Todd Heath v. Wisconsin Bell, Inc.

In the United States Court of Appeals For the Seventh Circuit ____________________ No. 22-1515 UNITED STATES OF AMERICA ex rel. TODD HEATH, Relator-Appellant, v. WISCONSIN BELL, INC., Defendant-Appellee. ____________________ Appeal from the United States District Court for the Eastern District of Wisconsin. No. 2:08-cv-00724-LA — Lynn Adelman, Judge. ____________________ ARGUED FEBRUARY 9, 2023 — DECIDED AUGUST 2, 2023 ____________________ Before EASTERBROOK, HAMILTON, and LEE, Circuit Judges. HAMILTON, Circuit Judge. Congress established the Schools and Libraries Universal Service Support program to keep tel- ecommunications services aﬀordable for schools and libraries in rural and economically disadvantaged areas. The program subsidizes services and requires providers to charge these customers rates less than or equal to the lowest rates they charge to similarly situated customers. Relator Todd Heath brought this qui tam action under the False Claims Act, 2 No. 22-1515 31 U.S.C. § 3729 et seq., alleging that defendant Wisconsin Bell charged schools and libraries more than was allowed un- der the program, causing the federal government to pay more than it should have. The district court granted summary judg- ment in favor of Wisconsin Bell. Heath’s brieﬁng and evidence focused more on which party bore the burden of proving violations than on identify- ing speciﬁc violations in his voluminous exhibits and lengthy expert report. We understand how the district court could look at this record and rule in Wisconsin Bell’s favor. Never- theless, Heath identiﬁed enough speciﬁc evidence of discrim- inatory pricing to allow a reasonable jury to ﬁnd that Wiscon- sin Bell, acting with the required scienter, charged speciﬁc schools and libraries more than it charged similarly situated customers. Accordingly, we reverse the judgment of the dis- trict court and remand the case for trial. I. Factual and Procedural Background In 1996, Congress created the E-rate program (known more formally as the Schools and Libraries Universal Service Support program) to help schools and libraries across the country aﬀord telecommunications and information services. See Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56. As part of the program, schools and libraries receive federal subsidies for 20 to 90 percent of charges on a sliding scale that depends on the income level in the surrounding community and whether the community is urban or rural. 47 C.F.R. § 54.505(b) & (c). Under Federal Communications Commission regulations implementing the E-rate program, service providers must follow what is known as the “lowest- corresponding-price” rule and oﬀer schools and libraries “the No. 22-1515 3 lowest price … charge[d] to non-residential customers who are similarly situated.” 47 C.F.R. § 54.500. The regulations do not impose a speciﬁc formula to deter- mine when a school or library is similarly situated to a partic- ular non-residential customer for purposes of comparing prices. Yet the FCC has long made clear that service providers cannot escape their obligation to provide the lowest price charged to similarly situated customers simply “by arguing that none of their non-residential customers are identically situated to a school or library.” In re Federal-State Joint Board on Universal Service, Report and Order, 12 FCC Rcd. 8776, ¶ 488 (1997) (“First Order”), adopted by FCC at Universal Ser- vice, 62 Fed. Reg. 32862 §§ 290–97 (June 17, 1997). Diﬀerences in rates between similarly situated customers are acceptable only when “providers can show that they face demonstrably and signiﬁcantly higher costs” in serving the school or library due to diﬀerences between the customers “that clearly and signiﬁcantly aﬀect the cost of service, including mileage from switching facility[,] … length of contract,” “traﬃc volumes,” and “any other factor that the state public service commission has recognized.” Id., ¶¶ 488–89. Wisconsin Bell has provided services to at least hundreds of eligible schools and libraries. Those customers have sub- mitted claims to the FCC requesting reimbursement for Wis- consin Bell’s services, and Wisconsin Bell has submitted reim- bursement claims directly for eligible services provided to E- rate program customers. As the E-rate program began, Wisconsin Bell’s parent company helped develop industry proposals about its imple- mentation. Wisconsin Bell admitted during this lawsuit that it had been aware of the lowest-corresponding-price