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

On July 15, the FCC issued an Order approving a consent decree between Blue Jay Wireless and the FCC’s Enforcement Bureau, ending the Bureau’s investigation into whether Blue Jay’s Tribal Lifeline enrollments in Hawaii from November 2013 through August 2014 violated Lifeline program rules.

Under the FCC’s rules, ETCs can claim an additional $25 for eligible consumers living on Tribal Lands, which include Hawaiian Home Lands.  However, this support is subject to numerous conditions, including self-certification by the customer that he or she resides on qualifying Tribal Lands.  The FCC opted to rely on self-certification in its 2012 Lifeline Reform Order, citing the “consensus among ETCs and Tribes that Tribal addresses are often difficult, if not impossible, to determine, and that requiring ETCs to document Tribal residency would significantly undermine the goal of increasing access to telecommunications services on Tribal lands by discouraging carriers from serving Tribal communities.”  But in its June 2015  Order and NPRM, the FCC sought comments on whether to require evidence of residency on Tribal lands beyond self-certification, and on whether the burden of confirming Tribal residency should fall upon the Lifeline provider, rather than the subscriber.

According to the Order, in response to the high number of consumers reporting addresses on Hawaii Home Lands, the Enforcement Bureau’s “USF Strike Force” conducted an extensive investigation into whether the company was complying with the rules.  The consent decree brings the Enforcement Bureau’s investigation to a close.  It also affirms Blue Jay’s ability to continue participating in the Lifeline program, through which Blue Jay serves 17 states and Puerto Rico.  Under the terms of the consent decree, Blue Jay will pay over $2 million to the Universal Service Fund in reimbursement, although this number includes the company’s forfeiture of $918,010 in Lifeline funding that had already been frozen by USAC and $258,990 that Blue Jay had voluntarily restored to the Fund earlier.  Blue Jay will also develop and implement a compliance plan and adjust operating procedures to prevent enrollment of ineligible Tribal consumers.  The revised operating procedures, according to the Order, will include the use of a USAC-approved software tool to identify and verify the accuracy of consumers’ self-certification of their residency on Tribal Lands.  The consent decree notes that even before the FCC’s initial Letter of Inquiry (LOI) was issued, Blue Jay had voluntarily developed a geo-mapping tool and a process to verify subscriber self-certifications of residency before the FCC’s investigation, and had begun using that tool for new Hawaii enrollments by June 2014.

In the FCC’s press release concerning the consent decree, Enforcement Bureau Chief Travis LeBlanc commented that the Blue Jay “settlement makes clear that no Lifeline provider should turn a blind eye to potential fraud on the program.”  Blue Jay has issued its own press release, highlighting the company’s voluntary compliance efforts and noting that the consent decree contains “no finding or admission of wrongdoing by Blue Jay.

The consent decree is the latest example of heightened FCC enforcement activity.  Earlier this year, the FCC imposed a $51 Million fine on Total Call Mobile for allegedly enrolling tens of thousands of ineligible and duplicate consumers in the Lifeline program.

Although the consent decree ends the Enforcement Bureau’s investigation of Blue Jay, further FCC Lifeline enforcement activity is possible.  In a separate statement, Commissioner Ajit Pai stated that Blue Jay Wireless was among several companies he was investigating in his campaign to expose fraud and abuse. In the statement, Pai explained, “Today’s consent decree with Blue Jay Wireless for improperly receiving Lifeline subsidies confirms that the FCC’s Lifeline program still contains waste, fraud, and abuse.  I can confirm that Blue Jay Wireless is one target of my ongoing investigation and that I flagged further suspicious conduct for the Enforcement Bureau’s investigation earlier this year.”