The opinion of the court was delivered by: Judge Feinerman
MEMORANDUM OPINION AND ORDER
In this qui tam action brought on behalf of the United States and the State of Illinois, Plaintiffs-Relators Cathy Wildhirt and Nancy McArdle allege that their former employers, Defendants AARS Forever, Inc. ("AARS"), and THH Acquisition LLC I ("Acquisition") violated the False Claims Act, 31 U.S.C. § 3729 et seq. ("FCA"), and the Illinois Whistleblower Reward and Protection Act, 740 ILCS 175/1 et seq. ("IWRPA"), by submitting false and fraudulent claims to the federal and state governments. Relators also bring individual claims alleging that Acquisition violated the FCA's and IWRPA's anti-retaliation provisions by terminating their employment in retaliation for calling attention to the false or fraudulent claims. After the United States and the State of Illinois declined to intervene, the complaint was unsealed and served on Defendants, who have moved to dismiss under Federal Rule of Civil Procedure 12(b)(6). The motion is granted, but Relators are given leave to file an amended complaint that attempts to satisfy the applicable pleading standards.
The facts alleged in the complaint are assumed true on a Rule 12(b)(6) motion. See Reger Dev., LLC v. Nat'l City Bank, 592 F.3d 759, 763 (7th Cir. 2010); United States ex rel. Main v. Oakland City Univ., 426 F.3d 914, 916 (7th Cir. 2005). In May 2007, Defendant AARS entered into a contract with the Veterans Administration ("VA") to provide home healthcare services and durable medical equipment to respiratory patients in portions of Illinois, Wisconsin, and Michigan. AARS also provided medical services to respiratory patients through the Medicaid and Medicare programs. Defendant Acquisition took over AARS's business under the VA, Medicaid, and Medicare programs in early 2008. Both AARS and Acquisition operated under the name "Total Home Health."
From 2007 until September 2008, Plaintiffs-Relators Wildhirt and McArdle worked as a respiratory therapists for AARS and then for Acquisition. During their employment, Relators came to realize that Defendants were breaching numerous performance requirements under the VA contract (Doc. 1, ¶¶ 86, 104-137) and violating numerous Medicare and Medicaid standards and regulatory provisions (id. ¶¶ 139-163). Those breaches and violations, Relators allege, caused all or nearly all of the claims sent by Defendants to the federal and state governments to be "false claims." Id. ¶¶ 138, 157, 164, 175-177, 188-189.
Relators repeatedly complained to their supervisors that Defendants were violating the VA contract, breaching applicable Medicaid and Medicare regulations, and placing patients at risk. Id. ¶¶ 165-169. McArdle's complaints culminated in a "run-in" with Richard Manning, a senior official at Acquisition, the Friday before Labor Day in 2008. Id. ¶ 169. McArdle left a message with Scott Hughes, her direct supervisor, stating that she would not return to work on Tuesday because she was distraught over her conversation with Manning and uncertain whether she could continue to work under existing conditions. Id. ¶ 170. A human resources manager then contacted McArdle and told her that if she did not return to work on Tuesday, she would be terminated for job abandonment. Ibid. McArdle did not return on Tuesday, and was terminated later that week. Ibid.
Wildhirt was ill over that same Labor Day weekend and informed her direct supervisor, McArdle, who in turn informed Hughes. Id. ¶ 171. Although Acquisition knew that Wildhirt was ill and had a doctor's note restricting her from working, Wildhirt was terminated the same day as McArdle for job abandonment. Ibid. Relators contend that their terminations "were directly related to the fact that they were regularly trying to provide an adequate level of patient care on behalf of a company who seemed not to care at all about providing such care to veterans." Id. ¶ 173. The Illinois Department of Employment Security, in a decision entitled to judicial notice on a Rule 12(b)(6) motion, see 4901 Corp. v. Town of Cicero, 220 F.3d 522, 527 n.4 (7th Cir. 2000), ruled that Wildhirt was not "discharged"; rather, she "knew that she could have preserved her job by returning" a call from Acquisition's Human Relations Department two days after Labor Day, "but she decided not to do that." Doc. 29-1.
The complaint contains four counts. Count I is a qui tam claim against both Defendants under the FCA, alleging that they knowingly submitted false or fraudulent claims to the United States. Count III is a materially identical qui tam claim against both Defendants under the IWRPA, alleging that Defendants knowingly submitted false or fraudulent claims to the State of Illinois. Counts II and IV allege that Acquisition unlawfully terminated Relators in violation of the anti-retaliation provisions of the FCA and IWRPA, respectively.
