Federal Communications Commission FCC 18-9 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of DataConnex, LLC ) ) ) ) ) ) File No.: EB-IHD-15-00020296 NAL/Acct. No.: 201832080002 FRN: 0024163537 NOTICE OF APPARENT LIABILITY FOR FORFEITURE AND ORDER Adopted: January 30, 2018 Released: January 30, 2018 By the Commission: Chairman Pai and Commissioners Clyburn and Carr issuing separate statements. TABLE OF CONTENTS Heading Paragraph # I.  INTRODUCTION .................................................................................................................................. 1  II.  BACKGROUND .................................................................................................................................... 4  A.  Legal Framework ............................................................................................................................. 4  B.  Relevant Entities and Individuals ................................................................................................. 16  1.  DataConnex, LLC ................................................................................................................... 16 2.  Aptus Telecom, LLC ............................................................................................................... 19  3.  Healthcare Connect United, LLC ............................................................................................ 20  4.  Harrison & Howard Advisors, LLC ........................................................................................ 23  5.  Health Care Providers ............................................................................................................. 24  III. THE COMMISSION’S INVESTIGATION ........................................................................................ 25  A.  DataConnex’s Conduct Related to the Rural Health Care Program’s Competitive Bidding Process ........................................................................................................................................... 27  1.  DataConnex/Aptus Engaged in a Multiyear Financial Relationship with H&H/HCU .......... 32  2.  DataConnex Referred Healthcare Providers to HCU, and Was Then Awarded Contracts by Several Healthcare Providers that Retained HCU as Their Consultant ............. 35 3.  DataConnex/Aptus and HCU/H&H Coordinated Their Marketing Strategies, Cost Estimates, and Other Information Before a Form 465 Was Posted Apparently to Increase the Likelihood of Both Companies Winning Healthcare Providers’ Business ......... 44  4.  DataConnex/Aptus, in Concert with HCU/H&H, Apparently Violated the Rules Requiring Competitive Bidding ............................................................................................. 49 5.  DataConnex Apparently Made Payments to H&H Based Upon Contracts DataConnex Received from Healthcare Providers Represented by HCU ............................... 54 B.  DataConnex Issued Urban Rates That Were Apparently False, Misleading, or Otherwise Unsubstantiated or Were Based on Forgeries ................................................................................ 60 1.  DataConnex Received USF Payments Based on Urban Rate Letters That Were Supported by Apparently False and Forged Sales Quotes ...................................................... 62  2.  DataConnex’s Urban Rate Letters Apparently Misrepresented the Cost of Urban Telecommunications Services ................................................................................................. 67 Federal Communications Commission FCC 18-9 2 3. DataConnex Issued Urban Rate Letters Without Underlying Documents to Substantiate the Listed Rates ................................................................................................... 72 C. DataConnex Apparently Submitted Payment Requests to USAC That Were Based on Contracts Tainted by Violations of Applicable Rules and/or Were Based on Invalid Urban Rate Documentation and in so Doing Falsely Implied Compliance with Commission Rules ......................................................................................................................... 76 IV. DISCUSSION ...................................................................................................................................... 80 A. DataConnex Apparently Falsely Implied Compliance with the Rural Health Care Program Rules, and Acted Unreasonably and Unjustly When Requesting Payment for Services Rendered under Contracts that Undermined the Integrity of the Competitive Bidding Process ............................................................................................................................. 81 B. DataConnex Apparently Falsely Implied Compliance with the Rural Health Care Program Rules, and Acted Unreasonably and Unjustly, When Requesting Payment for Services Rendered Based on Apparently False, Forged, Misleading, and Unsubstantiated Urban Rate Documents .................................................................................................................. 93 V. PROPOSED FORFEITURE .............................................................................................................. 100 A. Proposed Forfeiture Amount for DataConnex’s Apparent Violations of the Commission’s Competitive Bidding Rules and Sections 254(h)(1)(A) and 201(b)’s of the Commuinications Act ................................................................................................................. 105 B. Proposed Forfeiture Amount for DataConnex’s Apparent Violations of the Commission’s Rules Governing Urban Rates and Sections 254(h)(1)(A) and 201(b) of the Communications Act ................................................................................................................... 108 VI. CONCLUSION .................................................................................................................................. 111 VII. ORDERING CLAUSES .................................................................................................................... 114 APPENDIX A – Payments Made by DataConnex to H&H Advisors APPENDIX B – FY2016 FRNs Supported by Apparently Forged Jackson Zoo and Hardee’s Restaurant Sales Quotes APPENDIX C – FY2016 FRNs Supported by ACC Sales Quotes as Urban Rate Documents APPENDIX D – Payment Requests Charged APPENDIX E – Overview of Urban Rate Letters Supported by ACC Sales Quotes APPENDIX F – Overview of Relevant Entities and Individuals APPENDIX G – Examples of DataConnex’s Urban Rates and True Cost of Urban Services I. INTRODUCTION 1. The federal Rural Health Care Program (RHC Program) ensures that eligible rural healthcare providers have access to telecommunications necessary to their delivery of essential health care services to families and individuals living and working in rural and remote parts of the country.1 Through this program, the Commission facilitates the availability of cutting edge medical services to rural communities, including broadband and high-speed telecommunications services and internet connectivity.2 Parties that defraud or otherwise harm the RHC Program not only deprive the program of much-needed funds, but also potentially harm millions of rural Americans, who may end up paying more for necessary medical services or forgoing them altogether. 2. From at least 2014 through the present, DataConnex, LLC (DataConnex), a reseller of telecommunications services, received millions of dollars from the RHC Program’s Telecom Program to 1 See 47 U.S.C. §§ 254(h)(1)(A), (h)(2)(A). 2 The RHC Program includes two subprograms: the Telecommunications Program (Telecom Program) and the Healthcare Connect Fund (HCF). While the NAL references the RHC Program generally, the apparent rule violations at issue in this NAL concern the Telecom Program. See infra Sections III, IV, V; see also 47 CFR §§ 54.603, 54.605, 54.609, and 54.615. Federal Communications Commission FCC 18-9 3 which it was apparently not entitled. DataConnex’s apparently wrongful conduct includes, but is not limited to: • engaging in an undisclosed multiyear financial relationship with a RHC Program consultant through which DataConnex gained an unfair advantage in the competitive bidding process; • steering healthcare providers to this RHC Program consultant and paying more than $200,000 to a company owned by the consultant over a two-year period during which time DataConnex received dozens of contracts from healthcare providers represented by this same consultant; • making monthly payments ranging from $250 to $2,000 to a company owned by the RHC Program consultant which were directly tied to six contracts DataConnex was awarded by healthcare providers represented by the same consultant; • reaching agreements in principle with the RHC Program consultant that healthcare providers would award the contract to DataConnex before the required competitive-bidding period ended; • using documents containing forged, false, misleading, and unsubstantiated information, including material misrepresentations, to increase its receipt of payments from the Telecom Program; and • submitting payment requests based upon service contracts tainted by violations of the Commission’s competitive bidding and urban rates rules and in so doing falsely implying compliance with Commission rules. 3. In this Notice of Apparent Liability for Forfeiture and Order (NAL), we find that DataConnex apparently willfully and repeatedly engaged in conduct which undermined the competitive bidding process, and relied on apparently forged, false, misleading, and unsubstantiated documents to support its claims for payment from the Universal Service Fund (the Fund or USF). As a result, and after an extensive and comprehensive investigation (the Investigation),3 we propose a forfeiture penalty of $18,715,405. The forfeiture penalty we propose here reflects the seriousness, duration, egregiousness, and scope of DataConnex’s multiple apparent violations. The Commission further orders DataConnex to submit a report within 30 days of this NAL addressing why the Commission should not begin proceedings to revoke its Commission authorizations. II. BACKGROUND A. Legal Framework 4. Before discussing DataConnex’s apparent violations, we first describe the RHC Program’s legal framework. As noted above, the RHC Program provides financial support to eligible rural healthcare providers so that all health care facilities—regardless of whether they are located in a rural or urban area—can implement the modern telecommunications systems that are vital to 21st century medical care.4 The Telecom Program is part of the Commission’s RHC Program and is paid for through 3 During this Investigation, the Enforcement Bureau interviewed witnesses, including healthcare providers’ executives and IT personnel involved in the procurement of telecommunication services from DataConnex, as well as consultants who represented healthcare providers that received telecommunications services from DataConnex through the Telecom Program. The Enforcement Bureau also reviewed tens of thousands of documents and analyzed data obtained from USAC, DataConnex, Aptus Telecom, Harrison & Howard Advisors, Health Care Connect United, other RHC Program consultants, healthcare providers, financial institutions, underlying service providers, and other third parties. 