SCOTUS Hears Oral Arguments in Four Cases

The U.S. Supreme Court has returned to the bench for its November oral argument session. Last week, the justices heard oral arguments in four cases. While none of the cases are considered “blockbusters,” the Court considered key issues related to employment, securities, healthcare, and white-collar criminal law.

Below is a brief summary of the questions before the Court:

Wisconsin Bell, Inc. v. United States, ex rel. Todd Heath: The Telecommunications Act of 1996 directs the Federal Communications Commission (FCC) to further the goal of universal access to telecommunications services. To this end, the FCC established the “E-rate” program to provide discounted services to eligible schools and libraries. The program is administered by a private, non-profit corporation and funded entirely by contributions from private telecommunications carriers.

After telecommunications carriers provide services to eligible schools and libraries, either the schools and libraries or the providers can submit reimbursement requests to the private corporation for the amount of the discount. In this way, the E-rate program distributes up to $4.5 billion each year. The question before the justices is whether reimbursement requests submitted to the E-rate program are “claims” under the False Claims Act.

E.M.D. Sales, Inc. v. Carrera: The Fair Labor Standards Act (FLSA) guarantees eligible workers a minimum wage and overtime pay. The FLSA also contains 34 exemptions from those requirements, with employers not required to pay overtime to, e.g., bona fide executives, agricultural workers, and outside salesmen. The federal courts of appeal are divided over the burden of proof that employers must satisfy to demonstrate the applicability of an FLSA exemption. The Fourth Circuit Court of Appeals holds that clear and convincing evidence is required, while six other circuits hold that mere preponderance of the evidence is sufficient. The Court will now weigh in to resolve the circuit split.

Advocate Christ Medical Center v. Becerra: Because low-income patients are often costlier to treat, Congress directed the government to reimburse hospitals that treat a disproportionate share of low-income patients at higher Medicare rates. Pursuant to 42 U.S.C.§ 1395ww(d)(5)(F)(vi)(I), a hospital qualifies for higher payments in part based on the number of days that a hospital provides inpatient care to senior (or disabled) low-income patients, measured as those who “were entitled to benefits under part A of [Medicare] and were entitled to supplementary security income [SSI] benefits.”

In Becerra v. Empire Health Foundation, 597 U.S. 424, 445 (2022), the Supreme Court agreed with the agency that the phrase “entitled to [Medicare part A] benefits” included “all those qualifying for the [Medicare] program,” whether or not Medicare paid for that hospital stay. However, the decision in Empire expressly left open the question of whether “entitled to [SSI] benefits” likewise includes all those who qualify for the SSI program. The Court has now agreed to decide whether the phrase “entitled … to benefits,” used twice in the same sentence of the Medicare Act, means the same thing for Medicare part A and SSI, such that it includes all who meet basic program eligibility criteria, whether or not benefits are actually received.

Facebook, Inc. v. Amalgamated Bank: The federal courts of appeal are divided over what public companies must disclose in the “risk factors” section of their 10-K filings. The Sixth Circuit holds that companies need not disclose past instances when a risk has materialized. Meanwhile, the First, Second, Third, Fifth, Tenth, and D.C. Circuits hold that companies must disclose that a risk materialized in the past if the company knows that event will harm the business.

In the case before the Court, the Ninth Circuit adopted a third position requiring companies to disclose that a risk materialized in the past even if there is no known threat of business harm. The justices have agreed to consider the following question: Are risk disclosures false or misleading when they do not disclose that a risk has materialized in the past, even if that past event presents no known risk of ongoing or future business harm?