Lawsuit Claims Wireless Companies Ripped Off State Entities for $100 Million

Wednesday, December 09, 2015

Wireless carriers in California have been sued for $500 million in a whistleblower lawsuit filed three years ago but just made public Monday when it was announced that 42 state entities inside and out of government had joined the action.

The newly-unsealed lawsuit (pdf), filed by OnTheGoWireless in July 2012 in Sacramento County Superior Court, accused Sprint Nextel, Verizon Wireless, AT&T Mobility and T-Mobile of signing contracts in 2005 to provide wireless services optimized with the least-expensive rates available.

The contracts stipulated that the carriers were supposed to review customer usage numbers quarterly—to determine, for instance, if they were signed up for too few or too many minutes—and automatically shift the customers into proper-fitting plans.

The complaint says the companies “did not in fact provide this important and bargained for cost-cutting service as promised. Instead, they continued to falsely bill for their services as if they had optimized.”

Properly selecting a plan reportedly reduces costs between 20% and 30% over the term of a contract.

The state attorney general reportedly considered joining the lawsuit early on, but did not. Customers who did join include cities, counties, school districts, fire districts and the University of California. They purchased service for 400,000 phone lines for more than $1 billion. A number of other customers have chosen not to join the suit. The lawsuit’s Exhibit A lists hundreds of them.

Verizon spokesman John Johnson alluded to the state’s absence when he told the San Francisco Chronicle, “After an extensive two-year investigation, the California attorney general declined to intervene and prosecute this matter, further demonstrating that the case lacks any merit.”

The lawsuit alleges that customers were overcharged around $100 million, but the plaintiffs are asking for company records to reach a precise figure. If the suit is successful, the companies could be liable for triple damages under the California False Claims Act.  

“The carriers promised optimization in order to win these government contracts, which are worth billions of dollars,” said Anne Hayes Hartman, a partner at Constantine Cannon, the law firm filing the case. “But while they were happy to take the government's money, the carriers simply ignored their commitments to bill using the lowest cost rate plans. The carriers profited and taxpayers paid the price.”

OnTheGoWireless attorney Wayne Lamprey told the Chronicle that counties in the lawsuit include Marin, Santa Cruz, Stanislaus, Yuba, Sacramento, San Bernardino, Los Angeles, Orange, Madera and Riverside. Cities include San Mateo, Santa Rosa, Victorville, Sacramento and San Bernardino. San Francisco Unified School District and the San Francisco Bay Area Rapid Transit District are also on board.

There was no discussion in the media about applying the practice of quarterly reviews and optimized payment plans to individuals.

–Ken Broder


To Learn More:

Suit Claims Verizon, Other Mobile Carriers Overcharged Agencies (by Benny Evangelista, San Francisco Chronicle)

Big Wireless Companies Target of Whistleblower Suit (by Marisa Kendall, The Recorder)

Forty-Two California Government Entities Join Whistleblower Suit Against Nation's Largest Wireless Carriers (PR Newswire)

Wireless Carriers Sued for $100 Million for Overcharging Customers (by Denver Nicks, Time)

UC Joins State Government Entities in Suing Wireless Providers (by Maxwell Jenkins-Goetz, The Daily Californian)

State of California v. Verizon Wireless et al (Sacramento County Superior Court) (pdf)

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