what they promise."
Devermont doesn't believe Uber's claim on their website that UBERx rides are cheaper than they would be in a taxicab. He has filed a lawsuit against the company that he and his attorney Michael Cohen hope will become a class-action lawsuit.
The Uber Android app reads, "It's easier than a taxi and often cheaper!" while the iPhone app doesn't mention the price difference. Yet, Uber's website describes UBERx as, "Better, faster, and cheaper than a taxi."
"If they tell me it's going to be cheaper than a cab, that is what needs to occur," Devermont said.
Devermont has also found issue with the "free ride" vouchers granted for referring a new Uber user to the app, because he claims the app failed to notify users that the voucher expired in three months.
Uber allegedly only notified the user that the voucher, for up to $20 toward a free Uber ride, could not be used for Uber Taxi, he said.
"Lots of people tell their friends about Uber and share with their family for the free rides," Devermont said. "I don't think they know the rides expire."
Devermont said he used to stock up on vouchers from his referrals because the emails containing his vouchers said nothing about an expiration date. But the emails he gets now include that the vouchers expire, he added.
"If they say they're giving me a credit for getting a user, let me keep that credit," Devermont added. "If you're saying I'm going to get home cheaper than a cab, make sure I'm getting home cheaper than a cab."
Devermont's attorney said their goal is to return money to other people who feel they have been cheated in a way similar to Devermont.
"But ultimately the court will have to decide if it can be a class action," Cohen said.
Until then, they are hoping more people will come forward so they can gather evidence toward the lawsuit. Whether or not it can be a class-action lawsuit will likely be decided on by the Los Angeles Superior Court in the next few months.
"We've already had people come forward saying they've had the same experience as Mr. Devermont. And we'd like to have more," Cohen said.
Uber officials said they don't comment on pending litigation.
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RBS £153m first-half loss after more litigation costs
Jul 30, 2015 | BBC
Royal Bank of Scotland has reported a half-year loss after setting aside more money for repaying customers and potential legal settlements.
The £153m loss for the six months to the end of June compares with a £1.43bn profit a year ago.
Restructuring costs almost tripled to £1.5bn amid efforts by chief executive Ross McEwan to cut staff and refocus the bank on the UK.
The lender set aside £1.3bn for lawsuits and customer recompense.
Another £459m was earmarked mainly for litigation costs in the second quarter. Most of those are likely to arise from sales of mortgage-backed securities in the US, said the bank.
In May, RBS and Japanese bank Nomura were ordered to pay $806m between them for making false statements when selling the mortgage-backed bonds to US agencies Fannie Mae and Freddie Mac.'Lot of noise'
The bank's net profit rose to £293m for the three months to the end of June.
"There's a lot of noise," Mr McEwan told BBC Radio 4's Today programme, referring to fines and probable lawsuits, "but underneath is a very strong bank."
"These things are very distracting," he said, "so we need to face into these and put our energies into creating a better bank here in the UK."
Mr McEwan later added: "We are having to deal with a lot of issues from the past. My strategy has been to deal with those things as quickly as possible and to restructure this bank."
RBS was one of six banks fined a total of about £2.8bn for failing to stop traders trying to manipulate currency markets last year.
RBS has already paid £399m in fines to US and UK regulators over the forex scandal.Costs fall
The bank's capital strength improved after selling a stake in US lender Citizens.
Costs for the bank have fallen, which finance director Ewen Stevenson attributed to smaller staff costs and "getting out of expensive real estate" on a conference call with journalists.
Shares in RBS rose 0.8%, or 2.8p, to 356p in afternoon trading in London, making it worth £41bn. The stock is largely unchanged compared with the same time last year.
Mr McEwan said investors saw the long-term value of the bank improving: "My job is to create a really good bank … it's a great business - we have some of the leading franchises in retail banking and small business."
Analysts at IG said Mr McEwan was "ramping up the rate of restructuring to try and whip the bank into shape as fast as he can". They added: "Even though it will be a number of years before the bank will return cash to shareholders, the firm is moving in the right direction."
The government remains the biggest shareholder in RBS and Chancellor George Osborne wants to start selling shares in the bank by the end of the year. The first sales could come as soon as September.
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