Proposed Penalty Raised to $22.5 Million for USF Rural Health Care Program Violations


The Federal Communications Commission (FCC or Commission) has increased its proposed fine on Network Services Solutions, LLC (NSS) and its chief executive from $21.7 million to $22.5 million for apparent violations involving the Universal Service Fund (USF) Rural Health Care (RHC) Program.  Last November, the Commission found that NSS violated the RHC Program’s competitive bidding rules, inflated the rates for services it charged to rural health care providers (HCPs) and the USF, used forged and false documents to seek funding from the program, and violated the federal wire fraud statute.  As a result, the Commission proposed a total forfeiture penalty of $21,691,499.  The FCC’s proposed penalty relating to NSS’ violations of the Commission’s competitive bidding and urban rates rules was based on 175 FCC Form 466s containing false information that HCPs submitted to USAC.  Upon further consideration, the Commission has determined that payment requests contained in the online invoices NSS submitted to USAC, rather than the Form 466s, serve as the appropriate basis for a forfeiture penalty.  The FCC has accordingly proposed a total amended forfeiture penalty of $22,547,443 for NSS’ apparent violations.  In addition, the Commission expects to order NSS to refund $3.5 million in improper payments that the company has received through the RHC Program, which provides funding to rural HCPs for telecommunications and broadband services. This is the FCC’s first enforcement action involving the RHC Program and the first time the Commission has proposed a fine for wire fraud in connection with a USF program.

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