Opinion ID: 3135228
Heading Depth: 2
Heading Rank: 3

Heading: whistleblower reward and protection act

Text: The circuit court dismissed plaintiffs’ claims brought under the Whistleblower Reward and Protection Act (740 ILCS 175/1 et seq. (West 2002)), holding the Act unconstitutionally usurped the Attorney General’s duties as the sole legal representative of the state under the rationale in Lyons , 201 Ill. 2d 529. The constitutionality of a statute is a question of law that we review de novo . People ex rel. Sherman v. Cryns , 203 Ill. 2d 264, 290 (2003). Statutes are presumed constitutional and courts are required to construe statutes to “uphold their constitutionality whenever reasonably possible.” Hill v. Cowan , 202 Ill. 2d 151, 157 (2002). We begin our analysis with a review of the Act. The Act imposes civil liability upon “[a]ny person” who, inter alia , “knowingly presents, or causes to be presented, to an officer or employee of the State  a false or fraudulent claim for payment or approval.” 740 ILCS 175/3(a)(1) (West 2002). A person who violates the Act is liable to the state for a civil penalty of not less than $5,000 and not more than $10,000, plus treble damages. 740 ILCS 175/3(a) (West 2002). An action under the Act may be commenced by the Attorney General. 740 ILCS 175/4(a) (West 2002). A private person may also bring a qui tam civil action “ for the person and for the State” (emphasis added), “in the name of the State.” 740 ILCS 175/4(b) (West 2002). A qui tam plaintiff bringing an action under the Act must serve the state with “[a] copy of the complaint and written disclosure of substantially all material evidence and information.” 740 ILCS 175/4(b)(2) (West 2002). The complaint is filed in camera and remains under seal for at least 60 days. 740 ILCS 175/4(b)(2) (West 2002). The Attorney General then has 60 days (plus any extensions granted by the court) to investigate the claim and decide whether to intervene. 740 ILCS 175/4(b)(2) (West 2002). When the Attorney General intervenes, the Attorney General assumes “primary responsibility for prosecuting the action,” and the qui tam plaintiff has a right to continue as a party in the case, subject to certain limitations. 740 ILCS 175/4(c) (West 2002). The Attorney General may dismiss or settle the action at any time “notwithstanding the objections of the person initiating the action.” 740 ILCS 175/4(c)(2)(A), (c)(2)(B) (West 2002). The Attorney General may also restrict the qui tam plaintiff’s participation in the action. 740 ILCS 175/4(c)(2)(C) (West 2002). If the Attorney General declines to proceed with the action, the qui tam plaintiff has the right to proceed, and the Attorney General may later intervene. 740 ILCS 175/4(c)(3) (West 2002). The Attorney General has the right to monitor the action and receive copies of all pleadings and deposition transcripts. 740 ILCS 175/4(c)(3) (West 2002). In the event “certain actions of discovery by the person initiating the action would interfere with the State’s investigation or prosecution of a criminal or civil matter,” the Attorney General may seek a stay of discovery or simply exercise the Attorney General’s ultimate authority and dismiss the qui tam action. 740 ILCS 174/4(c)(2)(A), (c)(4) (West 2002). The qui tam plaintiff is entitled to receive 15% to 25% of the proceeds of the action if the Attorney General intervenes. 740 ILCS 175/4(d)(1) (West 2002). If the Attorney General elects not to intervene, the qui tam plaintiff is entitled to receive 25% to 30% of the proceeds, plus reasonable attorney fees and costs. 740 ILCS 175/4(d)(2) (West 2002). In addition to its qui tam provisions, the Act also protects an employee from retaliation for disclosure of an employer’s misconduct. 740 ILCS 175/4(g) (West 2002). The Act thus contains both “whistleblower” and “ qui tam ” provisions. Plaintiffs assert standing under the qui tam provisions of the statute. We must first determine the real party in interest under the qui tam provisions of the Act. See Lyons , 201 Ill. 2d at 534. The real party in interest is the person or entity entitled to recovery if the lawsuit is successful who “has an actual and substantial interest in the subject matter of the action, as distinguished from one who has only a nominal, formal, or technical interest in, or connection with, the case.” Lyons , 201 Ill. 2d at 534. The Act closely mirrors the Federal False Claims Act originally enacted in 1863. See 31 U.S.C. §§3729 through 3733 (2000). The United States Supreme Court has recently addressed the issue of standing of a qui tam plaintiff under the Federal False Claims Act, and we find its analysis instructive. Vermont Agency , 529 U.S. 765, 146 L. Ed. 2d 836, 120 S. Ct. 1858. The Federal False Claims Act provides: “A person may bring a civil action for a violation of section 3729 for the person and for the United States Government.” (Emphasis added.) 