In the
United States Court of Appeals
For the Seventh Circuit

No. 00-2486

Michael Brandon, M.D.,

Plaintiff-Appellant,

v.

Anesthesia & Pain Management
Associates, Ltd., Kumar S. Ravi,
M.D., James R. Boivin, M.D., and
Kathleen H. Slocum, M.D.,

Defendants-Appellees.

Appeal from the United States District Court
for the Southern District of Illinois.
No. 97-CV-1004--G. Patrick Murphy, Chief Judge.

Argued April 18, 2001--Decided January 18, 2002



  Before Harlington Wood, Jr., Diane P. Wood,
and Williams, Circuit Judges.

  Diane P. Wood, Circuit Judge. Dr. Michael
Brandon was employed as an
anesthesiologist by Anesthesia & Pain
Management Associates (APMA). After
discovering that certain APMA doctors
seemed to be falsifying the bills they
submitted to Medicare, he brought his
concerns to the attention of the APMA
shareholders. This led in short order
first to problems at work and later to
his discharge. Believing that the
discharge was in retaliation for his
airing of the Medicare issue, Brandon
filed a lawsuit claiming that the
defendants had committed the Illinois
tort of retaliatory discharge. A jury
found in his favor, but not long
afterward the district court granted
APMA’s motion for judgment as a matter of
law and vacated the jury verdict. The
court found as a matter of law that the
Illinois Supreme Court would not
recognize a retaliatory discharge claim
under the circumstances of Brandon’s
case. In our view, the district court was
mistaken on this critical question of
Illinois law; we therefore reverse the
grant of the Rule 50 motion and order the
jury’s verdict to be reinstated.
Furthermore, we conclude that the trial
court should not have dismissed the
punitive damage claims, which we remand
for further proceedings.

I

  Brandon began working as an
anesthesiologist for APMA in September
1993. APMA provides anesthesia services
to patients at St. Elizabeth’s Hospital
in Belleville, Illinois; approximately
45% of its patients are Medicare
recipients. When Brandon was hired, APMA
had four shareholder/ anesthesiologists:
Dr. Kumar Ravi, Dr. Kathleen Slocum, Dr.
James Boivin, and Dr. Maurice Boivin.
(Maurice Boivin was no longer a
shareholder at the time Brandon filed his
complaint, which accounts for his absence
in the list of defendants.) After two
years on the job, Brandon was promoted to
an associate position. Along with the
promotion came a 42% pay raise and the
ability to begin the process of becoming
an APMA shareholder. Brandon also
received a substantial bonus at the end
of 1995.

  As an associate, Brandon was now
responsible (along with the shareholder-
doctors) for filling out Medicare billing
reports. He soon began to suspect that
several of the shareholders were making
alterations to reports or otherwise
falsifying reports in order to receive
Medicare reimbursement at rates higher
than the rates to which APMA was entitled
by law. Under the governing regulations,
Medicare allows for more generous
reimbursements for procedures that an
anesthesiologist "medically directs"
(because the bill includes both the
doctor’s services and the services of
various assistants), than for procedures
that the doctor "personally performs."
There are limits, however, to the use of
the "medically directed" rate; most
importantly for present purposes, an
anesthesiologist may not oversee more
than four surgeries at a time. If she
does, then the provider may bill (at a
much lower rate) only for the services of
the assistants who are actually
performing the work.

  In May or June 1996, Brandon contacted
Medicare to obtain a copy of its
regulations. After reviewing them, he
became convinced that his colleagues’
practices were improper. Some, he
thought, were falsifying the number of
operations they were supervising, so that
they could bill at the highest "medically
directed" rate; others were altering the
billing sheets to indicate that they were
performing work, even though they had
left the hospital for the day.
Accordingly, at the shareholders’ meeting
held in early July 1996, he brought these
issues to their attention and showed them
copies of the relevant Medicare rules.
The doctors seemed upset that he had
contacted Medicare and worried about what
he had told the Medicare authorities.
Brandon assured them that he had asked
Medicare only generic questions and had
not divulged any information about APMA’s
billing procedures. He also suggested
that the shareholders should hire another
anesthesiologist, which would make it
easier for them legitimately to meet the
Medicare requirements for billing at
higher rates. The shareholders told
Brandon that they would look into the
problem. (At trial, the shareholders
argued that Brandon did not complain
about Medicare fraud until November 1996.
But since the jury found in Brandon’s
favor, we are taking his version of the
facts as true.)

