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United States ex rel. Heath v. Wisconsin Bell, Inc.

United States Court of Appeals, Seventh Circuit

July 28, 2014

UNITED STATES OF AMERICA ex rel. TODD HEATH, Plaintiff/Relator-Appellant,
v.
WISCONSIN BELL, INC., Defendant-Appellee

Argued April 7, 2014

Appeal from the United States District Court for the Eastern District of Wisconsin. No. 2:08-cv-00724 - Lynn Adelman, Judge.

For United States of America, Plaintiff: Keith S. Alexander, Attorney, Office of The United States Attorney, Milwaukee, WI.

For Todd Heath, Appellant: Douglas P. Dehler, Attorney, O'Neil Cannon Hollman Dejong & Laing, S.C, Milwaukee, WI.

For Wisconsin Bell, Incorporated, Defendant - Appellee: Demetrios G. Metropoulos, Attorney, Mayer Brown Llp, Chicago, IL.

Before WOOD, Chief Judge, and KANNE and SYKES, Circuit Judges.

OPINION

Page 689

Kanne, Circuit Judge.

Relator Todd Heath filed this qui tam complaint under the False Claims Act. Heath alleged that defendant Wisconsin Bell was overcharging school districts for telecommunications services it provided under the Education Rate Program (the " E-Rate Program" ), a federal subsidy program. He discovered that certain schools received more favorable pricing than others, which allowed Wisconsin Bell to receive more federal subsidies than it was due. Heath also learned that Wisconsin Bell offered an even lower price to the Wisconsin Department of Administration (" DOA" ), a price which ought to have been conferred to the school districts. The district court held that it did not have jurisdiction to hear the case, as the complaint was based upon publicly disclosed information in the form of the contract with the DOA; namely their website. We reverse and remand for further proceedings.

I. Background

We first note that this case is still in the jurisdictional phase of this litigation and therefore, to the extent that these facts are disputed, we consider them in the light most favorable to Heath.

This case involves the Educational Rate Program, a federal subsidy program authorized by the Telecommunications Act of 1996. The Federal Communications Commission, the organization responsible for implementing the E-Rate Program, established the Universal Service Administrative Company (" USAC" ), a private non-profit corporation, to administer the E-Rate Program. The USAC provides subsidies to eligible school districts for the cost of telecommunication services.

As a condition of participating, telecommunication providers have a statutory duty to charge " rates less than the amounts charged for similar services to other parties." 47 U.S.C. § 254(h)(1)(B). Furthermore, the obligation to offer schools the best pricing is set forth in the FCC regulations, which maintain that providers must offer schools the " lowest corresponding price" (" LCP" ) for their services. The LCP is defined as the " lowest price that a service provider charges to non-residential customers who are similarly situated to a particular school, library, or library consortium for similar services." 47 C.F.R. § 54.500(f).

Since 1998, Heath has operated a business that audits telecommunications bills to identify improper charges. His company was retained by several Wisconsin school districts to perform these services. By 2006, Heath ascertained through extensive review of the charges administered by Wisconsin Bell that certain schools paid much higher rates than others for the same telecommunications services. As a direct result, many Wisconsin school districts did not receive the ...


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