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January 14, 2015 Contractor Fraud

Verizon to Pay $1.3 Million to Settle Allegations of Overcharging for Services

Contract fraud is one of the most common issues addressed by the False Claims Act, and it can be found in virtually any industry. In today’s case, we explore a recent settlement between Verizon New England, Inc. and the Commonwealth of Massachusetts involving overcharges for services pursuant to lucrative contracts with the New York-based telecommunications provider.

The allegations arose after several whistleblowers began noticing billing discrepancies involving the service provider, and brought the issue to the attention of the Massachusetts Attorney General’s Office, which launched its own investigation into the matter.

Details of case against Verizon New England, Inc.

Headquartered in New York City, Verizon New England, Inc. is an offshoot of the Verizon corporation responsible for handling the telecommunications and wireless needs of customers in the northeastern United States. The company engaged in a contract with the Commonwealth of Massachusetts for the provision of telephone services to various state agencies. Under the terms of the procurement contract, the company must adhere to specific rates when charging the Commonwealth for its services – and it is not permitted to overcharge or inflate its charges for any reason.

According to the allegations, for a period spanning from September 2006 through October 2012, Verizon repeatedly submitted invoices for telephone services which included rates that were above the agreed-upon rate formula in the procurement contract. These overcharges included fees for “local calling usage, regional toll service, flat rate business lines, flat rate trunks, and business listings.”

The settlement not only involves major state agencies, but local towns and municipalities, as well. Following the $1.3 million settlement, the Attorney General’s office will be contacting any entities believed to have been targeted by the fraud in order to offer a share of the settlement.

The case was commenced by a whistleblower familiar with the billing practices of the defendant. However, his identity – and any share of the settlement – have not been disclosed at this time.

The settlement resolves a Massachusetts False Claims Act lawsuit pending in Hampshire Superior Court. The defendant has not admitted any liability in the matter. In fact, in a statement, Verizon New England, Inc. reiterated, “We have a long history of providing reliable, cost-efficient services and promptly addressing issues that can arise under agreements as complex and wide-ranging as the state’s blanket contracts.”

History of fraud

Verizon New England has been met with several other fraud allegations in the past. In December 2011, the company paid $800,000 to the Commonwealth of Massachusetts – in addition to a $1.5 million refund to customers – after a finding that the company overcharged cities and towns within the Commonwealth for basic telephone services. Again, Verizon blamed the matter on a “systemic billing error” and did not admit any liability in the matter.

Contact Berger Montague today

For more information about contract fraud, or to discuss whether you have a possible case for fraud, we encourage you to contact Berger Montague right away. We can help you with your federal or state law issue and look forward to hearing from you today.