False Claims Act Case Against UScellular Can Proceed, DC Circuit Rules
The U.S. Court of Appeals for the D.C. Circuit on Friday reversed a lower court’s dismissal of a False Claims Act (FCA) case brought by lawyers Mark O’Connor and Sara Leibman, who allege that UScellular fraudulently obtained nearly $113 million in bidding credits in an FCC auction by participating through a “shell company,” Advantage Spectrum. The D.C. Circuit didn’t rule on the merits and said the case could continue.
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The FCA imposes civil liability for various types of fraud against the government, and a private individual, called a relator, may bring a “qui tam” action alleging an FCA violation on behalf of the U.S. O’Connor and Leibman have filed various FCA claims against UScellular, which is exiting as a carrier.
“The core allegation is that U.S. Cellular controlled and had an attributable material relationship with Advantage, which these companies concealed from the FCC,” said the decision by Judge Greg Katsas. Because UScellular was “one of the largest telecommunications companies in the country, such control or relationships would have disqualified Advantage from receiving any bidding credits as a small business.”
The court ruled only on procedural grounds. “The sole question before us is whether the FCA’s public-disclosure bar applies to this case,” Katsas wrote. The decision noted that the case differs from one decided in UScellular’s favor by the D.C. Circuit earlier this year (see 2502110037).
In that case, “the prior disclosures had been made in earlier qui tam litigation, where other relators sketched out the relevant fraud allegations in significant detail,” Katsas wrote. “Here, in contrast, the defendants contend that the prior disclosures of fraud were made in the very FCC filings through which the putative small business obtained and retained its bidding credits. … We do not think that those filings support dismissal at this early stage of the case.”