A Western Pennsylvania telecommunications company has agreed to pay $6.5 million to settle claims that it violated federal law by inflating its costs to receive greater federal subsidies under the Federal Communication Commission’s High-Cost Program, the U.S. Department of Justice said Friday.
The settlement resolves the government’s action filed in the U.S. District Court for the Western District of Pennsylvania, alleging that Butler, Pennsylvania-based Armstrong Group violated the False Claims Act. The company was accused of submitting inflated funding requests for money from the FCC’s Universal Service Fund, which supports high-speed communications infrastructure and access.
High-Cost Program and FCC Violations
The High-Cost Program, part of the Universal Service Fund (USF), provides federal funds to eligible telecommunications carriers, or incumbent local exchange carriers (ILECs), to expand connectivity to rural or high-cost areas, the DOJ explained.
“When providers like the Armstrong Group fail to follow federal law and FCC regulations, they jeopardize not only critical government programs but also consumers’ ability to access a modern lifeline — rapid, reliable, and efficient telecommunications services,” said U.S. Attorney Eric G. Olshan for the Western District of Pennsylvania.
Armstrong Group to Pay $6.5M to Settle FCA case : Whistleblower and Overstated Costs
Federal authorities claimed that from 2008 to 2023, five Armstrong Group telephone companies in Pennsylvania, New York, West Virginia, and its Northern Division entity overstated costs related to telecom infrastructure to receive more money. The case was brought to the government’s attention by whistleblower James Ranko, Armstrong’s former controller, who is set to receive $1.26 million from the settlement.
