Array Advocates Against Whistleblower Litigation Rights Under False Claims Act

Federal judges should find that whistleblowers can’t sue for fraud under the False Claims Act, Array Digital Infrastructure argued Thursday in a Washington D.C. courtroom, adding a new corporate voice to a growing legal challenge against one of America’s primary anti-fraud mechanisms.

The company, formerly known as UScellular until it sold its wireless operations to T-Mobile, urged a U.S. District Court judge to dismiss a fraud suit based on the constitutional argument that private parties should not be permitted to bring lawsuits under the False Claims Act (FCA).

“The proper remedy, therefore, is to dismiss this case,” Array told the court, claiming that whistleblowers who file such suits effectively act as “officers of the United States” without being properly appointed, violating constitutional requirements.

This legal position mirrors an argument recently advanced by an AT&T subsidiary and has found receptive ears among three conservative Supreme Court justices, signaling potential vulnerability for a law that has been a cornerstone of anti-fraud enforcement for decades.

The case at the center of this constitutional challenge involves allegations from attorneys Mark O’Connor and Sara Leibman, a former FCC lawyer. The pair claim Array used subsidiaries to improperly obtain small business credits and purchase spectrum at reduced prices compared to what it would have paid by bidding directly. Array has consistently denied these allegations.

In its court filing, Array emphasized that federal authorities have repeatedly reviewed the allegations without taking action: “The Department of Justice and the FCC have repeatedly investigated these claims, over the course of many years, and each time have declined to take any action against Defendants. It could not be clearer that the FCC – the supposed victim of the scheme – is done with these claims.”

The current case has followed a complex legal path. Leibman and O’Connor had a second, similar FCA case against Array that ended when the Supreme Court recently declined to review a decision dismissing it. Meanwhile, the D.C. District Court case was revived in October by the same D.C. Circuit panel that had dismissed the other suit.

The constitutional challenge to the FCA’s whistleblower provisions represents a potential seismic shift in how fraud against the government is prosecuted. Since its Civil War-era origins, the law has allowed private individuals to file suits on behalf of the government against those who defraud federal programs, with whistleblowers receiving a percentage of any recovery.

AT&T’s Wisconsin subsidiary advanced similar arguments in July when facing FCA claims from a telecom auditor. The company argued that whistleblowers “qualify as ‘Officers of the United States'” because they “exercise significant authority in bringing civil suits on behalf of the United States.” However, that particular motion to dismiss was unsuccessful, with the judge finding the FCA provisions consistent with the Constitution’s Article II.

That case is scheduled for trial in May, potentially setting up another precedent on the issue.

The Supreme Court has shown increasing interest in the constitutional questions surrounding the FCA. In a unanimous decision on a separate aspect of the law last year, Justices Brett Kavanaugh and Clarence Thomas wrote a concurring opinion stating that the provisions allowing private whistleblower lawsuits “raise substantial constitutional questions under Article II.”

“Those constitutional questions are not before the Court in this case,” Kavanaugh wrote. “But in an appropriate case, the Court should consider the competing arguments on the Article II issue.”

Justice Amy Coney Barrett joined Kavanaugh in a similar concurrence in a separate FCA case, further signaling the conservative wing’s interest in reviewing the law’s constitutionality.

Several circuit courts have already upheld the FCA provisions, but the Eleventh Circuit, which heard oral arguments on the issue in December, has yet to rule. Legal experts from Morgan Lewis cautioned in a recent analysis that if judges find these provisions unconstitutional, it would “wreak havoc” on “the vast majority” of FCA cases currently in the legal system.

The outcome of these challenges could fundamentally alter how the government combats fraud in federal programs, potentially eliminating a mechanism that has recovered billions in taxpayer funds since its inception.