Wisconsin Bell, Inc. v. United States ex rel. Heath
The Supreme Court unanimously ruled that a federal anti-fraud law can be used to pursue cheating in the E-Rate program — which subsidizes internet access for schools and libraries — because the federal government deposited over $100 million of its own money into the program's fund.
The decision clears the way for a billing auditor's fraud lawsuit against Wisconsin Bell and signals that the False Claims Act's reach extends to programs where the government contributes even a small share of the funding.
How it got here: A federal district court denied Wisconsin Bell's motion to dismiss; the Seventh Circuit affirmed, finding E-Rate requests are FCA "claims"; Wisconsin Bell sought Supreme Court review to resolve a conflict with the Fifth Circuit.
The Case in Depth
What happened
Todd Heath, a telecommunications billing auditor, accused Wisconsin Bell of systematically overcharging Wisconsin schools for internet services from 2002 to 2015 in violation of the E-Rate program's "lowest corresponding price" rule, which prohibits carriers from billing schools more than similarly situated commercial customers. The overcharges, Heath alleged, caused the E-Rate subsidy fund — which reimburses carriers and schools for a large share of internet costs — to pay out more than it should have.
The question before the Court
Does the federal False Claims Act's fraud protection extend to the E-Rate internet subsidy program, even though most of its money comes from private telecom companies rather than directly from the federal government?
The Court's answer
Yes — E-Rate reimbursement requests count as "claims" under the False Claims Act because the federal government "provided" a portion of the fund's money. During the years covered by the lawsuit, the U.S. Treasury deposited more than $100 million into the E-Rate fund — about half from delinquent carrier payments that federal agencies collected, and the other half from Justice Department civil settlements and criminal restitution payments for E-Rate fraud. The Act requires only that the government supply "any portion" of the money, so those deposits were enough to trigger its fraud protections.
The Court also rejected Wisconsin Bell's argument that the government was merely a passive middleman transmitting private carriers' money. Federal agencies actively extracted delinquent payments and prosecuted wrongdoers to generate the settlement funds — they were not just passing private money along. And even a true intermediary can "provide" things to a recipient, just as a bank teller provides funds or a delivery driver provides a package, so the government's role here satisfied the statute regardless.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Telecom companies that participate in the E-Rate program now face clear federal fraud liability for overcharging schools and libraries. Private whistleblowers who uncover such schemes can bring False Claims Act lawsuits on the government's behalf and share in any monetary recovery — creating a stronger financial incentive for auditors and insiders to expose billing fraud in a program that serves millions of students across the country.
What changes now
The case returns to the lower courts, where Heath's fraud allegations against Wisconsin Bell — overcharging schools for more than a decade — will be litigated on the merits. If Heath ultimately prevails, the parties and courts will need to work out damages questions, including whether the amount the government actually deposited should cap what Heath can recover. The Court explicitly set those issues aside as not yet ripe.
What this does not decide
The Court decided only that the government's direct Treasury deposits make E-Rate requests qualify as False Claims Act claims. It did not decide whether the government's regulatory power to require carrier contributions alone would be enough, nor whether the program's private administrator counts as a federal agent — either of which could independently expand the Act's reach.
Concurrences and dissents
Concurrence — Justice Thomas
Justice Thomas joined the majority in full but wrote separately to warn about two unresolved questions that could arise in future cases. First, he expressed skepticism about the government's broader theory that merely requiring private carriers to contribute to the fund means the government 'provides' all of the program's money — a reading he suggested could dramatically expand the False Claims Act's reach to child-support payments, civil judgments, and private health insurance mandates. Second, he cautioned that if the Administrative Company is deemed a federal agent, the E-Rate program's current structure may violate the Government Corporation Control Act, which prohibits creating government corporations without specific congressional authorization. Justice Alito joined Part I of this concurrence.
Concurrence — Justice Kavanaugh
Justice Kavanaugh joined the Court's narrow statutory ruling but flagged that the False Claims Act's qui tam provisions — which allow private parties to sue on the government's behalf and share in any recovery — raise substantial constitutional questions about presidential control of law enforcement under Article II of the Constitution. Those questions were not before the Court in this case, but he urged the Court to address them in an appropriate future case.
How the Court got there
The legal reasoning, step by step
- The False Claims Act imposes liability when someone knowingly submits a false 'claim' for payment. A request to an entity other than a federal officer or agent qualifies as a 'claim' only if the government 'provides or has provided any portion of the money' requested. The Court began by giving 'provides' its ordinary meaning: to supply, furnish, or make available.
- The Court identified a narrow, factually grounded path to resolving the case: in the years covered by the lawsuit, the U.S. Treasury deposited more than $100 million directly into the E-Rate fund. About half came from delinquent carrier contributions that the FCC and Treasury Department collected after the fund's private administrator failed to do so. The other half came from civil settlements and criminal restitution payments that the Justice Department obtained from parties who had committed E-Rate fraud.
- The Court rejected Wisconsin Bell's characterization of the government as a passive middleman. The federal agencies did not merely route money from one private party to another — they extracted overdue payments using government enforcement power and generated the settlement and restitution funds through active litigation. In that sense, the government itself produced the money it then transferred to the fund.
- Even if the government had acted only as an intermediary, that would not have prevented it from 'providing' the money. The Court used everyday examples — a proctor who hands out exam blue books she got from the school, a bank teller who dispenses a customer's deposited paycheck, a delivery driver who brings a department store's package — to show that transmitters and facilitators can also be said to supply, furnish, or make available something to a recipient.
- The FCA's own text reinforced this conclusion: the definition of 'claim' is satisfied 'whether or not the United States has title to the money' at issue — so technical ownership of the $100 million while it sat in Treasury accounts is irrelevant to whether the government 'provided' it.
- Because the government provided at least 'any portion' of the E-Rate fund — all the statute requires — the reimbursement requests at issue qualify as FCA claims. The Court expressly left open whether the government's broader regulatory role in mandating carrier contributions would independently satisfy the statute, finding it unnecessary to reach that harder question.