On Nov. 4, the U.S. Supreme Court heard oral arguments in a case challenging the scope of the False Claims Act with respect to industry-funded federal programs that are mandated by Congress. A ruling against the whistleblower threatens to narrow the scope of the FCA, limiting the ability of whistleblowers and the US government to hold fraudsters accountable.

In case, Wisconsin Bell Inc. v. US ex rel HeathWisconsin Bell, an AT&T subsidiary is challenging the revival of a qui tam The whistleblower lawsuit alleges the company violated the FCA by defrauding the Federal Communications Commission’s E-rate program. Wisconsin Bell argues that there are no false claims at issue because the E-rate program, a program mandated by Congress to help certain schools and libraries afford Internet and telecommunications, is administered by a private nonprofit organization and funded by payments imposed by government made by private telecommunications operators in the Universal Service Fund (USF).

In 2022, the US Court of Appeals for the Seventh Circuit ruled that whistleblower Todd Heath provided sufficient evidence of falsehood or science to defraud a federal program. This created a circuit split, as in 2014 the US Court of Appeals for the Fifth Circuit ruled that the FCA does not apply to E-rate program funds.

The justices appear poised to fully resolve the circuit split in favor of whistleblower Heath and against Wisconsin Bell, and hold that there are misrepresentations in the case. Focusing on the False Claims Act’s definition of what constitutes a “claim,” the justices appeared satisfied that the federal government provided at least some of the funds to USF that the whistleblower alleges were defrauded by Wisconsin Bell.

At oral argument, the justices were skeptical of Wisconsin Bell’s argument that no federal money was provided to USF and there was no “revenue” within the meaning of the False Claims Act. Instead, the justices debated whether to decide the issue narrowly on the basis that the federal government provided USF with $100 million because the False Claims Act only requires the government to “provide or provide any part of the money” which is requested.

This fact appears to be sufficient for the Court to uphold the Seventh Circuit’s holding that a false claim is at issue in the case.

What weighed heavily is that the circuit split between the US Courts of Appeals for the Fifth Circuit and the Seventh Circuit arose, in part, because the Fifth Circuit court did not know that the federal government had given USF $100 million when ruled that the fund did not meet the False Claims Act definition of claim. Some judges seemed content to resolve the circuit split on that narrow ground alone.

Deciding the larger question of whether the federal government actually provides all the money to USF, since Congress forces the telcos to pay money into the fund and the FCC controls how the money is spent, could be avoided entirely by the Court.

A Court ruling in favor of the whistleblower, even a narrow ruling that avoids larger questions about industry-funded federal programs, is a victory for accountability and the American taxpayer. The False Claims Act, esp qui tam provisions that empower whistleblowers, is a vital tool in combating fraud in government programs and contracts. Since the law was modernized in 1986, this resulted in the recovery of $75 billion in taxpayer dollars from fraudsterswith over $50 billion of these recoveries coming from qui tam whistleblower processes.

If it does not adopt a narrow interpretation of “demand,” the Court would allow whistleblowers and the government to continue to use the FCA to root out fraud in a range of government programs where private money is used to fund government programs under the government’s mandate .