On February 21, the U.S. Supreme Court issued a unanimous decision in the False Claims Act (FCA) case Wisconsin Bell Inc. v. U.S. ex rel. Heath, ruling that a qui tam whistleblower suit alleging that Wisconsin Bell defrauded the Federal Communications Commission’s E-rate program may proceed because there are false claims at issue.

“This is an important victory to uphold the whistleblower (or qui tam) provisions of the False Claims Act,” says whistleblower attorney David Colapinto, founding partner of Kohn, Kohn & Colapinto. “Fraudsters should be on notice that whenever they commit fraud against a government program enacted by Congress, whistleblowers are empowered to report and pursue fraud cases to protect the taxpayers and consumers who depend on federal programs like the E-Rate program.”

“The FCA is the most important anti-fraud tool on the books to fight against unscrupulous government contractors and others who overcharge and steal from federal programs,” adds Colapinto.

In the case, Wisconsin Bell argued that a qui tam whistleblower suit filed against it could not proceed because the E-rate program, a Congressionally-mandated program to help certain schools and libraries afford internet and telecommunications, is administered by a private nonprofit organization and is funded by government-mandated payments made by private telecommunications carriers into the Universal Service Fund (USF). Thus, according to Wisconsin Bell, only private funds were at issue and there were no “claims” against the government in the case.

The Supreme Court ruled, however, that there are “claims” at issue in the case based on the fact that the federal government had provided the USF with $100 million from the U.S. Treasury. The Court chose not to consider a wider question as to whether all the monies in the fund were “provided” by the government (and thus covered under the FCA) given that Congress mandates that telecommunications companies pay money into the fund and the FCC controls how the money is spent.

“While this decision is a clear win for whistleblowers and accountability, it is concerning that two Justices raised the issue of constitutionality of the qui tam provisions even though that issue was not before the Court in this case,” notes Colapinto.

Justices Kavanaugh and Thomas wrote that “The [False Claims] Act’s qui tam provisions raise substantial constitutional questions under Article II… in an appropriate case, the Court should consider the competing arguments on the Article II issue.” In a decision heavily criticized by the federal government, members of Congress, constitutional scholars, and anti-fraud advocates, the Middle District of Florida ruled that the FCA’s qui tam provisions are unconstitutional.

Geoff Schweller also contributed to this article.