4 See Federal-State Joint Board on Universal Service, Report and Order, 12 FCC Rcd 8776, 8796, para. 35 (1997); see also 47 CFR § 54.602. Federal Communications Commission FCC 18-9 4 the Universal Service Fund (USF).5 Through the Telecom Program, eligible rural healthcare providers can obtain rates for supported services that are no higher than the highest tariffed or publicly available commercial rate for a similar service in the closest city in the state with a population of 50,000 or more people.6 Support payments from the Fund related to the Telecom Program are calculated as the difference between the rural rate (the rate for telecommunication services provided to healthcare providers in rural areas, which is generally more expensive) and the lower urban rate (the rate for commercial customers, other than health care providers, in nearby urban areas, which is generally less expensive).7 5. Competitive Bidding. Through the RHC Program, healthcare providers may apply for USF support for eligible services only by making a “bona fide” request for services from telecommunications carriers, seeking competitive bids for services eligible for support, and following any other applicable state, local, or other procurement requirements.8 The competitive bidding requirement is a significant safeguard to protect the RHC Program and USF from waste, fraud, and abuse, and ensures that healthcare providers choose the most cost-effective bid so that USF funds are used wisely and efficiently.9 6. To make the required bona fide request for bids in the Telecom Program, healthcare providers prepare and transmit an FCC Form 465 (Form 465) to USAC, which USAC then posts on its website for telecommunications carriers to review.10 A healthcare provider submits one Form 465 per Funding Year (FY) for all services for which it is seeking bids through the Telecom Program.11 Each funding year begins on July 1 and ends June 30 of the next calendar year; for example, FY2017 runs from July 1, 2017 through June 30, 2018, and FY2018 begins on July 1, 2018. 7. Through the Form 465, healthcare providers describe the planned service requirements and may provide other information about their service needs to potential service providers.12 In response to the Form 465, interested service providers submit bids to the healthcare providers. Healthcare providers must review all bids submitted in response to the Form 465 and wait at least 28 days before 5 The RHC Program also includes the HCF which provides a 65 percent discount on eligible expenses related to broadband connectivity to both healthcare providers and consortia. See generally Rural Health Care Support Mechanism, Report and Order, 27 FCC Rcd 16678 (2012). Beginning in January 2014, rural healthcare providers receiving support for Internet access received support for these services through the HCF. See id. at para. 354. 6 47 CFR § 54.607. 7 47 CFR §§ 54.602, 54.609. See generally Rural Health Care Support Mechanism, Report and Order, Order on Reconsideration, and Further Notice of Proposed Rulemaking, 18 FCC Rcd. 24546 (2003) (2003 Order and Further Notice). 8 47 CFR §§ 54.602, 54.603, 54.615. 9 See In the Matter of Rural Health Care Support Mechanism, Order, 22 FCC Rcd. 20360, 20412, paras. 101-02. (2007). See also Federal-State Joint Board on Universal Service, Report and Order, 12 FCC Rcd. 8776, 9076, paras. 480, 686, 688 (1997) (requiring a competitive bidding processes for eligible schools and libraries and eligible health care providers requiring that descriptions of services be posted “so that potential providers can see and respond to them”). 10 47 CFR § 54.603; Health Care Providers Universal Service, Description of Services Requested and Certification Form, OMB 3060-0804 (July 2014) (Form 465); Form 465 Instructions, Rural Health Care Universal Service Mechanism, OMB-3060-0804 (July 2014). 11 Beginning January 1, 2017, rural healthcare providers may only submit FCC form data electronically through “My Portal,” the RHC Program’s online application management system. See Forms, http://www.usac.org/rhc/telecommunications/tools/forms/default.aspx (last visited Aug. 30, 2017). 12 See Form 465, Block 5; USAC, Rural Health Care, Telecommunications Program, Step 2: Evaluation Criteria & Service Requests, http://www.usac.org/rhc/telecommunications/health-care-providers/step02/default.aspx (last visited Oct. 31, 2016). Federal Communications Commission FCC 18-9 5 “making commitments” with the selected service provider.13 The earliest date on which healthcare providers can enter into agreements with the selected service provider, i.e., the 29th day after the Form 465 is posted, is known as the Allowable Contract Selection Date (ACSD). 8. Under the Commission’s Rules, healthcare providers must choose the most cost-effective service provider, which is the “method that costs the least after consideration of the features, quality of transmission, reliability, and other factors that the health care provider deems relevant to choosing a method of providing the required health care services.”14 Once the healthcare provider selects the most cost-effective service provider and enters into a service contract, the healthcare provider conveys this selection to USAC by filing an FCC Form 466 (Form 466), which also serves as the healthcare provider’s request for support payments from the USF.15 The applicant uses the Form 466 to verify the type of services ordered and to certify that the selected service provider is the most cost-effective option.16 9. Requesting Support. USAC uses the Form 466, along with the supporting documentation and information that applicants submit, to determine, among other things, the appropriate support payments from the Fund.17 Supporting documentation and information includes the rural and urban rates, the requested USF support amount, a copy of the signed contract (if applicable), and copies of bids (if more than one bid is received).18 The Form 466 and supporting documentation, including the urban rate documentation, is submitted electronically through USAC’s “My Portal” web-based application.19 Healthcare providers must submit one Form 466 for each service for which they are seeking support from the Fund.20 10. Determining the Urban and Rural Rates.21 The rural rate submitted by the healthcare provider, which is supposed to reflect the service provider’s average rate for the service,22 is substantiated by a monthly bill or invoice from the service provider with the type of service and the actual cost of the 13 47 CFR § 54.603(b)(3). 14 47 CFR § 54.603(b)(4). 15 See Health Care Providers Universal Service, Funding Request and Certification Form, OMB 3060-0804 (July 2014) (Form 466); Form 466 Instructions, Rural Health Care Universal Service Mechanism, OMB-3060-0804 (July 2014) (Form 466 Instructions). 16 See 47 CFR § 54.603(b)(4); see also Form 466. 17 See Form 466; USAC, Rural Health Care, Telecommunications Program, Health Care Providers, Step 4: Submit Funding Requests, http://www.usac.org/rhc/telecommunications/health-care-providers/step04/default.aspx (last visited Oct. 31, 2016). 18 See Form 466; USAC, Rural Health Care, Telecommunications Program, Health Care Providers, Documentation, http://www.usac.org/rhc/telecommunications/health-care-providers/documentation.aspx (last visited Oct. 31, 2016). 19 See USAC, Rural Health Care, Telecommunications Program, My Portal, http://usac.org/rhc/tools/applicant- login/default.aspx (last visited Oct. 31, 2016). 20 See Form 466 Instructions. 21 The term “rate” refers to the entire cost of a service, end-to-end to the customer and does not refer to the cost of each element or sub-element of a telecommunications service. See 47 U.S.C. § 254(h)(1)(A). See also Federal- State Joint Board on Universal Service, Report and Order, 12 FCC Rcd. 8776, 9128-9, at paras. 674-5 (1997) (finding that “254(h)(1)(A) refers to ‘rates for services provided to health care providers’ and ‘rates for similar services provided to other customers,’ not rates for particular facilities or elements of a service.”) (emphasis in original). 22 More precisely, the rural rate is the “average of the rates actually charged to commercial customers, other than health care providers, for identical or similar services provided by the telecommunications carrier. . . in the rural area in which the health care provider is located.” 