(§ 1871.7, subd. (e).) The district attor- ney or insurance commissioner may, within 60 days, opt to intervene in the matter. (§ 1871.7 (e)(4)(A).) If the district attorney and the insurance commissioner decline to do so, the interested person has the right to conduct the action. (§ 1871.7, subd. (e)(4)(B).) Civil penalties of not less than
$5,000 or not more than $10,000 may be imposed for each claim for compensa- tion. “The penalty prescribed in this paragraph shall be assessed for each fraudulent claim presented to an insurance company by a defendant and not for each violation.” (§ 1871.7, subd. (b).) (Italics added.) In addition, an assessment of three times the amount of the claim may be recovered. As under the False Claims Act, the
successful relator receives a share of the recovery by the insured or its insurer. The relator may be entitled to between 30 and 50 percent, depending on whether the district attorney or the insurance commissioner intervenes and proceeds with the action. However, the relator’s share provisions of the Insurance Code are very different than the Federal or State of California False Claims Act.
History of section 1871.7 Section 1871.7 was enacted in 1993
to fight fraud in the workers’ compensa- tion arena. (Stats. 1993, ch. 120, § 3.3, eff. July 16, 1993.) The bill also con- tained “bounty hunter” provisions allow- ing interested persons to share in a per- centage of the proceeds for successful actions. (§ 1871.7, subd. (g).) The statute enabled “the Attorney General and other interested persons to bring a civil action for the crime of employing runners, cap- pers, steerers, or other persons to pro- cure clients to obtain workers’ compensa- tion benefits.” (Assem. Ways and Means Com., Analysis of Assem. Bill No. 1300 (1993-1994 Reg. Sess.) Section 1871.7 was subsequently
amended in 1994 to encompass all types of insurance fraud against an insurer. (Assem. Bill No. 1926 (1993-1994 Reg. Sess.) The original express purpose of the amendments was to fight automobile insurance fraud. However, the amend- ments were drafted to encompass all form of insurance fraud. “The purpose of this bill is to enact a comprehensive package of laws to assist in the preven- tion, identification, investigation, and prosecution of insurance fraud.” (Sen.
Com. on Judiciary; Analysis of Assem. Bill No. 1926 as amended Aug. 8, 1994.) In 1995, the statute was amended
again. (Stats. 1995, ch. 574.) Among other things, the amendments increased a successful interested person’s share of the proceeds from a maximum of 30 per- cent to up to double the amount paid by the victim. In addition, the statute was amended to provide, “If the person bringing the action, as a result of viola- tion of this section has paid money to the defendant or to an attorney acting on behalf of the defendant in the underlying claim, then he or she shall be entitled to up to double the amount paid to the defen- dant or the attorney if that amount is greater than 50 percent of the proceeds.” (§ 1871.7(2)(B).) (Italics added.) The statute was given its final sub-
stantive amendments in 1999. (Stats. 1999, ch. 885, § 2, No. 12 West’s Cal. Legis. Service, p. 5038.) The share of the recovery for the relator or other interest- ed party in a successful case was increased to a minimum of 30 percent and a maximum of 50 percent depend- ing on whether the state authorities intervene. (Assem. Bill No. 1050 (1999- 2000 Reg. Sess.)) Not least, the 1999 amendment also imposed the penalties
JANUARY 2012 The Advocate Magazine — 65
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