  A few weeks later, on July 24, 1996, the
shareholders told Brandon that his job
performance was unsatisfactory, that they
had received complaints about him, and
that he should start looking for other
work. Brandon found this suspicious, as
no formal complaint had ever been filed
against him, he had recently been
promoted, and he had recently received a
substantial raise. He pressed the
shareholders for details about the
alleged complaints against him, but they
did not furnish any particulars. Around
the same time, Brandon began keeping a
journal documenting all of the cases in
which he thought that APMA shareholders
were improperly billing Medicare. He
periodically brought these occurrences to
the shareholders’ attention, but he took
no other action at that time.

  On October 4, 1996, Slocum told Brandon
that the shareholders had decided that he
had to leave his job by the end of the
year. Brandon protested that the
shareholders were firing him only because
of his challenges to their Medicare
claims and that he planned to "take them
to court." Slocum answered, "We can do
what we want with you. You don’t have a
contract."

  On October 21 and 22, Brandon again
brought his complaints to the attention
of the shareholders. His effort did
nothing but bring about a letter from the
shareholders dated October 23, 1996,
formally notifying him that he was
discharged effective at the end of the
year, but also giving him the option to
resign. On November 1, 1996, Brandon met
with the shareholders to discuss the
termination; he again accused the
shareholders of retaliating against him
for pointing out the billing fraud. With
strong, vulgar language, Slocum made it
plain that Brandon was finished, and
bluntly added, "You don’t have a signed
contract." At this time, Brandon, for the
first time, threatened to report the
alleged fraud to the government.

  On November 4, the shareholders sent
Brandon another letter making his
termination effective immediately, but
still urging him to resign. They
suggested that if he did not resign, they
could make it very difficult for him to
find another job. Brandon refused to
resign, and so he was terminated. Ten
months after his termination, he reported
APMA’s billing practices to the U.S.
Attorney’s Office. (The record does not
reflect what use, if any, the U.S.
Attorney’s Office made of his report.)

  Brandon (a citizen of Missouri) then
filed this diversity suit against APMA
and its current shareholders (all
Illinois citizens), alleging retaliatory
discharge under Illinois law. The trial
began on October 26, 1999. Two days
later, at the close of Brandon’s
evidence, the defendants filed a motion
for judgment as a matter of law pursuant
to Federal Rule of Civil Procedure 50(a);
they renewed their motion at the close of
all the evidence. The court reserved its
ruling on the motions; it also refused
Brandon’s request for a punitive damages
instruction. On November 3, 1999, the
jury returned a verdict in favor of
Brandon, awarding him $1,034,000 for lost
earnings and $1,000,000 for pain and
suffering and emotional distress.

  But Brandon’s victory was short-lived.
About six months after the jury verdict,
the district court entered a final
judgment granting the defendants’ motion
for judgment as a matter of law, vacating
the jury verdict, and dismissing the
complaint. This appeal followed.

II

  The jury concluded that Brandon was
fired for complaining about the
shareholders’ fraudulent billing
practices, and we are not asked to
overturn this determination. Rather, the
question for us is whether this discharge
was in retaliation for activities which
are protected by the clearly mandated
public policy of Illinois, and as such
was tortious under Illinois law.

  Illinois is an at-will employment state,
which means that in general an employee
can be discharged at any time for any
reason or none at all. Pratt v.
Caterpillar Tractor Co., 500 N.E.2d 1001,
1002 (Ill. App. Ct. 1986). Nevertheless,
there are exceptions to that rule: one
obvious one is that a forbidden
characteristic such as race cannot be the
reason for the actions of someone
counting as an "employer." 775 Ill. Comp.
Stat. Ann. 5/2-102 (West 2001). The tort
of retaliatory discharge embodies another
exception. A discharged employee may sue
her employer for the common law tort of
retaliatory discharge if her discharge
was in retaliation for certain actions
that are protected by the public policy
of Illinois, including retaliation for
complaints about an employer’s unlawful
conduct. Pratt, 500 N.E.2d at 1002;
Hinthorn v. Ronald’s of Bloomington,
Inc., 519 N.E.2d 909, 911 (Ill. 1988).
Unlike the federal False Claims Act
("FCA"), 18 U.S.C. sec. 287, which we
discuss below, the Illinois tort does not
require that the employee have reported
the allegedly illegal conduct to the
authorities, as long as she reported it
to the employer, Lanning v. Morris Mobile
Meals, Inc., 720 N.E.2d 1128, 1130-31
(Ill. App. Ct. 1999). The tort also does
not require the employee to have been
correct about the unlawfulness of the
conduct, as long as she had a good-faith
belief that it was unlawful. See
Stebbings v. Univ. of Chicago, 726 N.E.2d
1136, 1144 (Ill. App. Ct. 2000).

