Case: 1:19-cv-07247 Document #: 34 Filed: 01/29/21 Page 1 of 28 PageID #:714
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`) No. 19 C 7247
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`) Judge Rebecca R. Pallmeyer
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`PEOPLE OF THE STATE OF ILLINOIS,
`ex rel. BYRON STRAKUSEK, Relator,
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`Plaintiff,
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`v.
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`OMNICARE, INC. and CVS HEALTH
`CORPORATION,
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`Defendants.
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`MEMORANDUM OPINION AND ORDER
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`In this action brought under the Illinois False Claims Act, Plaintiff-Relator Byron Strakusek
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`(“Relator”) contends that Defendants Omnicare, Inc. (“Omnicare”) and its parent, CVS Health
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`Corp. (“CVS”), caused the submission of materially false claims to Medicaid—specifically, claims
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`for prescription drugs dispensed without a valid prescription. Defendants removed the case to
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`this court on the basis of diversity jurisdiction, and now move to dismiss it. They argue that Plaintiff
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`has not adequately pleaded facts supporting their direct involvement in the alleged wrongdoing,
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`and that Plaintiff’s complaint, a copy of one he filed in this federal court almost seven years ago,
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`is barred by res judicata. As explained here, the court agrees. The motion is granted.
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`Relator commenced this qui tam action under the Illinois False Claims Act (“IFCA”), 740
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`ILCS 175/1–8. Like the federal False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., the IFCA
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`allows private citizens acting as whistleblowers to sue on behalf of the State of Illinois to recover
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`damages for the submission of materially false claims to government programs. 740 ILCS 175/3,
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`4(b)(1). Without describing the nature of his job, Relator alleges that he worked at Omnicare
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`between July 2011 and December 2013, when the alleged misconduct occurred. (Compl. ¶ 6,
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`Ex. 1 to Defs.’ Notice of Removal [1-1].) Specifically, Strakusek alleges that Defendants
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`Omnicare and its parent, CVS, caused the submission of false claims to the Illinois Medical
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`Assistance Program (“Illinois Medicaid”) for controlled substances that were dispensed without a
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`valid prescription. (Compl. ¶¶ 1–2.) The Illinois Controlled Substances Act (“ICSA”), 720 ILCS
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`570/100–603, prohibits pharmacists and pharmacies from dispensing a prescription unless the
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`prescriber has affixed his or her manual signature to the prescription. 720 ILCS 570/312(i), (i-5);
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`see also ILL. ADMIN. CODE tit. 77, § 3100.390(b). Relator claims that Defendants received and
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`filled more than 2,000 prescriptions using pre-signed or photocopied forms in violation of the
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`ICSA. (Compl. ¶¶ 18, 20.) This practice, Strakusek alleges, caused various long-term care
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`facilities to submit false claims and false certifications to Illinois Medicaid in violation of the IFCA.
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`(Compl. ¶¶ 28–30.)
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`Relator filed this lawsuit in state court on March 31, 2017. The Complaint was held under
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`seal while the State of Illinois investigated Relator’s claims. See 740 ILCS 175/4(a), (b). On
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`April 15, 2019, the State declined to intervene in the action. (State of Illinois’ Notice of Declination
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`of Intervention, Ex. 2 to Defs.’ Notice of Removal.)1 The Illinois court then ordered that the
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`Complaint be unsealed. (Order, Apr. 15, 2019, Ex. 3 to Defs.’ Notice of Removal.) On October 7,
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`2019, Relator served process on Defendants. (Service of Process Transmittal, Ex. 1 to Defs.’
