Supreme Court Unanimously Holds that Reimbursement Requests to a Private Corporation Are FCA “Claims” Because the Treasury Provided a Portion of the Money Requested
The U.S. Supreme Court recently issued its opinion in Wisconsin Bell, Inc. v. United States ex rel. Heath, holding that reimbursement requests submitted to the private corporation administering the E-Rate program are FCA “claims,” because the Treasury provided a portion of the pool of funds used to pay the requests. We previously reported on the oral argument before the Court here.
The E-Rate program subsidizes internet and other telecommunications services for schools and libraries. A private corporation manages the subsidies, which private telecommunications carriers pay to the corporation. The relator alleged that the defendant, a carrier, charged schools a price that flouted the Federal Communications Commission’s (“FCC”) “lowest corresponding price rule.” Under the relator’s theory, those high prices caused schools to submit high subsidy requests that overcharged the program. The question became whether those subsidy requests constitute FCA “claims.”
Writing for a unanimous Court, Justice Kagan’s analysis began with the FCA’s definition of “claim.” In relevant part, the statute establishes that a request for money is a “claim” where the Government “provides or has provided any portion of the money . . . requested.” 31 U.S.C. § 3729(b)(2)(A)(ii)(I). “So if the Government, by making direct payments, has provided even a small fraction of the money used to fund E-Rate reimbursements, the question presented here is resolved.”
Justice Kagan easily concluded that the Government had provided at least a portion of the money requested. The U.S. Treasury had put $100 million into the E-Rate fund to finance the subsidies. In doing so, she rejected defendant’s argument that the Government “played no more than an intermediary role” and “merely collected and held” the $100 million. The Court observed that the “Government was not a passive throughway for the transmission of E-rate moneys from one private party (the carrier) to another;” rather, the money came as a result of affirmative actions by the FCC, Treasury, and DOJ to collect money from carriers and wrongdoers. Justice Kagan left open the possibility, though, that FCA liability may attach even to claims for money where the Government is no more than an intermediary. As she wrote, “a simple intermediary can sometimes also ‘provide’ things to a recipient.” An exam proctor gives out blue books and pencils to students. “She has not purchased them herself; rather, she has gotten them from the school.” Yet it “would still be natural to say that she (along with the school) has ‘provided’—has supplied, furnished, or made available—the booklets and pencils.”
In a short concurrence joined by Justice Thomas, Justice Kavanaugh further concluded that “[t]he Act’s qui tam provisions raise substantial constitutional questions under Article II. . . . 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 II issue.” Justices Kavanaugh and Thomas have previously demonstrated their willingness for the Court to take up Article II concerns implicated by the FCA’s qui tam provisions, as discussed here.
A copy of the opinion is available here.
This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.