  As noted earlier, the district court did
not overturn the jury’s determination of
the reason for Brandon’s termination:
that he was fired for complaining about
the billing practices. Instead, it found
that Brandon’s claim failed on two other
grounds: (1) he "failed to show any clear
mandate of Illinois public policy which
his discharge contravenes," and (2) "even
if such public policy exists, other means
exist to vindicate it absent recognition
of the tort of retaliatory discharge in
this case." These are purely legal points
that we review de novo. Doe v. Howe
Military School, 227 F.3d 981, 990 (7th
Cir. 2000).


  A.   Public Policy Against Medicare Fraud

  While the Illinois Supreme Court has
acknowledged that "[t]here is no precise
definition" of the term "clearly mandated
public policy," Palmateer v. Int’l
Harvester Co., 421 N.E.2d 876, 878 (Ill.
1981), the court has explained that
"public policy concerns what is right and
just and what affects the citizens of the
State collectively. . . . [A] matter must
strike at the heart of a citizen’s social
rights, duties, and responsibilities
before the tort will be allowed." Id. at
878-89.

  Illinois courts have identified two
situations in which the "clear mandate of
public policy" standard is met: (1) when
an employee is fired for asserting a
workers’ compensation claim, Kelsay v.
Motorola, Inc., 384 N.E.2d 353, 357-59
(Ill. 1978); and (2) when an employee is
fired for refusing to engage in illegal
conduct or reporting the illegal conduct
of others ("whistle blowing" or "citizen
crime fighting"). Palmateer, 421 N.E.2d
at 879. Brandon’s claim rests upon the
latter of these two.

  The defendants implicitly concede, as
they must, that Brandon believed that the
conduct about which he had complained
amounted to Medicare fraud. Medicare
fraud is covered by several federal
felony statutes, including the FCA, which
criminalizes the act of making false
claims to the federal government
(including overcharging for Medicare
reimbursements), the False Statements
Act, 18 U.S.C. sec. 1001, and the
criminal Medicare and Medicaid anti-fraud
and abuse provisions, 42 U.S.C. sec.
1320a-7 (West 2001).
  Notwithstanding the fact that Illinois
has long had a public policy that
encourages citizens to report crimes, see
Palmateer, 421 N.E.2d at 880, the
district court took the rather narrow
view that these federal criminal statutes
could not provide a basis for Illinois
public policy. It stated that Brandon had
failed to prove "the existence of any
clear mandate of Illinois public policy
in favor of preventing health care fraud
against the federal government rather
than the State of Illinois," implying
that state public policy would not be
concerned with the defrauding of the
federal government and the violation of
federal statutes that make it a crime to
commit Medicare fraud.

