Case No. 97023
in the
supreme court of illinois
Raymond G. SCACHITTI, Patrick J. HOULIHAN and Robert F. RIFKIN,
Plaintiffs-Appellants,
v.
UBS FINANCIAL SERVICES AND
DELOITTE & TOUCHE, LLP,
Defendants-Appellees.
On Direct Appeal from Cook County Circuit Court, Case No. 02 CH 21121
The Honorable Stephen Schiller, Judge Presiding
Brief Amici Curiae of
AARP and taxpayers against fraud
in Support of
Plaintiffs-Appellants
Deborah Zuckerman Jim Moorman
Sarah Lock Amy Wilken
AARP Foundation Bret Boyce
TAXPAYERS AGAINST FRAUD
Michael Schuster 1220 19TH Street NW
AARP Washington, D.C. 20036
(202) 296-4838
601 E Street, NW
Washington, DC 20049
(202) 434-2060
Counsel for AARP
Counsel for TAF
Tracy L. Netzel Michael I. Behn
Netzel & Associates, P.C. Futterman & Howard Chtd.
211 E. Ontario Street, Suite 1800 122 S. Michigan Avenue, Suite 1850
Chicago, IL 60611 Chicago, IL 60603
(312) 283-5200 (312) 427-3600
Firm ID # 40469 Firm ID # 80656
Counsel for Amici Curiae
Counsel for Amici Curiae
TABLE
OF CONTENTS
POINTS AND
AUTHORITIES……………………………………………………………………………
3
INTEREST OF AMICI……….……………………………….………………………..………...…….......
9
SUMMARY OF
ARGUMENT…………………………………………………………………………..
10
ARGUMENT……………………………………………………………………………………………..
12
i.
THE IWA’s QUI TAM PROVISIONS codify THE
pUBLIC-private PARTNERSHIP deeply entrenched in THE
COMMON LAW TO PREVENT FRAUD AGAINST
THE
GovernMENT……………………………………………………………….…………..12
Ii.
A Qui Tam Relator under the iwa Has Individual
Standing To sue……..14
A.
As The U.S. Supreme Court Has Held, Qui Tam
Provisions Confer Standing To
Relators By Virtue Of A Partial Assignment Of The
Government’s Damages Claim….14
B.
The Standing Of Qui Tam Relators Derives From The
Inherent Legislative Power Over
State
Property…………………………………………………………………………….17
C.
Illinois Has
Long Recognized The Standing Of
Assignees……………………………..
19
D.
The Statute Found Unconstitutional In Lyons Did
Not Confer Assignee Standing…… 19
E.
The Minimal Due Process Rights Afforded To Relators By
Virtue Of The Partial
Assignment Do
Not Conflict With The Attorney General’s
Prosecutorial
Discretion………………………………………………………………………………...20
III.
The IWA Does Not Usurp The Attorney General’s
Constitutional
Authority To Direct The Legal Affairs Of The
State………………….…….
21
A.
The IWA’s Qui Tam Provisions Were Carefully
Crafted To Ensure The Attorney General
Retains Authority To Control The Litigation At Every
Stage…………………………...22
B.
The IWA Does Not Contain The Same Constitutional Defects
As Article XX………... 26
IV.
EXTENDING LYONS v. RYAN TO THE IWA WOULD STRIP
AWAY THE STATE’S MOST EFFECTIVE ANTI-FRAUD
WEAPON………………………………………..……………….
28
CONCLUSION…………………………………………………………………………………………...
31
points
and authorities
Interest of
amici
31 U.S.C.
§ 3729-33……….9
740 ILCS
175/4……….9
Department
of Justice Press Release, False Claims Act Recoveries
Exceed $12 Billion Since 1986 (Nov. 10, 2003), available
at
www.usdoj.gov/opa/pr/2003/November/03_civ_613.htm.........10
Department
of Justice Press Release, Bayer to Pay $14 Million to
Settle Claims For Causing Providers To Submit Fraudulent
Claims To 45 State Medicaid Programs (January 23, 2001),
available at www.usdoj.gov/opa..........10
Department
of Justice Press Release, TAP Pharmaceutical Products
Inc. And Seven Others Charged With Health Care Crimes;
Company Agrees To Pay $875 Million To Settle Charges
(October 3, 2001), available at
www.usdoj.gov/opa..........10
Department
of Justice Press Release, Drug Giant Pfizer & Two
Subsidiaries To Pay $49 Million For Defrauding Drug
Medicaid Rebate Program (October 28, 2002), available at
www.usdoj.gov/opa..........10
Department
of Justice Press Release, Astrazeneca Pharmaceuticals LP
Pleads Guilty To Healthcare Crime; Company Agrees to Pay
$355 Million To Settle Charges (June 20, 2003), available
at www.usdoj.gov/opa..........10
TAF
Press Release, Study of Fraud Cases Against Drug Makers
Explains How Medicare/Medicaid Are Cheated (November 6,
2003), available at
http://www.taf.org/press/prnov6-2003.htm..........10
summary of
argument
Lyons v.
