FCC reaches $31M Rural Health Care Program settlement

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The Federal Communications Commission announced on Wednesday that it has reached the largest Rural Health Care Program settlement in the agency’s history.

The FCC reached a $31 million settlement with San Antonio, Texas-based TeleQuality Communications, which provides telecommunications and network connectivity solutions to the program.

Under the RHC Program, eligible providers receive funding for telecommunications and Internet access services to ensure they have affordable telecom services that are critical for care. However, an investigation of TeleQuality found competitive bidding and rate violations as well as fabricated sales quotes.

According to FCC, TeleQuality admits to using fabricated sales quotes as urban rates and failing to use agency-required methods for determining rural rates. Also, in violation of competitive bidding rules, the company helped providers in creating the bid evaluation criteria and bid matrices against which TeleQuality’s bids would be assessed. In addition, TeleQuality offered improper incentives to providers such as free routers and other equipment to encourage them to award contracts to the company.

“This case involves some of the most egregious violations of our universal service rules that I can recall,” said FCC Commissioner Geoffrey Starks in a written statement. “In the course of only three years, TeleQuality received over $47 million in improper payments from the Universal Service Fund. The company obtained this money by violating virtually every rule in the book, including fabricating invoices, colluding with healthcare providers to obtain contracts, using incorrect rates, and charging the fund for services that were never provided.”

Despite the settlement, which requires TeleQuality to provide the Universal Service Fund with $31 million worth of repayments and forfeitures of payment claims as a sanction, Starks contends that the FCC should have taken stronger action against the company.

“Even this ($31 million) figure will not result in TeleQuality repaying the full amount of universal service support that it unlawfully obtained,” observes Starks. “Instead, the company will simply repay a portion of its ill-gotten gains.”

In addition, he notes that the settlement “effectively lacks any penalty” and that “given the egregious nature of the misconduct” the FCC should have debarred TeleQuality from further participation in the RHC program.

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