  In so holding, the court erred. To begin
with, under the Supremacy Clause of the
United States Constitution, the state is
required to treat federal law on a parity
with state law, and thus it is not
entitled to relegate violations of
federal law or policy to second-class
citizenship. See Claflin v. Houseman, 93
U.S. 130, 136-37 (1876). But we need not
escalate this case to the constitutional
level, because it is plain that the
courts of Illinois have done no such
thing. To the contrary, they have
explicitly stated that it is a clearly
established policy of Illinois to prevent
its citizens from violating federal law
and that the state’s public policy
encourages employees to report suspected
violations of federal law if that law
advances the general welfare of Illinois
citizens. Russ v. Pension Consultants
Co., 538 N.E.2d 693, 697 (Ill. App. Ct.
1989) ("The [Illinois] supreme court has
held that public policy may be found in
federal law. . . . [A]n Illinois
citizen’s obedience to the law, including
federal law, is a clearly mandated public
policy of this state. . . ."); Johnson v.
World Color Press, Inc., 498 N.E.2d 575,
576 (Ill. App. Ct. 1986) ("Public policy
can be found not only in the laws and
judicial decisions of Illinois, but can
also be found in federal law. Our supreme
court . . . held that a cause of action
for retaliatory discharge could be based
upon a clearly mandated public policy
which has been declared by Congress and
which is national in scope.") (citations
omitted).
  There are many examples of Illinois
cases in which reports about violations
of federal law have given rise to valid
claims of retaliatory discharge. See,
e.g., Wheeler v. Caterpillar Tractor Co.,
485 N.E.2d 372 (Ill. 1985) (employee was
fired after reporting violations of
Nuclear Regulatory Commission policy);
Stebbings, 726 N.E.2d at 1145-46
(employee was fired for complaining about
violations of federal radioactive
materials regulations); Sherman v. Kraft
Gen. Foods, Inc., 651 N.E.2d 708, 712
(Ill. App. Ct. 1995) (employee was fired
for reporting violations of OSHA); Howard
v. Zack Co., 637 N.E.2d 1183, 1190-91
(Ill. App. Ct. 1994) (employee was fired
for reporting violation of federal record
keeping regulations); Johnson, 498 N.E.2d
575 (employee was fired for reporting
violations of federal securities laws).
Furthermore, the Illinois legislature
itself has explicitly articulated a state
policy against all public benefits fraud:

Because of the pervasive nature of public
assistance fraud and its negative effect
on the people of the State of Illinois
and those individuals who need public
assistance, the General Assembly declares
it to be public policy that public
assistance fraud be identified and dealt
with swiftly and appropriately
considering the onerous nature of the
crime.

305 Ill. Comp. Stat. Ann. 5/8A-1 (West
2001). Although in a highly technical
sense APMA may not have committed state
public benefits fraud, its discharge of
Brandon violated the statutory policy
against public benefits fraud in general.
See Stebbings, 726 N.E.2d at 1142
(statute from which public policy can be
inferred need not necessarily apply to
the specific conduct at hand). Finally,
the Illinois Supreme Court is
particularly sensitive to the public
policy underpinnings of statutes that
affect the health and safety of citizens.
United States ex rel. Chandler v. Hektoen
Inst. for Med. Research, 35 F. Supp. 2d
1078, 1083 (N.D. Ill. 1999).

  In short, the Illinois courts are under
no illusions about the status of federal
law as a source of public policy for the
state of Illinois. The Illinois
legislature has stated that it is the
public policy of the state to identify
and end public benefits fraud; Illinois
has an undeniable interest in ensuring
that its citizens are obedient to federal
law and that its public benefits
recipients are not cheated out of proper
medical care or benefits. Taking all this
into account, we conclude that the
Illinois Supreme Court would find that
Brandon’s discharge was in violation of
the public policy of the state of
Illinois.


  B.   Alternative Means of Enforcement

  Even if Brandon has established the
elements of a retaliatory discharge
claim, the Illinois courts have hinted in
dicta that the claim may still be
rejected if an adequate alternative
remedy exists to vindicate the
retaliatory discharge or otherwise to
deter the activity that is inconsistent
with public policy. "The tort of
retaliatory discharge was not intended to
serve as a substitute means for
enforcement of particular laws."
Stebbings, 726 N.E.2d at 1141. See also
Hamros v. Bethany Homes & Methodist
Hosp., 894 F. Supp. 1176, 1178-79 (N.D.
Ill. 1995) (no retaliatory discharge
claim for plaintiff fired for exercising
his rights under the Family and Medical
Leave Act (FMLA) since the FMLA already
prohibits retaliation and this discharge
presented a private matter between the
employer and the employee).

  Taking its lead from these cases, the
district court also supported its
decision on the ground that the FCA,
which forbids the submission of knowingly
false claims for money to the federal
government, adequately protected the
state’s policy against public benefits
fraud and provided Brandon with a
sufficient remedy for the retaliatory
discharge. The FCA permits the federal
government to impose civil sanctions
against fraudulent parties. 31 U.S.C.
sec. 3730(a). It also allows a private
individual to bring a qui tam action for
fraud, on behalf of the federal
government, and to recover an award of up
to 30% of the proceeds of the action. See
31 U.S.C. sec. 3730(b)-(d).