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`Notice of Removal.) Defendants timely removed the action to federal court on the basis of
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`diversity and federal question jurisdiction. (Defs.’ Notice of Removal ¶¶ 1–2).2 Defendants now
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`The text of 740 ILCS 175/4(b)(1) provides that, when the State declines to
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`intervene, a qui tam action “may be dismissed only if the court and the [State] Attorney General
`give written consent to the dismissal and their reasons for consenting.” Citing this provision in its
`notice declining to intervene, the State requested that, “should either the Relator or the
`Defendants propose that this action be dismissed, settled, or otherwise discontinued, [the Circuit
`Court of Kane County] solicit the written consent of the State of Illinois before ruling or granting
`its approval.” Relator has not argued that this court must obtain the State Attorney General’s
`consent before dismissing this case, but even if he had, that argument would fail. As this court
`made clear in another qui tam case, “Section 175/4(b)(1) only applies to voluntary dismissals or
`settlements initiated by the parties, not to court-ordered involuntary dismissals.” United States ex
`rel. Stop Illinois Mktg. Fraud, LLC v. Addus Homecare Corp., No. 13 C 9059, 2018 WL 1411124,
`at *8 (N.D. Ill. Mar. 21, 2018) (citing Salmeron v. Enter. Recovery Sys., Inc., 579 F.3d 787, 797
`n.5 (7th Cir. 2009) (reaching the same conclusion in a federal FCA action)).
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`Defendants assert that federal question jurisdiction supports removal because the
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`Complaint implicates a prior federal court judgment that may have preclusive effect. (Defs.’ Notice
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`move to dismiss Relator’s complaint, arguing that res judicata bars this case, that the IFCA’s
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`public disclosure bar applies, and that the Complaint fails to state a claim. (Mot. to Dismiss [19];
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`Defs.’ Mem. in Support of Mot. to Dismiss [20] (hereinafter “Defs.’ Mem.”).) For the following
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`reasons, Defendants’ motion is granted.
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`BACKGROUND
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`Relator’s allegations, deemed true at this stage, are summarized below. See United
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`States ex rel. Berkowitz v. Automation Aids, Inc., 896 F.3d 834, 839 (7th Cir. 2018). A court may
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`also take judicial notice of matters in the public record, including judicial proceedings, because
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`their accuracy cannot reasonably be questioned. See FED. R. EVID. 201(b); Fletcher v. Menard
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`Corr. Ctr., 623 F.3d 1171, 1173 (7th Cir. 2010) (collecting cases and observing that courts may
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`“take judicial notice of prior proceedings in a case involving the same litigant”). Because one
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`basis for Defendants’ motion to dismiss is res judicata, the court takes judicial notice of pleadings
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`and orders from a previous lawsuit that Relator filed against Omnicare in this court: United States
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`ex rel. Strakusek v. Omnicare, Inc., No. 14-cv-2808 (N.D. Ill.) (Castillo, J.) (hereinafter
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`“Strakusek I”).
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`A.
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`Strakusek I
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`In 2014, Relator filed a complaint under the federal FCA and the Controlled Substances
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`Act (“CSA”), 21 U.S.C. § 801 et seq., making allegations similar to those at issue here. (Compl.,
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`United States ex rel. Strakusek v. Omnicare, Inc., No. 14-cv-2808 (N.D. Ill. Apr. 18, 2014); Am.
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`Compl. (Apr. 25, 2014), Ex. 1 to Defs.’ Mem. [20-1] (hereinafter “Strakusek I Compl.”).) After
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`investigating the allegations, the United States concluded that further prosecution of the case was
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`of Removal ¶ 2 (citing Doe v. Allied-Signal, Inc., 985 F.2d 908, 911–12 (7th Cir. 1993); Franchise
`Tax Bd. v. Const. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 13 (1983); Federated Dep’t
`Stores, Inc. v. Moitie, 452 U.S. 394 (1981)); see also Defs.’ Notice of Removal ¶ 27 (same).)
`Without endorsing that theory, the court acknowledges that diversity jurisdiction provides an
`independent basis for this court’s exercise of jurisdiction.
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`not in the Government’s interest. (Mem. in Support of U.S. Mot. to Dismiss, Ex. 2 to Defs.’ Mem.
