Whistleblower Act
Content
Suits brought by a Qui Tam Plaintiff When a private person brings an action under the Whistleblower Reward and Protection Act, numerous procedural obstacles must be successfully negotiated. Failure to negotiate these obstacles can lead to the relator’s case being dismissed or the whistleblower being dismissed with the State taking over the action. The State can of course proceed without a whistleblower and settle the case without having to award the private person an award. A private person bringing an action must closely follow the filing and service provisions of the Whistleblower Reward and Protection Act. Section 4(b)(2) requires that “a copy of the complaint, a written disclosure of substantially all material evidence and information that a person possesses shall be served on the State. The complaint shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders.” Failure to follow these filing and service requirements could result in the relator’s case being dismissed. Even if the private person’s case is dismissed, the State could still intervene and take over the action by filing its own complaint or simply adopting the complaint filed by the private person. In Pilon v. Martin Marietta Corp., the defendants Martin Marietta and General Electric appealed a judgment dismissing the Pilons’ complaint without prejudice, contending that the complaint should have been dismissed with prejudice because the Pilons’ failed to follow the filing and service provisions of the Federal False Claims Act. The court held that the False Claims Act counts of the complaint should have been dismissed with prejudice, because the plaintiffs did not take steps to have the complaint filed under seal neither did they serve a copy of the complaint and the material evidence on the government. While the court stated that the legislative history of the False Claims Act’s 1986 amendments were “to encourage more private enforcement suits” the government was concerned with private suits alerting defendants to ongoing or potential investigations. Therefore, the sealing of the complaint provision was enacted to permit the government time to evaluate the allegation and conduct an investigation. Furthermore, defendants maybe more willing to reach an expeditious settlement with the government prior to the case being unsealed. “The Pilons’ failure to comply with the service provision incurably frustrated all of these interests.” Once the complaint has been properly filed a copy of the complaint along with “written disclosure of substantially all material evidence and information the person possesses shall be served on the State.” Regarding the requirement that material evidence be served on the State, there is no clear definition as to the precise meaning of the phase “material evidence.” However, practically, the better this evidence is organized and presented to the Attorney General, the more likely the Attorney General’s Office will devote resources to investigate and ultimately intervene in the action. State intervention is critical to a successful prosecution. Over 80% of the cases in which the government declines intervention are voluntarily dismissed by the whistleblower. State’s Declination of Intervention If the State chooses not to proceed with the action, it shall notify the court of its decision to decline intervention “in which case the person bringing the action shall have the right to conduct the action.” When the State declines intervention it will typically request, that the seal be
lifted on the complaint and served upon the defendants by the whistleblower; that all other contents of the court’s file in the action remain under seal and not be made public or served upon the defendants, except for this Order and Illinois’ Notice of Declination of Intervention which the whistleblower will serve upon the defendants only after service of the complaint; that the seal be lifted as to all other matters occurring in this action after the date of this Order. In addition, the State requests that the parties serve the State with copies of all pleadings filed in the action; all orders issued by the court; be notified of all deposition transcripts prepared and supplied with copies of said transcripts when requested. The State will also reserve its right to intervene at a later date upon a showing of good cause. The State will also notify the court that should the whistleblower or a defendant propose that this action be dismissed, settled, or otherwise discontinued, the court should order the parties to solicit the written consent of the State of Illinois Attorney General before ruling or granting its approval. Even though the State has declined to intervene in the action, the whistleblower may not dismiss the case unless the Attorney General consents. The Whistleblower Reward and Protection Act states, “[An] action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.” Several federal cases have dealt with the scope of the Attorney General’s authority to prevent the voluntary dismissal of a qui tam action by withholding his consent. In Doyle v. Health Possibilities, for example the court held that a “qui tam plaintiff may not seek a voluntary dismissal of any action under the Federal False Claims Act without the Attorney General’s Consent.” The Ninth Circuit Court of Appeals also supports the position that a case cannot be dismissed absent the consent of the Attorney General. United States ex rel. Killingsworth v. Northrop Corp., involved a suit in which the United States declined intervention after conducting an eighteen-month long investigation. The whistleblower and the defendant reached a proposed settlement, which the government objected to, believing it was intentionally structured to shift money away from the government claim to a wrongful termination claim. The government informed the court that it did not consent to the dismissal. The court held that the government’s consent to dismissal is required during the seal period or any extension thereof but once the government declines intervention the government may not force parties to continue litigation but may question the settlement for good cause. The court in Killingsworth ruled that the government has an absolute bar to dismissal absent its consent while the case is still under investigation. Thus, all three circuits which have addressed this issue agree that while an action is under seal the case cannot be dismissed without the Attorney General’s consent. If the Court finds that the person bringing the action did so to harass the defendant or if the action was “clearly frivolous, [or] clearly vexatious,” the Court may award the defendant reasonable attorneys’ fees and expenses. State Intervention Once the State has made the decision to intervene in the action, the State will file a Notice of Intervention with the Court. The State has the right of intervention pursuant to Illinois Code of Civil Procedure section. The State’s has several options in terms of intervention decisions. The State may, for example, intervene and simply adopt the relator’s complaint, or file its own complaint. In addition, if there are multiple defendants the State may intervene as to some of the defendants, decline as to others, and reserve
intervention on the remaining defendants. Once the State decides to proceed with the action, the State “shall have primary responsibility for prosecuting the action.” While the whistleblower continues to be a party to the action. The State may dismiss the action over the objections of the whistleblower so long as the person has been provided notice and been given an opportunity for a hearing on the motion. The Statute, however, does not state any grounds upon which the Court may prevent the State from dismissing the action. Presumably, the Court’s role would be to conduct a hearing to determine if the case is being dismissed pursuant to a settlement, which if it was, the court would conduct a hearing to determine if the “proposed settlement is fair, adequate, and reasonable under all the circumstances.” This hearing may be held in camera. Upon a showing by the State that the relator’s participation in the case would interfere with or unduly delay the State’s prosecution of the case “the court may, in its discretion, impose limitations on the person’s participation.” The court may impose limits on the person’s participation by limiting the number of witnesses, the length of their testimony, the cross-examination and any other limitation the Court deems appropriate. The defendant may also move to limit the person’s participation in the litigation. If the defendant makes a showing that the unrestricted participation of the whistleblower “would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense.” Other State Rights Whether or not the State intervenes in the action the State may request a stay of discovery upon a showing that certain discovery actions being pursued by the person initiating the action would interfere with the State’s investigation or prosecution of a criminal or civil matter arising out of the same facts. The State’s case for a stay shall be conducted in camera and initially be for not more than 60 days. The State may, however, seek an extension of the 60-day stay period. Even though a person has filed an action, the State may choose not to pursue the action under the provisions of the Whistleblower Reward and Protection Act but under alternative remedies such as administrative proceedings. If the State chooses to pursue an alternative remedy the whistleblower shall have, “the same rights in such proceeding as such person would have had if the action had continued under this Section.”
