The Illinois Appellate Court recently upheld the dismissal of a lawsuit brought by Forde & O'Meara, LLP, against Vendor Assistance Program, LLC (VAP) and several related entities. The court ruled that the lawsuit did not sufficiently state a claim under the Illinois False Claims Act. This decision affects how similar claims may be pursued in the future, particularly those involving allegations of fraud against state programs.
The case, officially titled The State of Illinois v. Vendor Assistance Program, LLC, was filed under docket number 1-25-0543. It centers around allegations that VAP engaged in a scheme to avoid paying taxes and to conceal the identities of individuals profiting from certain investments related to state programs. The ruling has implications for whistleblowers and private citizens who seek to hold companies accountable for fraudulent activities involving state funds.
Background
Forde & O'Meara, LLP initiated this lawsuit on March 11, 2021, as a relator on behalf of the State of Illinois. The firm claimed that VAP and its associated entities violated the Illinois False Claims Act by failing to adhere to the rules of two state-administered programs: the Vendor Payment Program (VPP) and the Vendor Support Initiative Program (VSI). These programs allow qualified purchasers to buy accounts receivable owed to vendors by the state, with specific requirements for payment and disclosure.
According to the complaint, VAP and its trusts allegedly assigned receivables to non-qualified purchasers without notifying the state, which is a violation of the program rules. The complaint also claimed that VAP failed to adhere to the mandated payment structure, resulting in vendors receiving less than they were entitled to. The allegations included that some undisclosed parties involved in the scheme were former state officials and lobbyists.
The case progressed through the Cook County Circuit Court, where the trial court dismissed the first amended complaint on August 16, 2024, but allowed the plaintiff to file a second amended complaint. This second complaint was filed on September 16, 2024, but was dismissed with prejudice on February 21, 2025. The trial court found that the allegations were barred by a public disclosure rule, which prevents claims based on information that has already been publicly disclosed.
The Ruling
The Illinois Appellate Court affirmed the trial court's dismissal of the second amended complaint. The court ruled that the plaintiff failed to state a cause of action under the Illinois False Claims Act. It noted that the allegations were substantially similar to those already disclosed in a 2013 article by WBEZ, which reported on VAP's activities and the alleged scheme to avoid taxes.
The court stated, "the essence of the scheme was publicly disclosed by WBEZ prior to the filing of the lawsuit," emphasizing that simply adding more details to a known scheme does not create a new claim.
Presiding Justice Oden Johnson, along with Justices Mikva and Wilson, concurred in the judgment and opinion. The court highlighted that the plaintiff's allegations did not sufficiently demonstrate any damages recoverable by the state, noting that the complaint lacked specific factual support for the claimed damages.
Impact
This ruling has significant implications for future cases involving the Illinois False Claims Act. It reinforces the public disclosure bar, which limits the ability of private parties to bring claims based on information that has already been reported in the media. This could make it more challenging for whistleblowers to pursue claims if similar allegations have been previously disclosed.
The decision also underscores the importance of providing specific factual allegations in complaints, particularly in fraud cases. Plaintiffs must clearly demonstrate how they have been damaged by the alleged fraudulent conduct to survive motions to dismiss. This ruling may deter some potential whistleblowers from filing claims if they believe their allegations have already been publicly addressed.
What's Next
As of now, it is unclear if the plaintiff will seek further appeal to a higher court. The Attorney General indicated that they would not file a brief unless necessary to respond to constitutional challenges, but no such challenges are currently being advanced by the defendants. Details were not available in the court filing regarding any related cases pending.