31 U.S.C. §3730 (2000). In examining standing under the Federal False Claims Act, the Supreme Court noted that the complaint clearly asserted an injury to the United States–an injury to its sovereignty based on the violation of its laws, and a proprietary injury from the alleged fraud. Vermont Agency , 529 U.S. at 771, 146 L. Ed. 2d at 844, 120 S. Ct. at 1862. It was not clear, however, if the complaint asserted an injury to the complaining party (the relator), a prerequisite for standing under article III of the United States Constitution. Vermont Agency , 529 U.S. at 771, 146 L. Ed. 2d at 844, 120 S. Ct. at 1862. The Supreme Court stated that“[i]t would perhaps suffice to say that the relator [in an action brought under the Federal False Claims Act] is simply the statutorily designated agent of the United States, in whose name  the suit is brought–and that the relator’s bounty is simply the fee he receives out of the United States’ recovery for filing and/or prosecuting a successful action on behalf of the Government.” (Emphases in original.) Vermont Agency , 529 U.S. at 772, 146 L. Ed. 2d at 845, 120 S. Ct. at 1862. This analysis, however, could not adequately explain the relator’s standing under the Federal False Claims Act because the statute “gives the relator himself an interest in the lawsuit , and not merely the right to retain a fee out of the recovery.” (Emphasis in original.) Vermont Agency , 529 U.S. at 772, 146 L. Ed. 2d at 845, 120 S. Ct. at 1862. The Supreme Court therefore reasoned that some explanation of standing other than agency for the United States government had to be identified to explain the portion of recovery retained by the relator. Vermont Agency , 529 U.S. at 772, 146 L. Ed. 2d at 845, 120 S. Ct. at 1862. The Supreme Court went on to recognize that the bounty the relator would receive if the suit succeeded undoubtedly constituted a “ ‘concrete private interest in the outcome of [the] suit.’ ” Vermont Agency , 529 U.S. at 772, 146 L. Ed. 2d at 845, 120 S. Ct. at 1862, quoting Lujan v. Defenders of Wildlife , 504 U.S. 555, 573, 119 L. Ed. 2d 351, 372, 112 S. Ct. 2130, 2143 (1992). This interest, however, was insufficient to give rise to a cognizable injury in fact on the part of the relator because it was merely a “byproduct” of the lawsuit itself. Vermont Agency , 529 U.S. at 773, 146 L. Ed. 2d at 845, 120 S. Ct. at 1863, citing Steel Co. , 523 U.S. at 107, 140 L. Ed. 2d at 235, 118 S. Ct. at 1019. Although there was no cognizable injury in fact suffered by the relator to justify the Federal False Claims Act’s conferral of an interest in the lawsuit upon the relator, the Supreme Court concluded “the doctrine that the assignee of a claim has standing to assert the injury in fact suffered by the assignor” provided an adequate basis for the relator’s suit. Vermont Agency , 529 U.S. at 773, 146 L. Ed. 2d at 846, 120 S. Ct. at 1863. The Supreme Court reasoned that the Federal False Claims Act could “reasonably be regarded as effecting a partial assignment of the Government’s damages claim.” Vermont Agency , 529 U.S. at 773, 146 L. Ed. 2d at 846, 120 S. Ct. at 1863. Therefore, the relator’s complaint alleging an injury in fact to the United States sufficed to confer standing on the relator. Vermont Agency , 529 U.S. at 774, 146 L. Ed. 2d at 846, 120 S. Ct. at 1863. We adopt the reasoning of Vermont Agency and hold a qui tam plaintiff is a partial assignee of the state’s claim under the qui tam provisions of the Act permitting a private person to “bring a civil action for a violation of [the Act] for the person and for the State. ” (Emphasis added.) 740 ILCS 175/4(b)(1) (West 2002). The qui tam statute therefore gives a qui tam plaintiff a personal stake in the outcome. In other words, the interest of a qui tam plaintiff in a claim under the Act is justified as a partial assignment of the state’s right to bring suit. Accordingly, under the Act, a qui tam plaintiff is a “real party in interest,” together with the state. We must address, however, whether the qui tam provisions of the Act usurp the constitutional powers of the Attorney General to represent the state. The parties urge differing interpretations of the Act’s qui tam provisions. Plaintiffs argue the Act is constitutional because it places sufficient control in the hands of the Attorney General. In contrast, UBS