Dish Network Corp. must again defend itself in a whistleblower’s False Claims Act suit alleging that it used sham small businesses to win FCC communications licenses worth billions of dollars, the D.C. Circuit ruled Tuesday.

Vermont National Telephone Co. showed that a district court was wrong to rule that the FCA’s “government-action bar” required dismissal, Judge David S. Tatel of the US Court of Appeals for the D.C. Circuit said in its decision to reverse.

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.”

Vermont National 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 never led to a penalty.

Because the FCC had no authority to assess civil money penalties during its licensing proceeding, the licensing proceeding wasn’t an administrative civil money penalty proceeding, the court said.

Dish had argued that government-action bar was properly applied because the FCC had authority to issue a penalty if it found fraud.

The court also ruled that the district court erred by ruling that Vermont National failed to demonstrate “materiality” as required by the FCA.

Alleged false certifications and failures to...

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