Armstrong Group Settles False Claims Allegations
Armstrong Group, a major northeastern cable television, telecommunications and internet service provider based in Butler, Pennsylvania, has agreed to pay $6.5 million to settle allegations under the False Claims Act concerning its participation in the Federal Communications Commission’s (FCC) High-Cost Program. This program, part of the Universal Service Fund (USF), aims to ensure equitable access to modern communications services across rural, insular, and high-cost areas of the United States.
The settlement follows accusations that Armstrong Group’s subsidiaries, operating as incumbent local exchange carriers (ILECs), improperly inflated subsidy claims between 2008 and 2023 by misreporting costs associated with expanding telecommunications infrastructure. This misconduct allegedly resulted in excessive federal subsidies, compromising the integrity of FCC operations and the equitable distribution of public funds.
The FCC’s High-Cost Program is crucial for extending reliable voice and broadband services to rural regions at rates comparable to urban areas. The United States Department of Justice, alongside the FCC and the U.S. Attorney’s Office for the Western District of Pennsylvania, asserted that Armstrong Group’s subsidiaries failed to comply with FCC regulations governing subsidy calculations. By allegedly misrepresenting project costs, these companies received higher subsidies than legally permissible, undermining the program’s goals of fair access and cost-effective service provision.
“Telecommunications providers that seek to participate in important FCC programs like the High-Cost Program must comply with applicable rules, including those governing how they report the costs used to calculate their subsidies,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division.
General Counsel Michele Ellison for the FCC made an excellent point about the importance of accessible internet in our “digital age” for all Americans- even in the pockets of the country, or those who struggle to afford it. Ellison expressed, “…it is critical for everyone, everywhere to have access to reliable, high-speed broadband, including in rural and underserved areas. That is why we are laser-focused on pursuing waste, fraud, and abuse in these critical programs and ensuring that available funds flow to companies that play by the rules.”
There have been many debates and even studies about whether the internet should be free, with many calling it a basic human right. What once used to be a luxury to pay for to have entertainment in one’s home, is now a necessity for jobs, education, and basic communication. Until then, trying to keep the internet accessible for all is what the government is trying to maintain.
As Armstrong Group now implements corrective measures and adheres to stringent compliance protocols, stakeholders and consumers alike will continue to monitor the company’s adherence to fair business practices. The resolution is a reminder of the consequences of regulatory non-compliance. It is also a good representation for the need of whistleblowers to help maintain transparency and accountability in federal initiatives.
Whistleblowers can play a critical role in identifying and reporting fraud which can lead to regulatory oversight in maintaining lawful practices. By bringing forward allegations of unlawful practices seen in a workplace, whistleblowers can trigger investigations and legal actions that hold corporations accountable, ensure adherence to legal standards, and even be a key part of protecting the integrity of services for citizens nationwide.
Learn more about the types of fraud or misconduct that you can report. If you would like to speak to an experienced Constantine Cannon whistleblower lawyer team member, please don’t hesitate to contact us for a free and confidential consultation.