rule from 4 No. 22-1515 the rule’s inception in the 1990s. In 2001, a future leader of Wisconsin Bell’s legal and regulatory group recommended to an industry trade group representing Wisconsin Bell that the group withdraw its request to the FCC for clariﬁcation of the lowest-corresponding-price rule. He advised in an email that the rule “is a non-issue. We support not raising [it] …. Let a sleeping dog lie; it needs to keep a low proﬁle unless it starts to cause problems for us.” Despite being aware of the E-rate program and its pricing rule, Wisconsin Bell did not train its sales representatives on the rule, nor did it put into place any mechanism to comply with it, until 2009. Wisconsin Bell admits there was no diﬀer- ence between the way it treated pricing contracts with schools and libraries versus with private businesses or any other cus- tomers. By Wisconsin Bell’s own testimony, these practices in- cluded instructing sales representatives to oﬀer the highest prices “whenever possible.” Employees responsible for train- ing Wisconsin Bell’s salesforce testiﬁed that they had never heard of the lowest-corresponding-price rule before 2009. In 2009, Wisconsin Bell developed a plan for complying with the rule. It did so after its parent company settled a De- partment of Justice and FCC investigation of its E-rate prac- tices in Indiana through a monetary payment and a compli- ance agreement. Wisconsin Bell admits that, beginning in 2009, it used “interim policies and processes for at least two years” and that these policies did not reach a “steady state” until 2011. Wisconsin Bell also admits that it considered the prices charged to similarly situated customers “as just one fac- tor among many in deciding what price” to charge an E-rate customer even after 2009. No. 22-1515 5 Under the False Claims Act, a private citizen may sue as a “relator” in a qui tam action to recover funds fraudulently ob- tained from the United States government. 31 U.S.C. § 3729(a)(1)(A). Such suits are brought in the name of the gov- ernment and for its beneﬁt, but a successful relator may re- cover a signiﬁcant portion of any recovery. See generally United States ex rel. Polansky v. Executive Health Resources, Inc., 143 S. Ct. 1720, 1726–28 (2023) (summarizing qui tam litigation under the Act); Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 774–77 (2000) (holding that qui tam relator has Article III standing and noting that qui tam actions appear to have originated in England in 13th century, had long tradition in both England and the American Colo- nies, and were “prevalent” immediately before and after framing of Constitution). Todd Heath ﬁled this qui tam action under the False Claims Act in 2008. He alleged that Wisconsin Bell submitted false claims and caused others to submit false claims for more money than was allowed to be charged, as well as expressly and implicitly false certiﬁcations of compliance with E-rate program rules. In 2011, the federal government decided not to intervene. The district court then granted Wisconsin Bell’s motion to dismiss for lack of subject matter jurisdiction. This court reversed. United States ex rel. Heath v. Wisconsin Bell, Inc., 760 F.3d 688, 692 (7th Cir. 2014). Heath ﬁled his Second Amended Complaint in 2015. The parties engaged in discov- ery, and Heath hired an expert to analyze the extensive and detailed pricing data. Wisconsin Bell moved for summary judgment, and the district court granted that motion. United States ex rel. Heath v. Wisconsin Bell, Inc., 593 F. Supp. 3d 855, 861–62 (E.D. Wis. 2022). This appeal followed. 6 No. 22-1515 II. Analysis A company violates the False Claims Act if it “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” that is material to the government’s decision on the use of federal funds. 31 U.S.C. § 3729(a)(1)(A); Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176, 193 (2016) (§ 3729(a)(1)(A) requires falsity regarding material issue). Thus, a False Claims Act case requires proof of falsity, knowledge, materiality (meaning whether the al- leged misrepresentations had the natural tendency to inﬂu- ence the payment or receipt of funds), and the involvement of federal funds. The district court granted summary judgment for Wisconsin Bell, ﬁnding that Heath did not show a genuine dispute as to a material fact concerning either falsity or knowledge. In its summary judgment ruling, the district court did not reach the issues of materiality or whether the E-rate program involves federal funds, though the court had ad- dressed these issues in prior orders. Summary judgment is proper when there is no genuine dispute about any material fact. