Fifth Circuit Rejects Visa-Fraud FCA Claims Against Tata, Cementing Circuit Consensus

NEW ORLEANS (LN) — A Fifth Circuit panel on Tuesday affirmed the dismissal of a qui tam False Claims Act suit against Tata Consulting Services, ruling that a relator who uncovered what he called a sweeping visa-fraud scheme at the Indian IT giant could not show the company had any established obligation to pay the federal government money it allegedly avoided — joining the D.C., Second, and Ninth Circuits in rejecting a theory that had found a single, now-embattled foothold in a New Jersey district court.

Jack Palmer, Jr., hired by Comcast in 2016 to audit Tata's immigration practices, alleged that the company — which employs roughly 30,000 workers in the United States, about 75% of whom require H-1B, L-1A, or B-1 visas — systematically applied for cheaper L-1A and B-1 visas while assigning those workers to jobs reserved for H-1B holders. The scheme, Palmer alleged, let Tata pay $160 B-1 application fees or $5,460 L-1A fees instead of the $6,460 required for each H-1B visa, and retroactively edited personnel files to conceal the mismatch.

Palmer framed both theories as "reverse" false claims — the FCA provision that imposes liability when a defendant "knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government." His first theory held that labor regulations obligated Tata to pay H-1B fees whenever it knew workers would perform H-1B-level jobs. His second argued that by underpaying visa-dependent workers in violation of federal wage rules, Tata necessarily withheld less in federal payroll taxes.

Writing for the panel, Circuit Judge Cory T. Wilson rejected both theories on the same fundamental ground: Tata never had an "established duty" to pay the government the money Palmer said it avoided.

On the visa-fee theory, Wilson held that the regulations Palmer cited "merely require payments corresponding to the visas actually sought; they create no freestanding obligation to pay fees for a specific visa type." Because H-1B fees were contingent on Tata actually applying for — and winning through the lottery — those visas, the company had no present duty to pay them. The same logic defeated Palmer's amended-petition argument: regulations requiring new filings when circumstances change only obligate employers to adjust petitions for the same visa type, not to apply for an entirely different category.

The tax-withholding theory fared no better. Wilson held that the relevant wage regulations obligate payments to employees, not to the government, and that what counts as "appropriate" withholding is set by the Internal Revenue Code — which only requires withholding on wages actually paid. "Without paying higher wages to workers, Tata was thus not required to withhold more in taxes," Wilson wrote. Accepting Palmer's theory, the panel concluded, "would transform every failure to pay employees the wages required by federal law into a reverse false claim under the FCA" — a reading the court said flatly contradicts the statute's text, Supreme Court precedent, and the FCA's explicit tax bar.

The Fifth Circuit's ruling aligns it with a near-unanimous chorus of appellate authority. The D.C. Circuit reached the same result last year in a case involving the same defendant, concluding that immigration regulations "only oblige employers to pay fees on the visas for which they applied." The Second Circuit held that a violation of immigration law does not "trigger an immediate and self-executing duty to pay the [G]overnment those fees." The Ninth Circuit was blunter still: defendants "had no 'established duty' to pay for visas for which they did not apply."

The lone outlier — a 2021 District of New Jersey ruling in Franchitti v. Cognizant Technology Solutions that held a cognizable FCA obligation accrued upon submission of inaccurate visa applications — has been "roundly rejected by every court to contemplate it," Wilson wrote, noting that the Franchitti court "never so much as cited the labor regulations that purportedly give rise to Tata's obligation in this case." The Third Circuit granted interlocutory review of Franchitti on March 4, 2026.

The United States declined to intervene in the case in August 2022, leaving Palmer to prosecute the action alone.

The Third Circuit's pending review of Franchitti v. Cognizant means the last remaining judicial support for Palmer's theory is now under direct appellate scrutiny — with four circuits already lined up against it.