Supreme Court Finds E-Rate Program Subject to False Claims Act

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The U.S. Supreme Court has unanimously ruled that reimbursement requests submitted to the E-Rate program administered by the Universal Service Administrative Company can be considered “claims” under the False Claims Act (FCA).  E-Rate program participants supporting school and library connectivity can be sued for excess payouts under the FCA because the E-Rate subsidy’s funds are provided through the U.S. treasury.  The ruling allows a lawsuit by school district auditor Todd Health against provider Wisconsin Bell to go forward.  Wisconsin Bell had challenged a Seventh Circuit decision that allowed the school district auditor to proceed with FCA claims alleging that the company was recouping more money than it should have from the E-Rate program by overcharging schools and libraries.  Wisconsin Bell asserted that because E-Rate funds are collected from fees on the private sector, they are not subject to FCA claims.

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