Judges Revive Claim that AT&T Overcharged Schools for Internet Service

For seven years, a Wisconsin telecommunications consultant has waged an unsuccessful legal fight against AT&T, alleging that the company long defrauded a federal program by overcharging the nation’s schools and libraries for Internet and telephone services. Now an appeals court in the District of Columbia has given new life to his case. The little-noticed June 23 ruling concluded that the complaint by Todd Heath was properly filed under the US False Claims Act -- a decision that could lead to the disclosure of AT&T’s internal records about the federal program known as E-Rate. At issue in the court case is a rule established at E-rate’s inception that requires providers to set rates for schools and libraries at the lowest prices offered to comparable customers. The theory was that bargain rates would help schools in less-wealthy areas provide their students with access to the Web. An investigation in 2012 by ProPublica found that the preferential pricing rule had been widely neglected by AT&T and the Federal Communications Commission, which oversees the program. The result was that many schools were paying more than the program’s framers envisioned, draining the federal fund and limiting the reach of the subsidies.

AT&T said then, and reaffirmed recently, that it complies with the requirement that it charge such customers what is known as the “lowest corresponding price.” In 2014 a DC district court judge granted the company’s request to toss out the national suit, on grounds that Heath’s Wisconsin action meant the follow-on case shouldn’t qualify for whistleblower status. But on June 23, the DC Court of Appeals reversed that decision. Heath said he was “pleased that the case is going to move forward and I’m looking towards to the discovery phase,” where he seeks access to AT&T documents.