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Understanding State Insurance Fraud Prevention Acts

Only two states, California and Illinois, have insurance fraud prevention acts modeled after the Federal False Claims Act that also allows private insurers to recover stolen funds.

Insurance Fraud Versus Government Fraud

Both the California Insurance Frauds Prevention Act, Ins. Code §§ 1871 et seq., and the Illinois Claims Fraud Prevention Act, 740 ILCS 92/1 et seq., allow whistleblowers to fight insurance fraud by bringing qui tam cases against any person or company that defrauds private insurance companies. Rather than litigating on behalf of fellow taxpayers, the whistleblower is suing on behalf of fellow policyholders.

Both statutes operate much like the Federal False Claims Act. The laws require that the cases are initially under seal to allow the government an opportunity to investigate. Like its federal and state counterparts, the insurance fraud prevention acts make it illegal to present false or fraudulent claims to insurers for payment knowingly. Also, the laws forbid people and companies from paying incentives or kickbacks in exchange for obtaining insurance benefits.

The wrongdoer can be subject to a sizeable statutory fine per violation in addition to damages of three times the amount of money the fraud costs its victims.

Whistleblower Rewards

The California and Illinois Acts provide even more significant whistleblower rewards than most False Claims Act laws. These laws offer whistleblowers at least 30% of the recovery in intervened cases and 40% in declined cases.

Even if the court ultimately determines that the whistleblower’s case is based primarily on publicly available information, the whistleblower can still receive up to 10% of the government’s recovery.

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Also, both acts provide strong whistleblower retaliation provisions that allow a whistleblower to be made whole, including reinstatement and backpay, should he or she be demoted, harassed, or otherwise retaliated against for bringing a whistleblower case under the Act.

If you believe you have a case, you should act fast regardless of whether the California or Illinois law governs you. Both require that you bring the case within three years of discovering the fraud, but no more than eight years after the fraud itself took place. Also, you have to consider that only the whistleblower who files first may receive an award.

Types Of Insurance Fraud

Examples of insurance fraud covered by the acts include:

  • Billing health insurance companies for services not performed
  • Billing health insurance companies for a treatment performed by a person that is not licensed
  • Submitting multiple insurance claims to health insurance companies for the same service rendered
  • Employing “runners, steerers or cappers” to recruit patients or clients
  • Paying cash inducements or other kickbacks to obtain health insurance benefits

Our experienced whistleblower attorneys can help you determine if there is a violation of the California and Illinois laws, guide you through blowing the whistle in a manner calculated to protect your career, and fight for your rights if your employer retaliates. Call us at 844-277-1217 for a consultation. You can also contact us online.

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