47 CFR § 54.607(a); see also id. § 54.607(b) (providing alternative means of calculating the rural rate, including one based on costs). Federal Communications Commission FCC 18-9 6 service for which funding is requested.23 Healthcare providers and service providers can obtain and use urban rates from several sources. One source is USAC’s website, which contains a list of acceptable urban rates.24 If a healthcare provider uses an urban rate other than one posted on USAC’s website, it must provide documentation of the urban rate, which may come from the service provider.25 The urban rate must be in use in an urban area in the healthcare provider’s state.26 Urban rate documentation may include tariff pages, contracts, signed letters on a service provider’s letterhead, rate pricing information from a service provider’s website, or similar documentation showing how the urban rate was obtained,27 and the date on the urban rate documentation should indicate that the rate is provided in the current funding year.28 Service providers are required to retain documents that support any urban rates they issue for at least five years.29 11. Evergreen Status. USAC then reviews each contract to determine whether it is eligible for “evergreen” status, which refers to a contract that covers more than one funding year. If USAC approves the contract for evergreen status, the healthcare provider would be exempt from having to engage in further competitive bidding for the remainder of the contract term.30 However, regardless of whether the healthcare provider receives evergreen status, it is required to apply for support annually by filing a Form 466.31 12. Funding. USAC reviews the applicant’s Form 466 with accompanying documentation and information, the service contract entered between the healthcare provider and service provider, and any competing bids. USAC then issues funding commitment letters (FCLs) informing the healthcare provider whether the application has been approved or denied.32 USAC may also request additional information before finalizing a decision. 23 See Form 466; Form 466 Instructions (“The [healthcare provider] must submit to [Rural Health Care Division] a bill, contract, service offer or letter from the telecommunications carrier, which clearly identifies the service, bandwidth, and cost for which support is requested.”); USAC, Rural Health Care, Telecommunications Program, Documentation, http://www.usac.org/rhc/telecommunications/health-care-providers/documentation.aspx (last visited Oct. 31, 2016). 24 See USAC, Rural Health Care, Telecommunications Program, Search Tools, Urban Rates Search, www.usac.org/rhc/telecommunications/tools/UrbanRates/search.asp (last visited Oct. 31, 2016). 25 See Form 466 Instructions, Block 6; USAC, Rural Health Care, Telecommunications Program, Health Care Providers, Documentation, http://www.usac.org/rhc/telecommunications/health-care-providers/documentation.aspx (last visited Oct. 31, 2016). 26 See 47 CFR § 54.605; see also Form 466 Instructions, Block 6; USAC, Rural Health Care, Telecommunications Program, Health Care Providers, Supporting Documentation, http://www.usac.org/rhc/telecommunications/health- care-providers/documentation.aspx (last visited Oct. 31, 2016). 27 See Form 466; USAC, Rural Health Care, Telecommunications Program, Health Care Providers, Documentation, http://www.usac.org/rhc/telecommunications/health-care-providers/documentation.aspx (last visited Oct. 31, 2016). 28 See USAC, Rural Health Care, Telecommunications Program, Health Care Providers, Frequently Asked Questions, Q9: What is acceptable documentation, guidelines for calculating urban rates, http://www.usac.org/rhc/telecommunications/faqs/default.aspx (last visited Oct. 31, 2016). 29 See 47 CFR § 54.619(d). 30 See USAC, Rural Health Care, Telecommunications Program, Health Care Providers, Evergreen Contracts, http://www.usac.org/rhc/telecommunications/health-care-providers/evergreen-contracts.aspx (last visited Oct. 31, 2016). 31 Id. 32 If USAC denies support or if the healthcare providers or service provider disagrees with the support amount as determined by USAC, either the healthcare providers and/or the service provider may file an appeal of USAC’s determination. See USAC, Rural Health Care, Telecommunications Program, Health Care Providers, Step 4: Submit (continued….) Federal Communications Commission FCC 18-9 7 13. When USAC approves the healthcare provider’s Form 466 and related materials, a healthcare provider submits an FCC Form 467 (Form 467) to notify USAC that the service provider has begun providing the supported service.33 A healthcare provider must submit one Form 467 for each Form 466 that the healthcare provider previously submitted to USAC.34 The Form 467 is also used to notify USAC when the applicant has discontinued the service or if the service was or will not be active during the Funding Year.35 14. Service Provider Invoicing. If USAC approves the Form 467, the healthcare provider and the service provider will then receive a copy of the Healthcare provider Support Schedule (HSS), which outlines the approved support amounts for each billing cycle.36 The service provider should then begin crediting the healthcare provider for the support amount (if it has not yet done so) and may begin to invoice USAC for the telecommunications services approved by USAC.37 15. The service provider then submits its payment requests to USAC through the My Portal application and electronically certifies that the information contained in the invoice is correct and that the healthcare provider was credited with the amount shown under “Support Amount to be Paid by USAC.”38 USAC reviews the invoice, and if approved, disburses funds to the service provider in accordance with the HSS.39 As explained below, the claims for payment in this case made certain representations about the services provided, and knowingly failed to disclose noncompliance with the Commission’s rules.40 In addition, we find that DataConnex apparently acted unjustly and unreasonably in violation of section 201(b) of the Act by requesting payment for services provided under an agreement that was tainted by violations of the Commission’s rules for competitive bidding and urban rates.41 B. Relevant Entities and Individuals 1. DataConnex, LLC 16. DataConnex, LLC (DataConnex) is a limited liability company, organized under the laws of Florida,42 and has an operational and financial presence in Mississippi.43 DataConnex holds itself out as a Competitive Access Provider/Competitive Local Exchange Carrier and as a reseller of telecommunications (Continued from previous page) Funding Requests, http://www.usac.org/rhc/telecommunications/health-care-providers/step04/default.aspx (last visited Oct. 31, 2016). 33 See Health Care Providers Universal Service, Connection Certification, OMB 3060-0804 (July 2014) (Form 467); Form 467 Instructions, Rural Health Care Universal Service Mechanism, OMB-3060-0804 (July 2014). 34 See id. 35 See id. 36 USAC, Rural Health Care, Telecommunications Program, Service Providers, Step 5: Support Schedule, http://www.usac.org/rhc/telecommunications/service-providers/step05/default.aspx (last visited Oct. 31, 2016). 37 USAC, Rural Health Care, Telecommunications Program, Service Providers, Invoicing, http://www.usac.org/rhc/telecommunications/service-providers/invoicing.aspx (last visited Oct. 31, 2016). 38 See id. 39 USAC, Rural Health Care, Telecommunications Program, Service Providers, Step 6: Invoice USAC, http://www.usac.org/rhc/telecommunications/service-providers/step06/default.aspx (last visited Oct. 31, 2016). 40 See Lazo Technologies, Inc. et al., Order on Reconsideration, 26 FCC Rcd 16661 (2011); Universal Health Services, Inc. v. U.S., 136 S.Ct. 1989, 2001 (2016). 41 47 U.S.C. § 201(b). 42 DataConnex Articles of Organization, Limited Liability Company (Oct. 6, 2014). DCX_00001749-51. 43 See Subpoena Response, Bank. Information on file in EB-IHD-15-00020296. Federal Communications Commission FCC 18-9 10 25% and 87% on telecommunication cost and we strive to get every client the maximum discount they can receive.”63 22. HCU was managed by Howard and Shawn Miles (Miles).64 Howard served as the Manager of HCU, and Miles served as the Vice President.65 Howard is also a practicing dentist who operates a general dentistry practice under the trade name Arrow Dental Care, which has two locations: (1) 3931 Mid Rivers Mall Drive, St. Peters, Missouri; and (2) 15623 Manchester Road, Suite 100, Ellisville, Missouri.66 According to Howard, HCU’s “principle [sic] address” was ,67 which is owned by Howard and also appears to be Howard’s home address.68 HCU’s website listed its location as the Ellisville, Missouri address from which Arrow Dental Care operates.69 A review of HCU’s bank records shows that Howard is the sole signatory on the bank accounts.70 4. Harrison & Howard Advisors, LLC 23. Harrison & Howard Advisors, LLC (H&H) was a limited liability company organized under the laws of Missouri.71 H&H filed a Notice of Winding Up and Dissolution with the Missouri Secretary of State on July 17, 2017, and appears to have ceased operations.72 H&H claimed to be “an advisory group that is driven to provide quality training, auditing, and form based compliance services” that acted as “the client’s full functional advisor.”73 Howard was the sole owner of H&H, having “acquired 100% of the membership units of H&H at the time of incorporation on January 1, 2015.”74 H&H’s “principle [sic] address” was , which is owned 63 Id. See also HCC United, Program Summary and Information (“We have experience in the Universal Service Fund Program and Telecom audits, acquiring discounts up to 70% and 96% on telecommunication cost and we strive to get every client the maximum discount they can receive.”). IBERIA-0035. 64 Shawn Miles is also known as Shawn Harrison. Response to Subpoena Duces Tecum Request, Federal Communications Commission, Office of Inspector General, Affidavit of Mathew Howard (May 11, 2017) (“Howard H&H Aff.”) at para. 5. 65 See, e.g., Email from Shawn Miles to Justin McMasters (July 14, 2015, 9:12 a m.) (citing Miles as Vice President of HCU). HH_03357. 66 Arrow Dental Care, http://www.arrowdentalcare.com/ (last visited on July 13, 2017). 67 Howard HCU Aff. at para. 1; Information on file in EB-IHD-15-00020296. 68 Information on file in EB-IHD-15-00020296. 69 Healthcare Connect United, Contact Us, http://hccunited.com/contact-us html (last visited on July 13, 2017). 70 Information on file in EB-IHD-15-00020296. 71 Howard H&H Aff. at para. 1. 72 See Notice of Winding Up and Dissolution (July 17, 2017). Information on file in EB-IHD-15-00020296. 73 DataConnex, Telecommunications Advisory Proposal (Mar. 17, 2015) (emphasis in original). See HH_00160- 00164. While H&H claimed that it “has been assisting Telecommunications companies, Healthcare Groups with regulatory licensing, registrations, audits, and compliance for over four years,” H&H did not exist until January 1, 2015 and it appears that its only client was DataConnex. See Howard H&H Aff. at para. 3; Harrison & Howard, Articles of Organization (Jan. 2, 2015). HH_000644. See also Subpoena Responses, Bank and Bank (reflecting no payments to H&H other than from DataConnex). Information on file in EB-IHD-15- 00020296. 