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`(hereinafter “U.S. Mot.”) [20-2] at 1.) The United States estimated that the cost of assisting Relator
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`with discovery would outweigh any potential loss to the Government—a loss it calculated at
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`approximately $167,200. (Id. at 9–10.) Accordingly, the United States declined to intervene and
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`moved to dismiss as an exercise of its prosecutorial discretion under 31 U.S.C. § 3730(c)(2)(A),
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`which provides that “the Government may dismiss [a qui tam] action notwithstanding the
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`objections of the person initiating the action” so long as the relator receives notice and an
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`opportunity for a hearing. Relator received notice of the Government's motion but failed to submit
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`a response by the agreed-upon deadline. (See Am. Order, Ex. 3 to Defs.’ Mem. [20-3].) On
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`March 24, 2016, the District Court for the Northern District of Illinois granted the United States’
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`motion and dismissed the complaint “with prejudice as to Relator.” (Id.) Pursuant to the dismissal
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`order, the case was later unsealed. (Order of May 13, 2016, Ex. 4 to Defs.’ Mem. [20-4].)
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`B.
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`Strakusek II
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`More than a year after his federal case was dismissed, Relator filed the instant lawsuit
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`(“Strakusek II”) under seal in the Circuit Court of Kane County, Illinois on March 31, 2017. Relator
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`alleges that Defendants’ “management imposed performance standards . . . requir[ing] . . .
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`pharmacists to review fifty-five (55) prescriptions for controlled substances per hour.” (Compl.
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`¶ 17.) Relator further alleges that this policy “had the effect of causing . . . pharmacists to
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`dispense thousands of invalid prescriptions for controlled substances.” (Id.) These prescriptions
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`were invalid, according to Strakusek, because the prescriber’s signature was either “not manually
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`affixed” to the prescription or “photocopied and reused numerous times.” (Id. ¶ 18.)
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`A brief explanation of the Illinois Medicaid reimbursement scheme is helpful to understand
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`the basis for Strakusek’s theory of liability. First, Defendants provide pharmaceutical services to
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`long-term care facilities pursuant to a contract with the State of Illinois’s Medicaid licensure
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`program. (Id. ¶ 22.) In exchange for providing pharmaceuticals to Illinois Medicaid patients, the
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`Illinois Department of Public Aid reimburses Defendants for their costs plus a fixed dispensing
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`fee. (Id.) Physicians working at long-term care facilities write prescription orders for patients;
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`nurses then present the orders to data-entry personnel employed by Defendants; pharmacists at
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`Defendants’ pharmacies receive and fill the orders; and orders are finally shipped to long-term
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`care facilities where patients reside. (Id. ¶ 23–24.) Each day, Defendants’ pharmacies
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`electronically submit their Medicaid claims to the Illinois Department of Public Aid along with their
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`Medicaid provider identification number, which certifies that Defendants are complying with
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`federal and state regulations. (Id. ¶ 25.)
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`Relator alleges that, between July 2011 and December 2013, Defendants “knowingly
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`caused to be made false or fraudulent prescription[ ] reports that falsely represented that said
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`drugs were dispensed pursuant to a valid prescription.” (Id. ¶ 27.) Thus, Relator alleges,
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`Defendants “knowingly caused various long[-]term care facilities to submit false claims to Illinois
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`Medicaid for controlled substances including Schedule II drugs that were dispensed without valid
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`prescriptions.” (Id. ¶ 28.) Defendants’ conduct allegedly caused “long-term care facilities and
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`pharmacies to submit false certifications . . . on over 2000 occasions where controlled substances
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`were dispensed” based on the invalid prescriptions. (Id. ¶ 30.)
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`Relator points to four examples of patients who received medication without a manually
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`signed prescription. (Compl. ¶¶ 32–44, 45–56, 57–70, 71–82.) In each example, he asserts that
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`it is “plainly obvious” that the prescription forms were “pre-signed and photocopied” (id. ¶¶ 34, 47,
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`61, 73), sometimes “numerous times.” (Id. ¶¶ 34, 47.) He also attaches a “summary of controlled
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`substances,” detailing over 2,000 prescriptions that were illegally dispensed. (Id. ¶ 20 & Ex. A.)