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). We review de novo the district court’s grant of summary judgment. E.g., Anderson v. Nations Lending Corp., 27 F.4th 1300, 1304 (7th Cir. 2022). We give Heath the beneﬁt of conﬂicting evidence and draw rea- sonable inferences from the evidence in his favor. Id. The question is whether he oﬀered evidence raising “some genu- ine issue for trial such that a reasonable jury could return a verdict” agreeing with him that Wisconsin Bell knowingly caused the submission of claims that overcharged schools or libraries and that those overcharges were material to a pay- ment decision involving federal funds. United States v. King- No. 22-1515 7 Vassel, 728 F.3d 707, 711 (7th Cir. 2013) (quotation omitted). We address four issues in turn: (A) falsity; (B) knowledge or scienter; (C) materiality; and (D) involvement of federal funds. A. Falsity The district court found that Heath failed to show falsity because he did not “show that any customers that were charged the lower rates were similarly situated to those who were charged a higher rate.” Heath, 593 F. Supp. 3d at 860. Heath’s brieﬁng and the district court’s opinion focused pri- marily on which party bore the burden of identifying simi- larly situated customers as proper comparators to determine compliance with E-rate price rules. In the district court’s eyes, Heath waived the crucial argu- ment that the customers he analyzed who were charged dif- ferent prices were in fact similarly situated. Id. at 859 & n.1. The court wrote that Heath’s expert witness, James Webber, did not “describe what factors” he used to conclude that cus- tomers were similarly situated and thus proper comparators for rates charged. Id. at 859 n.1. The court acknowledged that Webber compared at least one school directly paying “a rate more than three times higher than the rate charged to” an- other customer but said that this comparison did not “attempt to show that the two customers were similarly situated.” Id. at 860. Heath’s heavy focus on persuading the district court that Wisconsin Bell should have had the burden to identify simi- larly situated customers seems to have distracted from the fact that he did muster quite speciﬁc evidence showing that certain schools and libraries were charged more than certain non-residential customers and that those pairs of customers 8 No. 22-1515 appeared to be similarly situated. See Pl. Br. in Opp’n to Summ. J., at 14, Dkt. 311; Decl. of James D. Webber ¶ 7, Dkt. 308. Heath’s evidence also showed that his expert did in fact take into account key factors, including contract duration, ur- ban versus rural location, size of contracting entity, and dis- tance from the provider. There is no complete list of which factors may be considered in deciding whether two customers are similarly situated. But Heath oﬀered evidence that his ex- pert considered those that the parties continue to identify in their brieﬁng as relevant. Expert Report of James D. Webber, at 76–81, Dkt. 279, Ex. 111. 1 We do not doubt that Heath could have better presented his evidence to walk the district judge through the parts of his expert’s report that directly compared customers who all known factors indicated were similarly situated. But critiqu- ing advocacy is not our role. For our purposes, the critical points are that this speciﬁc evidence was in the expert report and that Heath’s brieﬁng spelled it out with suﬃcient expla- nation and argument. For example, Heath’s brief opposing the motion for summary judgment and his statement of facts included a chart showing wide-ranging pricing for the same circuit product. All customers in the chart were in Wisconsin, and at least some were identiﬁed as being in the same city. The chart also displayed each contract’s duration and the 1 One chart was reproduced in briefing before this court that was not filed under seal. Additional evidence of comparisons indicating that dif- ferently charged customers appear similarly situated is in the district court record but still under seal. On remand it will be appropriate for the district court to ask whether any portions of the evidence, especially prices and contract terms from so many years ago, should be kept under seal any longer. No. 22-1515 9 number of products purchased by each customer. Thus, the chart