TeleQuality to Reimburse USF $31M for Fraud


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The FCC’s Enforcement Bureau reached a $31 million settlement with TeleQuality Communications for violating competitive bidding and rate rules and overbilling the agency’s Rural Health Care Program. The program ensures that eligible health care providers in rural areas have affordable access to telecommunications services so they can do their job. To do this, the program pays the difference between the state’s average urban rate for comparable services, and the higher rural rate.

The settlement requires TeleQuality to provide the Universal Service Fund with $31 million worth of repayments and forfeitures of payment claims as a sanction. Over a four-year period, from 2015-2018, the company admits to using fabricated sales quotes as urban rates and failing to use FCC-required methods for determining rural rates, according to the agency.  

“In violation of competitive bidding rules, TeleQuality helped health care providers to create the bid evaluation criteria and matrices against which TeleQuality’s bids would be judged,” states the FCC in the settlement order. The company “also provided improper incentives like free routers and other equipment to providers to encourage them to award TeleQuality the contracts. In addition, from 2010 to 2019, TeleQuality improperly reported its revenues in an attempt to shield itself from contributing to the Universal Service Fund at all,” said the Commission.

The San Antonio, Texas-based TeleQuality was acquired by Education Networks of America in January 2018 and has installed new management. TeleQuality agreed to a compliance plan which requires it to designate a compliance officer, establish new operating procedures to ensure compliance with FCC rules, file regular reports on its compliance to the Commission for the next five years, and promptly report any new violations.

Commissioner Starks was disappointed with the terms of the deal. He pointed out that, although the $31 million figure represents a record, it does not fully reimburse the program for the funds illegally received by TeleQuality, “nor does it include any penalty for TeleQuality’s admitted misconduct.” He also noted that, despite TeleQuality’s “egregious” actions, the company will be allowed to continue to participate in the program.

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