Illinois Whistleblower Reward and Protection Act

By: Joel M. Androphy1Rachel Grier and Nisha Ghosh

Illinois passed the Illinois False Claims Act (IFCA), previously called the “Illinois Whistleblower Reward and Protection Act,” in 1991.2 The IFCA models the Federal False Claims Act (FCA),3 but is different is some aspects.

1. LIABILITY AND DAMAGES PROVISIONS

Generally, an individual will be liable under the IFCA for the same violations as the federal FCA. For example, an individual will be liable for knowingly presenting or causing the presentation of a false claim, or knowingly making, using, or causing to be made or used a false record or statement, or conspiring to defraud the state.4 Like the federal FCA, the IFCA explicitly excludes false tax claims.5

The damages provision in the IFCA is similar to the statutory language of the federal FCA and allows for treble damages and civil penalties ranging from $5,500 to $11,000 per claim.6 But, unlike the federal FCA, the Illinois statute does not provide for the reduction of liability if the defendant voluntarily discloses the violations.7

2. PROCEDURAL ISSUES

a. General Procedural Provisions 

The IFCA allows a private person to be a relator.8 Several of the remaining procedural provisions in the IFCA are similar to those in the federal FCA, including the sixty-day sealing provisions with the state’s option to extend upon a showing of good cause;9the required disclosure of all material evidence to the state;10 the state’s primary responsibility for litigating the action if it chooses to intervene and the right to limit the relator’s participation;11 and the state’s right to dismiss the case over the objection of the relator, as long as the state notifies the relator and provides an opportunity for a hearing.12 The government also may settle the case despite the relator’s objections as long as the court determines that the settlement is “fair, adequate, and reasonable under all circumstances.”13 If the government decides not to intervene, the relator has the right to proceed with the litigation.14 However, the government may intervene at a later date upon a showing of good cause without limiting the status and right of the relator.15

Both federal and state statutes also grant the government the right to order a stay of proceedings if the civil action would interfere with a criminal matter arising from the facts of the violation and the right to petition the court for an extension upon a showing that the state has pursued the criminal or civil investigation with “reasonable diligence.”16 Like the federal FCA, the state statute also provides that the government or relator must prove all elements of the cause of action, including damages, by a preponderance of the evidence.17 In addition, both the federal FCA and the IFCA provide that, if a final judgment was rendered in favor of the government in a criminal proceeding, the defendant is estopped from denying the essential elements of the offense in any action brought pursuant to the statute that involves the same transactions.18

b. Statute of Limitations

The limitations period in the IFCA is the same as in its federal counterpart. The IFCA provides that an action may not be brought more than six years after the date on which the violation is committed or more than three years after the date on which government officials knew or reasonably should have known of the material facts of the violation.19 In addition, an action may not be brought later than ten years after the violation occurred.20 Like the post-FERA federal FCA,21 the IFCA allows the state’s pleading to relate back to the filing date of the relator’s complaint for statute of limitations purposes if the state decides to intervene.22

3. JURISDICTIONAL BARS TO ACTIONS

a. First to File Bar and Bar Against Members of Legislative, Executive or Judicial Branches

Like its federal counterpart, the IFCA provides jurisdictional bars to certain qui tam actions. The IFCA contains a first to file bar and a bar prohibiting actions against members of the judicial, executive and legislative branches, and certain exempt officials.23 It also contains a bar against actions based on transactions or allegations that are the subject of another civil or administrative action to which the government is already a party.24

b. Public Disclosure Bar

The IFCA also contains a public disclosure bar that is similar to the federal FCA. The IFCA prohibits a relator from bringing an action based upon

“the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a legislative, administrative, or Auditor General’s report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.”25

In order to be an “original source,” the IFCA requires the relator to have “direct and independent knowledge” of the violation and to have voluntarily provided this information to the Government.26 This used to be very similar to the federal FCA language, which also required an original source to have “direct and independent knowledge,” but the Patient Protection and Affordable Care Act (“the Affordable Care Act”)27 amended that section of the federal statute in 2010.28 Illinois has not yet enacted these changes.

4. RETALIATION

The IFCA, like the federal statute, protects whistleblowers from retaliation by their employers. The damages recoverable under the state statute are almost identical to those recoverable under the federal FCA.29 Damages include reinstatement with the same seniority status and damages necessary to make the employee whole, such as double the back pay, interest on the back pay, and special damages, including litigation costs and reasonable attorney’s fees.30

5. RELATOR’S SHARE

The relator’s recovery under the IFCA is the same as the federal FCA. If the state proceeds with an action, the relator is entitled to fifteen to twenty-five percent of the proceeds.31 If the state decides not to intervene and the relator proceeds with an action, the relator is entitled to twenty-five to thirty percent of the proceeds.32 The relator is also entitled to necessary expenses incurred, including reasonable attorney’s fees and costs.33 The IFCA reduces the relator’s share to no more than ten percent of the proceeds if the suit was based upon public disclosure and the relator was not an original source of the information.34 It also provides for the reduction of a relator’s award if the relator “planned and initiated” the fraudulent activity.35 If the relator is convicted of criminal conduct due to his role in the fraud, the relator shall be dismissed from the civil action and will not share in the proceeds.36

