Dish Network Denied Rehearing in FCC License Auction Fraud Case

Dish Network Inc. lost its bid for a rehearing to argue that a D.C. Circuit panel improperly revived a False Claims Act suit alleging that the company used sham small businesses to win FCC communications licenses worth billions of dollars, according to a D.C. Circuit order.

Dish’s petition for a rehearing and rehearing en banc was denied by the US Court of Appeals for the D.C. Circuit on Wednesday.

Whistleblower Vermont National Telephone Co. alleges that Dish’s scheme prevented it from fairly competing in a 2014 FCC auction for spectrum licenses, which let companies provide television, mobile phone, and wireless internet services.

A Vermont National subsidiary and others filed a petition in the FCC to challenge the licenses May 11, 2015. Vermont National filed its FCA lawsuit two days later.

A district court dismissed the FCA suit under the government-action bar in March 2021. The bar precludes suits “based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the government is already a party.”

A D.C. Circuit panel reinstated the suit May 17.

Vermont National successfully argued that its FCA suit—filed days after a Federal Communications Commission challenge to the licenses—shouldn’t have been dismissed because the agency proceeding didn’t lead to a penalty, the panel said.

Dish argued in its rehearing request that the conclusion that the bar wasn’t triggered because the FCC lacked authority to impose penalties, insofar as the agency never initiated forfeiture proceedings, had no basis under the FCA’s text.

Hogan Lovells US LLP, Wilmer Cutler Pickering Hale & Dorr LLP, and Covington & Burling LLP represented the defendants. Wiley Rein LLP and MoloLamken LLP represented Vermont National.

The case is United States ex rel. Vt. Nat’l Tel. Co. v. Northstar Wireless LLC, D.C. Cir., No. 21-7039, 8/17/22.