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`According to Relator, “[n]early each and every nursing home and/or long[-]term care facilit[y]” in
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`the summary chart accepts Illinois Medicaid [reimbursement].” (Id. ¶ 26.)
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`Defendants read Strakusek’s factual allegations as “a copy-and-paste of his allegations”
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`from Strakusek I. (Defs.’ Mem. at 3.) Both complaints alleged violations of the ICSA at an
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`Omnicare pharmacy, located at 2313 South Mt. Prospect Road, Des Plaines, Illinois, between
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`July 2011 and December 2013. Compare Compl. ¶¶ 3, 26, with Strakusek I Compl. ¶¶ 5, 62. The
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`four patient examples are identical (compare Compl. ¶¶ 32–82, with Strakusek I Compl. ¶¶ 72–
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`122),3 as is the summary chart of alleged violations. (Compare Compl., Ex. A, with Strakusek I
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`Compl., Ex. B.) The only meaningful differences between the allegations of Strakusek I and those
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`of Strakusek II are (1) Relator has replaced federal FCA claims with IFCA claims (Compl. ¶¶ 86–
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`94), and (2) Relator added CVS as a defendant (id. ¶ 7.).
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`DISCUSSION
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`Defendants first argue that this case is barred by res judicata. (Defs.’ Mem. at 5–7.) In
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`the alternative, they contend that the prior public disclosure bar applies. (Defs.’ Mem. at 7–10.)
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`Turning to the merits, they argue that Relator has failed to state a claim on all four counts under
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`FED. R. CIV. P. 12(b)(6). (Defs.’ Mem. at 10–18.) Finally, they ask the court to dismiss CVS from
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`this suit. (Defs.’ Mem. at 18–19.) The court concludes that dismissal is warranted on all four
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`grounds.
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`A.
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`Res Judicata
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`The doctrine of res judicata, also known as claim preclusion, prevents parties or their
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`privies from relitigating claims that proceeded to final judgment on the merits. Because
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`Strakusek I was litigated in federal court, the federal law of res judicata applies. United States ex
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`rel. Conner v. Mahajan, 877 F.3d 264, 270 (7th Cir. 2017) (citations omitted); see also
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`Restatement (Second) of Judgments § 87 (1982)). The doctrine “bars litigating claims which
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`were, or could have been, decided in a prior suit, even if the fresh attempt relies on marginally
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`different theories.” Conner, 877 F.3d at 271 (citation and internal quotation marks omitted). There
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`are three requirements for res judicata to apply: “(1) an identity of the parties in the two suits; (2) a
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`Defendants have summarized these similarities in a chart. (See Defs.’ Mem. at 4.)
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`Relator did not dispute the accuracy of this chart in his response brief.
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`final judgment on the merits in the first; and (3) an identity of the causes of action.” Barr v. Bd. of
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`Trustees of W. Ill. Univ., 796 F.3d 837, 840 (7th Cir. 2015) (citation omitted). With respect to the
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`third element (identity of the causes of action), “two claims are one for purposes of res judicata if
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`they are based on the same, or nearly the same, factual allegations.” Id. (citations omitted). The
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`party seeking to invoke res judicata bears the burden of proving each element to bar the
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`subsequent action. Allahar v. Zahora, 59 F.3d 693, 696 (7th Cir. 1995).
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`1.
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`Identity of the Parties or Their Privies
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`Defendants argue that the parties in Strakusek I and this case—namely, Relator and
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`Omnicare—are identical for purposes of res judicata. Relator disagrees, arguing that that the
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`United States was the “real party in interest” in Strakusek I because Relator brought his suit under
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`the FCA. (Pl.’s Resp. at 6.) By contrast, the State of Illinois is the “real party in interest” here
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`because this suit invokes the IFCA. (Id.) This difference in sovereigns, he contends, defeats the
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`identity-of-parties element of the res judicata doctrine.
