by Brian Mahany
Just one week ago we posted an article about the developing controversy with the federal cellphone Lifeline program. A report first published in the Wall Street Journal said that as many as 41% of the 6 million participants in the program may not meet federal eligibility guidelines. This number was based on a study that found 41% of people surveyed either did not meet the eligibility criteria or refused to answer questions (usually a great sign of ineligibility). Our question when we wrote the story was “Who is responsible for this mess?”
It didn’t take long for an answer. As we suspected, whenever problems are this large, it probably is not the random effort of millions of individuals each committing the same fraud. We thought then as we do now that the phone companies were behind much of the fraud. And why not? They get to sell more phones and Uncle Sam (which means you and I as taxpayers) foots the bill.
A program fraud of this size is ideal for the false claims act. That law, called the whistleblower or Lincoln law, allows concerned citizens with inside information to claim a piece of whatever the government collects. By filing a complaint in federal court, the whistleblower establishes his or her right to get as much as 30% of whatever the government collects, assuming the information is valid and leads to a recovery.
Today’s Wall Street Journal has a new story containing new allegations of cell phone companies doing such things as signing up people in hospital emergency rooms and mailing ineligible people unsolicited phones. We can’t say we are surprised.
In response to the first WSJ article, the FCC issued a press release indicating that it hoped to save $400 million in the program this year and $2 billion by the end of 2014. The release was long on promise but short on facts. According to a spokesperson at the Commission, “without adequate protections in place, the program experienced rapid growth, and waste, fraud, and abuse were threatening its future.”
Amen. So how will the government save that much money? Certainly not by contacting every Lifeline participant in the U.S. The only way to achieve savings of this size is to force the industry to better police the program and by relying on whistleblowers to expose fraud within the phone companies. By targeting the big cellphone giants, the government can save the program and we can sleep better knowing our tax dollars aren’t being wasted.
The Lifeline program was designed to help needy families have a phone for emergencies or to help find jobs. It was not designed to give every person in the United States a phone. Indeed, we know of several people making good money that have obtained “free phones.” With millions of people in the same situation, we believe that either the phone companies assisted in the fraud or deliberately turned a blind eye.
The fraud lawyers at Mahany & Ertl are seeking whistleblowers – present or former employees of cell phone companies or their vendors or auditors – with inside knowledge of abuses within the Lifeline program. We are a leading whistleblower firm and presently have one of the largest false claims act cases pending in the United States, HUD’s $2.4 billion dollar 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 (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 San Francisco, California. Fraud recovery available in many jurisdictions.
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