by Brian Mahany
Today’s Wall Street Journal says it all. Millions of Americans illegally claimed eligibility to the Lifeline program. Now that the FCC has cracked down on the the eligibility guidelines and misspending, the question becomes who to blame. Is it solely the fault of greedy program participants who lied on applications or did some of the carriers tacitly participate in the fraud by simply turn a blind eye? With billions spent annually on the program, the stakes are quite high.
The Lifeline program was started in 1984 to insure poor Americans had access to emergency services and employment opportunities. The program is funded through monthly surcharges on cell phone bills. In other words, those who can pay subsidize those who can’t. Whether that is even fair isn’t the point of this story. The apparent rampant fraud is the story within the story.
Of 6 million participants, the Wall Street Journal reports that 41% did not meet eligibility requirements or ignored requests for verification. In some states, the cell carriers are limited in their efforts to verify eligibility. But sometimes, carriers simply turn a blind eye. Without the government program and subsidies, many people would not have phones and that means lost revenue for the carriers.
Already, General Communication Inc paid $1.5 million to settle false claims allegations stemming from a carrier it acquired, Alaska DigiTel. The sheer magnitude of the program fraud suggest that other carriers may have problems too.
Under the federal False Claims Act, whistleblowers with inside (non-public) information can bring an action on behalf of the United States. Assuming the government lost money through fraud, the whistleblower becomes entitled to receive up to 30% of whatever is collected.
In the present scenario, if a current or former employee or vendor of a cell phone company can demonstrate that the carriers knew the program was being abused but did nothing, a huge cash award may be forthcoming.
We believe whisteblowers are the new American heroes. They help the government and taxpayers (meaning you and I) save billions of dollars annually. When carriers permit ineligible people participate in the program, the carrier commits fraud. When a participant receives phone service through the program, it means that the government is footing the bill. Increased government subsidies mean increased cell phone surcharges. Both the government and taxpayers lose.
If you have inside information about the Lifeline verification policies and practices of any of the major carriers, give us a call. Our whistleblower lawyers specialize in state and federal false claims actions. If you believe the loss may be $1 million or more, we may be able to help you both stop the waste and earn a reward. (Our Detroit partner Joe Bird represents the whistleblower in the largest pending false claims act case in the nature – HUD’s $2.4 billion claim against Allied Home Mortgage.)
For more information, contact attorney Brian Mahany. Our whistleblower lawyers are involved in a wide variety of cases from cases against hospitals to major banks and mortgage lenders. Brian can be reached at or by telephone at (414) 704-6731 (direct). All calls are protected by the attorney – client privilege and kept in strict confidence.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and coming soon San Francisco, California. Fraud recovery available in many jurisdictions.
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