Ryan, 201 Ill. 2d 529, 780 N.E.2d 1098
(2002)……….10, 11
Vermont
Agency of Nat’l Resources v. U.S. ex rel. Stevens,
529 U.S. 765, 773 (2000)……….11
740 ICLS
175/4……….10
735 ILCS
5/20-104(b)……….11
argument
I.
THE IWA’s QUI TAM PROVISIONS
codify THE pUBLIC-private
PARTNERSHIP deeply entrenched in THE COMMON LAW TO
PREVENT
FRAUD AGAINST THE GOVERNMENT
Lyons v.
Ryan, 201 Ill. 2d 529, 780 N.E.2d 1098
(2002)……….12
Vermont Agency of Nat’l
Resources v. U.S. ex rel. Stevens, 529 U.S.
765 (2000)……….12
Marvin v. Trout, 199 U.S.
212, 225 (1905)……….12
Chicago & Alton R.R. Co. v.
Howard, 38 Ill. 414 (1865)……….13
Illinois Central R.R. Co. v. Herr,
54 Ill. 356 (1870)……….13
Dempsey v. Donnelly, 58 Ill.
40 (1871)……….13
Holland v. Swain, 94 Ill. 154
(1879)……….13
Cairo & St. Louis R. R. Co.
v. Warrington, 92 Ill. 157, 160
(1879)……….13
Ill. Const. Art. V §
1……….13
31 U.S.C. §
3729……….13
Ii.
A Qui Tam Relator under the IWA Has
Individual Standing To sue
A.
As The U.S. Supreme Court Has Held, Qui Tam
Provisions Confer Standing To Relators By Virtue
Of A Partial Assignment Of The Government’s Damages
Claim.
Vermont Agency of Natural
Resources v. U.S. ex rel. Stevens, 529 U.S. 765
(2000)……….14, 15, 16
Lyons v.
Ryan, 201 Ill. 2d 529, 780 N.E.2d 1098
(2002)……….14, 16
People
v. Whitlow, 89 Ill. 2d 322, 433 N.E.2d 629
(1982)……….15
People
ex rel. Levenstein v. Salafsky, 338 Ill. App. 3d 936,
789 N.E.2d 844 (2nd Dist.
2003)……….15
Dr.
Charles W. Smith III, Ltd. v. Gen. Life Ins. Co.,
122 Ill. App. 3d 725, 462 N.E.2d 604 (1st
Dist. 1984)……….15
U.S. ex
rel. Long v. SCS Business & Technical Inst., Inc.,
173 F.3d 870 (D.D.C. 1999)……….16
Burger
v. Lutheran Gen. Hosp., 198 Ill. 2d 21, 759 N.E.2d
533 (2001)……….17
740 ILCS
175/4(b)(1)……….15
740 ILCS
175/4(d)……….16
740 ILCS
175/3(a)……….16
305 ILCS
5/11-22a……….16
40 ILCS
5/13-312……….16
30 ILCS
500/53-10……….16
B. The Standing
Of Qui Tam Relators Derives From The
Inherent Legislative Power
Over State Property.
Droste
v. Kerner, 34 Ill. 2d 495, 217 N.E.2d 73
(1966)……….17
Cremer
v. Peoria Hous. Auth., 399 Ill. 579, 78 N.E.2d 276
(1948)……….17
Cairo
& St. Louis R.R. Co. v. Warrington, 92 Ill. 157
(1879)……….17, 18
Fodge
v. Bd. of Educ. of Village of Oak Park, 309 Ill. App.
109, 32 N.E.2d 650 (1st Dist.