lifted on the complaint and served upon the defendants by the whistleblower; that all other contents of the court’s file in the action remain under seal and not be made public or served upon the defendants, except for this Order and Illinois’ Notice of Declination of Intervention which the whistleblower will serve upon the defendants only after service of the complaint; that the seal be lifted as to all other matters occurring in this action after the date of this Order. In addition, the State requests that the parties serve the State with copies of all pleadings filed in the action; all orders issued by the court; be notified of all deposition transcripts prepared and supplied with copies of said transcripts when requested. The State will also reserve its right to intervene at a later date upon a showing of good cause. The State will also notify the court that should the whistleblower or a defendant propose that this action be dismissed, settled, or otherwise discontinued, the court should order the parties to solicit the written consent of the State of Illinois Attorney General before ruling or granting its approval. Even though the State has declined to intervene in the action, the whistleblower may not dismiss the case unless the Attorney General consents. The Whistleblower Reward and Protection Act states, “[An] action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.” Several federal cases have dealt with the scope of the Attorney General’s authority to prevent the voluntary dismissal of a qui tam action by withholding his consent. In Doyle v. Health Possibilities, for example the court held that a “qui tam plaintiff may not seek a voluntary dismissal of any action under the Federal False Claims Act without the Attorney General’s Consent.” The Ninth Circuit Court of Appeals also supports the position that a case cannot be dismissed absent the consent of the Attorney General. United States ex rel. Killingsworth v. Northrop Corp., involved a suit in which the United States declined intervention after conducting an eighteen-month long investigation. The whistleblower and the defendant reached a proposed settlement, which the government objected to, believing it was intentionally structured to shift money away from the government claim to a wrongful termination claim. The government informed the court that it did not consent to the dismissal. The court held that the government’s consent to dismissal is required during the seal period or any extension thereof but once the government declines intervention the government may not force parties to continue litigation but may question the settlement for good cause. The court in Killingsworth ruled that the government has an absolute bar to dismissal absent its consent while the case is still under investigation. Thus, all three circuits which have addressed this issue agree that while an action is under seal the case cannot be dismissed without the Attorney General’s consent. If the Court finds that the person bringing the action did so to harass the defendant or if the action was “clearly frivolous, [or] clearly vexatious,” the Court may award the defendant reasonable attorneys’ fees and expenses. State Intervention Once the State has made the decision to intervene in the action, the State will file a Notice of Intervention with the Court. The State has the right of intervention pursuant to Illinois Code of Civil Procedure section. The State’s has several options in terms of intervention decisions. The State may, for example, intervene and simply adopt the relator’s complaint, or file its own complaint. In addition, if there are multiple defendants the State may intervene as to some of the defendants, decline as to others, and reserve
intervention on the remaining defendants. Once the State decides to proceed with the action, the State “shall have primary responsibility for prosecuting the action.” While the whistleblower continues to be a party to the action. The State may dismiss the action over the objections of the whistleblower so long as the person has been provided notice and been given an opportunity for a hearing on the motion. The Statute, however, does not state any grounds upon which the Court may prevent the State from dismissing the action. Presumably, the Court’s role would be to conduct a hearing to determine if the case is being dismissed pursuant to a settlement, which if it was, the court would conduct a hearing to determine if the “proposed settlement is fair, adequate, and reasonable under all the circumstances.” This hearing may be held in camera. Upon a showing by the State that the relator’s participation in the case would interfere with or unduly delay the State’s prosecution of the case “the court may, in its discretion, impose limitations on the person’s participation.” The court may impose limits on the person’s participation by limiting the number of witnesses, the length of their testimony, the cross-examination and any other limitation the Court deems appropriate. The defendant may also move to limit the person’s participation in the litigation. If the defendant makes a showing that the unrestricted participation of the whistleblower “would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense.” Other State Rights Whether or not the State intervenes in the action the State may request a stay of discovery upon a showing that certain discovery actions being pursued by the person initiating the action would interfere with the State’s investigation or prosecution of a criminal or civil matter arising out of the same facts. The State’s case for a stay shall be conducted in camera and initially be for not more than 60 days. The State may, however, seek an extension of the 60-day stay period. Even though a person has filed an action, the State may choose not to pursue the action under the provisions of the Whistleblower Reward and Protection Act but under alternative remedies such as administrative proceedings. If the State chooses to pursue an alternative remedy the whistleblower shall have, “the same rights in such proceeding as such person would have had if the action had continued under this Section.”