74 Howard H&H Aff. at para. 3; Harrison & Howard, Articles of Organization (Jan. 2, 2015). HH_000644. See also Appendix F. Federal Communications Commission FCC 18-9 11 by Howard and also appears to be Howard’s home address.75 A review of H&H’s bank records reveals that Howard is the sole signatory on the bank accounts.76 5. Health Care Providers 24. A number of healthcare providers contracted for services from DataConnex through the Telecom Program and are referenced throughout the NAL: a. Iberia Comprehensive Community Health Center, Inc. (Iberia Comprehensive) and its satellites provide primary healthcare services in Iberia, Vermilion, St. Martin, Beauregard, Lafayette, Sabine and the surrounding parishes in Louisiana;77 b. Gulf Coast Mental Health Center (Gulf Coast) is a full-service community mental health center providing a wide range of services to the residents of Hancock, Harrison, Pearl River, and Stone Counties in Mississippi;78 c. Aaron E. Henry Community Health Services Center, Inc. (AEH) is a Federally Qualified Health Center (FQHC) with five locations in Mississippi.;79 d. Region One Mental Health Center (Region One) is a comprehensive mental health care provider that offers services in a four-county area in Mississippi, including Coahaoma, Quitman, Tallahatchie and Tunica counties;80 e. Community Counseling Services provides comprehensive behavioral health services at seven facilities in Mississippi;81 f. Access Family Health Services (Access Family) provides health care services at seven locations in Mississippi;82 g. Jackson Hinds Comprehensive Health Center (Jackson Hinds) provides comprehensive health service at 14 locations in Mississippi;83 h. Central Arkansas Radiation Therapy Institute (CARTI) is an independent, not-for-profit cancer care provider with 11 locations in Arkansas;84 i. Ocoee Regional Health Corporation (Ocoee) is a regional health center with six locations in Tennessee;85 j. Valley View Health Center (Valley View) is a non-profit, FQHC with 11 locations in 75 Howard H&H Aff. at para. 3; Information on file in EB-IHD-15-00020296. 76 Information on file in EB-IHD-15-00020296. 77 Iberia Comprehensive Health Center, Inc. http://icchc.org/ (last visited Sept. 27, 2017). 78 Gulf Coast Mental Health Center, https://www.gcmhc.com/ (last visited Sept. 27, 2017). 79 Aaron E. Henry Community Health Services Center, Inc., https://www.aehchc.org/index.php (last visited Sept. 27, 2017). 80 Region One Mental Health Center, http://www regionone.org (last visited Sept. 27, 2017). 81 Community Counseling Services, https://www.ccsms.org/ (last visited Sept. 27, 2017). 82 Access Family Health Services, http://www.accessfamilyhealth.com/ (last visited Sept. 27, 2017). 83 Jackson Hinds Comprehensive Health Center, https://www.jackson-hinds.com/ (last visited Sept. 27, 2017). 84 CARTI, http://www.carti.com/ (last visited Oct. 3, 2017). 85 Ocoee Regional Health Corporation, http://www.ocoeeregional.com/index html (last visited Oct. 3, 2017). Federal Communications Commission FCC 18-9 12 Washington state;86 k. Little River Medical Center (Little River) provides comprehensive medical, dental, and behavioral services through six locations in South Carolina;87 and l. River Valley Primary Care Services (River Valley) is a non-profit center that offers dental and medical services through seven locations in Arkansas.88 III. THE COMMISSION’S INVESTIGATION 25. During the Investigation, multiple witnesses were interviewed, including healthcare provider executives and IT personnel involved in the procurement of telecommunication services from DataConnex, as well as consultants who represented healthcare providers that received telecommunications services from DataConnex through the RHC Program. The Enforcement Bureau also reviewed tens of thousands of documents obtained from DataConnex, Aptus, H&H, HCU, other consultants, healthcare providers, financial institutions, underlying service providers, and other third parties. 26. The evidence demonstrates that DataConnex/Aptus89 and H&H/HCU90 apparently maintained a multiyear financial relationship that was undisclosed to healthcare providers represented by HCU, which gave DataConnex an improper advantage in the RHC Program marketplace. The evidence also demonstrates that DataConnex provided apparently false, forged, misleading, and unsubstantiated urban rates to healthcare providers, and their consultants which caused USAC to increase the support it awarded healthcare providers, and ultimately the payments it made to DataConnex from the Fund. These actions violate the Communications Act and the Commission’s Rules governing the RHC Program. A. DataConnex’s Conduct Related to the Rural Health Care Program’s Competitive Bidding Process 27. The Commission has consistently stated that competitive bidding is fundamental to the RHC Program, and that a critical requirement of the competitive bidding process is to ensure that is conducted in a manner that does not give one bidder an unfair advantage over another bidder.91 The 86 Valley View Health Center, https://www.vvhc.org/locations/ (last visited Oct. 3, 2017). 87 Little River Medical Center, https://lrmcenter.com/ (last visited Oct. 3, 2017). 88 River Valley Primary Care Services, http://www.rvpcs.org/Home/tabid/12912/Default.aspx (last visited Oct. 3, 2017). 89 Based on the interdependent relationship of these entities, DataConnex and Aptus are referred to as a single entity in Sections III and IV of the NAL. See supra Section II.B. 90 Based on the relationship of these entities, HCU and H&H referred to as a single entity in Sections III and IV of the NAL. See supra Section II.B. 91 See Federal-State Joint Board on Universal Service First Report and Order, Report and Order, 12 FCC Rcd 8776, 9133-34, paras. 686, 688 (1997) (“Consistent with the Joint Board’s recommendation for eligible schools and libraries, we conclude that eligible health care providers shall be required to seek competitive bids for all services eligible for support pursuant to section 254(h) by submitting their bona fide requests for services to the Administrator [for posting]”); Requests for Review of Decisions of the Universal Service Administrator by Hospital Networks Management, Inc., Manchaca, TX, 31 FCC Rcd 5731, 5742 para. 20 (Wireline Comp. Bur. 2016) (“The principles underlying the Mastermind Order and other orders addressing fair and open competitive bidding not only apply to the E-rate program . . ., but also to participants in the rural health care program. Indeed, the mechanics of the bidding processes in the rural health care and E-rate programs are effectively the same.”) (internal citation omitted); See also Rural Health Care Support Mechanism, Report and Order, 27 FCC Rcd 16678, 16778, paras. 229-30 (2012) (“[C]ompetitive bidding furthers the competitive neutrality requirement . . . of the Act by ensuring that universal service support does not disadvantage one provider over another . . . [A]ll entities participating in the [RHC Program] must conduct a fair and open competitive bidding process prior to submitting a request for funding . . .”); and Schools and Libraries Universal Service Support Mechanism, Third Report and Order and Second Further (continued….) Federal Communications Commission FCC 18-9 13 Commission has further explained that “[t]o preserve the integrity of the competitive bidding process, an applicant’s consultant is subject to the same prohibitions as an applicant itself with regard to the competitive bidding process.”92 Service providers have long been on notice that competitive bidding is compromised when they place themselves in a position to influence the healthcare provider’s award of the bid.93 The Commission long ago made clear that pre-selection of service providers would violate the competitive bidding rules for the RHC Program.94 28. The Investigation uncovered a business and financial relationship between H&H/HCU and DataConnex/Aptus through which DataConnex apparently gained an unfair advantage in the competitive bidding process. Using a variety of methods, DataConnex/Aptus identified healthcare providers to target for participation in the RHC Program.95 Aptus, in concert with DataConnex, approached rural healthcare providers, especially those who were not currently participating in the RHC Program, and proposed upgraded telecommunications solutions based on USF funding. After DataConnex initially met with a healthcare provider, it referred the healthcare provider to HCU and/or referred HCU to the healthcare provider in hopes that the healthcare provider would retain HCU as its consultant. Once retained by the healthcare provider, HCU initiated the competitive bidding process after which DataConnex was almost always awarded the contract.96 (Continued from previous page) Notice of Proposed Rulemaking, 18 FCC Rcd 26912, 26939, para. 66 (2003) (Schools and Libraries Third Report and Order) (stating that the competitive bidding process is critical to preventing waste, fraud, and abuse of program resources). 92 Requests for Review of Decisions of the Universal Service Administrator by Hospital Networks Management, Inc., Manchaca, TX, 31 FCC Rcd 5731, 5740, para. 18 (finding a conflict of interest where “Mr. Zunke, in the role of consultant to the consortium members, was ostensibly acting on their behalf alone. Yet, simultaneously, [he] was acting on behalf of the apparent service provider, with whom the consortium was considering contracting . . .”). 