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Public Act 92-0233
SB879 Enrolled LRB9204099JSpc
AN ACT concerning insurance.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Insurance Claims Fraud Prevention Act.
Section 5. Patient and client procurement.
(a) Except as otherwise permitted or authorized by law,
it is unlawful to knowingly offer or pay any remuneration
directly or indirectly, in cash or in kind, to induce any
person to procure clients or patients to obtain services or
benefits under a contract of insurance or that will be the
basis for a claim against an insured person or the person's
insurer. Nothing in this Act shall be construed to affect
any contracts or arrangements between or among insuring
entities including health maintenance organizations, health
care professionals, or health care facilities which are
hereby excluded.
(b) A person who violates any provision of this Act or
Article 46 of the Criminal Code of 1961 shall be subject, in
addition to any other penalties that may be prescribed by
law, to a civil penalty of not less than $5,000 nor more than
$10,000, plus an assessment of not more than 3 times the
amount of each claim for compensation under a contract of
insurance. The court shall have the power to grant other
equitable relief, including temporary injunctive relief, as
is necessary to prevent the transfer, concealment, or
dissipation of illegal proceeds, or to protect the public.
The penalty prescribed in this subsection shall be assessed
for each fraudulent claim upon a person in which the
defendant participated.
(c) The penalties set forth in subsection (b) are
intended to be remedial rather than punitive, and shall not
preclude, nor be precluded by, a criminal prosecution for the
same conduct. If the court finds, after considering the goals
of disgorging unlawful profit, restitution, compensating the
State for the costs of investigation and prosecution, and
alleviating the social costs of increased insurance rates due
to fraud, that such a penalty would be punitive and would
preclude, or be precluded by, a criminal prosecution, the
court shall reduce that penalty appropriately.
Section 10. Action by State's Attorney or Attorney
General. The State's Attorney of the county in which the
conduct occurred or Attorney General may bring a civil action
under this Act. Before the Attorney General may bring the
action, the Attorney General shall present the evidence
obtained to the appropriate State's Attorney for possible
criminal or civil filing. If the State's Attorney elects not
to pursue the matter, then the Attorney General may proceed
with the action.
Section 15. Action by interested person.
(a) An interested person, including an insurer, may
bring a civil action for a violation of this Act for the
person and for the State of Illinois. The action shall be
brought in the name of the State. The action may be dismissed
only if the court and the State's Attorney or the Attorney
General, whichever is participating, gives written consent to
the dismissal stating their reasons for consenting.
(b) A copy of the complaint and a written disclosure of
substantially all material evidence and information the
person possesses shall be served on the State's Attorney and
Attorney General. The complaint shall be filed in camera,
shall remain under seal for at least 60 days, and shall not
be served on the defendant until the court so orders. The
State's Attorney or Attorney General may elect to intervene
and proceed with the action within 60 days after he or she
receives both the complaint and the material evidence and
information. If more than one governmental entity elects to
intervene, the State's Attorney shall have precedence.
(c) The State's Attorney or Attorney General may, for
good cause shown, move the court for extensions of the time
during which the complaint shall remain under seal under
subsection (b). The motions may be supported by affidavits or
other submissions in camera. The defendant shall not be
required to respond to any complaint filed under this Section
until 20 days after the complaint is unsealed and served upon
the defendant.
(d) Before the expiration of the 60-day period or any
extensions obtained under subsection (c), the State's
Attorney or Attorney General shall either:
(1) proceed with the action, in which case the
action shall be conducted by the State's Attorney or
Attorney General; or
(2) notify the court that it declines to take over
the action, in which case the person bringing the action
shall have the right to conduct the action.
(e) When a person or governmental agency brings an
action under this Act, no person other than the State's
Attorney or Attorney General may intervene or bring a related
action based on the facts underlying the pending action
unless another statute or common law authorizes that action.
Section 20. Role of State's Attorney or Attorney
General.
(a) If the State's Attorney or Attorney General proceeds
with the action, he or she shall have the primary
responsibility for prosecuting the action, and shall not be
bound by an act of the person bringing the action. That
person shall have the right to continue as a party to the
action, subject to the limitations set forth in subsection
(b).
