Wisconsin Bell to Pay $55 Million to Settle False Claims Act Allegations

AT&T subsidiary Wisconsin Bell Inc. has agreed to pay $55 million to resolve allegations that it systematically overcharged schools and libraries for telecommunications and information services, violating the False Claims Act in its dealings with the Federal Communications Commission.

The settlement, which includes $25 million in attorneys’ fees, was announced Wednesday when Judge Lynn Adelman of the US District Court for the Eastern District of Wisconsin administratively closed the case. The agreement still requires formal approval from the federal government before it becomes final.

This resolution encompasses not only the Wisconsin case but also extends to similar claims pending in the US District Court for the District of Columbia in United States ex rel. Heath, according to court documents.

The case stems from allegations that Wisconsin Bell, operating under AT&T’s corporate umbrella, improperly inflated charges to educational institutions and libraries participating in the FCC’s E-Rate program. The E-Rate program was established as part of the Telecommunications Act of 1996 to provide discounted telecommunications services to schools and libraries, particularly those in disadvantaged or rural communities.

Under the program’s regulations, service providers are required to offer these institutions their lowest available rates. The lawsuit alleged that Wisconsin Bell failed to comply with this requirement, instead charging premium rates that depleted limited federal funds intended to bridge the digital divide in education.

The settlement comes after years of litigation that began when whistleblowers filed qui tam lawsuits alleging the telecommunications giant had knowingly submitted false claims to the government. Under the False Claims Act, private citizens can file suits on behalf of the government and receive a portion of any recovered funds.

Telecommunications industry analysts note that this settlement represents one of the larger resolutions involving E-Rate program fraud. The case highlights ongoing concerns about compliance within the $4.1 billion annual program that serves as a lifeline for connectivity in underserved educational settings.

“This settlement sends a clear message about the government’s commitment to protecting programs designed to expand digital access in education,” said an attorney familiar with telecommunications regulation who requested anonymity to speak freely about the case. “With schools increasingly dependent on reliable internet services for education delivery, ensuring the integrity of programs like E-Rate is more important than ever.”

The Wisconsin Bell case is part of a broader pattern of scrutiny faced by major telecommunications providers participating in government subsidy programs. In recent years, the FCC has intensified its oversight of E-Rate and similar initiatives as digital infrastructure becomes increasingly critical to educational outcomes.

For AT&T, one of the nation’s largest telecommunications companies with a market capitalization exceeding $100 billion, the settlement represents a significant resolution of legacy liability. The company has been working to streamline operations and focus on core business areas, with this settlement removing one outstanding legal contingency.

The resolution also comes at a time when schools and libraries nationwide continue to struggle with technology budgets amid rising costs for essential services. Education advocates have long argued that telecommunications companies should be held accountable for providing fair pricing to these institutions, which often operate under tight budget constraints.

The case will formally conclude once the settlement receives final approval from the federal government, which typically reviews such agreements to ensure they adequately protect the government’s interests and provide appropriate compensation for the alleged violations.

Neither AT&T nor Wisconsin Bell has publicly admitted wrongdoing as part of the settlement, which is common in such resolutions. The telecommunications giant continues to be one of the largest providers of services to educational institutions across the country.