BLUE JAY WIRELESS TO PAY $2 MILLION, ENDING INVESTIGATION INTO ITS TRIBAL LIFELINE REIMBURSEMENTS IN HAWAII

News Release from FCC

WASHINGTON, July 15, 2016 – The Federal Communications Commission’s Enforcement Bureau today announced that it has reached a settlement with Blue Jay Wireless to resolve an investigation into whether the company improperly enrolled several thousand Hawaiian customers as eligible for enhanced Tribal support reimbursements from the FCC’s Lifeline program.

The Lifeline program provides a discount on phone service so that low-income consumers have access to the communications tools necessary to connect with jobs, family, and emergency services. Qualifying low-income consumers who reside on Tribal lands, which include Hawaiian Home Lands in the State of Hawaii, are eligible for higher support from the Lifeline program (up to an additional $25 per month). Under the settlement, Blue Jay will reimburse the Universal Service Fund approximately $2 million and adopt substantial compliance procedures.

“The Lifeline program is vital to millions of consumers in cities, rural areas, and tribal lands who rely upon it every day to connect with loved ones, interview for jobs, and contact emergency services,” said Enforcement Bureau Chief Travis LeBlanc. “This settlement makes clear that no Lifeline provider should turn a blind eye to potential fraud on the program.”

The Enforcement Bureau’s Universal Service Fund Strike Force conducted the investigation of Blue Jay, which is headquartered in Texas and is eligible to participate in Lifeline in 17 states and Puerto Rico. The investigation found that Blue Jay had incorrectly requested and received Lifeline Tribal reimbursements for enrolled consumers who did not reside on Hawaiian Home Lands.

In 2014, Hawaii Public Utilities Commission staff informed Blue Jay that the number of Tribal consumers it was claiming appeared to exceed the number of households on Hawaiian Home Lands. Despite knowing that Blue Jay could be improperly claiming enhanced Tribal support reimbursements, Blue Jay continued to seek reimbursement for those improper consumers while it sought to gather more accurate information about its Hawaiian Home Lands Tribal consumers.

Today’s settlement ensures a total of $2,002,000 in reimbursements by Blue Jay to the Universal Service Fund, including the company’s forfeiture of $918,010 in Lifeline disbursements that the Commission has already frozen. Blue Jay also will develop and implement a compliance plan to ensure appropriate procedures are incorporated into its business practices to prevent the enrollment of ineligible Tribal consumers, including the use of an approved software tool to identify and verify the accuracy of consumers’ self-certification of their residency on Tribal Lands.

Last year, the Commission sought public comment on whether to require additional evidence of residency on Tribal lands beyond self-certification and how carriers should provide proof of eligibility to prevent waste, fraud and abuse of enhanced support.  More information can be found here: http://go.usa.gov/xcHNT.

This is the second Lifeline enforcement action this year. In April, the Commission announced that it planned to fine Total Call Mobile $51 million for apparently enrolling tens of thousands of ineligible and duplicate consumers in the Lifeline program.  A copy of the Total Call Mobile Notice of Apparent Liability can be found here: http://go.usa.gov/xcH5R.

Today’s Consent Decree with Blue Jay Wireless can be found here: https://apps.fcc.gov/edocs_public/attachmatch/DA-16-790A1.pdf.

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Blue Jay Closes FCC Investigation With Commitments To Preserve And Protect The Integrity Of The Lifeline Program

News Release from Blue Jay Wireless

DALLAS, July 15, 2016 -- Today, Blue Jay entered into a settlement and consent decree with the Federal Communications Commission's Enforcement Bureau that closes an investigation and an audit appeal involving the company's provision of Lifeline services to eligible subscribers in Hawaii. The settlement memorializes Blue Jay's process for verifying self-certifications of subscribers seeking the enhanced Lifeline benefit available to residents of Hawaiian Home Lands, which included voluntarily building its own geo-mapping tool.

In a recently concluded audit, USAC concluded that this process was "conservative to the Fund" because FCC rules require only applicant self-certification. The settlement also allows Blue Jay to make good on a prior commitment to "make the Fund whole" for enhanced  Lifeline benefits provided based on self-certifications of residency on Hawaiian Home Lands that were later determined by Blue Jay to be inaccurate.

Blue Jay CEO David Wareikis explained that "Blue Jay made the commitment to make the Fund whole because it did not want to be seen as benefiting in any way from erroneous self-certifications made by subscribers." Wareikis also noted that the agreement reached "contains no finding or admission of wrongdoing by Blue Jay, and affirms Blue Jay's good standing as an ETC." In addition, he explained that "the financial terms of the settlement do not involve a fine or a civil penalty, and instead allow Blue Jay to reduce its future payments from the Fund."

Blue Jay is pleased to have successfully concluded this FCC inquiry and USAC audit in this manner and acknowledges the cooperation of the Enforcement Bureau, Wireline Competition Bureau and USAC in bringing the investigation and the audit appeal to closure in a manner that preserves and protects the Lifeline program and avoids potential litigation. Mr. Wareikis further affirmed, "Blue Jay is committed to leading the industry in compliance and self-regulates to maintain the highest standards of compliance across all aspects of its business."

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JDSupra: Tribal Enrollment Inquiry Leads to $2 Million FCC Settlement with Blue Jay Wireless

SA: Errors cost wireless provider $2M  -- “Former PUC Commissioner Carl Caliboso, now a private attorney with Yamamoto Caliboso, had also questioned the company’s practices in a letter to the PUC in November 2014. He pointed out that 2010 U.S. census data listed 7,294 households living on Hawaiian homelands. However, in the first six months of 2014, Blue Jay Wireless had signed up about 11,000 customers who claimed to reside on Hawaiian homelands.  Only one Lifeline subsidy is allowed per household.”

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