On August 23, 2019, Bloomberg Law published an article by Kathleen Carlson and Suzanne Notton of Sidley Austin discussing key provisions of the Illinois False Claims Act and recent trends in Illinois False Claims Act case law. This article is the first in a series of articles addressing the False Claims Acts of states that see relatively frequent state FCA lawsuits. In addition to Illinois, these states include California, Florida, Massachusetts, and New York. A copy of the article can be downloaded here.
In a recent decision, the First District of the Illinois Appellate Court reversed the dismissal of a complaint brought pursuant to the Illinois False Claims Act (the “IFCA”). The circuit court had held that relators satisfied the public disclosure bar because their claims were not substantially the same as publicly disclosed allegations or transactions, but that relators had failed to plead their claim with specificity. The First District agreed with the circuit court’s ruling regarding the public disclosure bar, but found that the circuit court had erred in holding that relators had failed to state a claim. This decision is the third Illinois Appellate Court decision in the last thirteen months reversing dismissals of IFCA actions (see People ex rel. Lindblom v. Sears Brands, LLC et al., No. 1-17-1468 (Ill. App. Ct), and Phone Recovery Services of Illinois, LLC ex rel. State of Illinois v. Ameritech Illinois Metro, Inc. et al., No. 1-17-0968 (Ill. App. Ct.)), and the language used by the court reflects a high threshold for dismissal.
The government action bar provides that a relator may not bring a False Claims Act (FCA) lawsuit “based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party.” 31 U.S.C. § 3730(e)(3) (emphasis added). Recently, in Schagrin v. LDR Industries, LLC, No. 14 C 9125, 2018 WL 2332252 (N.D. Ill. May 23, 2018), a district court held that the relators’ lawsuit was barred by the “government action bar” because LDR Industries had already been subject to administrative penalties by U.S. Customs for the same alleged conduct. (more…)