  But the existence of government-imposed
criminal and civil sanctions for unlawful
conduct cannot be the basis for inferring
that an employee cannot state a claim for
retaliatory discharge when the employer
fires her in retaliation for reporting
the unlawful conduct. In most "whistle-
blower" retaliatory discharge claims, the
employee is objecting to conduct by her
employer that carries criminal or civil
sanctions. See Johnson, 498 N.E.2d at 578
(employee who complains about violations
of the federal securities law is
protected from retaliation even though
the employer is subject to penalties for
such Securities Act violations). If the
district court’s view were correct, the
whole "citizen crime-fighter" species of
retaliatory discharge claim would become
extinct in Illinois. We see nothing in
the scraps of language from other courts
that would support such an important
shift in Illinois law, and the Illinois
Supreme Court itself has never taken such
a step.

  To the extent that alternative remedies
are relevant, however, we disagree with
the district court that the anti-
retaliation provision of the FCA, 31
U.S.C. sec. 3730(h) (West 2001), is
enough to bar Brandon’s claim. Section
3730(h) states that:

Any employee who is discharged, demoted,
suspended, threatened, harassed, or in
any other manner discriminated against in
terms and conditions of employment by his
or her employer because of lawful acts
done by the employee on behalf of the
employee or others in furtherance of an
action under this section, including
investigation for, initiation of,
testimony for, or assistance in an action
filed or to be filed under this section,
shall be entitled to all relief necessary
to make the employee whole.

(Emphasis added). That relief includes
reinstatement, double back pay with
interest, "and compensation for any
special damages sustained as a result of
the discrimination, including litigation
costs and reasonable attorneys’ fees." 31
U.S.C. sec. 3730(h). The final phrase
permits recovery for emotional distress.
Neal v. Honeywell, Inc., 191 F.3d 827,
832 (7th Cir. 1999).

  For Brandon to bring an action against
APMA based on his discharge under sec.
3730(h), he would have to show that (1)
his actions were taken "in furtherance of"
an FCA enforcement action and were
therefore protected by the statute; (2)
that the employer had knowledge that he
was engaged in this protected conduct;
and (3) that the discharge was motivated,
at least in part, by the protected
conduct. See United States ex rel.
Yesudian v. Howard Univ., 153 F.3d 731,
736 (D.C. Cir. 1998). The tort of
retaliatory discharge, as we have already
noted, does not require the employee to
have reported the allegedly illegal
conduct to the authorities. Lanning, 720
N.E.2d at 1131. People in Brandon’s
position, who choose to raise their
concerns privately within their firm or
company, rather than publicly, simply do
not qualify for the FCA claim.

  This conclusion disposes of the question
whether there was an alternative path
available to Brandon, unless his
complaints could somehow be seen as
something "in furtherance of" a yet-to-
be-filed FCA enforcement action or
Illinois would regard the FCA as
"equivalent" even though it addresses a
smaller set of cases than the state tort.
The FCA covers "investigation for,
initiation of, testimony for or
assistance in an [enforcement] action
filed or to be filed." 31 U.S.C. sec.
3730(h). In Neal v. Honeywell, 33 F.3d
860 (7th Cir. 1994) (Honeywell I), this
court defined an "action" under sec.
3730(h) to include situations in which a
qui tam action is a "distinct
possibility," or "litigation could be
filed legitimately--that is, consistently
with Fed. R. Civ. P. 11." Id. at 864. We
did not, however, define "in furtherance
of" or otherwise describe the actions the
employee must have taken in relation to
the possibility of litigation. In Neal
itself, the plaintiff had provided enough
information to the government to trigger
an investigation and that the employer
was on notice of the investigation. Id.
Luckey v. Baxter Healthcare Corp., 183
F.3d 730 (7th Cir. 1999), shed little
light on this issue, stating simply that
"[o]nly investigation, testimony, and
litigation are protected." Id. at 733.
Luckey also established that a
retaliatory complaint had to be dismissed
if the employer did not know about the
whistle-blower’s report before it
discharged him.

