Here is a Summary of the February 21, 2025 Supreme Court opinion in the case called Wisconsin Bell in Kercer v.

United States ex rel.

Heath case number 23, 1127.

The question presented in this case is whether reimbursement requests submitted to the E Rate program are claims under the False Claims Act.

Justice Kagan delivered the opinion for a unanimous court.

Justice Thomas filed a concurring opinion in which Justice Kavanaugh joined and in which Justice Alito joined.

As to Part one, Justice Kavanaugh filed a concurring opinion in which Justice Thomas joined.

Please note that this summary is read by an automated voice.

Justice Kagan's unanimous opinion the E Rate program, established under the Telecommunications act of 1996, subsidizes Internet and other telecommunications services for schools and libraries across the United States.

To finance those subsidies, Congress required that telecommunications carriers pay into a fund now known as the Universal Service Fund that is administered by the Universal Service Administrative Company, a private, not for profit corporation.

The company collects and distributes the resulting pot of money to beneficiaries pursuant to regulations prescribed by the Federal Communications Commission fcc.

In addition to providing for subsidies, those regulations impose upon carriers a rule called the Lowest Corresponding Price rule, which prohibits them from charging schools and libraries more than what they would charge a similarly situated non residential customer.

Once an appropriate charge is set, a school can obtain its subsidy by paying the carrier a discounted price and requiring the carrier to seek the remainder from the fund or by paying the carrier full freight and then applying for reimbursement from the fund.

Respondent Todd Heath is an auditor of telecommunications bills who believes that petitioner Wisconsin Bell defrauded the E Rate program out of millions of dollars.

According to Heath, Wisconsin Bell consistently overcharged schools in violation of the Lowest corresponding price rule.

Heath brought suit under the False Claims act, which enables private parties to bring civil actions on the government's behalf to protect federal programs and funds from fraud.

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 United States Code Section 3729A.

11A.

In Heath's view, Wisconsin Bell's violations of the lowest corresponding price rule led to reimbursement requests for amounts higher than the E Rate program should have paid.

The premise of Heath's suit is that an E Rate reimbursement request can give rise to FCA liability because it qualifies as a claim which, as relevant here, requires the government to provide or have provided any portion of the money requested.

Section 3729B2A 2I.

Wisconsin Bell moved to dismiss Heath's suit.

In its view, an E rate reimbursement request can never qualify as a claim under the FCA because the money comes from private carriers and is handled by a private corporation, meaning the government does not provide any portion of the money requested.

The district court and the Seventh Circuit rejected that argument.

The court of Appeals held that the government provided E Rate program funding for two independent reasons.

First, it held that the government provided all the money in the program through its regulatory role in the collection and distribution of contributions.

Second, and more narrowly, it found that the government provided some portion of E rate funding by depositing into the fund in the relevant years more than $100 million directly from the U.S.

treasury held.

The E rate reimbursement requests at issue are claims under the FCA because the government provided, at a minimum, a portion of the money applied for by transferring more than $100 million from the treasury into the fund.

Section 3729B2A2I the question is whether the government provided in ordinary, meaning supplied, furnished, or made available any portion of the money sought.

While the parties mirroring the 7th Circuit's opinion discuss two independent theories under which the government potentially provided the requested funds here, it is enough that the government provided some E rate monies through the Treasury's own transfer of over $100 million into the fund.

That amount consisted of delinquent contributions that the FCC and Treasury Department collected from carriers, as well as civil settlements and criminal restitution payments from Justice Department activities in response to wrongdoing in the E Rate program.

The government therefore provided a portion of the money disbursed from the fund to reimburse E rate program participants.

Wisconsin Bell argues that even the $100 million was provided only by the carriers, with the government playing no more than an intermediary role.

But to start with, Wisconsin Bell mischaracterizes the government's role rather than acting as a passive throughway for the transmission of the $100 million, it generated that money itself by extracting it from carriers and by prosecuting wrongdoing in the E Rate program.

And anyway, a simple intermediary can sometimes also provide things to a recipient, and the government, even if viewed only in that light, would do so.

Here, for example, a proctor for an exam provides blue books and pencils to students even if she has not purchased them herself and has instead gotten them from the school.

The same is true here.

The government provided the relevant $100 million to the fund by collecting it and routing it through treasury accounts.

Here, in the years relevant to Heath's FCA suit, the government provided a portion of the money requested for E Rate subsidies by collecting, holding, and transferring $100 million by way of the Treasury.

Indeed, those transfers look like most government spending money usually comes to the government from private parties, and it then usually goes out to the broader community to fund programs and activities.

That conclusion is enough to enable Heath's FCA suit to proceed.

Pages 7 to 14 affirmed and remanded.

Justice Thomas Concurring Opinion I join the Court's opinion in full because it correctly holds that for purposes of the False Claims act fca, the federal government provides money to the Education Rate E Rate program when the Government itself collects overdue contributions, interest penalties, settlements, and restitution payments and then transfers that money from U.S.

treasury accounts into the e rate program.

C.

31 USC Section 3729B 2AII the court saves for another day two more difficult questions.

First, whether the government provides the money that it requires private carriers to contribute to the E Rate Program CI bid and second, whether the E Rate program's administrator is an agent of the United States.

I express no definitive views on those questions today.

I write separately only to highlight that the Government's positions on these questions might, if accepted, have significant implications for both the scope of the FCA and and the lawfulness of the E Rate program.

Justice Kavanaugh's concurring Opinion I join the Court's opinion which decides a narrow statutory question regarding the scope of the False Claims Act.

That statutory issue arises in the context of a QUITAM suit.

The Act's QUITAM provisions raise substantial constitutional questions under Article 2.

See, eg.

United States ex Riel Polanski vs.

Executive Health Resources, Inc.

599 US 419442, 2023.

Kavanaugh, J.

Concurring IDE at 449.

452.

Thomas, J.

Dissenting.

Those constitutional questions are not before the Court in this case.

But in an appropriate case, the Court should consider the competing arguments on the Article 2 issue.

The ruling may expand False Claims Act FCA liability by establishing that even programs primarily funded through private sources could fall under FCA scrutiny if they receive any government funds which could affect various public private partnership programs beyond just E Rate.

Financial institutions and corporations participating in government programs might need to enhance their compliance protocols, particularly around certifications and representations made when government funds even indirectly touch their operations.

Justice Thomas's concurrence suggests that future cases could force the Court to grapple with fundamental questions about the scope of the FCA and whether it extends to fraud against purely private entities receiving mandated private funding, which could affect programs like the Affordable Care Act's individual mandate and child support enforcement.

The decisions focus on government providing funds through collection and transmission rather than just direct appropriation, may lead to increased scrutiny of programs where the government acts as an intermediary or facilitator of private funding streams.