An Alaska-based telecommunications provider agreed to pay more than $40.2 million as part of a settlement agreement announced Thursday with the Department of Justice (DOJ) for alleged violations of the False Claims Act (FCA).

GCI Communications Corp. was accused of violating Federal Communications Commission (FCC) competitive bidding regulations by “knowingly inflating its prices” in connection with its participation in the Rural Health Care Program (RHCP), the DOJ said in a press release. The program provides money each year to aid rural healthcare providers with their telecommunications needs.

The details: Between 2013-20, GCI failed to comply with FCC regulations and received greater subsidy payments than it was entitled to, according to the DOJ. The company also allegedly caused Eastern Aleutian Tribes, a rural healthcare provider in Alaska, to agree to inflated prices from 2015-18.

“Telecommunications providers that seek to participate in important FCC programs like the [RHCP] must comply with applicable rules, including those governing how they competitively bid on contracts and set their prices,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the DOJ’s Civil Division, in the press release.

The civil settlement resolves claims brought under the qui tam provisions of the FCA by Robert Taylor, GCI’s former director of business administration. Taylor will receive more than $6.4 million as part of the settlement.

Compliance ramifications: Contemporaneous with the settlement, GCI entered into a three-year corporate compliance agreement with the FCC. As part of the compliance agreement, GCI must:

  • Within 30 days designate a senior corporate manager to serve as a compliance officer to discharge the duties of the agreement. The compliance officer must report directly to the president, chief executive, general counsel, or vice president of ethics and compliance and shall not be directly or indirectly subordinate to the chief financial officer, vice president of operations, or have any legal counsel responsibilities;
  • Within 90 days implement a compliance plan to ensure future compliance with the RHCP;
  • Within 90 days the compliance officer shall distribute a compliance manual; and
  • Within 30 days implement a compliance hotline and publish it on the homepage of the company’s website.

Of the more than $40.2 million settlement GCI agreed to, about $26 million is restitution, which will go directly to the FCC’s universal service fund.

GCI entered into the agreement without admitting or denying liability. The company did not respond to a request for comment.

Jeff Dale is Managing Editor, Editorial Projects and Analytics, at Compliance Week. He previously served as Compliance Week's Digital Editor and has worked as a copy editor at the Boston Herald and city editor at The Hour Publishing Co. in Norwalk, Conn.View full Profile

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