E-Rate Reimbursements Subject to False Claims Act

On February 21, 2025, the U.S. Supreme Court unanimously decided Wisconsin Bell, Inc. v. United States ex rel. Heath, 604 U.S. ___, No. 23‑1127 (2025), ruling that E-rate reimbursement requests through the Universal Service Fund are “claims” for purposes of the False Claims Act.

Telecommunications carriers are required to pay into a fund known as the Universal Service Fund each quarter a percentage of their revenues as determined by the FCC’s appointed administrator the Universal Service Administrative Company. See 47 U.S.C. §254(b); 47 CFR §§54.701(a), 54.706, 54.709(a). The FCC and DOJ also contribute to the Universal Service Fund through enforcement action recoveries. The Universal Service Fund subsidizes internet and phone access for schools and libraries among other things. See 47 U.S.C. §§254(b)(6), (h)(1)(B); 47 CFR §54.500 et seq.

In Wisconsin Bell, a private auditor, sued a telecom provider under the False Claims Act (FCA) for allegedly overcharging schools and thus inflating reimbursements from the E‑Rate fund. The FCA protects government funds and programs by imposing civil liability on any person who knowingly presents a false or fraudulent claim. See 31 U.S.C. §§3729-3733.

The Supreme Court held that E-Rate reimbursement requests count as FCA “claims” if the government “provides or has provided any portion of the money” requested. The Court rejected the telecommunications carrier’s argument that all of the Universal Funds are private, not government, funds. It claimed that all funds come from private carriers and sent to and distributed by a private administrator. It was argued that any recovery of delinquent funds recovered by the FCC or DOJ were no more than an intermediary role. The Court disagreed and found that money from the Treasury was deposited with the Universal Service Fund Administrator was enough to show that a “portion of the money” was provided by the government. That is enough to qualify as a claim under the FCA. The Seventh Circuit decision was affirmed.

Justice Kagan delivered the opinion of the Court with Justices Thomas and Kavanaugh filing concurring opinions.

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