Illinois Appellate Court Upholds Attorney General Dismissal of Qui Tam Relator’s Illinois False Claims Act Case

An Illinois Appellate Court recently upheld a lower court’s decision to grant the State Attorney General’s (“AG”) motion to dismiss a qui tam Illinois False Claims Act (“Act”) case despite the AG’s initial election not to intervene.

In Illinois ex rel. Saporta v. Mortgage Electronic Registration Systems, Inc., et al., the relator filed a qui tam action against a number of entities—including those that originated and/or serviced home loans—alleging violations of the Act.  The relator’s action was based, among other things, on his claim that the defendants “filed with the County Recorder of Deeds Offices of this state purported ‘Mortgage’ documents with what purported to be self-executing language of assignment in order to avoid payment in full of all recording fees reflecting the establishment and/or transfer of secured interests in real property in the State.”

Initially, the AG declined to take over the action, but retained its statutory right to request that all of the pleadings, orders, and notices of appeal filed in the case be served upon the AG’s office.  The relator then requested an order that required the State to turn over its investigative files related to the defendants’ business practices.  After the Circuit Court of Will County granted this order, the AG filed a motion to dismiss the relator’s case.

The relator responded by opposing the motion to dismiss and filing a motion to disqualify the AG because of a conflict of interest created by an awards dinner in the AG’s honor that some potential defendants sponsored.  The circuit court granted the AG’s motion to dismiss and denied the motion to disqualify on the grounds it was untimely and without merit.

Agreeing with the circuit court, the Appellate Court found the AG had a statutory right to dismiss the case, even after it initially declined to take over the relator’s qui tam action. Relying both on the Act and precedent from the Illinois Supreme Court, the Appellate Court ruled that because qui tam plaintiffs are merely acting as statutorily designated agents for the state, they may only proceed with the consent of the AG and are completely subordinate to the AG at all times.  The conflict of interest motion was also denied on the grounds that neither of the two situations in which Illinois courts have found an AG to have a conflict of interest were present in this action.

The entire opinion may be found here.