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Authorized by the federal False Claims Act, qui tam litigation gives individuals who are aware of fraud against the government to initiate legal action and obtain a share of the amount recovered. These cases offer a strong incentive to potential whistleblowers and provide a valuable service to government agencies who lack the resources to root out every instance of wrongdoing on their own. Now, a question has arising about whether the qui tam provision can be utilized in a situation where a government program is funded by private companies. 

The U.S. Supreme Court is set to decide Wisconsin Bell Inc. v. U.S. ex rel. Heath, a pivotal case that threatens to narrow the scope of the False Claims Act (FCA). In this action, a whistleblower alleges that Wisconsin Bell defrauded the Federal Communications Commission’s (FCC) E-rate program. This program, created by Congress, aims to help schools and libraries access affordable telecommunications and internet services. It is funded not by tax dollars but through payments made by private telecommunications carriers into the Universal Service Fund (USF).

Wisconsin Bell argues that the FCA’s reach should be limited to programs directly funded by taxpayer dollars. According to the company, the key distinction is that because the USF is overseen but not directly controlled by the federal government it falls outside the FCA’s scope. This argument, if upheld, could create a significant loophole in FCA enforcement, potentially allowing fraud to go unchecked in other similar industry-funded, government-mandated programs.

While some Supreme Court observers believe that the justices’ questions at oral argument indicate that they are skeptical of Wisconsin Bell’s position, if their decision does go the company’s way, it could restrict the government and whistleblowers’ ability to combat fraud. Many federal programs rely on public-private partnerships, where private funds are used to achieve public objectives. 

Narrowing the FCA’s reach might dissuade people from reporting fraud and other types of misconduct that they notice. Other programs involving private funding for public purposes could fall outside FCA protections.

If you have questions about the False Claims Act or need assistance with a whistleblower case, contact  Kardell Law Group. We have an exceptional track record in these cases and a thorough understanding of the latest legal developments in this area.