93 Request for Review by Mastermind Internet Services, Inc., Federal-State Joint Board on Universal Service, Changes to the Board of Directors of the National Exchange Carrier Association, Inc., CC Docket No. 96-45, Order, 16 FCC Rcd 4028 (2000) (Mastermind Order) (finding that the FCC Form 470 contact person influences an applicant’s competitive bidding process by controlling the dissemination of information regarding the services requested and, when an applicant delegates that power to an entity that also participates in the bidding process as a prospective service provider, the applicant impairs its ability to hold a fair competitive bidding process); Requests for Review of Decisions of the Universal Service Administrator by Hospital Networks Management, Inc., Manchaca, TX, 31 FCC Rcd 5731, 5742, para. 20 (Wireline Comp. Bur. 2016) (applying holdings in Mastermind to the RHC Program); see also Request for Review by Dickenson County Public Schools, Federal-State Joint Board on Universal Service, CC Docket No. 96-45, 17 FCC Rcd 15747, 15748, para. 3 (2002) (noting that an applicant impairs its ability to hold a viable competitive bidding process when the applicant's FCC Form 470 contact person is also a service provider participating in the bidding process as a bidder). Cf. Schools and Libraries Universal Service Support Mechanism and A National Broadband Plan for Our Future, Sixth Report and Order, CC Docket 02-6, 25 FCC Rcd 18762, 18799-800, para. 86 (2010) (Schools and Libraries Sixth Report and Order) (“an applicant violates the Commission's competitive bidding rules if the applicant turns over to a service provider the responsibility for ensuring a fair and open competitive bidding process”). See, e.g., Requests for Review of the Decision of the Universal Service Administrator by SEND Technologies, L.L.C., CC Docket No. 02-6, Order, 22 FCC Rcd 4950 (Wireline Comp. Bur. 2007) (SEND Order) (finding that where the applicant's contact person is also a partial owner of the selected service provider, the relationship between the applicant and the service provider creates a conflict of interest and impedes fair and open competition). 94 Rural Health Care Support Mechanism, Order, 22 FCC Rcd 20360, 20412, paras. 101-102 (2007) (denying waivers of competitive bidding rules in order to prohibit preselection of service providers). 95 To secure new business for DataConnex, Aptus engaged in a variety of methods including reviewing Form 465 postings on USAC’s website, receiving introductions to healthcare providers through facilities-based carriers currently servicing the healthcare providers, and soliciting rural hospitals and other health care providers they believed to be eligible to participate in the RHC Program but were not current participants. 96 See infra Section III.A.2. Federal Communications Commission FCC 18-9 14 29. Emails produced by H&H/HCU demonstrate that Howard, Miles, Cucullu, and McMasters were in frequent contact, many times before the Form 465 was posted and before the healthcare provider retained HCU as its consultant. In these emails, H&H/HCU and Aptus/DataConnex discussed potential customers, DataConnex’s pricing, HCU’s pricing, the portion of HCU’s consulting fee DataConnex would pay to H&H, proposed network design, contracts, proposed bids, Commission regulations governing the RHC Program, and other topics. 30. DataConnex paid H&H for “advising” services on RHC Program matters.97 During the Investigation, the Enforcement Bureau subpoenaed and reviewed HCU’s, H&H’s, and DataConnex’s bank records.98 The Enforcement Bureau’s analysis of these records demonstrates that from January 2015 through January 2017, DataConnex paid H&H at least $222,110.94, which constituted H&H’s sole source of income for that two-year period.99 H&H’s invoices to DataConnex reflect charges for, among other things, a “monthly service retainer fee,” “advising fees,” “contract evaluation,” “remittance,” and “special billing.”100 Documents also indicate that DataConnex paid H&H a specific fee ranging from $ per month to $ per month during the relevant period. These specific fees were directly associated with six healthcare providers, all of which were represented by HCU and serviced by DataConnex.101 31. Finally, during this time, both HCU and H&H were wholly owned by Howard, while Cucullu and McMasters co-owned Aptus and PMG, which owns percent of DataConnex.102 It does not appear that this relationship was disclosed to the healthcare providers or other service providers that sought to bid on Form 465s filed by HCU-represented healthcare providers. 1. DataConnex/Aptus Engaged in a Multiyear Financial Relationship with H&H/HCU 32. Beginning in the fall of 2014 and through early 2015, McMasters and Cucullu on behalf of DataConnex/Aptus and Howard and Miles on behalf of H&H/HCU discussed forming a relationship where H&H would furnish “advisory” services to DataConnex.103 Miles described the arrangement as “helping both of our companies grow.”104 The services H&H proposed to DataConnex were described as “contract construction/advisement,” “training on correct verbiage to not raise red flags through sales,” “bid matrix training and advising – access to multiple bid matrixes,” and “bring[ing] potential clients from our end to work with Data Connex.”105 In discussing the fees H&H would charge DataConnex for 97 See Email from Shawn Miles, H&H to Jason Cucullu, Aptus, and Justin McMasters, Aptus (Jan. 7, 2015, 8:18 a.m.) (“As you know New Iberia has been signed. Per our conversation you guys agree to pay the advising side $400 a month starting with the first invoice to them.”). HH_03680. See also Email from Justin McMasters, Aptus to Shawn Miles, H&H and Matthew Howard, H&H (Sept. 29, 2014, 8:36 p m.) (“any monthly fee paid to advising company affects our operating budget which could mean we have to turn away HCC United customers from DataConnex.”). HH_03363. 98 Information on file in EB-IHD-15-00020296. 99 See Subpoena Response, Bank; Subpoena Response, Bank. 100 See, e.g., H&H Advisors, LLC Invoices to DataConnex. HH_01657, HH_01658, HH_00144, and HH_01661. 101 See Commission Report, September 2016. APTUS_00012066. See, e.g., Summary Sheet, Gulf Coast Mental Health. APTUS_00009561; and H&H Advisors, LLC Invoice to DataConnex (Oct. 1, 2016). HH_00157. 102 While Shawn Miles appears to not have had an ownership interest in H&H, he received substantial payments from H&H from January 2015 through December 2016. See Subpoena Response, Bank; Subpoena Response, Bank. 103 Email from Shawn Miles, H&H, to Jason Cucullu, Aptus (Dec. 18, 2014, 2:26 p.m.). HH_00384. 104 Email from Shawn Miles, H&H, to Justin McMasters, Matthew Howard, H&H, Advisory Breakdown Overview (Sept. 26, 2014, 5:41 p.m.). HH_01933-5. 105 Services Provided to DataConnex and Advisory Company Expenses. HH_01872. Federal Communications Commission FCC 18-9 19 3. DataConnex/Aptus and HCU/H&H Coordinated Their Marketing Strategies, Cost Estimates, and Other Information Before a Form 465 Was Posted Apparently to Increase the Likelihood of Both Companies Winning Healthcare Providers’ Business 44. It also appears that DataConnex and HCU/H&H coordinated their “Talking Points” when seeking to obtain RHC Program contracts and seeking to be retained as RHC Program consultants, respectively, with at least two healthcare providers.141 Among other topics, DataConnex, H&H, and HCU personnel coordinated on posting Form 465s, fees owed to both DataConnex and HCU, fee structure, timing of charges to DataConnex from healthcare providers, and the healthcare providers’ current service providers.142 This coordination between DataConnex/Aptus and HCU/H&H appears to have occurred, in several instances, before each healthcare provider posted its Form 465 requesting bids.143 a. Aaron E. Henry Community Health Services (AEH) 45. On December 11, 2014, Cucullu sent a pricing proposal to Miles concerning healthcare provider AEH and stated, “[n]eed to discuss this one with you. Potential client for you.”144 Healthcare provider AEH later retained HCU, which then filed FY2014 Form 465s on its behalf on January 24, 2015.145 Shortly thereafter, on February 23, 2015, healthcare provider AEH awarded DataConnex a contract.146 46. It appears that HCU and DataConnex further coordinated the bidding concerning healthcare provider AEH. In one email, Breazeale sent the DataConnex contract for healthcare provider AEH to Miles and reported that the healthcare provider “reached out to us and asked for a contract on putting in a new [point-to-point] service” and further inquired with Miles “whether or not this needs to go out to competitive bid.”147 b. Gulf Coast 47. Concerning healthcare provider Gulf Coast, DataConnex and HCU appear to have coordinated prior to the filing of the Form 465. On June 25, 2015, Miles emailed Breazeale that “Gulf Coast sent me their agreement. So, we’re go to go.”148 Two weeks later, on July 6, 2015, Howard filed three Form 465s for healthcare provider Gulf Coast, but only one was deemed an eligible location.149 During the competitive bidding period, Cucullu emailed Miles to express concern about the name used for the only location deemed eligible to participate in the Telecom Program and asked Miles, “[a]re we going 141 Email from Eddy Breazeale, Aptus, to Miles, Cucullu, Region One & Mallory Talking Points (Mar. 25, 2015, 1:06 p.m.). HH_001046. 142 Id. 143 Compare id. with FY2015, Form 465, HCP No. 16780, FRN 1572262 (June 4, 2015) [Region One] and FY2015, FCC Form 465, HCP No. 31556, FRN 1584888 (Feb. 12, 2016) [Mallory]. 144 Email from Jason Cucullu, Aptus, to Shawn Miles, H&H (Dec. 11, 2014, 2:31 p.m.). HH_01922. 145 Email from , AEH, to Shawn Miles, HCU (Jan. 9, 2015, 9:50 p.m.) (forwarding signed HCU Agreement). HH_01699. 146 See DataConnex Master Service Agreement, Aaron E. Henry Community Health Services, Center, Inc. (Feb. 23, 2015). 147 Email from Eddy Breazeale, DataConnex to Shawn Miles, HCU, Aaron E. Henry New PTP (Nov. 22, 2016, 3:10 p.m.). HH_000034. 148 See Email from Shawn Miles, H&H to Eddy Breazeale, Aptus (June 25, 2015, 2:53 p.m.). HH_02813. 149 See Email from Matt Howard, HCU, to Jason Cucullu, Aptus (July 7, 2015, 2:10 p m.). HH_02713; see also FY2015, FCC Form 465, HCP No. 44192, Form 465 Application No. 43156842 (July 6, 2015). Federal Communications Commission FCC 18-9 20 to have an issue running this as a hub while it is being called a satellite office?”150 Miles replied, “[t]he name doesn’t matter. It is an eligible site.”151 The exchanges described above all occurred during the 28- day competitive bidding period. c. Community Counseling Services 48. A further example of this pre-Form 465 coordination involved healthcare provider Community Counseling Services. On August 24, 2015, Cucullu emailed Miles and asked, “[w]hen do you think the other site will be posted? We are losing a lot of $ each day that this site is not posted.”152 Miles advised Cucullu that he was waiting on an updated license from a Community Counseling Services employee. Cucullu replied, “Ok. I will stand on him. Would not hurt to reach out to the CFO on it also.”153 Four days later, on August 28, 2015, HCU filed a FY2015 Form 465 for an additional Community Counseling Services location.154 Community Counseling Services awarded DataConnex a contract for all of its locations on October 15, 2015.155 4. DataConnex/Aptus, in Concert with HCU/H&H, Apparently Violated the Commission’s Rules Requiring Competitive Bidding a. Iberia Comprehensive 49. DataConnex apparently obtained a contract from healthcare provider Iberia Comprehensive after DataConnex referred Iberia Comprehensive’s staff to HCU. On October 20, 2014, Cucullu emailed Miles and stated, “Shawn spoke to [ , Iberia Comprehensive’s IT Director] and he wants you to give him a call. Give me a call before you call him. I need to discuss a few things with you.”156 On October 22, 2014, Miles spoke with and sent him an email outlining HCU’s fee structure and services.157 Included in this email were marketing materials, which described HCU as an “independent telecommunications representative without any associated vendor affiliations. . . .”158 150 See Email from Jason Cucullu, Aptus, to Shawn Miles, H&H (July 8, 2015, 7:49 a.m.). HH_02713. 