The estate of a former employee can sue an optometry practice for insurance fraud, in the name of the state of Illinois, even though neither the former employee nor the state lost any money in the alleged crime, the Illinois Supreme Court has ruled.
State Supreme Court Justice Michael J. Burke delivered the court’s unanimous decision upholding the ruling of a state appeals court.
A Cook County judge had ordered the case dismissed, but the ruling from the the Illinois First District Appellate Court ruling had overturned that decision.
The lawsuit brought by David P. Leibowitz, trustee of Marie A. Cahill’s bankruptcy estate, can now move forward with the state Supreme Court’s permission. Leibowitz brought the action against optometrist Jennifer Gula; the practice where she worked, Family Vision Care in LaGrange; medical management company NovaMed; and Surgery Partners, which acquired Family Vision Care in a merger with NovaMed.
Cahill worked at the clinic from 2012 until 2016, when she left and filed for bankruptcy. During her employment, she processed insurance claims. After she passed away, Leibowitz sued the defendants on behalf of the state of Illinois, claiming they violated the Insurance Fraud Claims Protection Act. Under the law, certain people are allowed to file so-called qui tam actions, which allow private individuals to press fraud claims on behalf of the state government. Qui tam plaintiffs, known as relators, can then collect at least a share of any judgment the state might receive from the lawsuit.
According to the suit, Gula claimed she owned Family Vision so the practice could receive payments from Vision Service Plan, a popular insurer that only works with optometrists who own a majority share of their practices. The lawsuit alleged, however, that Gula never had any ownership stake in Family Vision, but was encouraged by the management companies who do own the practice to lie so the practice could partner with VSP.
The defendants argued that Leibowitz should not be allowed to sue because Cahill had suffered no injury from the alleged fraud.
On appeal, the defendants argued that the state had also suffered no harm from the alleged fraud.
The Supreme Court justices, howver, said the Insurance Fraud Claims Protection Act is not about recouping financial losses. Rather, it is about protecting the people of the state from the crime of insurance fraud.
“The [Fraud Claims Protection] Act addresses violations of statutes that criminalize insurance fraud against private insurance companies. These criminal offenses result in an injury to the state’s sovereignty, not to its treasury,” Burke wrote. “The Act’s stated purpose of combating insurance fraud supports the interpretation that the state need not suffer pecuniary damages for the act to confer standing on a relator.”
The defendants claimed that assigning qui tam rights to an uninjured citizen equates to turning over the state’s right to investigate, charge and prosecute criminal offenses. The justices said that argument is overblown, as the doctrine allows relators to sue on behalf of the state only with the state’s permission, and only if the state retains control of the litigation.
“Only the attorney general is empowered to represent the state in litigation where the state is the real party in interest,” Burke wrote. “Although the qui tam plaintiffs may ‘conduct’ the litigation on the state’s behalf, the attorney general retains authority to ‘control’ the litigation.”
The case was remanded for further proceedings.
Leibowitz is represented in the action by attorneys with the Chicago firm of Hughes Socol Piers Resnick & Dym.
The defendants have been represented by the firm of McDermott Will & Emory, of Chicago.