Illinois Insurance Claims Fraud Prevention Act and Whistleblowers: How the law works

The Illinois Insurance Claims Fraud Prevention Act allows whistleblowers to file a lawsuit on behalf of the state against those engaged in fraud against private insurers. Whistleblowers receive financial rewards if funds are recovered as a result of their information.

The law is similar to the False Claims Act,  which allows private citizens to file “qui tam” (whistleblower) lawsuits on behalf of the government against entities engaged in fraud that causes financial damage to the government.

Illinois is one of only two states that have laws that encourage whistleblowers – whether private individuals or even insurance companies themselves – to expose schemes aimed at defrauding private insurers. The California Insurance Fraud Prevention Act is similar to the Illinois statute.

Both the Illinois and California laws were enacted to help protect the public from the potential consequences of large insurance-fraud losses, such as premium increases and smaller coverage limits. They cover a wide range of misconduct including upcoded health-insurance claims, kickback schemes, false workers-compensation claims and many other types of fraud.

Under the Illinois Insurance Claims Fraud Prevention Act, the Illinois attorney general investigates the allegations in the whistleblower lawsuit and decides whether to join the case. If the state intervenes in the lawsuit, it will litigate the case, working with the whistleblower and the whistleblower’s attorney. If the state declines to intervene, then whistleblowers and their attorneys may proceed on their own to litigate the matter to recover funds for the state.

Penalties in cases brought under the Illinois insurance whistleblower law are harsher than if the insurance company prosecuted the wrongdoing under other state insurance laws. Defendants found liable may be required to pay as much as three times the fraudulent claims, penalties of $5,000-$10,000 for each fraudulent claim, plus attorney fees and costs.

When funds are recovered as a result of the whistleblower’s lawsuit, the whistleblower will receive a minimum of 30 percent of the recovery when the state intervenes and at least 40 percent when the state does not join the case. The whistleblower also is entitled to recover from the defendant reasonable expenses as well as attorneys’ fees and costs.

If you are aware of fraud that may fall under either the Illinois Insurance Claims Fraud Prevention Act or the False Claims Act, it is important to discuss your options with an experienced whistleblower law firm.

MORE: Learn about how to choose the best whistleblower lawyer to represent you

Phillips & Cohen provides free and confidential reviews to those who are considering ways to expose and stop fraud. We work for whistleblowers on a contingency basis, which means you pay only if you receive a financial award. In the 30 years we have been fighting for whistleblowers, our whistleblower cases have helped recover more than $12.3 billion for taxpayers and defrauded investors.

Contact us for your free, confidential case review.

Let us help you.
Get a free, confidential case review