In a previous version of the statute, all proceeds of the action were placed into the Whistleblower Reward and Protection Fund, which was created by the IFCA, and proceeds were to be disbursed accordingly by the State Treasurer, but the newest version of the bill states that any attorney’s fees, expenses, and costs awarded are not to be deposited in the fund.37 The IFCA also allows a successful defendant to recover attorney’s fees and costs if the suit was filed for purposes of harassment or if the suit was frivolous or vexatious.38

 

  1. Author of treatise,Federal False Claims Act and Qui Tam Litigation, Law Journal Press (2010), research source of the issues discussed in this article.
  2. Ill. Ann. Stat., Ch. 740, §§175/1-175/8.  Illinois False Claims Act.
  3. 31 U.S.C. § 3729-3733.  Federal False Claims Act.
  4. Ill. Ann. Stat., Ch. 740, §175/3(a).
  5. Ill. Ann. Stat., Ch. 740, §175/3(c).  See also, 31 U.S.C. § 3729(d).
  6. Ill. Ann. Stat., Ch. 740, §175/3(a). Compare 31 U.S.C. § 3729(a). The civil penalties under the federal FCA have now been raised to $5,500 and $11,000 to account for inflation.  See Chapter 4, supra, for further discussion of this issue.
  7. Compare 31 U.S.C. § 3729(a)(2).
  8. Ill. Ann. Stat., Ch. 740, §175/4(b)(1).
  9. Ill. Ann. Stat., Ch. 740, §175/4(b)(2)-(3).
  10. Ill. Ann. Stat., Ch. 740, §175/4(b)(2).
  11. Ill. Ann. Stat., Ch. 740, §§175/4(c)(1) & 175/4(c)(2)(C).
  12. Ill. Ann. Stat., Ch. 740, §175/4(c)(2)(A).
  13. Ill. Ann. Stat., Ch. 740, §175/4(c)(2)(B).
  14. Ill. Ann. Stat., Ch. 740, §175/4(c)(3).
  15. Id.
  16. Ill. Ann. Stat., Ch. 740, §175/4(c)(4).
  17. Ill. Ann. Stat., Ch. 740, §175/5(d).  Compare 31 U.S.C. § 3730(c)(4).  The federal FCA states only that the “United States” must prove all elements by a preponderance of the evidence.
  18. Ill. Ann. Stat., Ch. 740, §175/5(e).
  19. Ill. Ann. Stat., Ch. 740, §175/5(b).
  20. Ill. Ann. Stat., Ch. 740, §175/5(b)(2).
  21. Fraud Recovery and Enforcement Act, Pub. L. No. 111-21.  § 4, 123 Stat. 1623 (May 20, 2009).
  22. Ill. Ann. Stat., Ch. 740, §175/5(c).  Compare 31 U.S.C. 3731(c).
  23. Ill. Ann. Stat., Ch. 740, §§175/4(b)(5) & (e)(2). Compare 31 U.S.C. §§ 3730(b)(5) and (e)(2).
  24. Ill. Ann. Stat., Ch. 740, §175/4(e)(3).
  25. Ill. Ann. Stat., Ch. 740, §175/4(e)(4)(A).
  26. Ill. Ann. Stat., Ch. 740, §175/4(e)(4)(B). Compare 31 U.S.C. § 3730(e)(4)(B).
  27. Patient Protection and Affordable Care Act (“the Affordable Care Act”), Pub. L. No. 111-148, 124 Stat. 119 (March 23, 2010).
  28. 31 U.S.C. §3730(e)(4)(B).  In the amended version of the federal FCA, the definition of “original source” was changed and the amended law now allows a person to qualify as an “original source” if that person discloses the information to the government before the public disclosure is made or if they have “knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions.”  In addition, in the amended version of the federal FCA, the court can only dismiss an action based upon a public disclosure if the government does not oppose the dismissal.  Also, actions based on public disclosures are only barred if they are made in a criminal, civil, or administrative hearing in which the government is a party.
  29. Ill. Ann. Stat., Ch. 740, §175/4(g).  See also,31 U.S.C. § 3730(h).
  30. Id.
  31. Ill. Ann. Stat., Ch. 740, §175/4(d)(1).
  32. Ill. Ann. Stat., Ch. 740, §175/4(d)(2).
  33. Ill. Ann. Stat., Ch. 740, §175/4(d)(1)-(2).
  34. Ill. Ann. Stat., Ch. 740, §175/4(d)(1).
  35. Ill. Ann. Stat., Ch. 740, §175/4(d)(3).
  36. Id.
  37. Ill. Ann. Stat., Ch. 740, §175/8(a).
  38. Ill. Ann. Stat., Ch. 740, §175/4(d)(4).

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