AG Racine Announces AT&T To Pay $1.5 Million for Overcharging District Government for Telecom Services

WASHINGTON, D.C. –  Today, Attorney General Karl A. Racine announced that AT&T Mobility National Accounts LLC (AT&T) agreed to pay $1.5 million for its failure to comply with its long-term contract with the District for cell phone and internet services and, as a result, overcharging District taxpayers by millions of dollars.

Today’s settlement resolves a lawsuit by the Office of the Attorney General (OAG) against AT&T for allegedly submitting false invoices that did not comply with contract requirements to provide cost optimization and the most cost-effective telecommunications plans available.  Instead, AT&T knowingly invoiced the District for features, add-ons, and other services that failed to comport with this mandate, causing millions in improper charges that were paid with taxpayer funds. OAG alleged AT&T violated the District’s False Claims Act (FCA) through its actions. After OAG filed a complaint in February, AT&T agreed to pay $1.5 million to resolve the suit.

“My office filed suit against AT&T to ensure that it fulfilled its contractual obligation to provide the District government with the least expensive cell phone and data services available. We are pleased that after filing suit, AT&T immediately sought to resolve the case in a manner that results in making the District and its taxpayers whole.” 

The District entered into a contract with AT&T in August 2012 which included wireless voice and broadband services, accessories, and equipment. The contract’s key purpose was to ensure that the District’s and other governmental entities’ plans and prices were the most cost-effective and lowest available. 

OAG’s complaint alleged AT&T violated the FCA by failing to:

  • Produce quarterly price optimization reports: Price optimization reports—which analyze all available services and all users’ activities to determine how an entity could save money—area common device in the telecommunications industry and are known to save customers 20-30% on wireless services. AT&T agreed to provide these reports on a quarterly basis but failed to do so. Instead, AT&T provided an array of other reports using similar and misleading phrases like “plan optimization” and “rate plan analysis.” This made it appear as though it was complying with the contract, even though the reports did not include the data or information necessary to evaluate the cost-effectiveness of the contracted services.
  • Offer standardized base rate plans: District entities receiving AT&T’s services were charged widely varying amounts for rate plans, data, and add-ons, even though AT&T agreed to provide standardized plans. Because AT&T did not standardize its plans, the District was forced to identify overcharges on each invoice or user line and demand credit on an ad hoc basis. Some users were set up without a data plan, resulting in thousands of dollars of overages when data was used on their device. 
  • Provide the District with the lowest cost available for these services: AT&T knew that failing to provide both quarterly price optimization reports and the standardized plans under the contract would violate its agreement to provide services at the lowest cost available and result in overbilling to the District, yet it continued this unlawful practice.

A copy of the complaint is available here.

A copy of the settlement agreement is available here.