  What exactly had Brandon done that could
have been seen as protected conduct or a
"precursor to [FCA] litigation?" He had
notified the shareholders that he
wasconcerned about their billing
practices. He had contacted Medicare for
information about Medicare billing rules.
But were any of these actions "in
furtherance of" a qui tam action? Did any
of these actions put APMA on notice of
the "distinct possibility" of a qui tam
action? Under the circumstances here, we
cannot find that APMA would have realized
that it faced the "distinct possibility"
of such an action. It is true that
Brandon used terms like "illegal,"
"improper," and "fraudulent" when he
confronted the shareholders about the
billing practices. On the other hand,
Brandon had never explicitly told the
shareholders that he believed they were
violating the FCA and had never
threatened to bring a qui tam action. He
never threatened to report their conduct
to the government until after he was
discharged. Compare Eberhardt v.
Integrated Design & Constr., Inc., 167
F.3d 861, 867 (4th Cir. 1999). Brandon
was simply trying to convince the
shareholders to comply with the Medicare
billing regulations. Such conduct is usu
ally not protected by the FCA, see
Yesudian, 153 F.3d at 740; Zahodnick v.
Int’l Bus. Machs. Corp., 135 F.3d 911,
914 (4th Cir. 1997); United States ex
rel. Hopper v. Anton, 91 F.3d 1261, 1269
(9th Cir. 1996). Additionally, such
conduct usually does not put an employer
on notice of potential FCA litigation.
See United States ex rel. Ramseyer v.
Century Healthcare Corp., 90 F.3d 1514,
1523 (10th Cir. 1996) (Plaintiff’s
conduct in advising her superiors of non-
compliance with Medicaid program
requirements did not suggest to employer
that she intended to bring an FCA
action.).

  It is more accurate to say that
Brandon’s investigation of the billing
reports was part of the general course of
his responsibilities. At trial, Ravi
testified that one of Brandon’s job
duties was to ensure that the billing
practices complied with Medicare rules
and regulations. Thus, the fact that
Brandon was alerting his supervisors to
the possibility of their non-compliance
with the rules would not necessarily put
them on notice that he was planning to
take a far more aggressive step and bring
a qui tam action against them or report
their conduct to the government. See
Eberhardt, 167 F.3d at 868 ("[I]f an
employee is assigned the task of
investigating fraud within the company,
courts have held that the employee must
make it clear that the employee’s actions
go beyond the assigned task" in order to
allege retaliatory discharge under the
FCA.); Ramseyer, 90 F.3d at 1523 n.7
(Persons whose jobs entail the
investigation of fraud "must make clear
their intentions of bringing or assisting
in an FCA action in order to overcome the
presumption that they are merely acting
in accordance with their employment
obligations.").

  Looking at all of the facts, it is
unclear at best that Brandon engaged in
activity that might have supported a suit
under the FCA anti-retaliation provision.
In this kind of situation, the Illinois
Supreme Court has held that the employee
remains free to pursue a remedy under the
common law tort of retaliatory discharge.
See Wheeler, 485 N.E.2d at 376-77.
Following Wheeler and respecting the
difference between the Illinois tort and
the FCA claim, we conclude that allowing
a state remedy in conjunction with
thepotentially available federal remedy
does "no violence to the interests
protected by the Federal statute."
Fragassi v. Neiburger, 646 N.E.2d 315,
318 (Ill. App. Ct. 1995). There is
nothing in sec. 3730(h) to lead us to
believe that Congress intended to preempt
all state law retaliatory discharge
claims based on allegations of fraud on
the government.

  Finally, even if there is some kind of
federal remedy available under sec.
3730(h) (though not the kind of remedy
Brandon wanted), it appears that the
Illinois Supreme Court looks at this fact
as one of many factors in a pragmatic
approach toward determining when the tort
of retaliatory discharge will lie. See
Fellhauer v. Geneva, 568 N.E.2d 870, 876
(Ill. 1991). Compare Schweiker v.
Chilicky, 487 U.S. 412, 424 (1988)
(denying a Bivens-type remedy to
claimants who were improperly denied
disability benefits even though "Congress
failed to provide for complete relief");
Bush v. Lucas, 462 U.S. 367, 388 (1983)
(refusing to provide a Bivens remedy
after acknowledging the congressional
remedy would not provide relief for the
plaintiff’s First Amendment injury). The
state thus seems to take a more exacting
approach to the availability of an
alternative remedy than the Supreme Court
has done for implied Bivens actions under
the federal constitution. As the final
authority on the common law of the state,
it is of course entitled to do so.