A. Counts I and III: FCA and IWRPA Qui Tam Claims
Qui tam claims brought under the FCA are subject to the heightened pleading standards of Federal Rule of Civil Procedure 9(b). See United States ex rel. Gross v. AIDS Research Alliance-Chicago, 415 F.3d 601, 604 (7th Cir. 2005). The same pleading standards apply to qui tam claims brought under the IWRPA. See Mason v. Medline Indus., Inc., 2009 WL 1438096, at *2 (N.D. Ill. May 22, 2009) (citing Ackerman v. Nw. Mut. Life Ins. Co., 172 F.3d 467, 470 (7th Cir. 1999)). To support their qui tam claims, the Relators must allege "the who, what, when, where and how" of the alleged fraud. Gross, 415 F.3d at 605.
Relators' FCA claim alleges that Defendants "knowingly submitted, and/or continue to submit . false or fraudulent claims for payment" to the federal government, "knowingly made, used, or caused to be made or used . false records and statements to obtain payment" from the government, and "knowingly submitted, and possibly continue to submit . false or fraudulent claims for payment or approval by improperly retaining funds that should have been credited to" the government. Doc. 1, ¶¶ 175-177. These allegations mirror the bad acts set forth in 31 U.S.C. §§ 3729(a)(1), (2), and (7). Relators' IWRPA claim makes parallel allegations under parallel provisions of the IWRPA. See Doc. 1, ¶¶ 188-189; 740 ILCS 175/3(a)(1), (2).*fn1
A qui tam plaintiff must allege that the defendant actually submitted a claim for payment to the government, and that the claim was knowingly false. See United States ex rel. Fowler v. Caremark RX, L.L.C., 496 F.3d 730, 741-42 (7th Cir. 2007) (affirming dismissal of FCA claim because "Relators do not present any evidence at an individualized transaction level to demonstrate that Caremark" engaged in the alleged fraud), overruled in part on other grounds by Glaser v. Wound Care Consultants, Inc., 570 F.3d 907, 909-10 (7th Cir. 2009); United States ex rel. Garst v. Lockheed-Martin Corp., 328 F.3d 374, 377 (7th Cir. 2003) (affirming dismissal of FCA claim because "the pleadings [do not allege] a single instance of a false statement made to obtain payment"); United States ex rel. Clausen v. Lab. Corp. of Am., 290 F.3d 1301, 1312 (11th Cir. 2002). That is, "[i]n order to plead cause of action for the submission of a false claim under the FCA and IWRPA, [a relator] must plead with particularly the details of actual claims submitted to the government." United States ex rel. Grant v. Thorek Hosp., 2008 WL 1883454, *2 (N.D. Ill. Apr. 25, 2008). Complaints that merely allege breaches of contract, cost overruns, or regulatory violations do not suffice. See Fowler, 496 F.3d at 743; Garst, 328 F.3d at 378; Clausen, 290 F.3d at 1311. As the Seventh Circuit has instructed, "failing to keep one's promise is just breach of contract, and cost overruns in government procurement projects may occur without fraud. To satisfy Rule 9(b), [the plaintiff must] allege that [the defendant] said something knowing at the time that the representation was false (or not intending to perform); failures to satisfy the customer ex post are not fraud . ." Garst, 328 F.3d at 378.
Relators have failed to satisfy these pleading standards. The complaint's principal thrust is that because Defendants violated the VA contract and breached Medicare and Medicaid regulations in so many ways, their performance fell so short that every or nearly every claim they submitted to the federal and state governments was false and fraudulent. Doc. 1, ¶¶ 138, 157, 164, 175-177, 188-189. The Seventh Circuit has rejected this "gestalt" method of alleging a qui tam claim, explaining that however rotten a government contractor's performance or motives, the relator must "identify specific false claims for payment or specific false statements made in order to obtain payment." Garst, 328 F.3d at 376. Consistent with this principle, the Seventh Circuit held that a qui tam claim could not rest on allegations that "[a]ll Lockheed invoices and payments within the statute of limitations" were fraudulent due to its prior violation of ethical rules, or that "[t]he total claims" for a specific component of contract were "fraudulent or false" because Lockheed submitted a false cost estimate to obtain the contract. Garst, 328 F.3d at 377-78; see also United States ex rel. Crews v. NCS Healthcare of Ill., Inc., 460 F.3d 853, 857-58 (7th Cir. 2006). Relators' attempt to paint with an equally broad brush ...