GCI pays $40.2 million to settle federal allegations it violated False Claims Act, bidding guidelines

GCI Communications Corp., Alaska’s largest telecommunications firm, has agreed to pay $40.2 million to settle allegations by federal prosecutors that it violated the U.S. False Claims Act and aggressive bidding guidelines.

The U.S. Justice Division had alleged that GCI knowingly inflated its costs as a way to obtain federal subsidies for its providers in rural areas.

Former GCI Director of Enterprise Administration Robert Taylor will obtain $6.4 million as a part of the settlement underneath provisions of a federal whistleblower legislation for his part within the case.

The allegations had been in reference to the corporate’s participation within the Federal Communications Fee’s Rural Well being Care Program. This system pays greater than $570 million yearly in subsidies to assist rural well being suppliers with telecommunications.

The subsidies are based mostly on the distinction in telecom service prices between rural and concrete areas in the identical state. FCC guidelines additionally require aggressive bidding for the sponsored providers.

Prosecutors alleged that between 2013 and 2020, GCI didn’t comply with the foundations on methods to calculate costs, resulting in the corporate getting extra in subsidies than it was entitled to.

The prosecutors additionally mentioned GCI induced rural well being care supplier Japanese Aleutian Tribes Inc. to conform to inflated costs after a contract was competitively bid. That additionally led to GCI knowingly getting further increased funds, on this case from 2015 to 2018, in accordance with the Justice Division.

“Telecommunications suppliers that search to take part in essential FCC applications just like the Rural Well being Care Program should adjust to relevant guidelines, together with these governing how they competitively bid on contracts and set their costs,” mentioned Brian M. Boynton, the principal deputy assistant lawyer basic and head of the Justice Division’s Civil Division.

The settlement ought to deter different firms from making an attempt to improperly enrich themselves by overcharging the federal government, mentioned Nick Brown, the U.S. lawyer for the Western District of Washington.

“Offering well being care providers in rural areas, particularly to Indigenous folks in distant areas of Alaska, is important and should be protected,” he mentioned.

GCI spokesperson Heather Handyside mentioned in a written assertion that the corporate takes critically its tasks as “stewards” of the federal applications.

“This settlement concludes a number of years of lively discussions with Federal regulatory companies,” she mentioned. “It displays the results of each broad adjustments in program steering and previous challenges GCI recognized throughout an in depth inside overview.”

She mentioned the settlement retroactively applies newer federal steering concerning the subsidies to the years 2010 to 2016. She mentioned it additionally resolves “a restricted variety of compliance points” that the corporate self-reported. The corporate has labored to make sure that acceptable protocols are in place, she mentioned.

GCI agreed together with the settlement to enter into a company compliance settlement with the FCC.