Reminder: CA and IL Allow Insurance Fraud Whistleblowers

The majority of work we do for whistleblowers reporting health care fraud involves cases of fraud against the US Government’s Medicare and Medicaid programs under the False Claims Act. However, a recent press release from an attorney settling a case in California reminds us that there are two states which allow private citizens to bring claims of insurance fraud on behalf of the state’s citizens: California and Illinois.

These laws allow an interested person or insurer to pursue a qui tam action on behalf of insurance policyholders in California and Illinois when they have been defrauded. By passing the laws, the states hoped to fight the fraud that translates into increased costs to insurance premiums.

California

The California Insurance Fraud Prevention Act (IFPA) allows a whistleblower to file a civil case against anyone committing insurance fraud, including a private insurer. The law works similar to the federal and state False Claims Acts except it does not require the government to lose money as a result of the harm. Instead, the individual is suing on behalf of the State of California and the policyholders in the state who have suffered harm as a result of the insurance fraud.

If California intervenes in the case, the whistleblower is entitled to between 30 and 40 percent of the recovery. If the government declines to intervene, the whistleblower is entitled to 40 to 50 percent of the amount recovered in the lawsuit. In the event that the relator’s case is primarily based on publicly available materials, the maximum percentage for an award is 10%.

The law was passed in 1993 and became a model for the bill later passed by Illinois.

Illinois

Illinois’ law, the Illinois Claims Fraud Prevention Act (ICFPA), allows a private citizen to file a lawsuit on behalf of private insurance companies and the state government. The law contains provisions against both kickbacks and insurance fraud. The kickback provision prohibits offering or paying remuneration to obtain services or benefits under an insurance contract. The insurance fraud provision prohibits false claims against an insurance company or self-insured entity. The law provides for a statutory penalty of between $5000 and $10,000 per false claim, up to treble damages and attorneys’ fees and costs.

It is a lucrative law for whistleblowers. If the state intervenes and prosecutes the case, the individual receives a minimum of 30%. If the individual prosecutes it on behalf of the state, the minimum award is 40% of the proceeds from the case. There is no maximum on the amount If the lawsuit relies primarily on information from a public disclosure, the reward is capped at 10% of the proceeds.

The bill was signed into law in 2001 by then Governor George Ryan, with the Illinois Department of Insurance sponsored the legislation. State Senator Patrick O’Malley sponsored the legislation, hoping that it could protect the state’s citizens from higher insurance rates due to millions of dollars lost each year to insurance fraud.

Our Whistleblower Law Practice

Our whistleblower attorneys have helped numerous employees and ex-employees report misconduct by their employer under the nation’s whistleblower laws.  Attorneys at McEldrew Young have assisted the United States with the recovery of billions of dollars lost due to fraud.  If you have any questions about bringing a claim of insurance fraud through these laws, please give us a call.  We’re here to help you and we will respect your confidentiality to the utmost at all stages of the process.