Federal court orders DHS to revisit H-1B visas in light of widespread gaming

A federal court in Arizona has issued a narrowly focused but powerful ruling spotlighting serious concerns about how certain U.S. employers are leveraging flaws in the H-1B visa lottery system to game their way into approvals. The Jan. 6 decision came in the case of Potnuru et al. v. U.S. Department of Homeland Security.

The lawsuit brought by nine Indian nationals, all beneficiaries of H-1B visas, challenged DHS after their employers’ H-1B petitions were revoked. The U.S. Citizenship and Immigration Services (USCIS), acting under DHS, contended the companies falsely attested under penalty of perjury that they had not colluded with other entities to submit multiple registrations, conduct that can unfairly boost chances of lottery selection.

The case determination does not strike down enforcement, but rather, it underscores that when employers file multiple H-1B registrations for the same worker, the government must carefully evaluate whether those filings reflect legitimate business needs or an effort to increase lottery odds unfairly. U.S. District Judge Douglas L. Rayes agreed that employers cannot just submit multiple H-1B registrations for the same noncitizen unless they correspond to distinct, legitimate business needs. The court found that in three of the nine challenged cases, USCIS had failed to explain how it evaluated employer evidence of legitimate need and ordered the agency to reevaluate those filings.

For the other six plaintiffs, however, the judge upheld DHS’s actions because those employers failed to present evidence of legitimate business need or the cases were moot after new H-1B approvals occurred. This confirms that USCIS retains the authority to revoke applications when the multiple-registration rule is implicated. The decision is a procedural remand, not a whitewash of alleged abuses. Judge Rayes made no attempt to legitimize multi-entry schemes; instead, he emphasized that the government must provide reasoned analysis when it takes adverse actions.

‘A tactic the agency describes as tantamount to fraud’

This case fits into a much larger, well-documented problem. Federal data and journalistic investigations, most notably a major Bloomberg investigation, revealed why DHS took these actions in the first place. Bloomberg found that many staffing and outsourcing firms were exploiting a loophole in the electronic H-1B lottery by submitting multiple registrations for the same individual, a tactic the agency describes as tantamount to fraud.

According to the Bloomberg report, roughly one out of every six H-1B visas awarded in 2023 were connected to this multiple-registration practice. Many of these visa slots went to firms that did not intend to employ all of the workers they entered, but were instead playing a numbers game to boost their odds in the lottery. Bloomberg’s data also shows that outsourcing and staffing firms have claimed a disproportionate share of H-1B visas, crowding out both genuine foreign applicants who want real jobs and U.S. companies looking to compete fairly for talent.

The court documents state that USCIS determined that all employers who filed petitions on behalf of the plaintiffs engaged in fraud and made materially false statements in their H-1B petitions. Specifically, USCIS found that the petitioner employers falsely certified that they had not coordinated with other employers to submit multiple petitions for the same foreign national in order to increase that individual’s chances of selection in the H-1B lottery, which aligns with the investigative report published by Bloomberg.

Staffing firms and outsourcing networks distort the lottery

The H-1B program has been adapted into a business model by large middlemen that treat the lottery like a raffle ticket machine, sometimes entering the same individual repeatedly through affiliated companies. Bloomberg’s analysis found that nearly half of H-1B visas went to staffing and outsourcing companies and many of those approvals were tied to registrations submitted repeatedly for the same beneficiaries.

These tactics inflate the number of lottery entries for certain workers and suppress the chances of Americans and legal immigrants who play by the rules. In some reported cases, staffing firms would enter the same name dozens of times in hopes one of the entries would be selected, an obvious distortion of the program’s intent. This is not a technicality. Multiple registrations erode the purpose of the visa lottery entirely. Rather than awarding visas based on real, bona fide job offers with documented employer need, multiple-entry schemes treat the program as a chance-enhancement marketplace.

That dynamic in turn fuels wage suppression, incentivizes inferior employment conditions and enables business models that profit from being middlemen, not true employers of record. Bloomberg’s reporting shows that many staffing firms involved in these tactics pay visa beneficiaries significantly less than the median wage, undercutting both U.S. workers and foreign workers alike.

Why this case matters

Judge Rayes did not throw out DHS’s enforcement of anti-collusion policy. Instead, he ruled that USCIS failed to sufficiently explain how it considered employer evidence showing legitimate business need for multiple filings in three of the plaintiffs’ cases. For those three, the judge ordered DHS to reconsider its decisions. This is crucial; the court did not hold that multiple registrations are lawful. It held only that DHS must document its reasoning better in individual cases where employers provided evidence of legitimate need.

In the other six cases, the employers either provided no evidence of legitimate business need or the individuals had already secured new approvals, meaning DHS’s actions stood as lawful. This decision confirms three critical points:

1. USCIS has the authority to revoke H-1B visas when employers file multiple registrations and misrepresent material facts. DHS’s interpretation of fraud and collusion under immigration law remains intact.

2. The anti-collusion attestation in the electronic registration process is enforceable and violations are treated as serious enough to revoke previously approved visas.

3. Employers cannot simply flood the lottery through affiliated companies without showing true, distinct business needs. If employers coordinate filings to inflate odds without distinct jobs behind them, that conduct remains suspect and subject to revocation.

More importantly, the ruling did not:

• Legalize multiple registrations across related entities
• Strike down the anti-collusion rule
• Overturn DHS’s enforcement authority
• End the possibility of revocation in similar cases

Instead, the court stressed the need for reasoned agency explanations, which is a standard procedural requirement under the Administrative Procedure Act (APA), not an endorsement of collusion. The decision also illustrates a broader legal point: Under long-standing immigration law, a foreign worker’s H-1B status depends entirely on the employer’s truthful attestation and compliance with the anti-fraud framework. Misrepresentation, even by omission, can trigger revocation and loss of status.