1941)……….18
Ill.
Const. art. VIII § 2(b)……….17
Ill.
Const. art. XIII § 4……….17
30 ILCS
550/2……….17
740 ILCS
175/4(b)(1)……….18
Transcript
of the Illinois House of Representatives, May 15, 1991
(50th Legislative Day)……….18
C.
Illinois Has Long
Recognized The Standing Of Assignees.
Saltzberg v. Fishman,
123 Ill. App. 3d 447, 462 N.E.2d 901 (1st
Dist. 1984)……….19
Hitchcock Air Conditioning,
Heating & Piping Co. v. Hazen, 43 Ill. App. 3d
483, 357 N.E.2d 69 (3rd Dist.
1976)……….19
Kleinwort Benson N. Am., Inc.
v. Quantum Fin. Servs., Inc., 181 Ill. 2d 214,
692 N.E.2d 269 (1998)…...19
D. The Statute Found
Unconstitutional In Lyons Did Not
Confer Assignee Standing.
Vermont
Agency of Natural Resources v. U.S. ex rel. Stevens,
529 U.S. 765 (2000)……….19
Lyons v.
Ryan, 201 Ill. 2d 529, 780 N.E.2d 1098
(2002)……….19
People
ex rel. Ulrich v. Bosman, 279 Ill. App. 3d 36, 664
N.E.2d 119 (1st Dist.
1996)……….19
Kleinwort Benson N. Am., Inc.
v. Quantum Fin. Servs., Inc., 181 Ill. 2d 214,
692 N.E.2d 269 (1998)……….20
U.S. ex
rel. Robinson v. Northrop, 824 F. Supp. 830 (N.D.
Ill. 1993)……….20
740 ILCS
175/4(b)(5)……….20
740 ILCS
175/4(e)(4)(A)……….20
E. The
Minimal Due Process Rights Afforded To Relators By The
Partial
Assignment Do Not Conflict With The Attorney
General’s Prosecutorial Discretion.
East
St. Louis Fed’n of Teachers, Local 1220 v.
East St. Louis School Dist. No.189 Fin. Oversight
Panel, 178 Ill. 2d 399, 687 N.E.2d 1050
(1997)……….20
U.S.
ex rel. Kelly v. Boeing Co., 9 F.3d 743 (9th
Cir. 1993)……….21
U.S.
ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp.,
151 F.3d 1139 (9th Cir.
1998)……….21
III.
The IWA Does Not Usurp The Attorney General’s
Constitutional Authority To Direct The Legal
Affairs Of The State
A. The
IWA’s Qui Tam Provisions Were
Carefully Crafted To Ensure The Attorney
General Retains Authority To Control The Litigation At
Every Stage.
Fair
Employment Practices Comm. v. Rush-Presbyterian-St.
Luke’s Med. Center, 41 Ill. App. 3d 712, 354
N.E.2d 596 (1976)……….22, 26
Fergus
v. Russel, 270 Ill. 304, 110 N.E.2d 130
(1915)……….22
U.S.
ex rel. Sarmont v. Target Corp., No. 02 C 0815, 2003
WL 22389119 (N.D. Ill. Oct. 17,
2003)……….23
U.S.
ex rel. Alderson v. Quorum Health Group, Inc., 171 F.
Supp. 2d 1323 (M.D. Fla. 2001)……….23
U.S.
ex rel. Robinson v. Northrop Grumman Corp., 89 C
6111, 2002 WL 31163734 (N.D. Ill. Sept. 26,
2002)……….23
U.S.
ex rel. Chandler v. Cook County, Illinois, 277 F.3d
969 (7th Cir. 2002)……….23
U.S.
ex rel. Found. for Fair Contracting, Ltd. v. G&M
Eastern Contracting, Inc., 259 F. Supp. 2d 329
(D.N.J. 2003)……….24
U.S.
ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp.,
151 F.3d 1139 (9th Cir.
1998)……….24
Swift
v. U.S., 318 F.3d 250 (D.D.C.