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`This argument has little merit. That Relator brought his FCA suit on behalf of the United
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`States makes no difference because res judicata bars a subsequent action “so long as the party
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`against whom the doctrine is asserted was a party to the earlier litigation.” In re Nat’l Indus. Chem.
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`Co., 237 B.R. 437, 442 (Bankr. N.D. Ill. 1999) (citing Dreyfus v. First Nat'l Bank of Chicago,
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`424 F.2d 1171, 1175 (7th Cir.1970)); see also Bethesda Lutheran Homes & Servs., Inc. v. Born,
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`238 F.3d 853, 857 (7th Cir. 2001) (addition of new plaintiffs who were not entitled to recovery did
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`not defeat res judicata defense against plaintiff who prevailed in earlier litigation). The district
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`court in Strakusek I dismissed his complaint “with prejudice as to Relator.” (Am. Order, Ex. 3 to
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`Defs.’ Mem. (emphasis added).) Defendants are now asserting res judicata against Relator, not
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`the United States. Thus, all that matters for the res judicata inquiry is whether Relator was a party
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`to the first action, which he certainly was.
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`7
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`Two qui tam cases that Defendants have identified underscore this point. (See Defs.’
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`Mem. at 7 n.4; Defs.’ Reply at 5–6.) In the first case, Emps.’ Ret. Sys. of Hawaii ex rel. Jackson v.
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`Clarion Partners, LLC, 2017 IL App (1st) 161480, 75 N.E.3d 405 (1st Dist 2017), a relator brought
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`a qui tam action on behalf of the State of Illinois under Illinois law, which was dismissed, and then
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`brought a second qui tam action on behalf of the State of Hawaii under Hawaii law. Id. at 408–
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`09. The court concluded that the “[relator] and [the defendant] were both parties in Jackson I,
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`notwithstanding the fact that Jackson sued on behalf of different states in Jackson I and
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`Jackson II,” and therefore res judicata barred the second action. Id. at 411. In another case,
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`United States ex rel. Laird v. Lockheed Martin Eng’g & Sci. Servs. Co., 336 F.3d 346 (5th Cir.
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`2003), abrogated on other grounds by Rockwell Int’l Corp. v. United States, 549 U.S. 457 (2007),
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`the relator had previously filed a wrongful discharge suit against his employer in state court,
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`alleging that the employer terminated him in retaliation for reporting possible violations of its
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`contract with a federal agency. Id. at 349. The relator then brought a qui tam action against the
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`employer on the same facts but under the FCA. Id. The Fifth Circuit concluded that res judicata
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`did not bar the qui tam action because, despite the factual similarities between the two cases, the
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`claims themselves were not identical. Significantly here, however, the court found that the
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`identity-of-parties element was satisfied, even though the qui tam action was ostensibly on behalf
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`of the relator and the United States. Id. at 357–58.
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`Relator’s attempt to distinguish these cases is unpersuasive. Regarding Jackson, Relator
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`emphasizes that Jackson brought claims in his individual capacity in conjunction with his first qui
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`tam action. (Pl.’s Resp. at 6.) The qui tam claim was dismissed, while the individual claims
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`continued to a jury trial, at which Jackson prevailed. Jackson, 75 N.E.3d at 408–09. But this
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`doesn’t change the relevance of Defendants’ analogy to this case—namely, that Jackson involved
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`8
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`two qui tam actions on behalf of different sovereigns.4 Relator similarly attempts to distinguish
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`Laird by noting that the relator brought a wrongful termination suit before filing his qui tam action.
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`(Pl.’s Resp. at 5.) For purposes of the identity-of-parties element, however, it does not matter
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`that the two suits were brought under different statutes so long as the parties (relator and
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`defendant) were the same, and even though the second case involved a nominal plaintiff-
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`sovereign not present in the first case.
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`2.
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`Final Judgment on the Merits
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`Defendants contend that the dismissal of Strakusek I with prejudice (see Am. Order, Ex. 3
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`to Defs.’ Mem.) constitutes a final judgment on the merits for purposes of res judicata. (Defs.’
