Judge Rules H-1B Visa Fraud Lawsuit Should Move to Third Circuit

In a significant development for corporate visa practices, a federal court has determined that a whistleblower case against Cognizant Technology Corp. merits appellate review regarding alleged visa fraud under the False Claims Act.

According to Thursday’s district court order, both Cognizant and whistleblower Jean-Claude Franchitti agreed that the U.S. Court of Appeals for the Third Circuit should weigh in on whether the case can proceed, specifically on the question of “reverse false claims” allegations.

Franchitti’s lawsuit centers on claims that Cognizant, a major player in the global IT services industry, deliberately circumvented proper visa procedures to reduce costs. The whistleblower alleges the company applied for L-1 and B-1 visas for its foreign workers when H-1B visas were actually required—a strategic move that potentially saved the company substantial filing fees.

H-1B visas, designed for specialized foreign workers in fields requiring technical expertise, carry higher application costs and are subject to annual caps. In contrast, L-1 visas are intended for intracompany transfers of managers or specialized knowledge personnel, while B-1 visas are short-term business visitor permits with significantly lower fees and fewer restrictions.

The case represents a particularly notable example of “reverse false claims” litigation under the False Claims Act. Unlike traditional false claims where a defendant directly bills the government for services not rendered, reverse false claims involve a defendant knowingly avoiding an obligation to pay the government—in this case, the higher fees associated with H-1B visas.

This distinction is critical to the legal proceedings, as it determines whether Franchitti’s allegations fall within the scope of the False Claims Act, which allows whistleblowers to file lawsuits on behalf of the government and potentially share in any financial recovery.

The visa practices of major technology companies have faced increasing scrutiny in recent years. The H-1B program in particular has been at the center of heated debate, with critics arguing it allows companies to replace American workers with lower-paid foreign employees, while supporters contend it’s essential for addressing critical skill gaps in the U.S. workforce.

For Cognizant, one of the largest users of the H-1B visa program, the stakes are particularly high. The New Jersey-based company, with approximately 300,000 employees worldwide and annual revenue exceeding $17 billion, has relied heavily on the ability to move workers between India and the United States to service its predominantly American client base.

This case follows several other high-profile legal challenges involving visa practices in the technology sector. In 2013, Infosys paid a $34 million settlement over allegations of visa fraud, while in 2019, Wipro faced similar accusations in a whistleblower lawsuit.

Industry experts suggest the outcome could have far-reaching implications for how multinational technology companies manage their global workforce mobility programs. With increased government enforcement and whistleblower incentives, companies may face greater pressure to ensure strict compliance with visa regulations.

The Third Circuit’s decision will likely clarify the applicability of the False Claims Act to visa-related obligations and could potentially expose technology companies to increased liability for their visa practices.

The case highlights the complex intersection of immigration policy, corporate compliance, and whistleblower protections in an increasingly globalized economy where talent mobility remains critical to business operations.

Neither Cognizant nor Franchitti’s legal representatives have commented publicly on the latest development, and a timeline for the Third Circuit’s consideration has not yet been established.

The Department of Labor and U.S. Citizenship and Immigration Services have previously indicated increased enforcement priorities regarding visa program compliance, making this case potentially significant in establishing precedent for future actions against companies alleged to have misused various visa categories.