Pittsburgh Review

Butler, Pennsylvania-based Armstrong Group has agreed to pay $6.5 million to resolve allegations that it violated the False Claims Act by knowingly breaching the Federal Communications Commission’s (FCC) rules governing the agency’s High-Cost Program and submitting improper costs to inflate subsidies received from the federal Universal Service Fund (USF).

The FCC established the USF to ensure nationwide access to rapid, efficient communications services at reasonable charges. The High-Cost Program, one of four programs within the USF, aims to provide modern communications networks in rural, insular, and high-cost areas at rates comparable to urban regions. This program provides federal funds to qualified eligible telecommunications carriers, including incumbent local exchange carriers (ILECs), for expanding connectivity infrastructure in the United States.

The United States alleged that between 2008 and 2023, five ILECs owned by Armstrong Group—Armstrong Telephone Company – Maryland, Armstrong Telephone Company – New York, Armstrong Telephone Company – Northern Division, Armstrong Telephone Company – Pennsylvania, and Armstrong Telephone Company – West Virginia—failed to comply with FCC regulations on allowable costs for subsidy claims. Consequently, these companies received greater subsidy payments than entitled.

“Telecommunications providers that seek to participate in important FCC programs like the High-Cost Program must comply with applicable rules,” said Principal Deputy Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “Today’s settlement demonstrates our continuing commitment to protect the integrity of the FCC’s operations and services.”

“When providers like the Armstrong Group fail to follow federal law and FCC regulations, they jeopardize not only critical government programs but also consumers’ ability to access a modern lifeline,” said U.S. Attorney Eric G. Olshan for the Western District of Pennsylvania. “Today’s settlement demonstrates our office’s dedication to ensuring fair play in business practices involving public funds.”

“In this digital age, reliable high-speed broadband is critical everywhere,” said General Counsel Michele Ellison for the FCC. “We are focused on pursuing waste, fraud, and abuse in these critical programs.”

“Carriers receiving support from any FCC benefit program must understand that actions undermining claims processes will be investigated vigorously,” said Inspector General Fara Damelin of the FCC.

Alongside this civil settlement, Armstrong Group has entered into a corporate compliance agreement with the FCC requiring internal control changes and comprehensive oversight mechanisms.

The civil settlement resolves claims brought under qui tam or whistleblower provisions of the False Claims Act by James Ranko, former Controller of Armstrong Group. Under these provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Ranko v. Armstrong Group of Companies et al., Case No. 17-1052 (W.D.Pa.). The whistleblower will receive $1,267,500 as his share.

This resolution resulted from coordinated efforts between several entities including Senior Trial Counsel Benjamin C. Wei and Assistant U.S. Attorney Paul E. Skirtich for Western District of Pennsylvania; Investigative Attorneys Elliot Lowenstein and Peter Feinberg from FCC Office of Inspector General provided investigative support.

The claims resolved by this settlement are allegations only; there has been no determination of liability.