The U.S. Supreme Court issued a unanimous but narrow opinion Friday that reimbursement requests submitted to the E-rate program, administered by the Universal Service Administrative Co., can be considered “claims” under the False Claims Act (FCA). The decision in Wisconsin Bell v. U.S. reaffirmed the ruling of the 7th Circuit Court of Appeals. Elena Kagan, one of three justices appointed by a Democratic president, wrote the opinion.
The U.S. Supreme Court has unanimously ruled that reimbursement requests submitted to the E-rate program, administered by the Universal Service Administrative Co., can be considered “claims” under the False Claims Act, said an opinion Friday authored by Justice Elena Kagan. The ruling in Wisconsin Bell v. U.S. allows a lawsuit by Todd Heath against provider Wisconsin Bell to go forward. “If the Government, by making direct payments, has provided even a small fraction of the money used to fund E-Rate reimbursements, the question presented here is resolved,” Kagan wrote. Both the FCC and DOJ provide portions of the funds used for E-rate reimbursements from enforcement actions against carriers, she said. “The Government was not a passive throughway for the transmission of E-rate moneys from one private party (the carrier) to another (the Administrative Company),” she wrote. “Nor were the Government’s activities confined to ‘facilitating’ such transfers, as Wisconsin Bell would have it.” Justices Clarence Thomas and Brett Kavanaugh joined the majority but also wrote concurring opinions. Thomas said the court’s ruling Friday is narrow, but the arguments made by the government would give the False Claims Act broader scope than previously understood and potentially mean that the Universal Service Administrative Co. is an agent of the government, rather than independent. That could mean it's unconstitutional, he said. “In a future case, however, we may need to confront the Government’s other arguments -- namely, that the FCA applies to funds that private parties pay to other private parties, and that the Administrative Company is an agent of the United States,” Thomas wrote. “If these issues return to us, I hope we will carefully consider their consequences.” Kavanaugh similarly said that Friday’s ruling could raise constitutional questions about the False Claims Act.
The U.S. Court of Appeals for the D.C. Circuit on Tuesday upheld a lower court’s dismissal of additional False Claims Act actions brought by lawyers Mark O’Connor and Sara Leibman, who allege that UScellular and other defendants fraudulently claimed that Frequency Advantage was a “very small business” qualifying for “designated entity” status and a bidding discount in FCC auctions (see 2303280061). Other defendants include King Street Wireless, Carroll Wireless and Barat Wireless. The case “must be dismissed because the frauds Leibman and O’Connor allege were publicly disclosed in an earlier lawsuit, and they are not original sources of the information,” Judge Neomi Rao wrote in a decision in docket 23-7044. “We therefore affirm the judgment of the district court.”
The FCC abruptly declined to defend the inclusion of a nonbinary gender category in its broadcaster workplace diversity data collection shortly before the start of oral argument at the 5th U.S. Circuit Court of Appeals on Tuesday. The eleventh-hour shift could lead to the court declining to rule on the case, attorneys told us.
U.S. Supreme Court justices Monday appeared divided on telecom industry arguments that reimbursement requests submitted to the Universal Service Administrative Co.-administered E-rate program can’t be considered “claims” under the False Claims Act (FCA). Justices peppered lawyers for both sides with questions during oral argument as they heard Wisconsin Bell v. U.S., a case from the 7th U.S. Circuit Appeals Court (see 2410070047).
The U.S. Supreme Court will take up early in its new term whether reimbursement requests submitted to the Universal Service Administrative Co.-administered E-rate program are “claims” under the False Claims Act (FCA). On Nov. 4, justices will hear Wisconsin Bell v. U.S., a case from the 7th U.S. Circuit Appeals Court (see 2405220039).
Universal service "has been an essential component" of federal telecom policy since the FCC's creation, the agency argued in a petition for writ of certiorari before the U.S. Supreme Court. Filed Monday (docket 24-354), the FCC's petition said the U.S. 5th Circuit Court of Appeals' ruling in favor of Consumers' Research's challenge of the Universal Service Fund contribution methodology was "incorrect." Moreover, the agency said it "did not delegate governmental power" when it designated the Universal Service Administrative Co. as USF administrator (see 2407240043).
The Armstrong Group agreed to pay $6.5 million for violating the FCC's rules on the USF high-cost program, DOJ announced Friday. The company admitted to "submitting improper costs in order to inflate the subsidies it received," a news release said. An investigation found that five incumbent local exchange carriers the Armstrong Group owns failed to comply with FCC rules between 2008 and 2023. A whistleblower will receive about $1.2 million "as his share of the recovery," DOJ said. “When providers like the Armstrong Group fail to follow federal law and FCC regulations, they jeopardize not only critical government programs but also consumers’ ability to access a modern lifeline," Eric Olshan, U.S. attorney for the Western District of Pennsylvania, said.
The U.S. Supreme Court granted Bell Wisconsin’s April 15 cert petition challenging the 7th U.S. Circuit Appeals Court ruling that E-rate reimbursement requests to the Universal Service Administrative Co. are actionable under the False Claims Act (FCA) (see 2405220039), said SCOTUS' order list Monday (docket 23-1127). In holding that the FCA’s treble damages and civil penalties apply to submissions made to USAC -- a private corporation paying private funds -- the 7th Circuit “explicitly acknowledged” that it was taking a “contrary view” from the 5th Circuit “about the identical program,” the petitioner said. The circuit split “directly affects billions of dollars distributed each year under the E-rate and three other universal service programs," it added.
The 7th U.S. Circuit Appeals Court erred when it ruled that E-rate reimbursement requests to the Universal Service Administrative Co. (USAC) are actionable claims under the False Claims Act (FCA), Wisconsin Bell’s U.S. Supreme Court reply brief said Monday (docket 23-1127). The reply brief supported Wisconsin Bell's April 15 cert petition to reverse the 7th Circuit’s decision. In holding that the FCA’s treble damages and civil penalties apply to submissions made to USAC -- a private corporation paying private funds -- the 7th Circuit “explicitly acknowledged” that it was taking a “contrary view” from the 5th Circuit “about the identical program,” the reply brief said. The circuit split “directly affects billions of dollars distributed each year under the E-rate and three other universal service programs," it said. The acknowledged conflict “casts a shadow of extraordinary liability over a massive number of transactions involving numerous private entities that are subject to government supervision,” said the reply brief. SCOTUS should grant Wisconsin Bell’s cert petition “to resolve the circuit split and restore clarity to the scope of the FCA as applied to government-adjacent programs funded with private money,” it said. SCOTUS distributed Wisconsin Bell's cert petition for the justices' June 6 conference, said a text-only docket entry Tuesday.