argues the Act is unconstitutional because it affords the Attorney General far less control over an action than does article XX. UBS contends the Act does not allow the Attorney General to preclude the qui tam plaintiff’s participation in the case, does not allow the Attorney General to settle claims absent court approval, and limits the overall ability of the Attorney General to intervene in the action. Additionally, Morgan Stanley argues that the Act poses no constitutional problem for qui tam actions brought on behalf of nonstate government entities. Qui tam suits on behalf of the state or its agencies, however, stand in irreconcilable conflict with the constitutional role of the Illinois Attorney General because it takes away any prosecutorial discretion and the limited role of the Attorney General does not comport with the Attorney General’s constitutional duty to represent the state. The Attorney General, on the other hand, argues that the Act is unconstitutional only to the extent it purports to confer standing on private persons to sue when the state has a real interest and the Attorney General has declined to intervene in the case. According to the Attorney General, when the Attorney General intervenes in an action under the Act, the Attorney General’s constitutional authority to direct and control the litigation is safeguarded. Plaintiffs counter that the Act provides the Attorney General with sufficient control over the litigation because it allows for intervention of the Attorney General at any time. Further, according to plaintiffs, the plain language of the Act provides the Attorney General may dismiss the case “notwithstanding the objections of the person initiating the action.” Thus, plaintiffs argue, this court should uphold the constitutionality of the Act. In considering the parties’ arguments for various interpretations of the Act’s qui tam provisions, we reiterate that statutes are presumed constitutional. In re Curtis B. , 203 Ill. 2d 53, 58 (2002). Since statutes enjoy a strong presumption of constitutionality, we must construe statutes to “uphold their constitutionality whenever reasonably possible.” Hill , 202 Ill. 2d at 157. We hold the qui tam provisions of the Act do not usurp the constitutional powers of the Attorney General to represent the state. The Act does not suffer the same infirmities as section 20–104(b) of article XX. Article XX, as it is currently written, purports to confer standing upon private citizens to sue on behalf of the state when the Attorney General declines to proceed with an action, with absolutely no subsequent involvement by the Attorney General. In other words, section 20–104(b) of article XX gives private citizens the unfettered right to prosecute claims in the state’s name, without the Attorney General’s oversight or participation in the action. As we have noted, section 20–104(b) of article XX is not a qui tam provision. Rather, section 20–104(b) of article XX is a citizen “derivative action” provision. In contrast, the qui tam provisions of the Act impose significant restrictions on qui tam plaintiffs. Although the qui tam plaintiffs may “conduct” the litigation on the state’s behalf, the Attorney General retains authority to “control” the litigation. As pointed out by amici , AARP and Taxpayers Against Fraud, the Act’s qui tam provisions ensure the Attorney General retains authority to control the litigation at every stage of the proceedings. For example, a qui tam plaintiff commences suit by filing a complaint in camera and serving it on the Attorney General with all material evidence in the qui tam plaintiff’s possession. 740 ILCS 175/4(b)(2) (West 2002). The complaint remains under seal for at least 60 days while the Attorney General investigates the allegations and the qui tam plaintiff may not proceed with the suit until the Attorney General completes an investigation and decides whether to intervene. 740 ILCS 175/4(b)(2), (b)(3) (West 2002). The Attorney General is entitled to extensions of time as necessary to complete an investigation. 740 ILCS 175/4(b)(3) (West 2002). If the Attorney General elects to intervene, the Attorney General has primary responsibility for prosecuting the action and is not bound by any act of the qui tam plaintiff. 740 ILCS 175/4(c)(1) (West 2002). Even though the qui tam plaintiff remains a party to the action, the Attorney General may restrict the qui tam plaintiff’s participation in the litigation if it would interfere with or unduly delay the state’s prosecution or if it would be “repetitious, irrelevant, or for purposes of harassment.” 