(b) The State's Attorney or Attorney General may dismiss
the action notwithstanding the objections of the person
initiating the action if the person has been notified by the
State's Attorney or Attorney General of the filing of the
motion, and the court has provided the person with an
opportunity for a hearing on the motion.
The State's Attorney or Attorney General may settle the
action with the defendant notwithstanding the objections of
the person initiating the action if the court determines,
after a hearing, that the proposed settlement is fair,
adequate, and reasonable under all the circumstances. Upon a
showing of good cause, the hearing may be held in camera.
Upon a showing by the State's Attorney or Attorney
General that unrestricted participation during the course of
the litigation by the person initiating the action would
interfere with or unduly delay the State's Attorney's or
Attorney General's prosecution of the case, or would be
repetitious, irrelevant, or for purposes of harassment, the
court may, in its discretion, impose limitations on the
person's participation, including, but not limited to, the
following:
(1) limiting the number of witnesses the person may
call;
(2) limiting the length of the testimony of those
witnesses;
(3) limiting the person's cross-examination of
witnesses; and
(4) otherwise limiting the participation by the
person in the litigation.
Upon a showing by the defendant that unrestricted
participation during the course of the litigation by the
person initiating the action would be for purposes of
harassment or would cause the defendant undue burden or
unnecessary expense, the court may limit the participation by
the person in the litigation.
(c) If the State's Attorney or Attorney General elects
not to proceed with the action, the person who initiated the
action shall have the right to conduct the action. If the
State's Attorney or Attorney General so requests, he or she
shall be served with copies of all pleadings filed in the
action and shall be supplied with copies of all deposition
transcripts, at the State's Attorney's or Attorney General's
expense. When a person proceeds with the action, the court,
without limiting the status and rights of the person
initiating the action, may nevertheless permit the State's
Attorney or Attorney General to intervene at a later date
upon a showing of good cause.
(d) If at any time both a civil action for penalties and
equitable relief pursuant to this Act and a criminal action
are pending against a defendant for substantially the same
conduct, whether brought by the government or a private
party, the civil action shall be stayed until the criminal
action has been concluded at the trial court level. The stay
shall not preclude the court from granting or enforcing
temporary equitable relief while the actions are pending.
Whether or not the State's Attorney or Attorney General
proceeds with the action, upon a showing by the State's
Attorney or Attorney General that certain actions of
discovery by the person initiating the action would interfere
with a law enforcement or governmental agency investigation
or prosecution of a criminal or civil matter arising out of
the same facts, the court may stay discovery for a period of
not more than 180 days. A hearing on a request for the stay
shall be conducted in camera. The court may extend the
180-day period upon a further showing in camera that the
agency has pursued the criminal or civil investigation or
proceedings with reasonable diligence and any proposed
discovery in the civil action will interfere with the ongoing
criminal or civil investigation or proceedings.
(e) Notwithstanding Section 15, the State's Attorney or
Attorney General may elect to pursue its claim through any
alternate remedy available to the State's Attorney or
Attorney General.
Section 25. Costs and proceeds of action.
(a) If the State's Attorney or Attorney General proceeds
with an action brought by a person under Section 15, that
person is entitled to receive an amount that the court
determines is reasonable based upon the extent to which the
person contributed to the prosecution of the action. Subject
to subsection (d), the amount awarded to the person who
brought the action shall not be less than 30% of the proceeds
of the action or settlement of the claim, and shall be paid
from the proceeds.
(b) If the State's Attorney or Attorney General does not
proceed with an action brought by a person under Section 15,
that person shall receive an amount that the court decides is
reasonable for collecting the civil penalty and damages.
Subject to subsection (d), the amount shall not be less than
40% of the proceeds of the action or settlement, and shall be
paid from the proceeds.
(c) If the person bringing the action as a result of a
violation of this Act 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 defendant or the attorney if
that amount is greater than 50% of the proceeds.
(d) Where the action is one that the court finds to be
based primarily on disclosures of specific information, other
than information provided by the person bringing the action
under Section 15, relating to allegations or transactions in
a criminal, civil, or administrative hearing, in a
legislative or administrative report, hearing, audit, or
investigation, or from the news media, the court may award
those sums that it considers appropriate, but in no case more
than 10% of the proceeds, taking into account the
significance of the information and the role of the person
bringing the action in advancing the case to litigation.
