California Insurance Fraud Prevention Act

Insurance fraud costs the industry billions of dollars every year and drives up the costs for consumers. Fraud can be perpetrated many ways, but often occurs when a pharmaceutical manufacturer makes a payment or provides services to induce a health care professional to dispense a drug to a patient.

Detecting insurance fraud can be difficult. However, a unique provision under the California Insurance Code encourages individuals to come forward and file lawsuits against anyone who commits insurance fraud in the state.

What is the California Insurance Fraud Prevention Act?

The California Insurance Fraud Prevention Act (CIFPA) Section 1871.7 was passed into law by the California legislature to assist in the fight against fraud committed against insurers. The CIFPA encourages whistleblowers who have information about fraud being committed against insurance companies to come forward and file a lawsuit against the individuals or companies committing the fraud. The whistleblower is rewarded by the state by receiving a portion of the money recovered.

Fraud committed against healthcare, automotive, and worker’s compensation insurance are typically the focus of the CIFPA. Examples include:

  • Overbilling or false billing of health insurance companies by medical providers
  • Auto repair shops billing auto insurance companies for services or parts not provided or installed
  • Submitting multiple insurance claims for the same service or parts
  • Providing kickbacks in order to recruit patients or clients or to obtain services or benefits

IFPA and Reckitt Benckiser Group

In 2019, a former sales representative for Reckitt Benckiser Group (RB Group) represented by Baron & Budd was one of several whistleblowers who came forward with information about how the company was committing insurance fraud. RB Group, a company headquartered in England, marketed and sold the drug Suboxone in the United States, including California. Suboxone is a medication which was marketed by the company as a treatment for opioid withdrawal symptoms.

According to information provided by the whistleblowers in the settlement, RB Group had provided physicians a wide array of free services “to induce physicians to obtain, refer, and treat patients with Suboxone.” RB Group recently settled the lawsuit for $11 million and the whistleblowers were awarded a 40 percent share of the recovery.

Attorneys from the California Department of Insurance, Baron & Budd, and several other law firms all worked together on this particular IFPA case in a perfect example of a public/private partnership between the government and counsel for private whistleblowers.  This public/private partnership is exactly what was envisioned by the California law.

If you work in the healthcare industry or know of any California health insurers who have been defrauded, you can help combat insurance fraud and may be entitled to a portion of the funds recovered.

Contact Baron & Budd

The experienced qui tam attorneys at Baron & Budd will help you in the fight to combat insurance fraud. If you feel you have evidence of fraud against insurance providers, please call us at (866) 401-5971. You can also complete an online form on our website www.becomeawhistleblower.com. We can answer your questions and explain what to expect as we help you navigate this process.

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