740 ILCS 174/4(c)(2)(C) (West 2002). Even when the Attorney General declines to intervene, the Attorney General retains control over the litigation by monitoring the proceedings through receiving copies of all pleadings and deposition transcripts. 740 ILCS 715/4(c)(3) (West 2002). The Attorney General may even stay certain discovery if it would interfere with an investigation or prosecution of a criminal or civil suit arising out of the same facts. 740 ILCS 175/4(c)(4) (West 2002). No one but the Attorney General may intervene in the action, and the Attorney General retains the right to intervene in the lawsuit at any time. 740 ILCS 175/4(b)(5), (c)(3) (West 2002). If the Attorney General has already initiated an action under the Act or filed any other civil action based on the allegations of the potential qui tam suit, the qui tam plaintiff is foreclosed from bringing the action. 740 ILCS 175/4(e)(3) (West 2002). Further, the Attorney General may elect to pursue the allegations of the qui tam complaint through any “alternate remedy” available to the state, including an administrative proceeding to recoup overpayments. 740 ILCS 175/4(c)(5) (West 2002). Most critically, the Attorney General has authority to dismiss or settle the action at any time, despite the objections of the qui tam plaintiff. 740 ILCS 175/4(c)(2)(A), (c)(2)(B) (West 2002). Moreover, even if the qui tam plaintiff is permitted to proceed with the action, the Attorney General must give written consent to any attempt by the qui tam plaintiff to dismiss the action. 740 ILCS 175/4(b) (West 2002). Although the qui tam provisions of the Act might have been more artfully drafted to avoid confusion, we determine that under the plain language of the qui tam provisions of the Act, once the Attorney General receives notification of the action being filed by the qui tam plaintiff, the Attorney General may: (1) intervene and assume primary responsibility for prosecuting the action (740 ILCS 175/4(b)(4)(A) (West 2002)); (2) decline to intervene and permit the qui tam plaintiff to conduct the litigation (740 ILCS 175/4(b)(4)(B) (West 2002)); or (3) simply dismiss the action (740 ILCS 175/4(c)(2)(A) (West 2002)). (footnote: 1) When the Attorney General intervenes in the action, the Attorney General conducts the litigation. See 740 ILCS 175/4(b)(4)(A) (West 2002). Even when the Attorney General declines to intervene, the Attorney General retains complete control of the litigation. See 740 ILCS 175/4(c)(2)(A), (c)(2)(B) (West 2002). For these reasons, we interpret the plain language of the Act to provide that the Attorney General in all circumstances effectively maintains control over the litigation, consonant with the Attorney General’s constitutional role as the chief legal officer of the state. Unlike section 20–104(b) of article XX, the qui tam provisions of the Act do not usurp the constitutional power of the Attorney General. Rather than usurping the constitutional power of the Attorney General, the qui tam provisions of the Act support the Attorney General’s law enforcement duties. As the Attorney General’s brief points out, private citizens and their attorneys play a vital role in bringing cases involving fraud and abuse of government-funded programs to the attention of the state. Since the Act was enacted in 1991, the Attorney General has brought or intervened in approximately 130 cases, almost all being brought to the attention of the Attorney General by private citizens filing qui tam actions. Underscoring the important role of qui tam actions in effective law enforcement, the Attorney General insists: “In many instances, but for the efforts of these private citizens and their attorneys, the Attorney General would not have known of these schemes to defraud the State.” Lyons and its predecessors simply established that the Attorney General possesses the exclusive authority to represent the state in litigation. Neither the facts nor the holdings in those cases considered whether the Attorney General’s constitutional authority is usurped when the Attorney General intervenes in a qui tam action and assumes exclusive control of the litigation, or when the Attorney General declines to intervene in, or consents to, a qui tam action but retains the exclusive power to dismiss or settle the action. As this court recognized in Fergus : “As the office of Attorney General is the only office at common law which is thus created by our constitution the Attorney General is the chief law officer of the State, and the only officer empowered to represent the people in any suit or proceeding in which the State is the real party in interest, except where the