2003)……….24
Searcy
v. Philips Elecs. N. Am. Corp., 117 F.3d 154
(5th Cir. 1997)……….24
U.S.
ex rel. Doyle v. Health Possibilities, P.S.C., 207
F.3d 335 (6th Cir. 2000)……….24
U.S.
ex rel. Taxpayers Against Fraud. v. G.E. Co., 41 F.3d
1032 (6th Cir. 1994)……….25, 26
Riley
v. St. Luke’s Episcopal Hosp., 252 F.3d 749 (5th
Cir. 2001)……….25, 26
U.S.
ex rel. Kelly v. Boeing Co., 9 F.3d 743 (9th
Cir. 1993)……….25, 26
Juliano
v. Fed. Asset Disposition Ass’n, 736 F. Supp.
348 (D.D.C. 1990)……….25
U.S.
ex rel. Gublo v. Novacare, Inc., 62 F. Supp. 2d 347
(D. Mass. 1999)……….25
U.S.
ex rel. Fallon v. Accudyne Corp., 921 F. Supp. 611
(W.D. Wis. 1995)……….25
U.S.
ex rel. Bantolas v. Superior Air & Ground Ambulance
Transport, Inc., No. 01 C 6168, 2004 WL 609793 (N.D.
Ill. March 22, 2004)……….25
Lyons v.
Ryan, 201 Ill. 2d 529, 780 N.E.2d 1098
(2002)……….26
Burger
v. Lutheran Gen. Hosp., 198 Ill. 2d 21, 32, 759
N.E.2d 533, 540 (2001)……….26
740 ILCS
175/4(b)(2)……….22
740 ILCS
175/4(b)(3)……….22
740 ILCS
175/4(c)(1)……….23
740 ILCS
175/4(c)(2)(C)……….23
740 ILCS
175/4(c)(3)……….23, 24
740 ILCS
175/4(c)(4)……….23
740 ILCS
175/4(b)(5)……….24
740 ILCS
175/4(a)……….24
740 ILCS
175/4(e)(3)……….24
740 ILCS
175/4(c)(5)……….24
740 ILCS
175/4(c)(2)(A)……….24
740 ILCS
175/4(c)(2)(B)……….24
740 ILCS
175/4(d)……….24
740 ILCS
175/4(b)……….24
B. The IWA Does
Not Contain The Same Constitutional Defects As Article
XX.
Lyons v.
Ryan, 201 Ill. 2d 529, 780 N.E.2d 1098
(2002)……….26
People
ex rel. Ulrich v. Bosman, 279 Ill. App. 3d 36, 664
N.E.2d 119 (1st Dist.
1996)……….27
Ryan
v. Consentino, 793 F. Supp. 822 (N.D. Ill.
1992)……….27, 28
735 ILCS
5/20-104(b)……….27
IV.
EXTENDING LYONS v. RYAN TO THE IWA
WOULD STRIP AWAY THE STATE’S MOST
EFFECTIVE ANTI-FRAUD WEAPON
Arkansas
Medicaid Fraud False Claims Act, Ark. Code Ann. §
20-77-91……….29
California
False Claims Act, Ca. Gov. Code §
12650……….29
Colorado
Medical Assistance Act, Colo. Rev. Stat. §
26-4-1101……….29
Delaware
False Claims and Reporting Act, Del. Code
6-1201……….29
District of
Columbia Procurement Reform Amendment Act, D.C. Code Ann.