accounted for the key factors determining whether cus- tomers are similarly situated. The diﬀerences in pricing are not disputed (or even ex- plained) by Wisconsin Bell, at least so far. For example, one school in Milwaukee, Bruce Guadalupe Community School, paid $1,110 per month for each of two telecommunications circuits on a month-to-month contract. At the same time, an- other school in Milwaukee, Messmer High School, paid $743 per month for one circuit, also on a month-to-month contract. Meanwhile, the Lake Geneva-Genoa City School District paid $459 per month for one circuit on a 36-month contract while a private business, Automatic Data, paid only $337 per month for one circuit on a contract of the same length. These com- parisons and the fact that Wisconsin Bell did not dispute them or provide any explanation for the price diﬀerences present genuine factual disputes over whether Wisconsin Bell was charging schools and libraries the lowest price it was charging similarly situated customers. 2 This same chart was reproduced in Webber’s declaration, ﬁled under seal. Though we do not go into detail here about 2 As discussed at oral argument and in supplemental submissions by the parties, Heath could have used statistical evidence to support his claim. We have recognized that statistical analyses may be used to support False Claims Act cases. See United States ex rel. Absher v. Momence Meadows Nursing Ctr., Inc., 764 F.3d 699, 713–14 (7th Cir. 2014) (vacating jury verdict where there was no “evidence—statistical or otherwise—from which the jury could determine (at least approximately) how many of [the] docu- ments contained false certifications”). Here, even without statistics, Heath has done enough to proceed past summary judgment because he identi- fied customers who appear similarly situated yet were charged different rates in apparent violation of the lowest-corresponding-price rule. 10 No. 22-1515 the contents of that sealed document, it makes clear that the $1,110 monthly price charged to Bruce Guadalupe Commu- nity School was higher than would be expected from looking at prices charged to other customers of the same circuit that same year. Further, Webber showed that in 2009 Wisconsin Bell entered a new contract with that school and dropped the price signiﬁcantly. In another chart, Webber calculated the overcharges to schools and libraries per year based on the lowest rate charged for the same service to a customer in Wisconsin. Web- ber went on to adjust this basic calculation based on the fac- tors that might justify diﬀerent prices: contract duration, ur- ban versus rural location, customer size (in terms of number of employees), and distance between the customer and the provider. Even when Webber limited his overcharges calcula- tion by directly comparing schools and libraries only to cus- tomers who shared these factors, the schools and libraries were still charged more every single year. Expert Report of James D. Webber, at 81, Dkt. 279, Ex. 111. Alongside this evidence was Wisconsin Bell’s admission that it had no methods or procedures in place to comply spe- ciﬁcally with the E-rate program prior to 2009, as well as the email sent on behalf of a trade organization representing Wis- consin Bell suggesting that the company withdraw a petition to the government asking for clariﬁcation on the E-rate pro- gram and instead “let a sleeping dog lie; [the rule] needs to keep a low proﬁle unless it starts to cause problems for us.” Webber’s speciﬁc comparisons against this factual backdrop were enough to raise a genuine dispute about the central issue of whether schools or libraries were charged more than simi- larly situated non-residential customers. In response, No. 22-1515 11 Wisconsin Bell provided no evidence showing that these spe- ciﬁcally compared customers were either not similarly situ- ated or that cost diﬀerences justiﬁed the pricing. 