United States District Court, N.D. Illinois, Eastern Division
UNITED STATES OF AMERICA and the STATE OF ILLINOIS ex rel. AMY O'DONNELL, Relator/Plaintiff,
AMERICA AT HOME HEALTHCARE AND NURSING SERVICES, LTD., d/b/a ANGELS AT HOME HEALTHCARE, Defendants.
MEMORANDUM OPINION AND ORDER
ROBERT BLAKEY UNITED STATES DISTRICT JUDGE.
Amy O'Donnell filed this qui tam action under
the False Claims Act (FCA), 31 U.S.C. § 3729, et
seq., and its state counterpart, the Illinois False
Claims Act (IFCA), 740 ILCS § 175/1, et seq.,
on behalf of the United States and Illinois. Relator sues
corporate defendants America at Home Healthcare and Nursing
Services, Ltd. d/b/a Angels at Home Healthcare (AAH), and
AAH's purported successor, Great Lakes Acquisition Corp.
d/b/a Great Lakes Caring. Relator also sues former AAH owners
Rachel Fitzpatrick and Tami Shemanske. Relator alleges that,
starting in 2006, AAH and its former owners fraudulently
billed Medicare and Medicaid, and that Great Lakes continued
AAH's fraudulent practices after buying AAH in early
filed her third amended complaint in July 2017. . Shortly
after, Defendants moved to dismiss. . Defendants also
filed counterclaims against Relator, seeking to rescind an
allegedly fraudulent settlement agreement between Relator,
her husband, and the corporate defendants that resolved two
lawsuits unrelated to this case. . Defendants moved to
join Relator's husband, Steven O'Donnell,
a counterclaim defendant, , while Relator moved to
dismiss the counterclaims, . For the reasons explained
below, this Court partially grants Defendants' motion to
dismiss, and denies both Defendants' motion to join
O'Donnell and Relator's motion to dismiss the
counterclaims as moot because this Court lacks jurisdiction
over the counterclaims.
Court presumes familiarity with, and incorporates by
reference, its prior opinion partially granting
Defendants' motion to dismiss Relator's second
amended complaint. . Thus, the Background section below
describes only additional details about the parties'
earlier lawsuits and settlement agreement that the prior
opinion did not address. Likewise, there is no need to repeat
in detail the required elements of each statute at issue
throughout the Analysis section.
and her husband both worked for AAH from January 2008 through
June 2011.  ¶¶ 11-12. In August 2012, the
O'Donnells sued AAH in this district, alleging violations
of the Fair Labor Standards Act (FLSA). Id. ¶
18; see also O'Donnell v. Angels at Home, No.
1:12-cv-6762 (N.D. Ill. 2012). Great Lakes bought AAH in 2015
during the course of that suit, which led the O'Donnells
to file a state suit against AAH and Great Lakes, alleging
violations of the Uniform Fraudulent Transfers Act (UFTA).
See O'Donnell v. Angels at Home, No. 2015-L-
8039 (Ill. Cir. Ct.). The parties settled the FLSA and UFTA
cases through one settlement agreement in August 2015. 
¶ 20. In relevant part, it provides:
Mutual Release. In consideration of the
payments set forth in . . . this Agreement, and of the other
promises and covenants set forth herein, the Parties agree to
the following Mutual Release: (a) Steven O'Donnell and
Amy O'Donnell, on behalf of themselves and their heirs,
legatees, personal representatives, successors and assigns,
hereby waive, release and forever discharge all employment
claims and employment causes of action, and all claims
asserted in the Federal Lawsuit and State Lawsuit, which they
have, had, or may have through the date of this Agreement,
whether known or unknown, from the beginning of time up to
and including the date of this Agreement.
 at 39-40. Relator filed this FCA case in February 2014,
and the case remained under seal until April 2016.
Id. ¶ 27. Thus, Defendants did not know about
the FCA case during the settlement negotiations; they had no
notice of this case until Relator served them with the
complaint in September 2016. Id. ¶ 28.
motion to dismiss under Rule 12(b)(6) “challenges the
sufficiency of the complaint for failure to state a claim
upon which relief may be granted.” Gen. Elec.
Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074,
1080 (7th Cir. 1997). To survive a motion to dismiss, a
complaint must provide a “short and plain statement of
the claim showing that the pleader is entitled to relief,
” Fed.R.Civ.P. 8(a)(2), so the defendant has
“fair notice” of the claim “and the grounds
upon which it rests.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v.
Gibson, 355 U.S. 41, 47 (1957)). A complaint must also
contain “sufficient factual matter” to state a
facially plausible claim to relief. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). A claim has facial
plausibility “when the pleaded factual content allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Iqbal,
556 U.S. at 678 (citing Twombly, 550 U.S. at 556).
This plausibility standard “asks for more than a sheer
possibility” that a defendant acted unlawfully.
Williamson v. Curran, 714 F.3d 432, 436 (7th Cir.
“threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice” to state a claim. Limestone Dev. Corp. v.
Vill. of Lemont, 520 F.3d 797, 803 (7th Cir. 2008). In
evaluating a complaint, this Court accepts all well-pleaded
allegations as true and draws all reasonable inferences in
the plaintiff's favor. Iqbal, 556 U.S. at 678.
This Court does not, however, accept a complaint's legal
conclusions as true. Brooks v. Ross, 578 F.3d 574,
581 (7th Cir. 2009).
the FCA and IFCA are anti-fraud statutes, claims under both
must also meet Federal Rule of Civil Procedure 9(b)'s
heightened pleading requirements. United States ex rel.
Gross v. AIDS Research Alliance-Chi., 415 F.3d 601, 604
(7th Cir. 2005). Rule 9(b) demands that claimants alleging
fraud “state with particularity the circumstances
constituting fraud.” Particularity resembles a
reporter's hook: a plaintiff “ordinarily must
describe the who, what, when, where, and how of the fraud-the
first paragraph of any newspaper story.” Pirelli
Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen
Co., 631 F.3d 436, 441-42 (7th Cir. 2011) (internal
quotation marks omitted). Ultimately, a plaintiff must always
inject “precision and some measure of
substantiation” into fraud allegations. United
States ex rel. Presser v. Acacia Mental Health Clinic,
LLC, 836 F.3d 770, 776 (7th Cir. 2016) (internal
quotation marks omitted).
Defendants' Motion to Dismiss
Allegations Against Great Lakes
claims against Great Lakes for successor liability survived
the last motion to dismiss.  at 36. On this motion,
however, Defendants argue for the first time that Great Lakes
cannot be liable as AAH's successor because Great Lakes
is AAH's parent company, not its successor. In support,
they submitted a filing from the Illinois Secretary of
State's website showing that AAH still exists as a
corporation in good standing. [114-1] at 2. This Court may
take judicial notice of information from the Illinois
Secretary of State's website. Fed.R.Evid. 201; see
also Lengerich v. Columbia Coll., 633 F.Supp.2d 599, 607
n.2 (N.D. Ill. 2009).
doctrine of successor liability, of course, applies only to
successor companies. See  at 36-37.
“Successor” means a corporation “vested
with the rights and duties of an earlier corporation”
through “amalgamation, consolidation, or other
assumption of interests.” Black's Law Dictionary
1660 (10th ed. 2014). In other words, a successor corporation
“must entirely absorb its predecessor: its business,
assets, rights and liability. At that point, the predecessor
ceases to exist.” AA Sales & Assocs., Inc. v.
JT&T Prod. Corp., No. 98-cv-7954, 2000 WL 1557940,
at *2 (N.D. Ill. Oct. 19, 2000). Because AAH still exists,
Great Lakes cannot be liable as its successor.
successor liability does not apply here, a parent corporation
may be liable for a subsidiary's actions if the parent
exercises enough control and direction over the subsidiary
that a court may properly pierce the parent's corporate
veil. See IDS Life Ins. Co. v. SunAmerica Life Ins.
Co., 136 F.3d 537, 540 (7th Cir. 1998) (collecting
cases). That said, Relator does not allege any facts to
support Great Lakes' liability as a parent corporation;
she conceded in earlier briefing that she “does not
bring any claims against Great Lakes for its own commission
of FCA or IFCA violations.”  at 60 n.17.
AAH and Great Lakes inexplicably waited until the third
amended complaint to clarify their corporate structure, this
Court grants the motion to dismiss Great Lakes without
prejudice. If Relator obtains information about Great Lakes
during discovery that gives her a good-faith basis for
amending her complaint to assert new claims against Great