§ 1-1188.13……….29
Florida
False Claims Act, Fla. Stat. §
68.081……….29
Hawaii
False Claims Act, Haw. Rev. Stat. §
661-21……….29
Massachusetts
False Claims Law, Mass Gen. Laws ch. 12, sec. 12, §§
5A-5O……….29
Michigan
False Claims Act, Mich. Comp. Laws
400.601……….29
Nevada
False Claims Act, Nev. Rev. Stat. §
357.010……….29
New Mexico
Medicaid False Claims Act, 2004 N.M. Laws
49……….29
Tennessee
False Claims Act, Tenn. Stat. §
4-18-101……….29
Texas
Medicaid Fraud Prevention Law, Tex. Hum. Res. Code §§
36.001-36-117……….29
Utah False
Claims Act, Utah Code Ann. §
26-20-1……….29
Virginia
Fraud Against Taxpayers Act, Va. Code §
8.01-216.1……….29
S. Rep. No.
99-345 (1986)……….30
Transcript
of the Illinois House of Representatives, May 15, 1991
(50th Legislative
Day)……….…….30, 31
Department
of Justice Press Release, False Claims Act Recoveries
Exceed $12 Billion Since 1986 (Nov. 10, 2003), available
at
www.usdoj.gov/opa/pr/2003/November/03_civ_613.htm..........28
Office of the Illinois Attorney
General Press Release, UIC Medical Center Pays $2 Million
to United States and State of Illinois To Settle Live
Transplant Fraud Suite (November 17, 2003), available at
http://www.illinoisattorneygeneral.gov/pressroom/2003_11/111703.html..........30
Interest
of AMici
AARP is a non-partisan, non-profit organization
with more than 35 million members, approximately 1.6
million of whom live in Illinois. As the largest
membership organization dedicated to addressing the needs
and interest of people 50 and older, AARP is concerned
whenever fraud leads to the misdirection of public
monies. AARP is especially concerned when this
occurs in the nation’s publicly-funded health care
system, upon which older persons are particularly
reliant. Health care fraud has a significant impact on
cost, quality, and utilization of services under the
Medicare and Medicaid programs. In
1996, an AARP task force began to work on a public
campaign to focus attention on fraud in the Medicare
program. The goal was to educate AARP members and
the general public on health care fraud and to involve
them in the process of reducing fraud and abuse in this
program. The extensive public education campaign,
launched in 1998, was carried out in partnership with the
U.S. Department of Justice and the U.S. Department of
Health and Human Services, including the Health Care
Financing Administration (now the Center for Medicare and
Medicaid Services) and the Office of the Inspector
General (OIG). The “Who Pays? You
Pay” campaign was designed to motivate Medicare
beneficiaries to be alert for signs of Medicare fraud and
to report suspected fraud on the OIG’s national
toll-free hotline number. AARP, working with others
in both the public and private sectors, has continued to
educate the public about the role they can play in
fighting health care fraud, thus helping to lower health
care costs and, at the same time, to increase the quality
of patient care.
Taxpayers Against Fraud Education Fund (TAF), is a
non-profit public interest organization dedicated to
preserving effective anti-fraud legislation at the state
and federal levels. TAF has participated as an amicus
curiae in numerous cases in order to defend the
constitutionality of the federal False Claims Act, 31
U.S.C. § 3729-33 (FCA). It also works to pass
false claims legislation modeled on the FCA, such as the
Illinois Whistleblower Reward & Protection Act, 740
ILCS 175/4 et seq. (IWA). TAF has a profound
interest in ensuring federal and state false claims
statutes are upheld against constitutional attacks.
Amici strongly support the FCA and parallel state
statutes, including the IWA. These statutes are
critical and effective tools for fighting fraud and abuse
in government programs such as Medicare, Medicaid and
other government-funded programs, and in enabling the
government to recover significant dollars, the loss of
which ultimately is borne by taxpayers. Since
Congress substantially strengthened the FCA in 1986, the
federal government has recovered over $12 billion in
civil fraud cases, the vast majority of which were
initiated by qui tam relators.[1]
Over sixty-five percent of these recoveries are
attributable to Medicare and Medicaid fraud.
The FCA and state false claims statutes such as the IWA
have also recently been employed in the fight against the
ever-rising cost of prescription drugs. Fraud in
prescription drug pricing and marketing has become an
increasing target of qui tam prosecutions
initiated under the FCA and state false claims statutes.
Since 2001 alone, qui tam cases against
pharmaceutical manufacturers resulted in government
recoveries of $1.6 billion.[2]
Because the Medicaid program (including prescription drug
benefits) is funded in part through state revenues, state
false claims acts are an important enforcement tool to
recover improperly paid state taxpayer dollars. Amici
support state false claims statutes such as the IWA
because they recognize qui tam relators often will
expose and assist in the prosecution of frauds that,
because of finite resources and competing priorities, the
various state attorneys general cannot single-handedly
pursue.
summary
of argument
The
trial court erred by extending this Court’s decision
in Lyons v. Ryan, 201 Ill. 2d 529, 780 N.E.2d 1098
(2002), to invalidate the qui tam provisions of
the Illinois Whistleblower Reward & Protection Act
(IWA), 740 ICLS 175/4 et seq. In Lyons,
this Court found that taxpayers do not have
constitutional standing to bring an action on behalf of
the State under 735 ILCS 5/20-104(b) (“Article
XX”). Article XX allowed a private
citizen without any personal stake in the outcome to
prosecute a claim on behalf of the State if the Attorney
General declined to do so, with no subsequent involvement
by the Attorney General in the action. This Court
held the statute unconstitutionally usurped the common
law powers of the Attorney General, by giving a private
citizen the unfettered right to prosecute an action that
belongs exclusively to the State. Lyons, 201
Ill. 2d at 541, 780 N.E.2d at 1106.
