The federal False Claims Act (FCA) and its state counterparts are some of the government’s most important tools in fighting fraud in the healthcare system. However, those statutes only incentivize whistleblowers to report fraud affecting government healthcare programs (for example, Medicare and Medicaid). By contrast, California has a unique law that permits whistleblowers to report healthcare fraud that affects private insurers—and those whistleblowers can receive up to 50% of any recovery.

The California Insurance Frauds Prevention Act (CIFPA) was initially designed to combat insurance fraud outside of the healthcare system. However, in a pioneering use of the statute, Baron & Budd attorneys successfully argued that its terms should extend further. This led to a $22.75 million settlement with Warner Chilcott in 2015—the first successful settlement under CIFPA involving fraud by a pharmaceutical manufacturer against private health plans. Through negotiations by Baron & Budd attorneys, the whistleblower received 49% of the recovery.

Baron & Budd continues to work side by side with the California Department of Insurance on several cases a year, helping to return tens of millions of dollars to California residents.

CIFPA vs. the Federal FCA

Although they are worded very differently, CIFPA and the federal FCA essentially do the same thing: they prohibit people and companies from making false statements when making claims for payment to private health insurers, in the case of CIFPA, and government healthcare programs, in the case of the FCA. However, the statutes have several key differences that sometimes make CIFPA an even stronger tool in the fight against fraud. For example, whereas the FCA provides successful whistleblowers 15%-30% of a successful recovery, depending on the circumstances, CIFPA sets a minimum share of 30% and a maximum share of 50%.

The following chart demonstrates some key differences between the two statutes:

 

CIFPA

FCA

Whistleblower share

30%-50%

15%-30%

Available for private insurance?

Yes

No

Available for government healthcare programs?

No

Yes

Statute of limitations

Up to 8 years

Up to 10 years

Protection from retaliation?

Yes

Yes

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Types of Fraud Covered by CIFPA

Healthcare fraud comes in many forms, and fraudsters continue to find new ways to cheat taxpayers out of their money. However, the following types of fraud are particularly common:

  • Kickbacks: It is illegal to provide anything of value in order to induce or reward the referral of business reimbursable by health insurance plans. This means it’s unlawful to give someone money, gifts, free meals, or anything else of value to try to convince that person to prescribe a drug, order a diagnostic test, refer patients to a particular facility, or do anything else that would result in health insurance plans paying money.
  • Medical Necessity: Health insurance plans will reimburse for goods and services only if they are medically necessary. Although it can be difficult to prove a treatment was not medically necessary, potential whistleblowers should be on the lookout for obvious signs of fraud, such as treating a patient who does not meet objective diagnostic criteria, or altering medical records to justify the provision of medical treatment.
  • Off-Label Marketing: Pharmaceutical companies are allowed to market drugs only for uses that have been approved by the FDA. These companies commit fraud when they convince healthcare providers to prescribe drugs “off-label,” for uses not approved by the FDA. This type of fraud is of particular interest to the government where the off-label use poses a danger to the patient.
  • Upcoding: Every procedure performed by a medical professional is assigned a code that is used to bill health insurance providers. Sometimes, these professionals intentionally submit the wrong codes with their claims for reimbursement, seeking a higher amount than they are entitled to.

Who Commits Fraud Covered by CIFPA

Nearly every participant in the healthcare industry has the opportunity to commit fraud, including:

  • Doctors and hospitals that bill health insurance companies for services tainted by kickbacks, services that are not provided, or services that are not medically necessary
  • Healthcare providers that use faulty Electronic Health Record (EHR) software to increase their reimbursements from health insurance companies, or pharmaceutical companies that pay kickbacks to EHR companies to promote certain drugs through their software
  • Hospices and Skilled Nursing Facilities that engage in upcoding or bill for services that are not provided
  • Pharmaceutical companies that engage in off-label marketing, often accompanied by kickbacks to doctors and nurses
  • Laboratories and testing facilities that bill health insurance companies for services tainted by kickbacks or that were not medically necessary

Identifying Fraud Covered by CIFPA

Whistleblowers are essential in identifying, reporting, and stopping fraud affecting California health insurance companies. Whistleblowers are typically employees (or former employees) of a pharmaceutical or healthcare company, with inside information about fraud being committed.

For example, a pharmaceutical sales representative might have information about her company’s off-label promotion of its drugs and payment of kickbacks to physicians. A laboratory technician might learn that his company is performing diagnostic tests that aren’t medically necessary. A healthcare provider might be offered a kickback to prescribe a certain drug, or might learn that her colleagues have been offered kickbacks.

Sometimes, successful whistleblowers don’t have this type of inside information, but they still have reliable knowledge that a company or individual is engaging in fraud.

When there is a fraudulent scheme affecting California health insurance companies, it usually involves government healthcare plans too. Baron & Budd frequently files whistleblower complaints that allege fraud both under CIFPA and under the federal and state False Claims Acts.

Our Team

With over 30 years of experience, the attorneys on Baron & Budd’s whistleblower representation team have represented dozens of clients in government fraud cases returning over $5.4 billion to federal and state agencies, with whistleblower recovery shares as high as 49%. They are ready to help if you have evidence of fraud against private health insurance companies in California.

Please call (866) 401-5971 or complete our contact form if you would like more information. For more information, see What You Need to Know About Becoming a Whistleblower.  Please understand that contacting us does not mean that you have established an attorney-client relationship with Baron & Budd, P.C.