(e) Any payment to a person under subsection (a), (b),
(c), or (d) shall be made from the proceeds. The person shall
also receive an amount for reasonable expenses that the court
finds to have been necessarily incurred, plus reasonable
attorney's fees and costs. All of those expenses, fees, and
costs shall be awarded against the defendant.
(f) If a local State's Attorney has proceeded with an
action under this Act, the Treasurer of the County where the
action was brought shall receive an amount for reasonable
expenses that the court finds to have been necessarily
incurred by the State's Attorney, including reasonable
attorney's fees and costs, plus 50% of the funds not awarded
to a private party. Those amounts shall be used to
investigate and prosecute insurance fraud, augmenting
existing budgets rather than replacing them. All remaining
funds shall go to the State and be deposited in the General
Revenue Fund and, when appropriated, shall be allocated to
appropriate State agencies for enhanced insurance fraud
investigation, prosecution, and prevention efforts.
(g) If the Attorney General has proceeded with an action
under this Act, all funds not awarded to a private party,
shall go to the State and be deposited in the General Revenue
Fund and, when appropriated, shall be allocated to
appropriate State agencies for enhanced insurance fraud
investigation, prosecution, and prevention efforts.
(h) If neither a local State's Attorney or the Attorney
General has proceeded with an action under this Act, 50% of
the funds not awarded to a private party shall be deposited
with the Treasurer of the County where the action was brought
and shall be disbursed to the State's Attorney of the County
where the action was brought. Those funds shall be used by
the State's Attorney solely to investigate, prosecute, and
prevent insurance fraud, augmenting existing budgets rather
than replacing them. All remaining funds shall go to the
State and be deposited in the General Revenue Fund and, when
appropriated, shall be allocated to appropriate State
agencies for enhanced insurance fraud investigation,
prosecution, and prevention efforts.
(i) Whether or not the State's Attorney or Attorney
General proceeds with the action, if the court finds that the
action was brought by a person who planned and initiated the
violation of this Act, that person shall be dismissed from
the civil action and shall not receive any share of the
proceeds of the action. The dismissal shall not prejudice the
right of the State's Attorney or Attorney General to continue
the action on behalf of the State.
(j) If the State's Attorney or Attorney General does not
proceed with the action, and the person bringing the action
conducts the action, the court may award to the defendant its
reasonable attorney's fees and expenses if the defendant
prevails in the action and the court finds that the claim of
the person bringing the action was clearly frivolous, clearly
vexatious, or brought primarily for purposes of harassment.
Section 30. Limitation on bringing actions.
(a) In no event may a person bring an action under
Section 15 that is based upon allegations or transactions
that are the subject of a civil suit or an administrative
civil money penalty proceeding in which the State's Attorney
or Attorney General is already a party.
(b) A court may not have jurisdiction over an action
under this Act based upon the public disclosure of
allegations or transactions in a criminal, civil, or
administrative hearing, in a legislative or administrative
report, hearing, audit, or investigation, or from the news
media, unless the action is brought by the State's Attorney,
the Attorney General, or a person who is an original source
of the information. For purposes of this subsection,
"original source" means an individual who has direct and
independent knowledge of the information on which the
allegations are based and has voluntarily provided the
information to the State's Attorney or Attorney General
before filing an action under this Act based on the
information.
Section 35. Expenses and sanctions.
(a) Except as provided in subsection (b), the State's
Attorney or Attorney General is not liable for expenses that
a person incurs in bringing an action under this Act.
(b) In civil actions brought under this Act in which the
Attorney General or a State's Attorney is a party, the court
shall retain discretion to impose sanctions otherwise allowed
by law, including the ability to order a party to pay
expenses as provided in the Code of Civil Procedure.
Section 40. Retaliatory discharge; remedy. An employee
who is discharged, demoted, suspended, threatened, harassed,
or in any other manner discriminated against in the terms and
conditions of employment by his or her employer because of
lawful acts done by the employee on behalf of the employee or
others in furtherance of an action under this Act, including
investigation for, initiation of, testimony for, or
assistance in an action filed or to be filed under this Act,
shall be entitled to all relief necessary to make the
employee whole. That relief shall include reinstatement with
the same seniority status the employee would have had but for
the discrimination, 2 times the amount of backpay, interest
on the backpay, and compensation for any special damages
sustained as a result of the discrimination, including
litigation costs and reasonable attorney's fees. An employee
may bring an action in the appropriate court for the relief
provided in this Section. The remedies under this Section are
in addition to any other remedies provided by existing law.
