Springfield, IL - Governor George H. Ryan signed legislation on August 2, 2001, to enhance the state's efforts to stem organized insurance fraud. Senate Bill 879 establishes a whistleblower provision and expands fraud reporting requirements to the Department of Insurance. The new law implements recommendations made by the Insurance Fraud Task Force statutorily created last year to investigate the issue of organized insurance fraud and methods to combat it.

"Insurance fraud is a multi-billion dollar crime that impacts insurance companies and their policyholders," said Director of Insurance Nat Shapo, who also serves as task force chairman. "Senate Bill 879 addresses two essential elements that will provide Illinois policymakers, regulators and law enforcement officials with the type of information we need to better understand this growing problem and how to attack it."

Similar to existing whistleblower statutes in other states, the new Illinois Insurance Claims Fraud Act makes it unlawful to offer or pay to induce a person to procure clients or patients to obtain services or benefits under an insurance contract and provides a strong monetary incentive to both governmental entities and private citizens to pursue civil cases against the perpetrators of insurance fraud. Under this Act, a State's Attorney, the Attorney General or a private citizen can sue anyone who knowingly participates in an insurance fraud scheme against an insurance company and can receive up to fifty percent of the proceeds recovered. Defendants can be fined $5,000 to $10,000, and assessed up to three times the amount of each claim for compensation under a contract of insurance. Senate Bill 879 also provides whistleblower protections, including job reinstatement and compensation, to employees who are discharged or otherwise discriminated against by an employer because they sought action under the Act.

The new law extends current fraud reporting requirements to all lines of insurance, as well as to insurance application and premium fraud. Previously, insurance companies were only required to report incidents of fraud pertaining to property and casualty insurance claims. Shapo said the Department of Insurance will promulgate administrative rules to define the type of information to be reported, the framework for collecting and compiling such information, and procedures for turning information over to the proper law enforcement agency or prosecutor.

Senate Bill 879 was sponsored by Sen. Patrick O'Malley (R-Palos Park) and Rep. David Winters (R-Rockford) and is effective January 1, 2002.