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Adam D. Miller


Whistleblowers under the Insurance Code The Insurance Code has a powerful, little-known tool for fighting insurance fraud


Insurance Code section 1871.7 is a


little-used statute containing whistleblow- er provisions that can greatly help in combating insurance fraud. One impor- tant issue currently being litigated is whether doctors and other health-care providers engage in illegal conduct under this section when they prescribe medication. They may be if they accept any kind of payment by a pharmaceutical company in exchange for prescribing that company’s products. It is common practice for pharma-


ceutical companies to attempt to influ- ence physicians to write prescriptions for their drugs. The pharmaceutical compa- nies have often made money payments or other benefits directly to the physi- cians in return for the prescribing of their drugs. Such quid pro quo (or even attempting to fraudulently induce physi- cians to write more prescriptions) is ille- gal under the federal Anti-Kick Statute.


(42 U.S.C. § 1320a-7b (b).) As will be dis- cussed below, this issue is currently being litigated in California State Court in the case of The People ex rel. Wilson v. Bristol Myers Squibb, BC 367873 under the little- used section of the Insurance Code.


Section 1871.7 Unknown to many practitioners is


that in addition to the California False Claims Act (Gov. Code, § 12650 et. seq.), there are false claims and whistleblower provisions under the California Insurance Code. (Ins. Code, § 1871.7.) Section 1871.7 was enacted in 1993 to help combat fraud against insurance companies. (Assem. Bill No. 1300 (1993- 1994 Reg. Sess.) The statute was original- ly enacted to fight workers’ compensation fraud. However, section 1871.7 was sub- sequently amended to include all forms of insurance fraud. (Assem. Bill No. 1926 (1993-1994 Reg. Sess.)


Under section 1871.7(a), “it is


unlawful to knowingly employ runners, cappers, steerers, or other persons to procure clients or patients to perform or obtain services or benefits pursuant to Division 4 (commencing with Section 3200) of the Labor Code or to procure clients or patients to perform or obtain services or benefits under a contract of insurance or that will be the basis for a claim against an insured individual or his or her insurer.” Section 1871.7, subdivi- sions (e)-(h) contain the whistleblower provisions of the statute. A civil action for a violation of sec-


tion 1871.7 can be brought by the district attorney or by the insurance commission- er. (§ 1871.7, subd. (d).) Also, “[a]ny interested persons, including an insurer, may bring a civil action for a violation of this section for the person and for the State of California. The action shall be brought in the name of the state.”


64 — The Advocate Magazine JANUARY 2012


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