There
are three critical reasons why the holding in Lyons
is inapplicable to the IWA. First, unlike the
statute at issue in Lyons, the IWA’s qui
tam provisions are deeply rooted in Anglo-American
law. Qui tam statutes co-existed with
traditional executive branch powers going back over six
hundred years, long before the State of Illinois was
founded and long since then. Thus, qui tam actions
cannot usurp the common law powers of the Attorney
General, as they have always complemented those powers.
Second,
the IWA’s statutory framework differs vastly in form
and function from the taxpayer statute struck down in Lyons.
In interpreting the federal FCA -- which was the model
for the IWA -- the U.S. Supreme Court recently held that
identical qui tam provisions in the federal
statute constitutionally confer standing by virtue of the
government’s partial assignment of its cause of
action. Vermont Agency of Nat’l Resources
v. U.S. ex rel. Stevens, 529 U.S. 765, 773
(2000). Following the U.S. Supreme Court’s
rationale, the IWA is grounded in the well-established
authority of the Illinois legislature to assign property
rights belonging to the State. Unlike the taxpayer
in Lyons, the qui tam relator has been
assigned an individual interest in the outcome separate
and apart from that of the State.
Finally,
unlike the statute struck down in Lyons, under the
IWA, the Attorney General has continuing power and
prerogative to control the litigation. Because the
Attorney General retains control over a qui tam
action under the IWA at every stage of the litigation,
the statute cannot and does not usurp the Attorney
General’s authority. As shown below, the IWA
fully comports with the standing and separation of powers
principles of the Illinois Constitution as articulated in
Lyons. The trial court’s sweeping
extension of Lyons to this wholly different
statute is unwarranted and its decision must be reversed.
ARGUMENT
I.
THE IWA’s QUI TAM PROVISIONS
codify THE pUBLIC-private
PARTNERSHIP deeply entrenched in THE COMMON LAW TO
PREVENT
FRAUD AGAINST THE GOVERNMENT
Respect for the common law underscored this
Court’s decision in Lyons. In
interpreting the scope of the Attorney General’s
authority, this Court recognized, “[t]he duties of
the Attorney General are prescribed by law and include
those powers traditionally held at common law.”
Lyons, 201 Ill. 2d at 541, 780 N.E.2d at
1105. The statute at issue was struck down because
the legislature “cannot reduce the Attorney
General’s common law authority in directing the
legal affairs of the state.” Id. By
this same reasoning, the common law standing of qui
tam relators should not be compromised. The
standing of qui tam relators rests on over six
hundred years of common law precedent.
By
the time Daniel Pope Cook – the namesake of Cook
County -- served as Illinois’ first Attorney General
for eleven days in March of 1819, courts had already been
hearing qui tam actions for hundreds of years.[3] Qui
tam actions have been a part of Anglo-American law
since the thirteenth century in England when private
individuals began bringing actions in the royal courts in
both their own name and for the Crown. [4]
Vermont Agency of Nat’l Resources v.
U.S. ex rel. Stevens, 529 U.S. 765, 774
(2000), citing Prior of Lewes v. De Holt (1300), reprinted
in 48 Selden Society 198 (1931). In the
fourteenth century, Parliament began enacting statutes
that explicitly allowed private parties to sue for
themselves and the Crown (and receive an award for doing
so), even if they suffered no injury. Stevens,
529 U.S. at 775.
Qui tam actions have existed in America “ever
since the foundation of our government.” Marvin
v. Trout, 199 U.S. 212, 225 (1905); see also Stevens,
529 U.S. at 777 (the history of qui tam in America
is “well nigh conclusive”). They were
also a highly significant feature of Illinois law from
earliest times, and were commonplace by 1870 when
language virtually identical to what is now article V,
section 15 of the Constitution of Illinois was enacted.[5] See,
e.g., Chicago & Alton R.R. Co. v. Howard,
38 Ill. 414 (1865) (holding qui tam action was
properly brought by informer on behalf of himself and the
State of Illinois); Illinois Central R.R. Co. v. Herr,
54 Ill. 356 (1870) (affirming award of penalty in qui
tam action, one-half to the State and one-half to the
prosecuting witness who sued for himself and the State of
Illinois); Dempsey v. Donnelly, 58 Ill. 40 (1871)
(affirming penalty awarded in qui tam action); Holland
v. Swain, 94 Ill. 154 (1879) (affirming penalty of
treble damages in qui tam action, one-half awarded
to the county and one-half to the private citizen).