3 Rather than explain why the apparent price diﬀerences were acceptable, Wisconsin Bell argued generally that Heath never showed that any two customers were similarly situated. But Wisconsin Bell indisputably had schools and libraries eli- gible for the program as customers, including the schools identiﬁed in the chart discussed above. The FCC’s guidance makes clear that providers cannot escape the E-rate program pricing rules by simply arguing that no customers are simi- larly situated. First Order, § 488. Wisconsin Bell’s assertion that Heath never identiﬁed any similarly situated customers throughout the lengthy expert analysis comes very close to that impermissible escape. In sum, Heath used the information provided by Wiscon- sin Bell in discovery to identify seemingly similarly situated customers. He identiﬁed individual schools that, when com- pared against each other, look like they were charged 3 Wisconsin Bell argues that it complied with the E-rate program rules by complying with separate federal and state rules more generally prohib- iting discriminatory pricing. See 47 U.S.C. § 202(a); Wis. Stat. § 196.60(1)(a). The theory is not persuasive. The federal nondiscrimination rule prohibits “unjust or unreasonable discrimination in charges,” and the state rule uses similar language. Both rules apply a different standard than the E-rate program created for school and library pricing. In fact, the FCC says that schools and libraries are “eligible for preferential rates … not- withstanding the nondiscrimination requirements of section 202(a).” First Order, ¶ 483. Even if Wisconsin Bell could show absolute compliance with the nondiscrimination rules, that showing would not necessarily defeat a claim that schools and libraries were overcharged in violation of the E-rate program requirements. 12 No. 22-1515 diﬀerent rates under comparable contract terms for the same products in the same geographic areas. Wisconsin Bell made no attempt to show how those identiﬁed customers were not similarly situated or why the schools and libraries were charged apparently higher prices for similar services, let alone to establish those points beyond reasonable dispute, as would be needed to resolve the issue as a matter of law on a motion for summary judgment. Heath oﬀered evidence suﬃ- cient to show falsity as to whether Wisconsin Bell impermis- sibly charged schools and libraries more than it charged sim- ilarly situated customers. 4 B. Scienter The False Claims Act imposes liability for the knowing sub- mission of false claims. The Act provides that a person acts “knowingly” if that person “with respect to information— (i) has actual knowledge of the information; (ii) acts in delib- erate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the in- formation.” 31 U.S.C. § 3729(b)(1)(A). To show the defendant acted knowingly, the relator is not required to prove “speciﬁc intent to defraud.” Id. The district court, applying circuit precedent that has since been reversed by the Supreme Court, ruled that even if Heath had oﬀered evidence of falsity, his claims would nonetheless fail on the knowledge element. Heath, 593 F. Supp. 3d at 860. The district court said that Wisconsin Bell’s interpretation of 4 We refer in this opinion to a few specific examples of Heath identi- fying similarly situated customers. As the case progresses on remand, Heath should not be limited to proving overcharges for only those cus- tomers identified in this opinion. No. 22-1515 13 the lowest-corresponding-price rule—that it could use “cost- based factors when determining which customers are simi- larly situated and to allow it to oﬀer diﬀerent rates to diﬀerent E-rate customers”—was “objectively reasonable” and “con- sistent with the plain language of the [lowest-corresponding- price] rule and the FCC guidance.” Id. at 861. The district court was following United States ex rel. Schutte v. SuperValu Inc., 9 F.4th 455, 463–65 (7th Cir. 2021), which held that knowledge under the False Claims Act could not be shown if the defend- ant’s interpretation of the regulation was objectively reasona- ble and no authoritative guidance warned against that inter- pretation, regardless of evidence of subjective intent and ac- tual knowledge. After oral argument in this appeal, the Supreme Court is- sued its decision in United States ex rel. Schutte v. SuperValu, Inc., 143 S. Ct. 1391 (2023), vacating this court’s judgment. The Supreme Court made clear that the knowledge analysis under the False Claims Act “refers to respondents’ knowledge and subjective beliefs—not to what an objectively reasonable per- son may have known or believed.” Id. at 1399. Under this reasoning, Wisconsin Bell’s own conduct at least raises a genuine question as to whether it acted in reck- less disregard of the truth or falsity of the claims submitted. “Reckless disregard” encompasses “defendants who are con- scious of a substantial and unjustiﬁable risk that their claims are false, but submit the claims anyway.” Id. at 1401; see also King-Vassel, 728 F.3d at 713 (“a person acts with reckless dis- regard ‘when the