On February 21, 2025, the U.S. Supreme Court issued a unanimous ruling in Wisconsin Bell, Inc. v. United States ex rel. Heath, No. 23-1127, rejecting a more limited applicability of the False Claims Act (FCA) and providing a significant victory for whistleblowers and the government. The decision makes clear that fraud relating to federal funds passing through a private intermediary is still subject to FCA liability because the government provided, at a minimum, a portion of the money at issue.

The case stemmed from allegations by Todd Heath, an auditor who uncovered potential fraud in the E-Rate program—a federal initiative subsidizing internet and telecommunications services for schools and libraries. Heath alleged that Wisconsin Bell overcharged schools in violation of the program’s “lowest corresponding price” rule, leading to inflated reimbursement claims. Wisconsin Bell sought dismissal, arguing that because E-Rate funds are collected from private telecommunications carriers and administered by a private entity (the Universal Service Administrative Company), they do not constitute government funds under the FCA. The Court rejected this argument, affirming the Seventh Circuit’s decision and holding that since the government had directly transferred some of the funds from the U.S. Treasury into the E-Rate program, the FCA applied.

This ruling is a resounding win for whistleblowers, as it reinforces the scope of the FCA’s anti-fraud provisions. By unanimously concluding that the FCA covers claims involving government funds even when routed through private intermediaries, the Court ensures that private companies cannot evade accountability by exploiting technicalities in program administration. Whistleblowers, who play a critical role in uncovering fraud, continue to have a strong foundation to bring claims related to federally supported programs.

This decision also aligns with the Court’s continued commitment to the FCA’s purpose in combating fraud, including in prior rulings in United States ex rel. Schutte v. SuperValu Inc. (2023) (unanimously holding that a defendant can be held liable under the False Claims Act if they knowingly submit false claims, even if their conduct was consistent with an objectively reasonable interpretation of the law, as long as they were subjectively aware of its falsity) and United States ex rel. Polansky v. Executive Health Resources, Inc. (2023) (holding that the government has the authority to dismiss a False Claims Act qui tam suit over a relator’s objection if it intervenes in the case, even if the intervention occurs later in the litigation).

Notably, Justices Thomas and Kavanaugh continue to raise concerns about the constitutionality of the FCA’s whistleblower provisions. In a concurrence joined by Justice Thomas, Justice Kavanaugh reiterated his skepticism about whether the FCA’s qui tam provision, which allows private individuals to sue on behalf of the government, is constitutionally permissible. Both justices have previously questioned whether private individuals can represent the government in litigation without violating Article II. However, this position remains a minority view, as the full Court has consistently upheld the qui tam framework and its historical role in deterring fraud. Additional information on the history and constitutionality of the FCA’s qui tam provisions can be found on this blog here.

The Wisconsin Bell decision affirms the FCA’s reach, ensuring that companies benefiting from programs that use public funds are held accountable for fraudulent misconduct. For whistleblowers and anti-fraud advocates, this ruling is a crucial affirmation that the law remains a strong tool for exposing and addressing fraud. As the Court continues to issue rulings in favor of the FCA, it is clear that protecting taxpayer dollars continues to remain a priority.

This piece was written by Jagir Patel, an Associate at Phillips & Cohen. This blog was edited by Clay Wire, a Partner at Ogborn Mihm.