The FCC plans to fine telecom services reseller Network Services Solutions and its chief executive $21.7 million for apparent violations involving alleged FCC Rural Health Care program fraud, a program of the Universal Service Fund (USF).
The fraud violation fine is the result of Network Services Solutions’ alleged use of forged and false documents to seek and obtain funding from the program. Network Services Solutions also will be asked to refund $3.5 million in improper funding that it allegedly received.
The planned rural health care fine is the FCC’s first enforcement action involving that program and the first time the agency has proposed a fine for wire fraud in connection with a USF program. The wire fraud charges are based on the FCC’s allegation that Network Services Solutions used information contained in forged documents to cause administrators to make improper payments to the company via interstate wire.
“Forgery, bribery, bid rigging and fraud are absolutely unacceptable in any federal program,” said FCC’s Enforcement Bureau Chief Travis LeBlanc in a press release about the FCC rural health care fine. “Today the Commission calls on Network Services Solutions and its CEO to account for any misuse of federal funds in this vital program that assists rural communities with access to critical services for health care.”
FCC Rural Health Care Program Fraud Fine
The USF Rural Health Care program pays some of the costs of communications services for rural health care providers. In some cases, the amount that the program pays is based on the difference between what a service costs in a rural area and the lower rates offered for similar services in the closest city with a population of 50,000 or more.
According to FCC allegations, Network Services Solutions used forged urban rate documents purportedly from Comcast and other false documents to increase its receipts from the USF. Additionally, the FCC alleges that Network Services Solutions gave a valuable network server to a rural health care provider to influence the provider’s decision to award a contract and misled fund administrators by creating and using documents that gave the false impression that contracts were awarded through an objective analysis of bidders. The FCC also alleges that Network Services Solutions received and improperly used competitors’ confidential and proprietary information.
“NSS has cooperated with the FCC in this investigation and looks forward to a full and complete review of the facts underlying the allegations,” said Network Services Solutions attorney Russell D. Lukas, a partner with Lukas, Nace, Guttierrez & Saches LLP, in response to an inquiry from Telecompetitor about the impending FCC rural health care fine.