7th Circuit Denies Wisconsin Bell's Petition for En Banc E-Rate Rehearing

Wisconsin Bell failed to persuade the 7th U.S. Circuit Court of Appeals to grant its petition for an en banc rehearing of an August decision reversing and remanding a lower court ruling regarding how much the company charged schools and libraries through the FCC's E-rate program (see 2308020067). The opinion, released Tuesday in case 22-1515, noted that no judge sought a vote for a rehearing.

The ruling went largely unchanged from the August decision. The amended opinion expanded on the court's reasoning when addressing the issue of government funds. "Even if Wisconsin Bell could show absolute compliance with the nondiscrimination rules, that showing would not necessarily defeat a claim that schools and libraries were overcharged in violation of the E-rate program requirements," it said.

In the court's original opinion, the issue of government funds was treated "much more briefly and said that the issue presented factual disputes that would need to be resolved at trial," wrote Judge David Hamilton in the amended opinion. The court reaffirmed its original opinion and was prompted to expand on this issue as a result of Wisconsin Bell's petition.

The court rejected Wisconsin Bell's argument that E-rate subsidies didn't amount to "claims" under the False Claims Act. The amended opinion concluded that the "government funds issue can be resolved as a matter of law, at least in the absence of a genuine dispute about the evidence showing that Treasury funds have flowed directly to the Universal Service Fund." It noted that relator Todd Heath, who brought the challenge under the False Claims Act, claiming that what Wisconsin Bell charged schools and libraries exceeded what was allowed under the program, provided evidence that the USF gets funding directly from the Treasury Department in addition to FCC's contribution system.

The court also rejected the company's claim that the Universal Service Administrative Co., which collects and administers funding for USF programs, wasn't an agent of the federal government. "The government’s involvement in the E-rate program is far greater than in other situations where courts have held that the government did not 'provide' money for purposes of the False Claims Act," the opinion said, noting the federal government can make such a claim because the FCC is "maintaining an active role in its collection and distribution"of E-rate funding.

The 7th Circuit said that Heath "identified enough specific evidence of discriminatory pricing" by showing that "certain schools and libraries were charged more than certain non-residential customers and that those pairs of customers appeared to be similarly situated."