THE STATE OF ILLINOIS еx rel. JOSEPH PUSATERI, Appellee, v. THE PEOPLES GAS LIGHT AND COKE COMPANY, Appellant.
116844
Supreme Court of Illinois
November 20, 2014
2014 IL 116844
CHIEF JUSTICE GARMAN delivered the judgment of the court, with opinion. Justices Freeman, Thomas, Kilbride, Karmeier, Burke, and Theis concurred in the judgment and opinion.
Illinois Official Reports. State of Illinois ex rel. Pusateri v. Peoples Gas Light & Coke Co.
Held
(Note: This syllabus constitutes no part of the opinion of the court but has been prepared by the Reporter of Decisions for the convenience of the reader.)
A circuit court complaint was properly dismissed as raising ratemaking issues which are within the exclusive jurisdiction of the Illinois Commerce Commission where it alleged that a gas utility company‘s failure to make accurate reports to the Commission caused rates to be higher and the State, as a customer, to pay more—Whistleblower Act and False Claims Act.
Decision Under Review
Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. Rаymond W. Mitchell, Judge, presiding.
Judgment
Appellate court judgment reversed.
Circuit court judgment affirmed.
Counsel on Appeal
David Novoselsky, Edward J. Stawicki and Jonathan P. Novoselsky, of Novoselsky Law Offices, of Chicago, for appellee.
John E. Rooney, Anne W. Mitchell and Conor B. Ward, of Rooney Rippie & Ratnaswamy LLP, of Chicago, for amici curiae Ameren Illinois and Nicor Gas Company.
Justices
CHIEF JUSTICE GARMAN delivered the judgment of the court, with opinion.
Justices Freeman, Thomas, Kilbride, Karmeier, Burke, and Theis conсurred in the judgment and opinion.
OPINION
¶ 1 Plaintiff Joseph Pusateri filed a complaint under the False Claims Act1 alleging defendant Peoples Gas Light and Coke Company (PG) used falsified gas leak response records to justify a fraudulently inflated natural gas rate before the Illinois Commerce Commission (Commission). As a customer, the State of Illinois would have paid such fraudulently inflated rates, making PG liable under the False Claims Act. The Cook County circuit court dismissed Pusateri‘s complaint with рrejudice, finding that as a matter of law, there was no causal connection between the allegedly false reports and the Commission-approved rates. The appellate court reversed, construing the complaint‘s allegations liberally to find PG could have submitted the safety reports in support of a request for a rate increase, despite not being required to do so under the Administrative Code. Accordingly, the appellate сourt found Pusateri had presented enough of a viable claim to survive dismissal. 2013 IL App (1st) 120972-U.
¶ 2 This court granted PG‘s petition for leave to appeal.
BACKGROUND
¶ 4 Pusateri is a former PG employee who filed a sealed complaint against the company under the False Claims Act on September 2, 2009.
¶ 5 The Attorney General declined to procеed with the action. See
¶ 6 The appellate court reversed. It held that although PG was not required to use its natural gas leak reports in support of a rate increase, it may have done so. 2013 IL App (1st) 120972-U, ¶ 21. Construing the complaint liberally, the appellate court found the alleged false reports could form the basis of a claim under section 3(a)(2), submitting a false record in support of a claim for payment. Id. ¶ 22. It аlso held that Pusateri‘s complaint alleged PG had submitted fraudulent bills to the State, making the basis of a claim under section 3(a)(1) for a false or fraudulent claim. Id. ¶ 28. One justice dissented, on the basis that the Commission‘s legislative rate making is a regulatory act, whereas the False Claims Act is concerned with procurement and the government‘s bills. Id. ¶¶ 42-46 (Palmer, J., dissenting).
ANALYSIS
¶ 8 A section 2-615 motion to dismiss challenges the legal sufficiency of a complaint. Kanerva v. Weems, 2014 IL 115811, ¶ 33. A court deciding a section 2-615 motion must accept all well-pleaded facts in the complaint as true, and it should dismiss the complaint only where it is apparent no set of facts could be proven that would entitle the plaintiff to recover. Id. We review de novo an order granting a motion to dismiss under section 2-615. Id. Whether Pusateri‘s complaint is a proper one under the False Claims Act is a question of statutory interpretation. The primary objective of statutory interpretation is to give effect to the legislature‘s intent, which is best indicated by the plain language of the statute itself. Citizens Opposing Pollution v. ExxonMobil Coal U.S.A., 2012 IL 111286, ¶ 23. The court may affirm on any basis appearing in the record. In re Veronica C., 239 Ill. 2d 134, 151 (2010).
