State ex rel. Leibowitz v. Family Vision Care, LLC
181 N.E.3d 790
Ill.2020Background
- The Insurance Claims Fraud Prevention Act (740 ILCS 92/1 et seq.) creates qui tam enforcement allowing an "interested person, including an insurer," to sue on behalf of the State for civil penalties for insurance fraud.
- Marie Cahill was the former office administrator for Family Vision Care and handled billing; she alleges defendants directed false certifications to VSP about optometrist ownership so the practice could obtain millions in VSP payments.
- After Cahill filed bankruptcy, the trustee (David P. Leibowitz) filed a qui tam complaint in the name of the State alleging violations of Illinois criminal insurance-fraud statute and seeking treble damages plus statutory penalties under the Act.
- Defendants moved to dismiss under section 2-619(a)(9), arguing the trustee lacked standing because Cahill had no personal pecuniary injury and the State’s injury was only to sovereignty and thus not assignable.
- The circuit court dismissed; the appellate court reversed, holding former-employee whistleblowers with nonpublic information are "interested persons" and the State’s nonpecuniary sovereignty injury can be partially assigned; the Illinois Supreme Court affirmed the appellate court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a relator must have a personal claim/status to be an "interested person" under §15(a) | Cahill (via trustee) is an "interested person" because she possesses nonpublic, material evidence and information; the Act does not require a personal pecuniary interest | "Interested person" requires a personal legal or pecuniary stake (e.g., the defrauded insurer); otherwise the term is meaningless | The Court held "interested person" means one who possesses and discloses material nonpublic information and participates in prosecution; no personal claim required |
| Whether the State’s injury (violation of criminal laws — injury to sovereignty) can be partially assigned so a relator has standing | The Act effects a partial assignment of the State’s claim for civil penalties; the State’s sovereignty injury suffices for relator standing (analogous to False Claims Act precedent) | The State suffers no pecuniary injury to assign; assigning enforcement of criminal law is improper — sovereign enforcement power cannot be transferred | The Court held the State suffers an "injury in fact" to its sovereignty from law violations and may partially assign that claim to a relator; qui tam enforcement does not usurp prosecutorial power |
| Whether qui tam enforcement under the Act is constitutional given the attorney general's exclusive authority to represent State interests | Interpreting the Act like the False Claims Act preserves the attorney general/state’s attorney control (notice, seal, intervention, dismissal power), so it is constitutional | Allowing private citizens to pursue qui tam claims encroaches on the attorney general’s constitutional authority to represent the State | The Court held the Act preserves sufficient control by the attorney general/state’s attorney and is consistent with constitutional authority |
Key Cases Cited
- Scachitti v. UBS Financial Services, 215 Ill. 2d 484 (2005) (relator standing as partial assignee under Illinois False Claims Act)
- Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000) (qui tam relator may have standing as partial assignee of government’s claim)
- Stauffer v. Brooks Brothers, Inc., 619 F.3d 1321 (Fed. Cir. 2010) (qui tam provision construed as statutory assignment of government rights; relator can assert government injury)
- People ex rel. Hartigan v. E&E Hauling, Inc., 153 Ill. 2d 473 (1992) (standing doctrine requires sufficient stake; limits on who may sue for State interests)
- People ex rel. Alzayat v. Hebb, 226 Cal. Rptr. 3d 867 (Ct. App. 2017) (interpretation of California statute analogous to Illinois Act—relator need not suffer personal injury)