SCOTUS Rules That E-rate Reimbursements Are Claims Under False Claims Act
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.…
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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.