¶ 9 Before this court, PG reiterates its prior arguments that Pusateri has not stated a claim within the meaning of the False Claims Act, or within the analogous federal False Claims Act.
¶ 10 PG additionally argues that Pusateri‘s complaint is a prohibited collateral attack on a Commission rate order. See, e.g., Peoples Gas Light & Coke Co. v. Buckles, 24 Ill. 2d 520, 528 (1962). Pusateri counters that PG has forfeited this argument by not raising it in the circuit or appellate courts. Pusateri additionally argues that his complaint does not seek to “adjust or countermand any rate making decisions of” the Commission, because he is asking the court only to review PG‘s conduct аnd order disgorgement. Pusateri also contends that arguments against applying the False Claims Act to PG‘s safety reports to the Commission are a constitutional attack on the False Claims Act. In reply, PG notes that no party has argued the False Claims Act is unconstitutional, facially or as applied to the Commission.
Jurisdiction of the Illinois Commerce Commission
¶ 12 The Public Utilities Act creates the Illinois Commerce Commission and charges it with “general supervision of all public utilities.”
¶ 13 The circuit and appellate courts have jurisdiction to review administrative agency actions only as provided by statute.
“An order of the Commission will be reversed only if it is outside the jurisdiction of the Commission or is not supported by substantial evidence, or if the proceedings or manner in which the order was arrived at violated the State or Federal Constitutions or relevant laws, to the prejudice of the appellant. *** Apart from examining whether the Commission acted outside the scope of its constitutional or statutory authority, a reviewing court is limited to determining whether the findings of the Commission are against the manifest weight of the evidence.” United Cities Gas Co., 163 Ill. 2d at 12.
¶ 14 Rate-setting is a legislative function, not a judicial one. Business & Professional People, 146 Ill. 2d at 196. “In the rate-making scheme, the Commission and not the court is the fact-finding body.” Id. “On appeal from an order of the Commission, its findings of fact are to be considered prima facie true; its orders are considered primа facie reasonable; and the burden of proof on all issues raised in an appeal is on the appellant.” United Cities Gas Co., 163 Ill. 2d at 11.
¶ 15 When the court reverses a Commission rate order, it does not set a new rate. See, e.g., Business & Professional People for the Public Interest v. Illinois Commerce Comm‘n, 136 Ill. 2d 192, 242 (1989). Ordinarily, where a Commission order approving a rate increase is reversed, and the rate increase has not been stayed pending litigation, ratepayers arе not entitled to any refund for excess charges collected between the rate‘s effective date and reversal. Id. This court has previously ordered a utility to refund excess money collected after we had reversed the applicable rate order, but only as “a result of a direct, statutorily authorized, review of the Commission order.” Independent Voters of Illinois v. Illinois Commerce Comm‘n, 117 Ill. 2d 90, 105 (1987). Such refunds were available for charges collected only after the court held “that a Commission-аpproved rate order included allowance of improper expenses and deductions for the utility company.” Id. In Independent Voters, the court declined to order disgorgement where the amounts collected under the Commission-approved rate were not unlawfully obtained. As noted above, the court considered the question only upon “direct, statutorily authorized” review. Id. The Commission‘s orders within its statutory authority are “not subject to collateral attaсk.” Peoples Gas Light & Coke Co. v. Buckles, 24 Ill. 2d 520, 528 (1962).
¶ 16 The legislature enacted the False Claims Act in 1991, long after the establishment of the Commission‘s exclusive rate-setting jurisdiction. See
Reparations as Distinguished From Civil Damages
¶ 18 This court has recently examined which causes of action against a regulated utility are subject to the exclusivе jurisdiction of the Commission. Claims for reparations are subject to the exclusive jurisdiction of the Commission. Sheffler, 2011 IL 110166, ¶ 41 (“It has long been recognized that the ‘evident intent and purpose of the legislature in providing a method by which reparation may be recovered and in requiring that an application therefor shall be first made to the commission, precludes an action at law for such reparation until the commission has heard a claim therefor.’ ” (quoting Terminal R.R. Ass‘n of St. Louis v. Public Utilities Comm‘n, 304 Ill. 312, 317 (1922))). In Sheffler, we nоted “a claim is for reparations when the essence of the claim is that a utility has charged too much for a service, while a claim is for civil damages when the essence of the complaint is that the utility has done something else to wrong the plaintiff.” Id. ¶ 42 (citing Flournoy v. Ameritech, 351 Ill. App. 3d 583, 585 (2004)).
¶ 19 At its heart, Pusateri‘s complaint alleges PG used fraudulent means to get the State (and others) to pay too much for natural gas. While the False Claims Act could subject PG to civil penalties of $5,500 to $11,000, PG would alsо be subject to paying treble damages for its actions.