151 Email from Shawn Miles, H&H, to Jason Cucullu, Aptus (July 8, 2015, 10:04 a m.). HH_04248-9. 152 Email from Jason Cucullu, Aptus, to Shawn Miles, H&H (Aug. 24, 2015, 8:54 a m.). HH_01980. HCU posted FY2015 FCC Forms 465 for several HCP Community Counseling Services locations on August 14, 2015. See FY2015 FCC Form 465, HCP 30911, Form 465 Application No. 43157424 (Aug. 14, 2015); FY2015 FCC Form 465, HCP 30913, Form 465 Application No. 43157604 (Aug. 14, 2015); FY2015 FCC Form 465, HCP 30915, Form 465 Application No. 43157603 (Aug. 14, 2015); FY2015 FCC Form 465, HCP 30916, Form 465 Application No. 43157602 (Aug. 14, 2015); FY2015 FCC Form 465, HCP 30917, Form 465 Application No. 43157601 (Aug. 14, 2015). 153 Email from Jason Cucullu, Aptus, to Shawn Miles, H&H (Aug. 24, 2015, 9:00 a m.). HH_01980. See also Email from Shawn Miles, H&H, to Jason Cucullu, Aptus (Aug. 24, 2015, 8:59 a.m.). HH_01980. 154 See FY2015 FCC Form 465, HCP 28265, Form 465 Application No. 43157940 (Aug. 28, 2015). 155 See DataConnex Master Services Agreement, Community Counseling Services (Oct. 15, 2015). See, e.g. FY2015 FCC Form 466, HCP 28265, FRN 15755271 (Mar. 2, 2016). USAC issued FCL’s designating this contract as “Evergreen.” DataConnex invoiced USAC in accordance with the support schedule and received USF funds through March 2017. 156 Email from Jason Cucullu, Aptus, to Shawn Miles, H&H (Oct. 20, 2014, 7:27 a m.). HH_02871. Cucullu had previously forwarded Miles pricing information and network design. See Email from Jason Cucullu, Aptus to Shawn Miles, HCU (Sept. 30, 2014, 6:31 a.m.). HCC_12444. 157 Email from Shawn Miles, HCU, to , Iberia Comprehensive (Oct. 22, 2014, 10:57 a m.) (quoting a fee of $550 per month). IBERIA-0033. 158 See Interview of , Iberia Comprehensive, Aug. 2, 2017. Information on file in EB-IHD-15-00020296. Program Summary and Information. IBERIA-0035-36. (attachment to email from Shawn Miles, HCU, to , Iberia Comprehensive (Oct. 22, 2014, 10:57 a m.). IBERIA-0033. Federal Communications Commission FCC 18-9 21 Healthcare provider Iberia Comprehensive executed a Service Agreement with HCU on December 22, 2014, and HCU filed Form 465s for FY2014 on behalf of Iberia Comprehensive and its related healthcare providers on January 23-24, 2015.159 Two vendors submitted bids in response to the Form 465s filed by HCU: (1) DataConnex and (2) .160 DataConnex was awarded the contract for all of healthcare provider Iberia Comprehensive’s locations on March 2, 2015.161 50. There appear to be several issues with this competitive bidding process. First, DataConnex and HCU, prior to the initiation of the 28-day competitive bidding period, apparently agreed that DataConnex would be awarded the contract if HCU was retained by healthcare provider Iberia Comprehensive as a consultant.162 On January 7, 2015, Miles sent an email to Cucullu and McMasters and reminded them that “[a]s you know New Iberia has been signed. Per our conversation you guys agree to pay the advising side $400 a month starting with the first invoice to them.”163 Yet, the competitive bidding period did not start until more than two weeks later, as healthcare provider Iberia Comprehensive’s Form 465s were not filed with USAC until January 23-24, 2015. 51. Second, the Bid Comparison Matrix that was submitted to USAC along with healthcare provider Iberia Comprehensive’s Form 466s was created and completed solely by HCU, a consultant with an undisclosed financial relationship with DataConnex.164 The record before the Commission indicates that healthcare provider Iberia Comprehensive did not have discussions with HCU about the bid evaluation criteria or the Bid Comparison Matrix prior to its submission to USAC.165 Moreover, healthcare provider Iberia Comprehensive’s IT Director stated that he had never seen the Bid Comparison Matrix until he was shown a copy by the Enforcement Bureau during an interview on August 2, 2017.166 b. Lewis County Community Health Services d/b/a Valley View Health Center – Onalaska (Valley View) 52. Healthcare provider Valley View is another healthcare provider that awarded a contract to DataConnex through a competitive bidding process that was apparently undermined by the relationship between DataConnex/Aptus and HCU/H&H. On April 2-3, 2015, McMasters and Miles discussed HCU’s fees and revenue. McMasters advised Miles that “I haven’t totaled everything but we’ve brought 159 FY2014 Form 465, HCP 13166, Form 465 Application No. 43150440 (Jan. 23, 2015). FY2014 Form 465, HCP 14689, Form 465 Application No. 43150469 (Jan. 24, 2015). FY2014 Form 465, HCP 18219, Form 465 Application No. 43150471 (Jan. 24, 2015). FY2014 Form 465, HCP 39855 Form 465 Application No. 43150470 (Jan. 24, 2015). 160 See Interview of , Iberia Comprehensive, Aug. 2, 2017. Information on file in EB-IHD-15-00020296. 161 See DataConnex Master Services Agreement, Iberia Comprehensive Community Health Center, Inc. (Mar. 2, 2015). IBERIA-0257-0263. 162 Email from Miles to Cucullu, McMasters, Advising Payments (Jan. 7, 2015, 8:18 a m.). HH_03680. 163 Id. 164 See Interview of , Iberia Comprehensive, Aug. 2, 2017. Information on file in EB-IHD-15-00020296. 165 See id. 166 See Interview of , Iberia Comprehensive, Aug. 2, 2017. On April 16, 2015, HCU filed Form 466s with USAC for the Iberia Comprehensive’s locations that were installed in FY2014. USAC issued FCLs designating the DataConnex contract as “Evergreen.” HCU continued to file Form 466s for Iberia in FY2015 and FY2016 based on the “Evergreen” contract. DataConnex has invoiced USAC for the authorized support amounts in FY2014, FY2015, and FY2016. Two locations, healthcare provider Merryville Community Health Center and healthcare provider Sabine Comprehensive Health Clinic, which are included on the February 27, 2015 contract were not installed until August 21, 2015. HCU filed FY2015 Form 466s with USAC for these locations on September 25, 2015 using the February 27, 2015 contract. USAC issued FCLs for these locations on October 7, 2015 and designated the contract as “Evergreen.” HCU filed Form 466s for FY2016 based on the “Evergreen” contract on March 18, 2016, and DataConnex invoiced USAC for the authorized support amounts. Information on file in EB-IHD-15-00020296. Federal Communications Commission FCC 18-9 22 you more revenue than you have brought us even if we get Cedar County and Valley View. . . I really would like for you to give us more opportunities. . . I just would like to see some more opportunities so we don’t feel like this is a one-sided relationship.”167 Miles reassured McMasters that their relationship would be profitable for DataConnex/Aptus, as well as HCU/H&H: [a]s I’ve told Jason [Cucullu] we see us bringing you more and more clients over the next year. Trust me if I can have my clients with you I will. It will make my life easier. Don’t think we are not trying to make you money and bring you our clients. Take Valley View for example. I could’ve gone to Toledo Tel easily. However, I wanted to get you in there. Not for one circuit. But, to get the whole network. Yes, today it’s one circuit, but tomorrow it’s the whole thing.168 In both FY 2014 and FY 2015, Valley View received $16,423.68 in USF funding for bonded T-1s (3 Mbps) pursuant to a contract with .169 On March 4, 2016, HCU filed a FY 2016 Form 465 for Valley View’s Onalaska, Washington location.170 On April 29, 2016, DataConnex was awarded a contract to provide 100 Mbps Ethernet to this location.171 USAC issued a funding commitment letter on October 12, 2016, approving support in the amount of $47,523.65, and designated this contract as “Evergreen.”172 c. Aaron E. Henry Community Health Services (AEH) 53. Yet another example of DataConnex/Aptus’ improper influence during the competitive bidding process involves healthcare provider AEH. Cucullu referred healthcare provider AEH to HCU.173 On December 30, 2014, approximately one week after DataConnex paid H&H the initial payment of $30,000,174 Miles arranged a phone call with healthcare provider AEH staff and later sent them an email that attached a HCU Service Agreement.175 In the email to healthcare provider AEH, Miles advised AEH, “I put in the monthly cost to Aaron E. Henry, the out clause should you choose not to sign with Jason’s company as well as that we will appeal your denied applications while not charging any extra for any funds that are able to be recovered.”176 On January 9, 2015, healthcare provider AEH returned the signed agreement to HCU, which provided that “[AEH] agreed to pay [HCU] $750 a month starting with the first 167 Email from Justin McMasters, Aptus, to Shawn Miles, HCU (Apr. 2, 2015, 8:33 p m.). HCC20919. 168 Email from Shawn Miles, HCU, to Justin McMasters, Aptus (Apr. 3, 2015, 12:24 p.m.). HCC20918. HCU filed a Form 465 on behalf on Valley View for FY2015 on April 24, 2015. Information on file in EB-IHD-15-00020296. 169 Information on file in EB-IHD-15-00020296. 170 See FY2016 Form 465, HCP 27579, Form 465 Application No. 41361592 (Mar. 4, 2016). 171 See DataConnex Master Services Agreement, Lewis County Community Health Services dba Valley View Health Center - Toledo (Apr. 29, 2016). This contract also referenced point to point services at unfunded location in Centralia, Washington. 172 See FY2016 FCL, HCP 27579, FRN 16877671 (Oct. 12, 2016). Valley View’s Form 466 indicated that it received no other bids in response to its FY2016 Form 465. See FY2016, HCP 27579, Form 466, Block 7. at 45., FRN 16877671 (Aug. 29, 2016). 