It is inconceivable that the framers of article V,
section 15 could have understood it to deprive qui tam
relators of standing, or to strip the legislature of the
power it had always enjoyed to create qui tam
actions. Indeed, less than a decade after the 1870
Constitution was enacted, this Court emphatically
affirmed the power of the legislature to enact qui tam
legislation:
The
statute books of Great Britain and of the various States
of the Union abound with such enactments. They give
popular or qui tam actions to recover forfeitures
for the omission or violation of duty. In some
cases the penalty is given to the informer, in others
one-half to the government and the other half to the
informer, or one-half to the informer and the other half
to some charity or specific fund. We are aware of
no case since the organization of our government, State
or Federal, which has questioned the power of the
legislature to thus dispose of a penalty or forfeiture.
Cairo
& St. Louis R. R. Co. v. Warrington, 92 Ill. 157,
160 (1879).
Illinois’ modern qui tam statute, the IWA,
was enacted well over a decade ago in 1991. The IWA
is closely modeled after a Civil War era federal statute
known as the False Claims Act (FCA), 31 U.S.C. § 3729 et
seq. The FCA was substantially revamped by
Congress in 1986 and since that time, has fast become the
federal government’s most potent fraud-fighting
weapon. Both the FCA and IWA contain qui tam
provisions that put into play a powerful public-private
partnership designed to ferret out fraud and abuse of
government-funded programs.
The modern FCA and state false claims statutes, including
the IWA, target the submission of “false” or
fraudulent claims to government-funded programs. The
qui tam provisions of these statutes incentivize
private citizens to promptly report fraud that otherwise
would go unchallenged. The private citizen, also
referred to as a “relator,” is entitled to
receive a portion of the government’s recovery from
a successful action. This incentive has paid
off. Since 1986, the federal government alone has
recovered over $12 billion as a result of suits arising
under the FCA. The overwhelming success of the FCA
is what inspired the various states, including Illinois,
to pass false claims legislation designed to facilitate
the return of fraudulently obtained state funds.
Ii.
A Qui Tam Relator under the IWA Has
Individual Standing To sue
A.
As The U.S. Supreme Court
Has Held, Qui Tam Provisions Confer
Standing To Relators By Virtue Of A Partial
Assignment Of The Government’s Damages Claim.
The issue in this appeal is whether the IWA properly
confers standing to private citizens to sue under the
Act’s qui tam provisions. The United
States Supreme Court recently considered this issue --
under the identical qui tam provisions of the
federal FCA -- and found that standing was constitutional
because qui tam relators had been assigned a
partial interest in the litigation. Vermont
Agency of Natural Resources v. U.S. ex rel. Stevens,
529 U.S. 765, 773 (2000).[6] The
language of the IWA and the well-established legislative
power to assign property compels the same result.
In Lyons, this Court held that a taxpayer
plaintiff lacked standing to bring suit under Article XX
because the State was the only real party in interest to
the litigation. 201 Ill. 2d at 535, 780 N.E.2d at 1102.
The “real party in interest” is “the
person or entity entitled to the benefits if the action
is successful.” Id. at 534, 780 N.E.2d
at 1102.
This
presents a key difference between the relator’s
standing in a qui tam action and the
plaintiff’s interest in an Article XX action. Under
Article XX, only the State was entitled to receive any
benefits from the action. The plaintiff taxpayer
could only recover attorneys’ fees upon successful
completion of the suit. But under the federal and
state qui tam statutes, the relator also is
entitled to benefit from the action. As the U.S.
Supreme Court emphasized:
[T]he
statute gives the relator himself an interest in the
lawsuit, and not merely the right to retain a fee out
of the recovery. Thus, it provides that
"[a] person may bring a civil action for a violation
of section 3729 for the person and for the United
States Government."