III

  Brandon also challenges the district
court’s refusal to instruct the jury on
punitive damages. As a federal court
sitting in diversity, we look to the law
of Illinois to determine the
appropriateness of punitive damages.
Europlast, Ltd. v. Oak Switch Sys., Inc.,
10 F.3d 1266, 1276 (7th Cir. 1993). Under
Illinois law, "[w]hile the measurement of
punitive damages is a jury question, the
preliminary question of whether the facts
of a particular case justify the
imposition of punitive damages is
properly one of law," Kelsay, 384 N.E.2d
at 359, and our review is therefore de
novo. Europlast, 10 F.3d at 1276.

  In general, the Illinois Supreme Court
does not favor punitive damages.
Nevertheless, they may be awarded where
"torts are committed with fraud, actual
malice, deliberate violence or
oppression, or when the defendant acts
willfully, or with such gross negligence
as to indicate a wanton disregard of the
rights of others." Kelsay, 384 N.E.2d at
359. See also Cornell v. Langland, 440
N.E.2d 985, 987 (Ill. App. Ct. 1982)
(punitive damages are appropriate where
conduct is "intentional, deliberate and
outrageous"). Punitive damages are an
important part of a retaliatory discharge
action:

In the absence of the deterrent effect of
punitive damages there would be little to
dissuade an employer from engaging in the
practice of discharging an employee for
filing a workmen’s compensation claim. .
. . The imposition on the employer of the
small additional obligation to pay a
wrongfully discharged employee
compensation would do little to
discourage the practice of retaliatory
discharge, which mocks the public policy
of this State.

Kelsay, 384 N.E.2d at 359; see also
Midgett v. Sackett-Chicago, Inc., 473
N.E.2d 1280, 1283-84 (Ill. 1984).

  It is certainly important to recall, as
APMA notes, that punitive damages are not
appropriate in all retaliatory discharge
cases. See Dixon Distrib. Co. v. Hanover
Ins. Co., 641 N.E.2d 395, 400 (Ill. 1994)
(actual malice is not necessarily
established in every retaliatory
discharge case). Only where the evidence
offered by the plaintiff, if believed,
would support a finding of malice, should
a jury be given instructions on punitive
damages. See Cirrincione v. Johnson, 703
N.E.2d 67, 70-71 (Ill. 1998).

  According to Brandon’s version of the
events, when he told APMA’s shareholders
that they could not terminate him in
response to his complaints, they
dismissed him as "fucked" because he did
not have a written contract and they told
him, "We can do what we want with you."
They fabricated complaints and made false
evaluations of his job performance. They
also took steps to prevent him from
filing suit, threatening to make it
difficult for him to find another job.
Rather than responding appropriately to
Brandon’s complaints, the shareholders
began a series of verbal and written
communications in which they threatened
to discharge him if he did not stop
complaining about their billing
procedures. These kinds of threats,
harassment, and coercive tactics show a
wilful and wanton disregard for Brandon’s
rights to investigate and report illegal
conduct and therefore could support a
jury award of punitive damages. See Cox
v. Doctor’s Assocs., Inc., 613 N.E.2d
1306, 1328 (Ill. App. Ct. 1993).

IV

  Even though the tort of retaliatory
discharge is a narrow exception to
Illinois’s doctrine of at-will
employment, in appropriate cases it
protects important public policies.
"There is no public policy more important
or more fundamental than the one favoring
the effective protection of the lives and
property of citizens," Palmateer, 421
N.E.2d at 879, and APMA’s discharge of
Brandon for complaining about Medicare
fraud violated this policy. Accordingly,
we Reverse the district court’s grant of
judgment as a matter of law in favor of
the defendant and we Remand for
Reinstatement of the jury verdict in this
case. We Remand for a jury trial on
punitive damages.
