The UC system will receive $8.6 million from Verizon Communications Inc. and AT&T Inc. after a settlement was reached over a whistleblower’s allegation that the two companies were overcharging California state contractors.
The settlement, approved Thursday by a California court, will require Verizon to pay $68 million and AT&T $48 million to local government users in California, including the UC Board of Regents and CSU Board of Trustees, according to a press release from Constantine Cannon LLP, the law firm that represented the whistleblower and government plaintiff.
“UC was one of the California subdivision plaintiffs and stands to receive $8.6 million,” said UC Office of the President spokesperson Stett Holbrook in an email. “Once received, the funds will be returned to the locations in proportion to their use of the cellular services.”
In 2012, OnTheGo Wireless LLC claimed that companies were overcharging California state institutions, including the UC system and the CSU system, using plan rate comparison software.
According to Constantine Cannon attorney Anne Hartman, when large organizations sign cellular contracts with “rate plan optimization,” telecommunications companies monitor cellular usage by organizations each quarter and adjust payment plans accordingly.
California’s contract with AT&T and Verizon included one such clause, but the whistleblower alleged that the companies did not respect it. As a result, the government purchasers, including the UC system, were overcharged, Hartman alleged.
The alleged overcharging was not limited to AT&T and Verizon. Sprint and T-Mobile USA Inc. have already agreed to pay a combined $9.6 million.
“We complied with our contracts and the law, and we deny any wrongdoing,” said AT&T spokesperson Jim Greer in an email. “However, nearly eight years after the suit was filed, the parties have decided to settle rather than continue costly and time-consuming litigation.”
Verizon spokesperson Rich Young also denied wrongdoing, and alleged in an email that “an outside party took advantage of the False Claims Act.” He added that Verizon “settled these meritless claims to avoid a protracted legal battle that would only have benefitted the plaintiff and his attorneys.”
Hartman said she was “very satisfied” with the results of the settlement.
“It eliminates the risk of having to go to trial,” she said. “It overall is a really good outcome. … We do think we got the maximum recovery for the government entities.”
According to Hartman, California will extend the existing contracts with the telecommunications companies, but the contracts will no longer include the rate optimization term.
Hartman added that the defendants will pay within the next month and that Constantine Cannon will get the money to the government entities as soon as possible.
“I certainly hope that this litigation might bring light to the availability of options for government purchasers and that they work with telecommunications expense management firms,” Hartman said. “Many of them already do so.”
Contact Catherine Hsu and David Villani at [email protected].