Section 45. Time limitations.
(a) Except as provided in subsection (b), an action
pursuant to this Act may not be filed more than 3 years after
the discovery of the facts constituting the grounds for
commencing the action.
(b) Notwithstanding subsection (a), an action may be
filed pursuant to this Act within not more than 8 years after
the commission of an act constituting a violation of this Act
or a violation of Article 46 of the Criminal Code of 1961.
Section 90. The Illinois Insurance Code is amended by
changing Sections 155.23 and 155.24 as follows:
(215 ILCS 5/155.23) (from Ch. 73, par. 767.23)
Sec. 155.23. Fraud Claims reporting.
(1) The Director of Insurance is authorized to
promulgate reasonable rules requiring insurers, as
defined in Section 155.24, doing business insurance
companies licensed in the State of Illinois to report
factual information in their possession that which is
pertinent to suspected fraudulent casualty and property
insurance claims, fraudulent insurance applications, or
premium fraud including claims involving the theft of
automobiles, after he has made a determination that the
such information is necessary to detect fraud or arson.
This Claim information may include:
(a) Dates and description of accident or loss.
(b) Any insurance policy relevant to the accident
or loss.
(c) Name of the insurance company claims adjustor
and claims adjustor supervisor processing or reviewing
any claim or claims made under any insurance policy
relevant to the accident or loss.
(d) Name of claimant's or insured's attorney.
(e) Name of claimant's or insured's physician, or
any person rendering or purporting to render medical
treatment.
(f) Description of alleged injuries, damage or
loss.
(g) History of previous claims made by the claimant
or insured.
(h) Places of medical treatment.
(i) Policy premium payment record.
(j) Material relating to the investigation of the
accident or loss, including statements of any person,
proof of loss, and any other relevant evidence.
(k) any facts evidencing fraud or arson.
The Director shall establish reporting requirements for
application and premium fraud information reporting by rule.
(2) The Director of Insurance may designate one or more
data processing organizations or governmental agencies to
assist him in gathering such information and making
compilations thereof, and may by rule establish the form and
procedure for gathering and compiling such information. The
rules may Such rule shall name any organization or agency
designated by the Director to provide this service, and may
shall in such case provide for a fee to be paid by the
reporting insurers companies directly to the designated
organization or agency to cover any of the costs associated
with providing this service. After determination by the
Director of substantial evidence of false or fraudulent
claims, fraudulent applications, or premium fraud, the
information shall be forwarded by the Director or the
Director's his designee to the proper law enforcement agency
or prosecutor State's Attorney and U.S. Attorney. Insurers
Insurance companies shall have access to, and may use, the
claims information compiled under the provisions of this
Section. Insurers Insurance companies shall release
information concerning claims against them to, and shall
cooperate with, any law enforcement agency requesting such
information.
In the absence of malice, no insurer insurance company,
or person who furnishes information on its behalf, is liable
for damages in a civil action or subject to criminal
prosecution for any oral or written statement made or any
other action taken that is necessary to supply information
required pursuant to this Section.
(Source: P.A. 83-851.)
(215 ILCS 5/155.24) (from Ch. 73, par. 767.24)
Sec. 155.24. Motor Vehicle Theft and Motor Insurance
Fraud Reporting and Immunity Law.
(a) As used in this Section:
(1) "authorized governmental agency" means the
Illinois Department of State Police, a local governmental
police department, a county sheriff's office, a State's
Attorney, the Attorney General, a municipal attorney, a
United States district attorney, a duly constituted
criminal investigative agency of the United States
government, the Illinois Department of Insurance, the
Illinois Department of Professional Regulation and the
office of the Illinois Secretary of State;
(2) "relevant" means having a tendency to make the
existence of any information that is of consequence to an
investigation of motor vehicle theft or insurance fraud
investigation or a determination of such issue more
probable or less probable than it would be without such
information; and
(3) information will be "deemed important" if
within the sole discretion of the authorized governmental
agency such information is requested by that authorized
governmental agency;.