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`Mem. at 6 & n.3 (citing Phillips v. Shannon, 445 F.2d 460, 462 (7th Cir. 1971) (noting that the
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`“overwhelming weight of authority” holds that dismissal with prejudice constitutes disposition on
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`the merits for purposes of res judicata)).) Relator counters that despite the language of the court’s
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`order (dismissing the case “with prejudice as to Relator”), there was in fact no final judgment on
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`the merits because the United States sought dismissal of Strakusek I under 31 U.S.C.
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`§ 3730(c)(2)(A), which provides that “[t]he Government may dismiss the action notwithstanding
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`the objections of the person initiating the action” if the relator is given notice and an opportunity
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`for a hearing. For support, Relator points to an unreported case from the Tenth Circuit, which
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`said (in a different context, as discussed below) that “[d]ismissal under § 3730(c)(2)(A) avoids a
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`decision on the merits and ‘does not entail any assumption by the court of substantive law-
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`declaring power.’” United States ex rel. Wickliffe v. EMC Corp., 473 Fed. App’x 849, 852 (10th
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`Cir. 2012).
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`Although Jackson is a state court decision, its holding appears to be consistent
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`with the federal law of res judicata. Compare Jackson, 75 N.E.3d at 410 (identifying the elements
`of res judicata as: “(1) a final judgment on the merits rendered by a court of competent jurisdiction,
`(2) an identity of cause[s] of action, and (3) an identity of parties or their privies”) (internal
`quotation marks omitted), with Barr v. Bd. of Trustees of W. Ill. Univ., 796 F.3d 837, 840 (7th Cir.
`2015) (enumerating the same elements).
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`This case therefore presents the question whether a dismissal with prejudice on a
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`§ 3730(c)(2)(A) motion has preclusive effect. Neither party has found a case definitively resolving
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`this question, but the court concludes that Defendants have the better argument. First, Wickliffe,
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`on which Relator relies, arose in an entirely different posture: the relator there had appealed the
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`district court’s grant of the government’s § 3730(c)(2)(A) motion to dismiss. 473 Fed. App’x at
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`850–51. There was no subsequent lawsuit to which res judicata might apply, so the court had no
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`need to discuss claim preclusion at all. Instead, the Tenth Circuit’s language explains its decision
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`not to address a separate jurisdictional issue (not relevant to this case) before reaching the merits
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`of the relator’s appeal. Relator’s discussion of Swift v. United States, 318 F.3d 250 (D.C. Cir.
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`2003) is similarly inapposite. (See Pl.’s Resp. at 4.) That case held that the government has an
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`essentially “unfettered right to dismiss” qui tam actions under § 3730(c)(2)(A), similar to the
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`exercise of prosecutorial discretion, such that judicial review is extremely limited. Id. at 252. Swift,
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`like Wickliffe, has nothing to say about res judicata.
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`Relator is correct that the United States’ motion to dismiss in Strakusek I did not turn on
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`the merits of his claims. (Pl.’s Resp. at 5.) The government simply argued that any recovery
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`would be too small to justify the cost of litigation. (See U.S. Mot. at 10 (“Given that the potential
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`loss to the United States in this case is $167,200, it is simply not in the United States’ interest to
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`allow this case to proceed.”)) Admittedly, the district court’s order granting the motion is silent on
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`whether Relator’s claims had merit. (See Am. Order, Ex. 3 to Defs.’ Mem.) But the district court
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`had no reason to discuss the merits because Relator failed to submit a response to the United
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`States’ § 3730(c)(2)(A) motion. (Id.) In this respect, granting the motion was similar to ordering
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`dismissal for want of prosecution under FED. R. CIV. P. 41(b).5 Dismissals under that rule
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`To be sure, an analogy to Rule 41(b) is imperfect because the text provides: “If a
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`plaintiff fails to prosecute . . . a defendant may move to dismiss the action.” FED. R. CIV. P. 41(b)
`(emphasis added). In the qui tam context, the United States is a fellow plaintiff with the power to
`seek dismissal of a relator’s suit.
