The lawsuit was filed more than three years ago by attorney John H. Denenea, Jr., but has been under seal until September 21, when an order from Judge Carl Barbier unsealed the case. The delay was in part to allow the federal government time to decide if it intended to intervene in the qui tam lawsuit.
With the unsealing of the lawsuit, which was originally filed in US District Court in New Orleans, Allstate has now been made aware of the allegations against them. To that end, the lawsuit claims that the insurer "knowingly fabricated" insurance documents to decrease its own claims payments and inflate flood losses at the expense of the federal government.
Allstate would not comment on the lawsuit.
Government whistleblowers have the capacity to claim percentages of damages and awards obtained through litigation against defendants who are found to have defrauded the federal government. Damages and awards can be three times as much as they might be otherwise when the case involves a fraud against the government.
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Denenea is reported to have turned over to the federal government all the documents he had in his possession related to the alleged fraud prior to filing the lawsuit three years ago. So far, the government has not taken the bait. Judge Barbier ordered the case unsealed, as the government "is not intervening at this time."
Federal whistleblowers are known to have uncovered numerous instances of fraud against the government over the years. In exchange for their diligence and willingness to blow the whistle against a defendant—often a former employer—whistleblowers enjoy a healthy payday in the end.