BUTLER, PA — The Armstrong Group, based in Butler, Pennsylvania, has agreed to a $6.5 million settlement to resolve allegations that it violated the False Claims Act. The company was accused of knowingly violating Federal Communications Commission (FCC) rules governing the High-Cost Program and submitting improper costs to inflate subsidies received from the federal Universal Service Fund (USF).
The USF, established by the FCC, aims to ensure that all Americans have access to rapid, efficient nationwide communications services at reasonable charges. The High-Cost Program, one of four programs within the USF, provides federal funds to qualified telecommunications carriers to expand connectivity infrastructure in rural, insular, and high-cost areas, ensuring these consumers have access to modern voice and broadband services at comparable rates to urban areas.
The United States alleged that from 2008 to 2023, five incumbent local exchange carriers (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 governing cost reporting for subsidy claims, resulting in greater subsidy payments than entitled.
Principal Deputy Assistant Attorney General Brian M. Boynton emphasized the importance of compliance with FCC rules by telecommunications providers participating in the High-Cost Program. U.S. Attorney Eric G. Olshan for the Western District of Pennsylvania highlighted the impact of such non-compliance on critical government programs and consumers’ access to essential telecommunications services.
FCC General Counsel Michele Ellison stressed the necessity of reliable, high-speed broadband access for all, particularly in rural and underserved areas. She praised the collaboration among the Office of General Counsel, the Office of the Inspector General, and the U.S. Department of Justice in addressing waste, fraud, and abuse in these programs. Inspector General Fara Damelin of the FCC reiterated the commitment to investigating and ensuring the integrity of FCC programs.
In addition to the financial settlement, Armstrong Group has entered into a corporate compliance agreement with the FCC. This agreement mandates significant changes in the company’s internal controls and the implementation of comprehensive oversight and monitoring mechanisms.
