Background
Forde & O’Meara, LLP brought a qui tam action in the State of Illinois’s name under the Illinois False Claims Act. It alleged that Vendor Assistance Program LLC and affiliated trusts improperly assigned receivables acquired through Illinois’s Vendor Payment Program and Vendor Support Initiative Program to entities that were not qualified purchasers, failed to disclose those assignments, and structured transactions to conceal beneficiaries and avoid state income taxes. The complaint also alleged that defendants failed to follow the programs’ required 90/10 payment structure and underpaid some vendors.
A 2019 WBEZ article had reported allegations that VAP used affiliated “front companies,” including Bluestone entities, to conceal profits, avoid taxes, and participate in the state programs without required disclosures. The circuit court concluded that the article publicly disclosed the essential scheme and that the relator’s additional allegations did not avoid the statutory public-disclosure bar. After permitting one amendment, the court dismissed the second amended complaint with prejudice under section 2-615 for failure to state a cause of action.
The Court’s Holding
The appellate court affirmed. It held that the second amended complaint alleged substantially the same scheme described in the WBEZ article: VAP’s use of undisclosed entities and assignments to conceal program profits and avoid taxes while violating state disclosure requirements. The court explained that allegations need not be identical for the Illinois False Claims Act’s public-disclosure bar to apply, and adding details to a publicly disclosed scheme does not create a materially different claim.
The relator could not avoid the bar by relying on allegations obtained through discovery after filing suit, including allegations involving former state senator James DeLeo, lobbyist Nancy Kimme, and violations of the programs’ 90/10 payment structure. The statutory original-source exception requires independent knowledge that materially adds to the public disclosures and information voluntarily supplied to the State before suit. Discovery obtained during the litigation could not satisfy that requirement or rescue an otherwise barred complaint.
Key Takeaways
- The Illinois False Claims Act requires dismissal when substantially the same allegations or transactions were previously disclosed by the news media, unless the State opposes dismissal or the relator qualifies as an original source.
- A relator cannot avoid the public-disclosure bar merely by adding names, entities, or other details to the same essential fraudulent scheme.
- Information first learned through discovery after filing does not establish the prefiling, independent knowledge required by the original-source exception.
Why It Matters
The decision reinforces that Illinois qui tam relators must possess a genuinely independent factual basis before filing suit. A previously reported scheme cannot serve as a platform for discovery aimed at finding new theories or allegations that might preserve the action.
For defendants, the opinion confirms that news reporting may trigger the public-disclosure bar even when a later complaint contains additional participants or details, so long as the publicly disclosed material revealed the essential fraudulent transaction.