A recent but growing threat for communications providers comes from investigations into the underpayment of 911 surcharges or fees. 911 fees are often calculated based on the number of active lines a provider offers to a customer. However, starting with the adoption of PBXs by traditional telephone providers and continuing with the transition to VoIP and virtual PBXs by modern communications providers, the calculation of 911 fees has not always been straight forward, and jurisdictions often establish fee ratios for technologies that can support multiple telephone numbers using a single line, such as a PBX or virtual PBX.
A private plaintiff, Phone Recovery Services, LLC (“PRS”), has initiated a number of state and local False Claims Act lawsuits, including lawsuits in Illinois, Pennsylvania, Rhode Island, Massachusetts, and the District of Columbia. The lawsuits allege that communications providers, including upstart VoIP providers and some of the largest LEC and CLEC telephone providers, have been underreporting 911 fees for years by misclassifying the services they provide to multi-line business customers. PRS claims these communications providers classify multi-line-capable services in such a way to reduce the number of lines the provider reports for the customer, therefore reducing the 911 fees the provider must collect.
More recently, local jurisdictions have started their own investigations, but PRS (or its counsel) appears to be assisting local jurisdictions in these investigations. These investigations often begin with a county propounding information requests on providers. Local jurisdictions have been most active in Pennsylvania, with at least six counties filing either a Writ of Summons or initiating an investigation into underpayment of 911 fees. In some counties, more than 100 defendants have been named in a Writ of Summons. In Pennsylvania, a Writ of Summons allows a party to file a lawsuit without filing a complaint in order to toll the statute of limitations while the filing party determines how to proceed.
If your company receives notice of a 911 fee investigation or is named in a 911 lawsuit, including receipt of a Writ of Summons, the company should immediately contact telecommunications counsel. If you’d like more information about the recent spate of 911 lawsuits, please contact Allison D. Rule at adr@commlawgroup.comor Michael P. Donahue at mpd@commlawgroup.com.