173 Email from Shawn Miles, H&H, to Justin McMasters, DataConnex (Dec. 31, 2014, 8:56 a.m.) (“This is one that Jason brought to me . . .”). HH_02637. 174 Information on file in EB-IHD-15-00020296. 175 See Email from Shawn Miles, H&H, to Jason Cucullu, DataConnex, Justin McMasters, DataConnex (Dec. 30, 2014, 12:46 p.m.). HH_02637; Email from Shawn Miles, HCU, to , AEH (Dec. 31, 2014, 10:32 a.m.). HH_01698. Miles forwarded this email to Cucullu using an H&H email account on January 7, 2015. See Email from Shawn Miles, H&H, to Jason Cucullu, Aptus (Jan. 7, 2015, 8:12 a m.). HH_01698. 176 Email from Shawn Miles, HCU, to , AEH (Dec. 31, 2014, 10:32 a m.). HH_01698. Miles forwarded this email to Cucullu using and H&H email account on January 7, 2015. See Email from Shawn Miles, H&H to Jason Cucullu, Aptus (Jan. 7, 2015, 8:12 a.m.). HH_01698. Federal Communications Commission FCC 18-9 23 invoice from DataConnex . . . Should Aaron E. Henry Community Health Services not move forward and sign with DataConnex this agreement can be cancelled.”177 Approximately two weeks later, HCU filed FY2014 Form 465s for healthcare provider AEH’s locations.178 On February 23, 2015, AEH awarded DataConnex a 36-month contract for all of its locations, and HCU filed a Form 466 with USAC on healthcare provider AEH’s behalf memorializing this contract award.179 5. DataConnex Apparently Made Payments to H&H Based Upon Contracts DataConnex Received from Healthcare Providers Represented by HCU 54. The relationship between H&H/HCU and DataConnex apparently involved DataConnex personnel referring healthcare providers to HCU for consulting work.180 With few exceptions, healthcare providers who hired HCU after receiving a referral from DataConnex awarded contracts to DataConnex for telecommunications services supported by funds from the Telecom Program. It also appears that at the same time, unbeknownst to the healthcare providers, DataConnex made significant and regular payments to H&H, HCU’s “advising side.”181 In addition, for at least six healthcare providers, DataConnex made specific monthly payments to H&H after DataConnex invoiced these healthcare providers for telecommunications services provided pursuant to contracts awarded to DataConnex after these healthcare providers retained HCU.182 55. Shortly after DataConnex made its first payment of $30,000 to HCU, Miles sent an email to Cucullu and McMasters and reminded them that “[a]s you know New Iberia has been signed. Per our conversation you guys agree to pay the advising side $400 a month starting with the first invoice to them.”183 Services were installed for healthcare provider Iberia Comprehensive on March 25, 2015,184 and Iberia Comprehensive received its first invoice from DataConnex on April 1, 2015.185 56. On April 15, 2015, H&H sent DataConnex an invoice for services described as “Contract Evaluation (1i) March 25-31, 2015” totaling $90.32 and “Contract Evaluation (1i) For month of April 177 See Healthcare Connect United, Service Agreement, Aaron E. Henry Community Health Services. HH_01870. See also Email from , AEH to Shawn Miles, HCU (Jan. 9, 2015, 9:50 p.m.). HH_01699. 178 FY2014 Form 465, HCP 10789, Form 465 Application No. 43150472 (Jan. 24. 2015); FY2014 Form 465, HCP 11510, Form 465 Application No. 43150475 (Jan. 24. 2015); FY2014 Form 465, HCP 11511, Form 465 Application No. 43150473 (Jan. 24. 2015); FY2014 Form 465, HCP 16113, Form 465 Application No. 43150477 (Jan. 24. 2015); FY2014 Form 465, HCP 16114, Form 465 Application No. 43150474 (Jan. 24. 2015). 179 DataConnex Master Services Agreement, Aaron E. Henry Community Health Services Center, Inc. (Feb. 23, 2015); FY 2014 Form 466, HCP 10789 (June 3, 2015). USAC issued FCLs designating the contract as “Evergreen.” Funding Commitment Letter, FY2014, Application No. 43150472 (June 17, 2015). HCU also filed FCC forms for FY2015 and FY2016 for AEH based on this same contract and USAC issued FCLs and support schedules and DataConnex has invoiced USAC for the authorized support amounts. 180 See infra Section III.A.2. 181 Email from Shawn Miles, H&H, to Jason Cucullu, Aptus, Justin McMasters, Aptus, Advising Payments (Jan. 7, 2015, 8:18 a m.). HH_01930. 182 See Invoice, H&H Advisors, LLC (Nov. 1, 2016). HH_01658; Invoice, H&H Advisors, LLC (Oct. 1, 2016). HH_01657. See also Invoice, H&H Advisors, LLC (Apr. 1, 2015). HH_00130. 183 Email from Shawn Miles, H&H, to Jason Cucullu, Aptus, Justin McMasters, Aptus, Advising Payments (Jan. 7, 2015, 8:18 a m.). HH_01930. See also Email from William Blahnik, DataConnex to Matthew Howard, H&H (Jan. 5, 2016, 2:08 p.m.) (“We are of the understanding that we would continue to pay $5,000 monthly until the $125,000 was paid off.”). HH_00523. 184 FY2014 FCC Form 466, HCP 13166, FRN 1459504 (Apr. 16, 2015). 185 DataConnex Invoice, Customer Number 1004, Statement Number 100004 (Apr. 1, 2015). Federal Communications Commission FCC 18-9 24 2015” totaling $400.”186 This $400 per month charge appears to represent the bulk of the $550 per month consulting fee payment HCU initially quoted Iberia Comprehensive in October 2014, in its introductory email.187 Iberia Comprehensive rejected this amount as being too costly.188 Without further discussion or negotiation, HCU reduced its fee to $100 per month when it provided its agreement to Iberia Comprehensive in December 2014.189 DataConnex was invoiced by H&H for this amount through at least February 2017.190 57. The Investigation also showed that DataConnex apparently paid H&H fees related to five additional healthcare providers that were represented by HCU as their consultant and who awarded contracts to DataConnex: AEH, Access Family Health, Gulf Coast, Region One, and Community Counseling Services.191 On March 3, 2016, Miles sent Howard an email that stated “[b]elow is a list of the [sic] some of our mutual clients (or clients they brought us) and the two left that we are getting paid both ways. . .”192 The email listed healthcare provider Community Counseling Services at $1,500, and Gulf Coast at $800, which apparently represented monthly payment amounts DataConnex had agreed to make to H&H.193 DataConnex records also reflect that fees were specifically paid for AEH, Access Family Health, and Region One.194 These amounts and healthcare providers directly correspond to notations contained on H&H’s invoices to DataConnex.195 58. Shortly after DataConnex received and responded to a subpoena issued to it in connection with this Investigation, DataConnex informed all six of these healthcare providers that it will no longer provide service to them under the Telecom Program after FY2016. Specifically, on April 28, 2017, DataConnex advised healthcare provider Iberia Comprehensive that it would “no longer be participating in the federal Rural Healthcare telecommunications subsidy program with respect to their services for 186 See Invoice, H&H Advisors, LLC to DataConnex (Apr. 15, 2015). HH_000131. H&H sent DataConnex a monthly invoice that included this description and amount each month through February 2017. See, e.g., Invoice, H&H Advisors, LLC to DataConnex (May 1, 2015). HH_900013; Invoice, H&H Advisors, LLC to DataConnex (June 1, 2015). HH_00014; Invoice, H&H Advisors, LLC to DataConnex (Oct. 1, 2016). HH_01657; Invoice, H&H Advisors, LLC to DataConnex (Dec. 1, 2016). HH_00159; Invoice, H&H Advisors, LLC to DataConnex (Feb. 1, 2017). HH_00129. The parenthetical notations on H&H invoices appear to correspond to the healthcare provider associated with the billing item, and in this case the notation 1i appears to relate to Iberia Comprehensive. 187 See Email from Shawn Miles, HCU to , (Oct. 22, 2014, 10:57 a m.). IBERIA-0033. See also Interview of , Iberia Comprehensive, Aug. 2, 2017. Information on file in EB-IHD-15-00020296. 188 Compare Email from Shawn Miles, HCU to , (Oct. 22, 2014, 10:57 a m.), IBERIA-0033, with HCC United Service Agreement (Dec. 22, 2014). IBERIA-0061. See also Interview with , Iberia Comprehensive, Aug. 2, 2017. Information on file in EB-IHD-15-00020296. 189 Email from Miles, HCU, to , Iberia Comprehensive (Oct. 22, 2014, 10:57 a.m.). IBERIA-0033. Miles quoted a fee of $550 per month. See also Healthcare Connect United Service Agreement, Iberia Comprehensive Health Center, Inc. [sic] (Dec. 22, 2014). IBERIA-0061 (stating that “with the first invoice of the vendor that New Iberia Community Health chooses . . .”). See also Interview of , Iberia Comprehensive, Aug. 2, 2017. Information on file in EB-IHD-15-00020296. 190 Invoice, H&H Advisors, LLC (Feb. 1, 2017). HH_00129. 191 Invoice, H&H Advisors, LLC (Dec.1, 2016). HH_00159. See Email from Shawn Miles, HCU, to Matt Howard, H&H (Mar. 3, 2016, 4:11 p.m.). HH_03420-1. 192 Email from Shawn Miles, HCU, to Matt Howard, H&H (Mar. 3, 2016, 4:11 p.m.). HH_03422. 193 See Invoice, H&H Advisors, LLC (Feb. 1, 2017). HH_00129. 194 See DataConnex Commission Report, July 2016. APTUS_000006442. The Commission Report indicates that the monthly “ ” are as follows: AEH $ ; Region One $ ; Access Family $ . Id. 195 See Invoice, H&H Advisors, LLC (Feb. 1, 2017). HH_00129. See also See Invoice, H&H Advisors, LLC (Oct. 1, 2016). HH_01658. Federal Communications Commission FCC 18-9 25 Iberia Community Health Center . . . in response to findings from a recent internal audit.”196 Similar letters were sent by DataConnex to AEH, Community Counseling Services, Gulf Coast, Region One and Access Family Health.197 DataConnex last submitted an invoice to USAC for an FRN related to Iberia Comprehensive, AEH, Gulf Coast, Access Family Health, Community Counseling Services, and Region One on March 5, 2017.198 59. Similarly, since the Commission began this Investigation, HCU has terminated its relationships with its former clients, including the above-referenced healthcare providers. Specifically, on July 12, 2017, HCU advised Iberia Comprehensive that it “finds itself unstaffed for the purposes of providing consulting services to your facility” and released Iberia Comprehensive from its agreement with HCU.199 HCU also sent similar letters to AEH, Gulf Coast, Access Family Health, Community Counseling Services and Region One.200 Both companies, HCU and H&H, have since ceased operations and dissolved. 