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`“operate[ ] as an adjudication on the merits,” meaning that they have preclusive effect for
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`purposes of res judicata. See 9 Charles A. Wright & Arthur R. Miller, Federal Practice and
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`Procedure § 2373 (4th ed. 2020); LeBeau v. Taco Bell, 892 F.2d 605, 607 (7th Cir. 1989)
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`(“[D]ismissal for want of prosecution in federal court was with prejudice, and thus a binding
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`adjudication on the merits.”). It follows that the dismissal “with prejudice as to Relator” in
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`Strakusek I should also have preclusive effect. (Am. Order, Ex. 3 to Defs.’ Mem.)
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`In United States ex rel. Conner v. Mahajan, 877 F.3d 264 (7th Cir. 2017), a case cited by
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`neither party, the court concluded that there had been a decision “on the merits” where the prior
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`court merely decided that a relator’s motion to intervene—in a case that the Federal Deposit
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`Insurance Corporation brought on similar facts but not under the FCA—was untimely. Id. at 271.
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`The district court denied that motion as untimely because the relator “conceded knowing for years
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`about the FDIC’s case yet had waited until the eve of settlement to seek intervention.” Id. at 269.
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`Affirming the application of res judicata to relator’s subsequent motion in his qui tam suit for a
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`share of the FDIC’s recovery, the Seventh Circuit reasoned that “the basis of the earlier decision
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`is unimportant so long as the claim was decided on the merits.” Id. (emphases in original). “Thus
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`a dismissal of a suit may have preclusive effect even if it did not resolve the central controversy . . .
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`or even regarding issues not raised in the initial suit.” Id. (citations omitted). If a denial of a motion
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`to intervene as untimely constitutes a decision on the merits, then surely Relator’s dismissal with
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`prejudice also satisfies that requirement.
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`In sum, Relator has not provided a persuasive reason for why a dismissal “with prejudice
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`as to Relator” under § 3730(c)(2)(A) should be treated differently than any other dismissal with
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`prejudice. (Am. Order, Ex. 3 to Defs.’ Mem.) By contrast, Defendants have identified numerous
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`cases indicating that an earlier court’s failure to address the meat of a claim does not undermine
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`Case: 1:19-cv-07247 Document #: 34 Filed: 01/29/21 Page 12 of 28 PageID #:725
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`the preclusive effect of dismissal.6 The court accordingly concludes that the final judgment on
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`the merits element of res judicata has been satisfied.
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`3.
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`Identity of the Causes of Action
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`Defendants argue that the causes of action in this case are essentially the same as those
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`in Strakusek I. (Defs.’ Mem. at 6; Defs.’ Reply at 4.) Relator responds that there is no identify of
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`claims here; he notes that the prior case did not involve claims under the IFCA, while this case
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`does not involve claims under the FCA. (Pl.’s Resp. at 6.)
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`“Two causes of action are identical if each claim is supported by the same factual
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`allegations, . . . and the judgment in each case would be based on the same evidence.” Conner,
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`877 F.3d at 271–72 (citations omitted). Notably, “causes of action may be identical even if the
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`litigant attempts different substantive or procedural strategies to pursue the same underlying
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`claim.” Id. at 272. Generally, “it is proper to examine the facts at a sufficient level of specificity to
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`ensure fair notice to the parties and predictability,” but where the two complaints are “virtually
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`identical,” it is unnecessary to “explore the nuances of this standard.” Tartt v. Nw. Cmty. Hosp.,
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`453 F.3d 817, 822 (7th Cir. 2006) (citation and quotation marks omitted).