actor knows or has reason to know of facts that would lead a reasonable person to realize’ that harm is the likely result of the relevant act,” quoting Black’s Law Dic- tionary 540–41 (9th ed. 2009)). A relator may of course rely on 14 No. 22-1515 circumstantial evidence to prove scienter under the False Claims Act. United States ex rel. Taylor-Vick v. Smith, 513 F.3d 228, 231 (5th Cir. 2008). Heath has oﬀered evidence that could support a reasona- ble inference of scienter here. Wisconsin Bell admits that it knew of the lowest-corresponding-price rule at the rule’s in- ception. Heath has oﬀered evidence that Wisconsin Bell for many years did not have any methods or processes in place even to determine whether it was complying with the law in pricing services for schools and libraries. Not until 2009, when Wisconsin Bell’s parent company signed a compliance agree- ment after a Department of Justice and FCC investigation in another state, did Wisconsin Bell even inform its employees responsible for negotiating rates with schools and libraries that the lowest-corresponding-price rule existed. Wisconsin Bell also did not have a system for identifying similarly situated customers within the meaning of the E-rate program rules. Wisconsin Bell does not present any compel- ling explanation for how it could have known whether the prices it was charging those schools and libraries were con- sistent with the lowest-corresponding-price rule without the ability to know what the lowest corresponding price was. 5 Drawing inferences in Heath’s favor, this behavior indicates at least a genuine question as to whether Wisconsin Bell was acting with reckless disregard of the possibility that it was 5 Wisconsin Bell asserts that even before 2009, it instructed employees responsible for pricing to “consider” what “similarly situated customers” were charged. But this vague instruction to “consider” other customers falls short of the requirements of the E-rate program, which were to ensure that schools and libraries would in fact be charged the lowest price charged to a similarly situated customer. No. 22-1515 15 charging E-rate eligible customers in violation of the lowest- corresponding-price rule and thus submitting false claims and causing others to submit false claims. The evidence of knowledge after Wisconsin Bell imple- mented its new policies in 2009 may not be as strong but is still suﬃcient to reach a jury. Heath’s expert reported that es- timated overcharges increased from 2008 through 2010 before dropping in 2011, even controlling for diﬀerences in custom- ers based on contract duration, rural versus urban location, size of customer, and distance from Wisconsin Bell facilities. This evidence is enough to create a genuine issue as to whether Wisconsin Bell continued acting with reckless disre- gard for the lowest-corresponding-price rule during its rollout of new compliance procedures. With this evidence, a jury could reasonably infer that Wisconsin Bell acted in reck- less disregard of whether the prices it was charging schools and libraries were above the prices charged to similarly situ- ated customers. We therefore cannot aﬃrm summary judg- ment on the issue of scienter. C. Materiality The district court’s decision on summary judgment did not reach the issue of materiality, but Wisconsin Bell asks us to aﬃrm on that alternative basis, which was briefed in the district court. Wisconsin Bell argues that Heath failed to demonstrate a factual dispute over whether the alleged falsity of the claims was material to the government’s payment deci- sions for two reasons. The ﬁrst is that the lowest-correspond- ing-price rule is not expressly identiﬁed as a condition of pay- ment on relevant forms. The second is that the government has continued to pay E-rate claims in Wisconsin while aware of Heath’s allegations. We reject both arguments. 16 No. 22-1515 First, the False Claims Act deﬁnes “material” as “having a natural tendency to inﬂuence, or be capable of inﬂuencing, the payment or receipt of money or property.” 