¶ 20 Pusateri‘s complaint in the circuit court also constitutes a prohibited collateral attack on a Commission rate order. It is not possible to determine how much PG‘s alleged safety-related fraud increased its rate without determining what its rate should have been without any false reports. At oral argument, Pusateri suggested this difficulty could be resolved through the testimony of expert witnesses, who could opine on how much PG‘s rate might have been inflated by fraudulent reports. The use of expert witnesses would not resolve the defect in this procedure—the circuit court would simply be asking experts to exercise the judgment statutorily reserved to the Commission. The court would then exercise the rate-setting authority reserved to the Commission, then order a refund outside of “direct,
Forfeiture
¶ 22 Pusateri has argued that PG forfeited the issue of a collateral attack on a Commission rate order, by not raising it below. Issues not raised below may be forfeited, meaning they are not properly before the court exercising appellate review. See, e.g., City of Champaign v. Torres, 214 Ill. 2d 234, 240 n.1 (2005). Forfeiture does not apply to questions of subject matter jurisdiction, however. People ex rel. Madigan v. Illinois Commerce Comm‘n, 231 Ill. 2d 370, 387 (2008) (dеscribing forfeiture argument as “ultimately irrelevant, as the issue in this case is one of jurisdiction, which any reviewing court has an obligation to consider” (citing Franson v. Micelli, 172 Ill. 2d 352, 355 (1996))). The prohibition against collateral attacks on Commission rate orders concerns the court‘s ability to adjudicate the controversy and to offer relief. People v. Hughes, 2012 IL 112817, ¶ 20 (“A court‘s subject matter jurisdiction relates to ‘the power of a court to hear and determine cases of the general class to which thе proceeding in question belongs.’ ” (quoting Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc., 199 Ill. 2d 325, 334 (2002))). Outside the administrative review prescribed by section 10-201, the circuit court lacked subject matter jurisdiction to adjudicate the central question of Pusateri‘s complaint: whether the rate set by the Commission was too high by virtue of the allegedly false gas leak reports. The circuit court was further unable to offer the relief sought: reparations, as augmented by the civil penalty provisions of the False Claims Act.
¶ 23 The legislature enacted the False Claims Act well after this court‘s rulings on the exclusive jurisdiction of the Commission. No part of the False Claims Act indicates the legislature intended to abridge that exclusive jurisdiction. This conclusion should not be mistaken for a conclusion that the legislature constitutionally cannot craft a remedy or whistleblower reward within the context of utility rates, as Pusateri suggested at oral argument. The legislature simply has not done so. This result emanates from analysis of the statutes, not our Constitution.
Whistleblower Protections and the Commission‘s Enforcement Role
¶ 25 At oral argument, Pusateri contended his complaint should proceed in the circuit court, lest he be subject to retaliation if not proceeding under “the Whistleblower Act.” The False Claims Act provides relief for employees who suffer retaliation for bringing a False Claims Act action, including reinstatement with double back pay.
However, the argument that Pusateri would be unprotected without the False Claims Act is unpersuasive for a number of reasons. First, we note that Pusateri was already a former employee at the time he filed his complaint. Second, the absence of False Claims Act protections would have no impact on the application of the Whistleblower Act (
¶ 26 Finding that the legislature did not intend the False Claims Act to apply to а Commission-set rate likewise does not create an enforcement gap. The legislature has granted the Commission an array of enforcement duties and powers. The Commission has the authority to pursue penalties, ranging from $1,000 to $500,000, for each misrepresentation to the Commission.
¶ 27 As noted above, the legislature enacted the False Claims Act long after this court‘s relevant findings about the exclusive jurisdiction of the Commission, and we find no indiсation the legislature intended to abridge that jurisdiction. This conclusion is bolstered by the existence of a robust regulatory scheme already existing within the Public Utilities Act. Pusateri‘s interpretation of the False Claims Act would invite the circuit court to review a Commission rate order collaterally, in the absence of any specific grant of jurisdiction and less deferentially than the manner prescribed under the Public Utilities Act. The complaint cannot proceed in the circuit court, and dismissal was proper. Accordingly, we need not address the parties’ arguments on whether the gas leak reports properly resemble a claim or a false record in support of a claim under the False Claims Act.
CONCLUSION
¶ 29 Because the circuit court was without jurisdiction to offer the relief sought by Pusateri‘s complaint, dismissal was appropriate. The judgment of the appellate court is reversed. The judgment of the cirсuit court is affirmed.
Appellate court judgment reversed.
Circuit court judgment affirmed.
CHIEF JUSTICE GARMAN
SUPREME COURT OF ILLINOIS