1. California Department of Insurance
Mike Levy, Deputy General Counsel - Litigation
Nick Campins, Senior False Claims Trial Attorney

2. Our statute is underutilized. Our capacity is growing.
A Powerful and Underutilized Weapon to Fight Fraud: the California Insurance Frauds Prevention Act
With Whistleblowers’ help, we are bringing fraud-fighting impact cases.
Our statute is underutilized. Our capacity is growing.

3. CDI Basics ✓
California Insurance Frauds Prevention Act (Cal. Ins. Code § ). ✓
Enforced through (1) intervention in qui tams and (2) independent investigations. ✓
We use administrative subpoena authority to aggressively investigate credible allegations of fraud (including document subpoenas, depositions, and interrogatories). ✓
We and the relevant district attorneys are granted 60 days to evaluate a case (under seal), extensions are likely. ✓
We have full litigation authority and staff our own cases. ✓
We are in the process of substantially building the capabilities of our team. Substantial investment in personnel and in technology. Strong and growing relationships with DAs.

4. IFPA Basics
Cal. Ins. Code § (a) like Anti-Kickback Statute, but better. OIG opinions and AKS safe harbors do not apply as a matter of law. Physicians’ should prescribe what is best for their patients. Not what benefits them financially and/or is most convenient. ✓ ✓
Cal. Ins. Code § (b) incorporates Penal Code sections 549, 550, and Like False Claims Act prohibitions re presentation of false claims. ✓
Civil penalties of not less than $5,000 nor more than $10,000 per violation. ✓
Assessments of not more than three times the amount of each claim for compensation pursuant to a contract of insurance. ✓
Equitable Relief.

5. 1871.7(a) - Kickbacks
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. Cal. Ins. Code §

6. KICKBACKS – Key Case Wilson v. Superior Court (2014) 227 Cal. App
KICKBACKS – Key Case Wilson v. Superior Court (2014) 227 Cal.App.4th 579
The leading case analyzing the requirements needed to show liability for kickbacks pursuant to Insurance Code section is State ex rel. Wilson v. Superior Court (“Wilson”) (2014) 227 Cal.App.4th In Wilson, the Court considered a complaint filed by a relator, in which CDI intervened, which alleged that the defendant, BMS, engaged in a course of illegal and fraudulent conduct aimed at doctors, health care providers, pharmacists, and insurance companies. It alleged that BMS targeted high-prescribing physicians, members of formulary committees, and sometimes their families, to be recipients of gifts and other benefits to induce physicians to prescribe BMS’s drugs and to reward them for doing so. And it alleged that the targeted physicians “wrote prescriptions and submitted them to the private insurance companies ... as a result of kickbacks BMS provided to them.”
The Court upheld the sufficiency of CDI’s legal theory and set forth required elements.

7. Kickbacks -Section 1871.7(a)
Defendant “employed” persons (e.g. healthcare providers or patients) by providing items or services of value to procure benefits under a contract of insurance. ✓ ✓
Defendant generally intended for insurance companies to cover the costs. ✓
For 5-10k Penalty per Fraudulent Claim - Kickbacks were substantial factor in causing the submission of fraudulent claims to insurers (unlawful kickback conduct constitutes showing needed). ✓
For treble Assessments - three times the amount of each claim for compensation pursuant to a contract of insurance. ✓
Equitable relief may be imposed without proof that a claim resulted from the unlawful conduct, or that any resulting claim was fraudulent or deceitful.

8. 1871.7(A) & PC 550 – Fraudulent claims
Penal Code section 550
(a) It is unlawful to do any of the following, OR to aid, abet, solicit, or conspire with any person to do any of the following:
(1) Knowingly present or cause to be presented any false or fraudulent claim for the payment of a loss or injury, including payment of a loss or injury under a contract of insurance.
(5) Knowingly prepare, make, or subscribe any writing, with the intent to present or use it, or to allow it to be presented, in support of any false or fraudulent claim.
(6) Knowingly make or cause to be made any false or fraudulent claim for payment of a health care benefit.
(b) It is unlawful to do, OR to knowingly assist or conspire with any person to do, any of the following:
(1) Present or cause to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any material fact.

9. Key Case: People ex rel. GEICO v. Cruz (2016) 244 Cal.App.4th 1184.
A violation is complete when a false claim for payment of loss is presented to an insurance company or a false writing is prepared or presented with intent to use it in connection with such a claim whether or not anything of value is taken or received. It is not necessary that anyone actually be defrauded or actually suffer a financial, legal, or property loss as a result of the defendant's acts. People ex rel. GEICO v. Cruz (2016) 244 Cal.App.4th 1184.

10. Practical Considerations✓
State Court is simply better. Better case law, non-unanimous jury, faster timeframe. ✓
Will still participate in Federal proceedings, but timeframe is much slower and we have much less control. ✓
Allocation when intervention occurs: Relator gets between 30 to 40% of recovery, depending on extent of assistance. After attorneys fees, the remainder goes to state general fund to combat fraud. ✓
Venue: Many District Attorney’s offices are also willing and helpful partners. E.g. Alameda County is working closely with us and providing excellent staffing. ✓
SOL: (l)– 3 year SOL after the discovery of the facts / 8 year statute of repose.

11. Notable Successes
2017: $1.1 million settlement with Novo-Nordisk (off-label) [settled prior to intervention determination]
2016: $30 million settlement with Bristol-Myers Squibb (kickback) [intervened]
2015: $23 million settlement with Warner Chilcott (kickback) [non-intervened]
2013: $46 million settlement with Sutter Health re anesthesia billing [intervened]
: Several more large settlements/judgments likely in next few years.

12. Let’s Fight Fraud Together
Current cases – if misconduct is within last 8 years, file a state court case alleging IFPA or amend federal complaint (less preferred)
New cases – call us immediately post-filing to discuss.
Unsure about a case – happy to discuss legal theories.
Serve us correctly (no really, pretty please) - contact/upload/Guidelines-for-Service-of- Process.pdf

13. Let’s Fight Fraud Together
Questions/Case Inquiries, Contact:
Nick Campins
Senior False Claims Trial Attorney
California Department of Insurance
Fraud Liaison Bureau
45 Fremont Street, 21st Floor
San Francisco, CA  94105
(415)
and/or
Mike Levy, Deputy General Counsel – Litigation
J. Scott McNamara, Fraud Liaison Bureau Chief