SCOTUS Case With FCC Implications Will Be Heard Nov. 4

The U.S. Supreme Court will take up early in its new term whether reimbursement requests submitted to the Universal Service Administrative Co.-administered E-rate program are “claims” under the False Claims Act (FCA). On Nov. 4, justices will hear Wisconsin Bell v. U.S., a case from the 7th U.S. Circuit Appeals Court (see 2405220039).

Todd Heath sued Wisconsin Bell under the FCA, arguing that the company charged schools and libraries impermissibly high prices under the E-rate program, which made each reimbursement request a false claim. A district court ruled against Wisconsin Bell’s move to dismiss the case on the grounds that the alleged submissions weren’t actionable “claims” under the FCA because they didn’t involve government funds or requests to government agents. But that court dismissed the case on other grounds, not before SCOTUS. The 7th Circuit reversed and remanded the case for trial.

The FCA is “the heavy artillery of the administrative state,” Wisconsin Bell argued in its appeal. “Congress deemed that formidable weapon necessary to protect funds and property that belong to the federal government,” the carrier said: “Yet the court of appeals trained the FCA’s considerable firepower on submissions made to a private corporation paying out only private funds.”

Industry sided in an August filing with Wisconsin Bell. The 7th Circuit’s decision “if affirmed, would put amici’s members across the country under the threat of Novel -- and potentially ruinous -- liability,” said a joint CTIA and USTelecom brief: “It would give private relators the ability to wield that threat of massive liability to extract settlements, even in non-meritorious cases.”

The U.S. government said in response, “It makes no difference that the government acquires E-Rate program funds through universal service contributions from private payers.” It added, “While the Administrator performs ministerial tasks on the FCC’s behalf, it exercises no independent regulatory power.” In a pleading last week, it said: “While most of the money contributed by carriers goes directly to the Administrator rather than passing through any government account, the government ‘provides’ that money by creating the E-Rate program and by specifying who must contribute and in what amounts.”

The 7th Circuit's decision “is correct both as a matter of pure statutory interpretation and on the undisputed record in this case,” the Southern Education Foundation said in an amicus brief filed last week: The E-rate program is “a government program that was designed to effectuate Congress’ intent to provide universal access to telecommunications services through the paired statutory mechanisms of the lowest corresponding price rule and federally provided cost subsidies,” the foundation said: Wisconsin Bell’s “narrow view of the E-Rate claims submission process inaccurately portrays these claims as ones for private funds alone. The Universal Service Fund is in fact public money.”

Three professors from California told SCOTUS their research found that ISPs “misstated or overstated” their compliance with the Connect America Fund, another subsidy program. “Research into four ISPs reveals that only 55% of addresses at which these ISPs certified that they offer broadband services are, in fact, served,” said an amicus brief. “Only about 60% of those addresses currently receive download speeds that comply with the FCC’s 10 Mbps threshold.”

Researchers determined the four ISPs “may have collected millions of dollars in CAF subsidies without living up to their CAF obligations, leaving targeted communities with no or substandard Internet connectivity,” the brief said. Tejas Narechania, law professor at the University of California, Berkeley, and Elizabeth Belding and Arpit Gupta, computer scientists at UC, Santa Barbara, wrote the brief.

“Petitioner’s arguments depend entirely on this Court’s willingness to accept the fallacy that the E-rate program consists of no more than ‘a private corporation paying out only private funds,’” said an amicus brief by the Anti-Fraud Coalition: “In fact,” the program “consists of statutorily-mandated contributions from service providers, held and distributed by an agent of the United States that has no private right to the funds but rather is empowered to act solely at the discretion and direction of the government to execute Congressionally-mandated functions.”