31 U.S.C. § 3729(b)(4). The materiality analysis is not controlled by whether the government expressly designated the legal re- quirement at issue as a condition of payment. “What matters is not the label the Government attaches to a requirement, but whether the defendant knowingly violated a requirement that the defendant knows is material to the Government’s pay- ment decision.” Escobar, 579 U.S. at 181. A defendant can be liable for “submit[ting] a claim for payment that makes spe- ciﬁc representations about the goods or services provided, but knowingly fails to disclose … noncompliance with a statu- tory, regulatory, or contractual requirement … if the omission renders those representations misleading.” Id. Wisconsin Bell argues that materiality is not satisﬁed be- cause “the government has never required E-rate program participants to expressly certify their compliance with the [lowest-corresponding-price] rule.” Relying on Escobar, Wis- consin Bell asserts that this fact shows a lack of materiality. But Escobar taught clearly that “the Government’s decision to expressly identify a provision as a condition of payment is rel- evant, but not automatically dispositive.” 579 U.S. at 194. Es- cobar warned against an expansive view of the False Claims Act that would impose liability, for example, where a com- pany providing health services failed to comply with a ran- dom hypothetical provision of the U.S. Code requiring all government contractors to use American-made staplers. Id. at 195–96. That example involved compliance with a require- ment not directly related to the claim or the underlying ser- vices. No. 22-1515 17 Here, the subsidies for school and library communications costs are tied directly to the lowest-corresponding-price rule. Escobar does not suggest that violating such a relevant re- quirement of a government subsidy program should be found immaterial under the False Claims Act. The government cre- ated the E-rate program to keep these services aﬀordable for schools and libraries. The lowest-corresponding-price rule is one mechanism to accomplish that purpose and to control the cost of government subsidies. Express certiﬁcation of compli- ance should not have been necessary for a provider to under- stand that the rule is important to the program’s functioning and thus that noncompliance could inﬂuence reimbursement decisions. A jury might also reasonably infer that the im- portance of this rule was in fact understood by those who wanted to leave it undisturbed as a “sleeping dog,” anticipat- ing that if this dog woke up, it might bark or even bite. Second, Wisconsin Bell argues that “the company’s sup- posed misstatements made no diﬀerence to any payment de- cision” because E-rate program payments have been “consist- ently made … despite the government’s … full awareness of Heath’s allegations.” Wisconsin Bell does not come close to mustering the kind of evidence that would defeat a False Claims Act case at summary judgment on such a theory re- garding materiality. The argument seeks to erase the diﬀer- ence between allegations and conclusive proof. None of Wis- consin Bell’s evidence suggests that the government has rou- tinely paid claims “in full despite actual knowledge” that E- rate pricing rules were violated. See Escobar, 579 U.S. at 195 (noting that such evidence would be “strong evidence that the requirements are not material”). 18 No. 22-1515 The government’s knowledge of a pending lawsuit mak- ing allegations simply does not indicate actual knowledge of actual violations. The entire purpose of the E-rate program is to keep costs low. Draining the program’s resources through higher prices for services aﬀects the government’s ability to subsidize services for schools and libraries across the country. It is reasonable to infer that if the government knew of actual overcharges, it would not approve claims. At the very least, a genuine question of material fact exists on this issue. It does not oﬀer an alternative basis for aﬃrming summary judg- ment. D. Government Funds Finally, Wisconsin Bell argues that we should aﬃrm sum- mary judgment on another issue the district court did not reach. Wisconsin Bell argues that Heath has not oﬀered evi- dence that the relevant claims were paid using funds pro- vided by the federal government. The United States govern- ment submitted a statement of interest and declarations to the district court in this case, however, saying that the federal government does provide funds to the E-rate program. There is suﬃcient evidence in the record from which a reasonable jury could ﬁnd that government funds were involved in the payments at issue. We decline to aﬃrm the grant of summary judgment on this ground. The judgment of the district court is REVERSED and the case is REMANDED to the district court for further proceed- ings consistent with this opinion.

Todd Heath v. Wisconsin Bell, Inc.

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