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`Defendants are correct that Relator’s Complaint relies on the same factual allegations as
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`Strakusek I. (See Defs.’ Mem. at 3–5.) Even though the two complaints bring claims under
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`different statutes, “the judgment in each case would be based on the same evidence.” Conner,
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`877 F.3d at 272. Moreover, if res judicata did not apply here, the practical ramifications for qui
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`tam litigation are significant: “Because the United States and most (if not all) states have false
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`See Defs.’ Mem. at 6 n.3 (citing Phillips v. Shannon, 445 F.2d 460, 462 (7th Cir.
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`1971); Cary v. City of Watseka, 870 F. Supp. 2d 567, 569 (C.D. Ill. 2012) (holding that
`homeowners’ voluntary dismissal of their counterclaim in a condemnation action still subjected
`the counterclaim to res judicata where the remaining claims were ultimately dismissed with
`prejudice); MonoSol, L.L.C. v. Cast Film Tech., Inc., No. 02 C 1611, 2002 WL 1822915, at *3
`(N.D. Ill. Aug. 7, 2002) (holding that res judicata precluded reinstatement of claims that were
`dismissed with prejudice pursuant to a settlement)).
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`claim statutes, [relators] potentially could file upwards of fifty cases, each one at a time.” (Defs.’
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`Reply at 6.) In the interest of encouraging parties to bring all possible claims in the same lawsuit,
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`the court concludes that Defendants have established the third and final element of res judicata.
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`See 18 Wright & Miller, Federal Practice and Procedure § 4408 (3d ed. 2020) (“One major function
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`of claim preclusion is to force a plaintiff to explore all the facts, develop all the theories, and
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`demand all the remedies in the first suit.”).
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`B.
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`Prior Public Disclosure
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`Next, Defendants argue that this case should be dismissed because it is based on facts
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`that were already publicly disclosed in Strakusek I. (Defs.’ Mem. at 7–10; Defs.’ Reply at 6–9.)
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`Relator claims that this action is not based on a public disclosure, but rather on “information that
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`is within [his] direct and independent knowledge.” (Compl. ¶ 4.) If the court concludes the
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`information was publicly disclosed, Relator argues, he should nevertheless be allowed to proceed
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`here because he is the “original source” of the information giving rise to this suit. (Pl.’s Resp. at
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`8–10.) The court addresses these arguments below.
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`1.
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`Public Disclosure Bar
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`Like the federal FCA, the IFCA includes what is known as the public disclosure bar.
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`Compare 31 U.S.C. § 3730(e)(4)(A), with 740 ILCS 175/4(e)(4)(A). The version of the IFCA in
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`effect in 2011, at the beginning of the alleged scheme, read: “No court shall have jurisdiction over
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`an action under this Section based upon the public disclosure of allegations or transactions in a
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`criminal, civil, or administrative hearing . . . unless . . . the person bringing the action is an original
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`source of the information.” 740 ILCS 175/4(e)(4)(A) (2010) (emphasis added).7 The purpose of
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`The current version of the IFCA, which went into effect in 2012, reads: “The court
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`shall dismiss an action or claim under this Section . . . if substantially the same allegations or
`transactions as alleged in the action or claim were publicly disclosed in a criminal, civil, or
`administrative hearing in which the State or its agent is a party . . . unless . . . the person bringing
`the action is an original source of the information.” 740 ILCS 175/4(e)(4)(A) (2012) (emphases
`added). The federal FCA was similarly amended in 2010. Compare id., with 31
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`Case: 1:19-cv-07247 Document #: 34 Filed: 01/29/21 Page 14 of 28 PageID #:727
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`this provision is to ensure that it is true whistleblowers who are able to bring claims under the Act,
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`rather than opportunists seizing on information that is already publicly available. See United
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`States ex rel. Feingold v. AdminaStar Federal, Inc., 324 F.3d 492, 495 (7th Cir. 2003) (“Where a
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`public disclosure has occurred, [the government] is already in a position to vindicate society's
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`interests, and a qui tam action would serve no purpose.”).
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`To determine whether the public disclosure bar applies, Illinois courts have interpreted the
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`IFCA as requiring four inquiries:
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`(1) whether the alleg