Two Oklahoma telephone companies have agreed to pay a total of more than $1 million to the federal government to resolve claims of improper reimbursements for a wireless phone program for low-income residents.
TerraCom LLC and YourTel America Inc. agreed to the payments to resolve investigations by the Federal Communications Commission into their participation in the Lifeline program.
The phone companies, which operate in 23 states, did not admit wrongdoing.
The FCC's investigation found the companies failed to adequately track customers who signed up for the Lifeline program. A review of subscriber rolls found TerraCom and YourTel customers had received duplicate landline or wireless services.
Lifeline allows just one subsidized phone line for each household. Participants have to meet low-income guidelines or be eligible for several types of assistance such as food stamps.
Money for the Lifeline program comes from Universal Service Fund fees tacked on to most telephone customer bills. Phone companies whose customers qualify for Lifeline can get reimbursements from $9 to $34 per subscriber.
TerraCom will pay back more than $402,000 in improper Lifeline reimbursements, according to the consent decree against the company. It also agreed to pay another $440,000 to the federal government to settle the case.
YourTel, a TerraCom affiliate, will pay back almost $38,000 in improper reimbursements and make an additional payment of $160,000 to the government.
“Today's enforcement action sends a clear message: the FCC will not tolerate waste or fraud in the Lifeline program,” FCC Enforcement Bureau Chief Michele Ellison said in a statement Tuesday. “Fundamental reforms of the program's rules are allowing us to vigorously pursue those who had abused the system — and safeguard this vital program for low-income Americans who truly need it.”
Dale Schmick, vice president and chief operating officer of TerraCom and YourTel, said the improper, duplicate house addresses at issue were the result of a previous computer system used by the companies.
“We began correcting the issue when we discovered it, and for the past several months we've been implementing protections and controls to prevent this from happening again,” Schmick said. “Although we believe this issue occurred as a result of the inconsistent address formatting in our old systems, it is still a matter of serious concern for us and it is why we fully cooperated with the FCC.”
The FCC instituted several reforms to the Lifeline program last year, including a rule requiring customers to recertify their eligibility annually. The top six carriers in the program told the FCC they dropped about 33 percent of their Lifeline customers — almost 3.3 million subscribers — after reviewing eligibility recertification in December.
Other reforms include a new national database for telephone companies to check customer addresses.
“Once it's up and running, carriers will be required to query this database when they add a subscriber,” said FCC spokesman Mark Wigfield. “If that household has a Lifeline service already, then they won't be able to sign up again. That will be a proactive way to deal with duplicate subscriptions.”
Separately, public utility division officials at the Oklahoma Corporation Commission this month filed cases against five phone companies providing wireless Lifeline service in Oklahoma, including TerraCom. Officials want to know if the companies have been verifying applicant eligibility for the program.
Phone company reimbursements from the federal Lifeline program in Oklahoma jumped to $218 million last year, up from $90 million in 2011, according to data from the Universal Service Administrative Co., a nonprofit that administers the Universal Service Fund.