constitution or a constitutional statute may provide otherwise . With this exception, only, he is the sole official adviser of the executive officers and of all boards, commissions and departments of the State government, and it is his duty to conduct the law business of the State, both in and out of the courts.” (Emphases added.) Fergus , 270 Ill. at 342. This court has recognized the Attorney General’s constitutional delegation of authority is not infringed when the state’s interest is represented by other counsel who remain under the control of the Attorney General and serves only at the Attorney General’s pleasure. See People v. Illinois Toll Highway Comm’n , 3 Ill. 2d 218, 236-38 (1954); Saxby v. Sonnemann , 318 Ill. 600 (1925). Toll Highway Comm’n involved, inter alia , a challenge to a statute authorizing the Illinois State Toll Highway Commission to appoint assistant Attorneys General and retain special counsel. The statute at issue in Toll Highway Comm’n expressly required the consent and approval of the Attorney General for the appointment of assistant Attorneys General and special counsel. Toll Highway Comm’n , 3 Ill. 2d at 236. This court noted that the statute also expressly provided assistant Attorneys General and special counsel “shall be under and subject to the control, direction and supervision of the Attorney General and shall serve only at his pleasure.” Toll Highway Comm’n , 3 Ill. 2d at 236. Accordingly, this court found that even though the assistant Attorneys General and special counsel were representing the state, “their right to do so exists only because they are subordinates of the Attorney General.” Toll Highway Comm’n , 3 Ill. 2d at 238. In Toll Highway Comm’n , this court distinguished Fergus since the appropriations in Fergus attempted to confer the Superintendent of Insurance with authority “entirely independent of control in the Attorney General.” Toll Highway Comm’n , 3 Ill. 2d at 236-37. This court further noted that Fergus acknowledged “ ‘there were other representatives of the crown in the courts at common law, but they were all subordinate to the Attorney General.’ ” Toll Highway Comm’n , 3 Ill. 2d at 237. This court also looked to Saxby , pointing out “the multiplicity of duties of the Attorney General forbids personal attention to all of them and that the Attorney General may act through deputies or assistants in carrying out his duties.” Toll Highway Comm’n , 3 Ill. 2d at 237. Accordingly, this court found no valid constitutional objection to the appropriation. Toll Highway Comm’n , 3 Ill. 2d at 238. Similar to the statute at issue in Toll Highway Comm’n , the qui tam provisions of the Act fully recognize the Attorney General’s constitutional role as the chief legal advisor of the state. Moreover, qui tam plaintiffs, acting as statutorily designated agents for the state, may proceed only with the consent of the Attorney General, and remain completely subordinate to the Attorney General at all times. We conclude, as in Toll Highway Comm’n , that the qui tam provisions of the Act “are a valid method of enabling the Attorney General to perform [the requisite] legal functions as attorney [for the state].” Toll Highway Comm’n , 3 Ill. 2d at 238. In accordance with this court’s duty to uphold the constitutionality and validity of a statute when reasonably possible, we have interpreted the Act according to its plain language. We therefore hold the qui tam provisions of the Act is a “constitutional statute,” as it does not usurp the Attorney General’s constitutional power to conduct the legal affairs of the state when the state is a real party in interest. See Fergus , 270 Ill. at 342 (holding that, “ except where the constitution or a constitutional statute may provide otherwise ”, the Attorney General is the sole official legal adviser of the state (emphasis added)). Accordingly, the circuit court erred in dismissing plaintiffs’ qui tam actions for lack of standing and in declaring the entire Act unconstitutional. We note by virtue of the Attorney General’s intervention in appeal No. 97023, she now has the primary responsibility for prosecuting the action on remand. See 740 ILCS 174/4(b)(4)(A), (c)(3) (West 2002). Since the Attorney General has not intervened in appeal No. 97866, plaintiffs may proceed to conduct the litigation in that case, subject to the Attorney General’s oversight and her authority to settle or dismiss the action at any time. Of course, if the Attorney General has determined through her investigations that neither case should proceed, she may dismiss both actions, and plaintiffs shall have no right to proceed.