Stevens,
529 U.S. at 772. Relators’ standing
under the IWA is conferred through identical language,
establishing that “[a] person may bring a civil
action for a violation of Section 3 for the person and
for the State.” 740 ILCS 175/4(b)(1)
(emphasis added). As Stevens went on to
note, this language “can reasonably be regarded as
effecting a partial assignment of the Government's
damages claim.” 529 U.S. at 773.[7] Every Justice,
including those concurring and dissenting, adopted this
interpretation. Id. at 788 (Ginsberg, J. and
Breyer, J. concurring); id. at 802 (Stevens, J.
and Souter, J. dissenting).
The U.S. Supreme Court’s authoritative
interpretation applies equally to the IWA. Illinois
courts look to federal interpretations when the
legislature models a statute on a federal law. People
v. Whitlow, 89 Ill. 2d 322, 333, 433 N.E.2d
629, 633-34 (1982); see also People ex rel.
Levenstein v. Salafsky, 338 Ill. App. 3d 936, 942,
789 N.E.2d 844, 849 (2nd Dist. 2003) (because
the IWA is modeled closely on the FCA, federal court
opinions construing the federal statute are instructive).
The language of Article XX made it clear that the
taxpayer actions were brought to recover damages “on
behalf of” the State. Moreover, Article XX
actions were exclusively “on behalf of” the
State, with the plaintiff having no interest in the
outcome separate and apart from the State or any other
taxpayer. Article XX was not a qui tam
statute as that term has been used by lawmakers and
courts for hundreds of years, but rather, a derivative
cause of action that permitted a plaintiff to bring suit
for the sole benefit of another party – the State of
Illinois – and only if the State declined to do so.
In contrast, the IWA’s language “for the person
and for the State” precludes an interpretation that
a qui tam case is brought solely in a
representative capacity. Stevens, 529 U.S.
at 772; see also U.S. ex rel. Long v. SCS Business
& Technical Inst., Inc., 173 F.3d 870, 884
(D.D.C. 1999) (holding that a relator also is a
“real party in interest” in an FCA action,
which is “brought for the benefit of both the
relator and the United States, not for the benefit of the
United States alone”). Under the IWA, a
relator is entitled to receive up to thirty percent of
the State’s recovery in the action, which may
include treble damages and civil penalties assessed
against a defendant. 740 ILCS 175/4(d) and 740 ILCS
175/3(a). While this Court has held that the
Illinois Attorney General has the exclusive right to
conduct litigation where the State is “the
real party in interest,” it has never held, nor
should it, that this right prevents the State’s
citizens from litigating a claim where they too are a
real party in interest in the litigation. Lyons,
201 Ill. 2d at 541, 780 N.E.2d at 1105-1106 (emphasis
added).
To put it another way, because a qui tam relator
under the IWA brings suit to protect his or her own
substantial property rights and interests, he or she is
not acting simply for the State, but for
themselves individually. That by virtue of the suit
the State is alerted to fraud that may otherwise go
uncovered can only be a great benefit, and is indeed the
reason the legislature decided to assign this right to
relators in the first place.
Illinois routinely becomes a real party in
interest, along with other private real parties in
interest, due to subrogation under the Medicaid laws and
Illinois Pension laws. See 305 ILCS 5/11-22a
(public aid); 40 ILCS 5/13-312 (pension system). State
agencies are specifically authorized to transfer
interests in intangible property within their
jurisdiction, thereby creating potential shared rights of
action. 30 ILCS 500/53-10. In many other situations
the government is a real party in interest in
private litigation, such as when it is a participant in a
common fund, all cases involving the constitutionality of
a statute, and even the venerable tort of public
nuisance.
All
of these cases enabling private litigants to vindicate a
government or public right have one thing in common: the
individual litigant has a stake in the action distinct
from that of the public-at-large. As the U.S. Supreme
Court recognized in Stevens, this stake is created
by the government’s valid partial assignment of its
damages claim. This Court should adopt Stevens’
reasonable construction of the rights afforded a relator
by virtue of the qui tam provisions to uphold the
legislative act. See, e.g., Burger v. Lutheran
Gen. Hosp., 198 Ill. 2d 21, 32, 759 N.E.2d 533, 540
(2001). Any doubts must be resolved in favor of the
IWA’s validity. Burger, 198 Ill. 2d at
32, 759 N.E.2d at 540-41.