(4) "Illinois authorized governmental agency" means
an authorized governmental agency as defined in item (1)
that is a part of the government of the State of Illinois
or any of the counties or municipalities of this State or
any other authorized entity; and
(5) For the purposes of this Section and Section
155.23, "insurer" means insurance companies, insurance
support organizations, self-insured entities, and other
providers of insurance products and services doing
business in the State of Illinois.
(b) Upon written request to an insurer by an authorized
governmental agency, an insurer or agent authorized by an
insurer to act on its behalf shall release to the requesting
authorized governmental agency any or all relevant
information deemed important to the authorized governmental
agency which the insurer may possess relating to any specific
motor vehicle theft or motor vehicle insurance fraud.
Relevant information may include, but is not limited to:
(1) Insurance policy information relevant to the
motor vehicle theft or motor vehicle insurance fraud
under investigation, including any application for such a
policy.
(2) Policy premium payment records which are
available.
(3) History of previous claims made by the insured.
(4) Information relating to the investigation of
the motor vehicle theft or motor vehicle insurance fraud,
including statements of any person, proofs of loss and
notice of loss.
(c) When an insurer knows or reasonably believes to know
the identity of a person whom it has reason to believe
committed a criminal or fraudulent act relating to a motor
vehicle theft or a motor vehicle insurance claim or has
knowledge of such a criminal or fraudulent act which is
reasonably believed not to have been reported to an
authorized governmental agency, then for the purpose of
notification and investigation, the insurer or an agent
authorized by an insurer to act on its behalf shall notify an
authorized governmental agency of such knowledge or
reasonable belief and provide any additional relevant
information in accordance with subsection paragraph (b) of
this Section. When the motor vehicle theft or motor vehicle
claim that gives rise to the suspected criminal or fraudulent
act has already generated an incident report to an Illinois
authorized governmental agency, the insurer shall report the
suspected criminal or fraudulent act to that agency. When no
prior incident report has been made, the insurer shall report
the suspected criminal or fraudulent act to the Attorney
General or State's Attorney in the county or counties where
the incident is claimed to have occurred. When the incident
that gives rise to the suspected criminal or fraudulent act
is claimed to have occurred outside the State of Illinois,
but the suspected criminal or fraudulent act occurs within
the State of Illinois, the insurer shall make the report to
the Attorney General or State's Attorney in the county or
counties where the suspected criminal or fraudulent act
occurred. When the fraud occurs in multiple counties the
report shall also be sent to the Attorney General.
(d) When an insurer provides any of the authorized
governmental agencies with notice pursuant to this Section it
shall be deemed sufficient notice to all authorized
governmental agencies for the purpose of this Act.
(e) The authorized governmental agency provided with
information pursuant to this Section may release or provide
such information to any other authorized governmental agency.
(f) Any insurer providing information to an authorized
governmental agency pursuant to this Section shall have the
right to request and receive relevant information from such
authorized governmental agency, and receive within a
reasonable time after the completion of the investigation,
not to exceed 30 days, the information requested.
(g) Any information furnished pursuant to this Section
shall be privileged and not a part of any public record.
Except as otherwise provided by law, any authorized
governmental agency, insurer, or an agent authorized by an
insurer to act on its behalf which receives any information
furnished pursuant to this Section, shall not release such
information to public inspection. Such evidence or
information shall not be subject to subpoena duces tecum in a
civil or criminal proceeding unless, after reasonable notice
to any insurer, agent authorized by an insurer to act on its
behalf and authorized governmental agency which has an
interest in such information and a hearing, the court
determines that the public interest and any ongoing
investigation by the authorized governmental agency, insurer,
or any agent authorized by an insurer to act on its behalf
will not be jeopardized by obedience to such a subpoena duces
tecum.
(h) No insurer, or agent authorized by an insurer on its
behalf, authorized governmental agency or their respective
employees shall be subject to any civil or criminal liability
in a cause of action of any kind for releasing or receiving
any information pursuant to this Section. Nothing herein is
intended to or does in any way or manner abrogate or lessen
the common and statutory law privileges and immunities of an
insurer, agent authorized by an insurer to act on its behalf
or authorized governmental agency or any of their respective
employees.
(Source: P.A. 85-1292.)
Passed in the General Assembly May 09, 2001.
Approved August 02, 2001.
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