We have written before on the various attempts at fraud perpetrated by insurance salesmen. We have also handled numerous cases of egregious insurance fraud. Fraud in the insurance industry is not going away.
Banner Life Insurance was recently hit with a $40.5 million settlement for fraudulently increasing the cost of insurance premiums. The case, filed in Maryland, detailed a scheme affecting roughly 10,000 policyholders where the insurance company significantly increase premiums on policies bought years, even decades, prior.
There are strict rules governing premium increases on insurance policies. After reports of skyrocketing premiums, Congress attempted to rein in rate increases.[1] The Affordable Care Act requires the federal government to work with the states to develop a process for reviewing unreasonable increases in premiums for certain categories of health insurance. As of 2012, insurers may not increase rates above a Virginia-specific percentage.[2]
Most interestingly in the Banner Life case, a whistleblower was the person who brought the fraudulent activities to light. It appears an employee with the defendant insurance company informed the plaintiff’s attorneys of the fraudulent scheme. It is highly likely the whistleblower received significant financial compensation in bringing the injustice to the public.
In addition to the protections afforded whistleblowers under the Virginia Fraud Against Taxpayers Act and the federal False Claims Act, the soon-to-be-enacted HB798 will provide additional protections for whistleblowers from retaliation as well as significant financial incentives to come forward.
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[1] Abelson, Reed. Health Insurers Making Record Profits As Many Postpone Care. New York Times. May 13, 2011. Available at https://www.nytimes.com/2011/05/14/business/14health.html.
[2] Fighting Unreasonable Health Insurance Premium Increases. Centers for Medicare & Medicaid Services. Nov. 16, 2011. Available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/ratereview05192011a#_ftn1.