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California Insurance Fraud Prevention Act Cases: Fraud on Private Insurance Companies

The California Insurance Fraud Prevention Act or CIFPA allows individuals to report fraud being committed against private insurance companies in California.

The California Insurance Fraud Prevention Act is not a very well utilized statute. To that end, if an individual has filed a qui tam case alleging Medicare and/or Medicaid has been defrauded, the whistleblower’s lawyer should also investigate if private insurance companies in California were defrauded by the same conduct. If private insurance companies are defrauded, the whistleblower might also have a case under the California Insurance Fraud Prevention Act or CIFPA.

 

Settlements of Cases Reporting Private Insurance Company Fraud

The following are some examples of successful qui tam cases brought by individuals seeking to report fraud on private insurance companies. This private insurance company fraud can be reported through the California Insurance Fraud Prevention Act or CIFPA.

People ex rel. Fire Insurance Exchange v. Anapol, 211 Cal. App. 4th 809 (2013). In this private insurance company fraud case, the Fire Insurance Exchange and Mid Century Insurance Company (collectively Farmers) uncovered what it believed to be a massive insurance fraud ring engaged in the submission of false and/or inflated claims for smoke and ash damage arising from several Southern California wildfires. Whistleblowers brought a qui tam action against several members of the alleged ring, including two attorneys, Neil R. Anapol and Robert B. Amidon, who submitted the purportedly false insurance claims on the part of Farmers’s insureds. As against the attorneys, Farmers alleged both the submission of false claims and the use of cappers to obtain insureds willing to pursue such claims.

Private Insurance Company Fraud Large Settlements

State of California ex rel. Rockville Recovery Associates LTD v. Multiplan, Inc. et al. (Superior Court of Ca., Sacramento County). In this case, Sutter Health (20 hospitals) included a false and misleading charge in its surgery bills. Sutter patients or their insurers received three separate charges relating to anesthesia, including a charge by an outside anesthesiologist, a charge for the operating room and a charge under an obscure Code 37x Anesthesia. Sutter often charged thousands of dollars for Code 37x Anesthesia for each operation. Yet the services covered by that code were allegedly already captured in the operating room charge, itself a charge in the thousands of dollars. Sutter charged for anesthesia on a time-based or chronometric basis even when no Sutter employee, only the outside anesthesiologist, was present and overseeing anesthesia. Some hospitals also charged separately for anesthesia gasses using code 25x. Sutter’s contracts with insurers also included a clause alleged to unduly restrict insurers from contesting the bills. The case settled for $46 million. The whistleblower seeking to report fraud on private insurance companies received a reward.

People ex rel. Schirrell Johnson et al. v. Warner Chilcott Sales (California Superior Court) Case No. BC496620-MHS (then United States District Court for the Central District of California, Case No. 2:14-cv-03249- DMG-JC). It was alleged knowingly used illegal inducements to influence physician decisions, including paying kickbacks and falsifying prior authorization forms to increase the number of prescriptions written for several Warner Chilcott medications. Warner Chilcott management funneled kickbacks and inducements to physicians under the guise of physician education, often hosting events with little or no education content at high-end hotels and spas-all in an effort to encourage physicians to increase the number of prescriptions written for Warner Chilcott medications. The case settled for $23.2 million.

Cases That Went To Trial Under the California Insurance Fraud Prevention Act


People ex rel. Monterey Mushrooms, Inc. v. Thompson, 136 Cal. App. 4th 24 (2006). This was a workers-compensation fraud scheme brought by a whistleblower who sought to report fraud on private insurance companies. The whistleblower alleged that defendants had participated in a scheme in which they submitted false claims for workers’ compensation payments for unnecessary and excessive chiropractic treatment from Monterey Mushrooms, Inc. a self- insured employer. The plaintiff recovered a verdict of $500,000 in damages and $1.2 million in penalties.

In People ex rel. Allstate Ins. Co. v. Muhyeldin, 112 Cal. App. 4th 605 (2004), three physicians and their medical clinics for knowingly using improper billing codes to inflate their bills and billing for services that were never performed were charged with fraud. The trial resulted in an $8 milion verdict.

In People of the State of California ex. rel. Allstate et al. v. Daniel H. Dahan and Progressive Diagnosic Imaging, Inc., No. BC-3976954 (Los Angeles Superior Court filed Nov 16, 2012) judgment was entered: awarded $10,000 for each of 487 false personal-injury claims totaling $4.87 million in civil penalties, plus triple the value of those claims (more than $918,000), and attorney fees, costs and expenses totaling more than $1.2 million. It was alleged that defendants recruited untrained and unlicensed individuals to work with the report-writing software to prepare the fraudulent radiology reports. To make it appear that the reports were genuine, Dahan instructed his “technicians” to cut and paste the signatures of board certified radiologists to the reports, all without the knowledge, approval or authorization of the radiologists. The reports and bills were presented to Allstate in support of claims, either directly by Dahan and Progressive Diagnostic Imaging or by plaintiff attorneys in auto accident cases.

Miscellaneous Cases Under the California Insurance Fraud Prevention Act

Contact Us for the Details on these cases where a whistleblower sought to
report fraud on private insurance companies.

People ex rel. Allstate Ins. Co. v. Weitzman, 107 Cal. App.4th 534 (2003).

People of the State of California ex rel. Allstate Insurance Company v. Paul E. Harnitchek, D.C., et al., No. SCV 48876 (San Bernardino Superior Court 2000)

People of the State of California ex rel. Allstate Insurance Company v. Arthur G. Collins, M.D., et al., No. PC 021925 (Los Angeles Superior Court 2003)

People of the State of California ex rel. Farmers Insurance Exchange, et al., v. Kosal Naing dba Queen Auto Center, et al., No. KC032572 (Los Angeles Superior Court 2003)

People ex rel. Farmers Insurance Exchange, et al v. Maurice Hale, M.D., et al, case No. BC515676 (California Superior Court, County of Los Angeles; filed July 18, 2013).

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