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Wisconsin Bell, Inc. v. United States, ex rel. Todd Heath, No. 23-1127
A Goldberg Kohn litigation team, led by Litigation Group Chair David Chizewer, has prevailed in a case before the U.S. Supreme Court (Wisconsin Bell, Inc. v. United States, ex rel. Todd Heath, No. 23-1127). On Feb 21, 2025, the U.S. Supreme Court ruled unanimously that telecoms participating in the federal E-Rate program supporting school and library connectivity can be sued for excess payouts under the False Claims Act because the subsidy's funds are provided through the U.S. Treasury.
David Chizewer is counsel of record for the relator in the case, Todd Heath. Goldberg Kohn's Roger Lewis and Harleen Kaur also represent the relator, and William Meyers joined the team in preparing for successful oral arguments on November 4, 2024.
Under the FCA's unique enforcement structure, whistleblowers acting as "relators" in the government's interest can bring claims for alleged overcharges and are entitled to a portion of any funds the feds recover. The U.S. Supreme Court's decision allows the case brought by Heath in 2008 to go to trial.
"We are gratified that a unanimous court recognized the power of the False Claims Act to root out fraud on government programs such as E-rate," said David Chizewer. "Nothing is more important than protecting the scarce funding available for educating the nation's children and, in particular, those most vulnerable who receive the bulk of these government funds. We look forward to presenting Mr. Heath's case to a jury in Milwaukee."
AT&T unit Wisconsin Bell had challenged a Seventh Circuit decision that allowed school district auditor Todd Heath to press forward with his FCA claims that the company was recouping more money than it should have from the E-Rate program by overcharging schools and libraries. Wisconsin Bell argued that because E-Rate funds are collected from fees on the private sector, they are not subject to FCA claims.
But the high court upheld the circuit ruling 9-0. Justice Elena Kagan wrote in the opinion that the $100 million in E-Rate funds at issue "look like most government spending - neither more nor less private, neither more nor less public. Money usually comes to the government from private parties - through taxes, fines, or fees of all kinds. And then money usually goes out to the broader community, to fund any number of programs and activities.
"Between the time money comes in and the time money goes out, it sits - as the $100 million here did - in Treasury accounts," Justice Kagan said. "In this broad array of schemes, the funding received may be more or less earmarked, and it may be disbursed more or less quickly. But the basic mechanism remains the same. Money enters and then exits the public fisc; the government collects money and then furnishes it for some use. And so it was here, in the years relevant to Heath's FCA suit."
Justice Kagan said the court wanted to resolve the lower court's split with a Fifth Circuit decision in a similar case, United States ex rel. Shupe v. Cisco Systems, which found in 2014 the Federal Communications Commission's "regulatory supervision" of the program insufficient to show that the government provided E-Rate funds.
The E-Rate connectivity fund relies on fees on telecom services mandated by the Federal Communications Commission that show up on customers' bills. The money is collected and disbursed by the privately run Universal Service Administrative Co. Wisconsin Bell claimed that meant USAC provides the funds, not the federal government.
Goldberg Kohn's co-counsel in the case are O'Neil Cannon in Milwaukee, Sparacino PLLC and Phillips & Cohen LLP.
CLICK HERE to read the Supreme Court's opinion.
CLICK HERE to read more about the case.