In an E-Rate fraud case brought under the False Claims Act (“FCA”) against Wisconsin Bell, the U.S. Supreme Court (“USSC”) recently ruled in favor of Todd Heath (“Heath”), in a significant decision which underscores the role of whistleblowers in exposing E-Rate fraud and enforcing accountability in federally managed funds.
What is the E-Rate Program?
The E-Rate (Education-Rate) program, established by the 1996 Telecommunications Act, helps schools and libraries afford internet and telecom services by drawing from the Universal Service Fund (“Fund”).
Telecom carriers contribute to the Fund, which is administered by the Universal Service Administrative Company, a nonprofit designated by the Federal Communications Commission (“FCC”) to oversee collections and distributions in accordance with FCC regulations.
A key regulation, the “lowest corresponding price” rule, ensures carriers do not charge schools and libraries more than comparable non-residential customers.
Whistleblower Lawsuit Against Wisconsin Bell
Heath, a telecommunications auditor, filed a lawsuit against Wisconsin Bell under the FCA, alleging that the company overcharged schools in violation of this rule and then submitted inflated reimbursement requests to the Fund, thereby defrauding the program.
The FCA imposes civil liability on any person who “knowingly presents, or causes to be presented, a false or fraudulent claim” as statutorily defined. 31 U.S.C. §3729(a)(1)(A).
Wisconsin Bell’s Defense & Lower Court Rulings
Wisconsin Bell argued that these reimbursement requests did not qualify as FCA “claims” because the money originated from private carrier contributions rather than the government. However, courts, including the Seventh Circuit, rejected this argument, noting that the government played a direct role in regulating the Fund’s collection and distribution.
Additionally, the government contributed more than $100 million directly from the U.S. Treasury, sourced from enforcement penalties and related actions.
Because these government funds were deposited into and disbursed from the Fund, the courts determined that E-Rate reimbursements qualified as FCA “claims,” allowing Heath’s lawsuit to proceed.
To read the USSC opinion, Wisconsin Bell, Inc. v. United States ex rel., click E-Rate fraud.
Impact on Whistleblowers & Fraud Enforcement
The USSC’s decision reinforces the False Claims Act’s role in protecting federal programs and highlights the critical role of whistleblowers in identifying and exposing fraud against the government.
Whistleblowers: Know Your Rights
Kehoe Law Firm is dedicated to protecting whistleblower rights, guiding them through the legal process, and pursuing potential financial rewards for reporting fraud.
For a free, no-obligation evaluation of whistleblower claims, send us a message or contact Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected].
KLF’s class action legal services are provided on a contingency-fee basis, meaning clients are not responsible for any fees or litigation expenses.
About Kehoe Law Firm, P.C.
Kehoe Law Firm, P.C. is a plaintiff-side class action firm, fiercely committed to safeguarding investors and consumers from corporate fraud and misconduct. Nationally recognized, our attorneys have taken the reins as Lead or Co-Lead Counsel in high-profile cases, securing over $10 billion in recoveries for institutional and individual investors and consumers. Through relentless class action litigation, we tackle securities fraud, fiduciary breaches, unfair mergers and acquisitions, and antitrust violations head-on. Beyond that, we champion whistleblowers and fight against data breaches, consumer scams, employment law abuses, retirement plan mismanagement, and deceptive business practices. With a no-nonsense, results-focused approach, we chase down meaningful outcomes—delivering justice and substantial recoveries for those we represent.
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