GCI Communications Corp, a telecommunications company based in Anchorage, Alaska, has agreed to pay $40,242,546 to resolve allegations that it knowingly inflated its prices and violated Federal Communications Commission (FCC) competitive bidding regulations in connection with its participation in the FCC’s Rural Health Care Program.
The program provides more than $570 million each year to assist rural health care providers with their telecommunications needs. Under the Rural Health Care Program, the FCC pays a subsidy equal to the difference between the more expensive cost for a telecommunication service in a rural area and the less expensive cost for the same service in an urban area in the same state.
The United States alleged that, between 2013 and 2020, GCI failed to comply with FCC regulations that governed how telecommunications companies must calculate their prices for purposes of claiming subsidy payments, and as a result GCI received greater subsidy payments than it was entitled to. The United States further alleged that GCI caused Eastern Aleutian Tribes Inc., a rural health care provider in Alaska, to agree to inflated prices after the relevant contract was competitively bid.
“Telecommunications providers that seek to participate in important FCC programs like the Rural Health Care Program must comply with applicable rules, including those governing how they competitively bid on contracts and set their prices,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s settlement demonstrates our continuing commitment to preventing the misuse of taxpayer funds.”
“Providing health care services in rural areas, especially to Indigenous people in remote areas of Alaska, is vital and must be protected,” said U.S. Attorney Nick Brown for the Western District of Washington. “This $40 million settlement should deter other companies from attempting to improperly enrich themselves by overcharging the government for important healthcare-related telecommunications services.”
GCI has agreed to enter into a corporate compliance agreement with the FCC. The company will also resolve an FCC administrative investigation and an FCC proceeding arising from its participation in the Rural Health Care Program.
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Robert Taylor, GCI’s former Director of Business Administration. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Taylor v. GCI Liberty, et al., Case No. 19-cv-2029 (W.D. Wash.). The whistleblower will receive $6.4 million as his share of the recovery.
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the United States Attorney’s Office for the Western District of Washington, with assistance from the FCC’s Office of the Inspector General and the Federal Bureau of Investigation.
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Key Facts
- State: Washington
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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