201 B. DataConnex Issued Urban Rates That Were Apparently False, Misleading, or Otherwise Unsubstantiated or Were Based on Forgeries 60. As DataConnex is a reseller of telecommunications services, it entered into contracts with facilities-based carriers such as AT&T and C-Spire, among others, to provide the underlying telecommunications services which DataConnex incorporated into the telecommunications solutions it then resold to healthcare providers. DataConnex’s invoices to the healthcare providers for these services were used to substantiate the rural rate on the healthcare providers’ Form 466s. DataConnex also provided urban rate letters to the healthcare providers or their consultants, which then submitted these letters to USAC to substantiate the urban rates listed on the healthcare providers’ Form 466s and other supporting documentation. Taken together, DataConnex’s rural rate and urban rate documents form the basis for USAC’s calculation of the USF support for each Funding Request Number (FRN).202 In accordance with the Commission’s Rules, these documents were used, and relied upon, by USAC in issuing the Funding Commitment Letters (FCLs), Health Care Provider Support Schedules (HSSs), and ultimately the USF payments to DataConnex.203 DataConnex’s urban rate letters were supported by 196 Letter from Jason Cucullu, DataConnex, to , Iberia Community Health Center (Apr. 28, 2017). HCU also advised Iberia Comprehensive that it was “releasing [the] facility from [their] contract. . . effective from the receipt of this letter.” See Email from Healthcare Connect United, LLC to , Iberia Comprehensive (July 12, 2017, 1:45 p.m.) (attaching an undated letter from Healthcare Connect United, L.L.C. to , Iberia Comprehensive Community Health [sic]). 197 Information on file in EB-IHD-15-00020296. 198 Id. 199 See Email from admin@hccunited.com to , Iberia Comprehensive (July 12, 2017, 1:45 p.m.) (attaching a letter from Healthcare Connect United, LLC to Iberia Comprehensive regarding the discontinuation of its consulting services). 200 Information on file in EB-IHD-15-00020296. 201 See supra Section II.B.3. 202 As used in 47 CFR §§ 54.605, 54.607, and 54.609, the “rate” refers to the entire cost of a service, end-to-end to the customer and does not refer to the cost of each element or sub-element of a telecommunications service. See also Federal-State Joint Board on Universal Service, Report and Order, 12 FCC Rcd. 8776, 9128-9, at paras. 674-5 (1997) (finding that “254(h)(1)(A) refers to ‘rates for services provided to health care providers’ and ‘rates for similar services provided to other customers,’ not rates for particular facilities or elements of a service.”) (emphasis in original). DataConnex apparently violated 47 CFR §§ 54.605 and 54.609 by issuing urban rate letters that omitted the more expensive element of the service and making it appear as if its urban rates represented the entire cost of the telecommunications services at issue. 203 See 47 CFR §§ 54.605, 54.607, 54.609. See also supra Section II.A. at paras. 8-15. Federal Communications Commission FCC 18-9 26 apparently forged and false AT&T sales quotes, misrepresented the true cost of the urban telecommunications services by not including all elements associated with the cost of services, and were otherwise invalid based on the underlying documentation produced in response to a subpoena issued by the Commission. 61. During the Investigation, the Commission served DataConnex with a subpoena that requested, among other things: 2.o. All documents concerning each urban rate DataConnex has provided in connection with [69 identified healthcare providers] or to anyone acting on the [healthcare providers’] behalf; 2.p. For each urban rate produced in response to request 2.o., all documents evidencing, supporting, or establishing said urban rate.204 In response, DataConnex produced sales quotes from carriers such as ACC Business, AT&T, and Airespring, among others, as supporting documentation for its urban rate letters.205 DataConnex also produced a chart that linked each healthcare provider/FRN to the documents DataConnex had previously produced and which it apparently relied upon to purportedly substantiate its urban rate letters.206 1. DataConnex Received USF Payments Based on Urban Rate Letters That Were Supported by Apparently False and Forged Sales Quotes 62. The Investigation uncovered evidence that DataConnex transmitted, or caused to be transmitted to USAC through the healthcare providers or their consultants, urban rate letters that were supported by apparently false and forged sales quotes. These urban rate letters were then used by USAC to calculate the USF support payments that were disbursed to DataConnex. 63. At least 51 funding requests were supported by urban rate letters issued by DataConnex that apparently relied upon two sales quotes purportedly issued by AT&T for service in Mississippi based on alleged services provided to the Jackson Zoo located at 2918 W. Capitol Street, Jackson, Mississippi (Jackson Zoo)207 and for service in Missouri based on alleged services provided to a Hardee’s restaurant located at 5854 Oakland Avenue, St. Louis, Missouri (Hardee’s Restaurant).208 These two sales quotes purport to have been generated by an AT&T employee, , for Matt Cafferata, an HCU employee, 204 FCC Subpoena to DataConnex, FCC Case No. EB-IHD-15-00020296 (Jan. 16, 2017). 205 Letter from Deepika Ravi and Jared Marx, Harris, Wiltshire & Grannis, LLP to Mary Beth DeLuca and David Sobotkin, FCC (Feb. 15, 2017) (identifying responsive documents as those contained in Bates ranges DCX_00017772-DCX_00017772, DCX_00017668- DCX_00017761, and DCX_00017762-DCX_00017784). See also Letter from Deepika Ravi and Jared Marx, Harris, Wiltshire & Grannis, LLP to Mary Beth DeLuca and David Sobotkin, FCC (June 7, 2017) (attaching a “revised chart showing for each healthcare provider listed in the January 16 subpoena, the corresponding Bates ranges for documents produced in response to subpoena requests (2)(O) and 2(P) broken down by FRN.”). 206 Letter from Deepika Ravi and Jared Marx, Harris, Wiltshire & Grannis, LLP to Mary Beth DeLuca and David Sobotkin, FCC (June 7, 2017) (attaching a “revised chart showing for each [healthcare provider] listed in the January 16 subpoena, the corresponding Bates ranges for documents produced in response to subpoena requests (2)(O) and 2(P) broken down by FRN.”). See also Email from Jared Marx, Harris, Wiltshire & Grannis, LLP to Mary Beth DeLuca and David Sobotkin, FCC (July 11, 2017, 12:16 p.m.) (attaching a revised chart with a column indicating the entity that procured the underlying documentation for the urban rates that DataConnex issued to healthcare providers). 207 See 5.19.2017_DataConnex Initial Response to 5.8.2017 FCC Enforcement Bureau Request. See also 6.7.2017_DataConnex Revised Response to 5.8.2017 FCC Enforcement Bureau Request. DCX_00017768 (Recommended Solution, The Jackson Zoo, 2918 West Capitol St., Jackson, MS). 208 See id. See also 6.7.2017_DataConnex Revised Response to 5.8.2017 FCC Enforcement Bureau Request. DCX_00017767 (Recommended Solution, Hardee’s, 5854 Oakland Avenue, St. Louis, MO). Federal Communications Commission FCC 18-9 27 on July 26, 2015 (Hardee’s Restaurant)209 and July 27, 2015 (Jackson Zoo).210 Unlike other standard AT&T sales quotes for similar types of services that were reviewed as part of the Investigation, these supposed AT&T sales quotes for the Jackson Zoo in Mississippi and Hardee’s Restaurant in Missouri do not describe a service type or bandwidth.211 Instead, the AT&T sales quotes for the Jackson Zoo and Hardee’s Restaurant simply indicate that the “access charge” is $ while the “port charge” is $ for an unidentified telecommunications service.212 64. In response to a Commission subpoena, AT&T certified under penalty of perjury that it was unable to locate and produce these specific sales quotes or any other document related to sales quotes or solutions for the Jackson Zoo or a Hardee’s Restaurant in 2015.213 AT&T was also unable to identify or produce any documents that reflected the access charge for Ethernet at a bandwidth of 100 Mbps was $ per month in St. Louis, Missouri,214 as claimed by DataConnex in its urban rate letters for healthcare provider Cedar County Memorial Hospital (Cedar County) which document the urban rate of $ listed on healthcare provider Cedar County’s Form 466s filed with USAC.215 65. DataConnex’s subpoena response further indicates that its urban rates for these FRNs are supported by an additional sales quote that is undated and issued by an unidentified carrier.216 This alone renders this document invalid as an urban rate.217 Moreover, the pricing of the telecommunications services listed on this undated document ( port and loop) does not match the pricing set forth in DataConnex’s urban rate letters for these FRNs or on the healthcare providers’ FY2016 Form 466s ( ).218 209 See DCX_00017767 (Hardee’s Restaurant). 210 See DCX_00017768 (Jackson Zoo). 211 Compare DCX_00017767 (Hardee’s Restaurant) and DCX_00017768 (Jackson Zoo) with ATT01-000419 (SEMO Health Services). As part of her job responsibilities at AT&T, issued a sales quote for SEMO Health Services to Matthew Cafferata on Apr. 7, 2016. 212 Id. 213 See Letter from Jeanine Poltronieri, AT&T Services, Inc. to Mary Beth DeLuca, FCC and David Sobotkin, FCC (May 1, 2017). See also Subpoena Certificate of Compliance, FCC Case No. EB-IHD-15-00020296 (May 1, 2017). 214 See FCC Subpoena to AT&T Services, Inc. Attachment A, para. h.3. (Mar. 8, 2017). See also Letter from Jeanine Poltronieri, AT&T Services, Inc. to Mary Beth DeLuca, FCC and David Sobotkin, FCC (May 1, 2017) and Subpoena Certificate of Compliance, FCC Case No. EB-IHD-15-00020296 (May 1, 2017). 215 See DataConnex Service Quote, FY2015/2016, HCP 25078, FRNs 15697811; 15822111; 15822281; 16870131. DCX_00017717; DCX_00017716. See also DataConnex Service Quote, FY2015/2016, HCP 25421, FRNs 15697831; 15822301; 16870161. DCX_00017717. See also DataConnex Service Quote, FY2015/2016, HCP 20577, FRNs 15767261; 15822341; 16870141. DCX_00017717. The Form 466s indicate that DataConnex provided Cedar County with Ethernet at a bandwidth of 100Mbps. See FY2016 Form 466, HCP 25077, FRN 16870141 (Aug. 2, 2016); FY2016 Form 466, HCP 25078, FRN 16870131 (Aug. 2, 2016); and FY2016 Form 466, HCP 25421 FRN 16870161 (Aug. 2, 2016). 216 See DCX_0001776 and 6.7.2017_DataConnex Revised Response to 5.8.2017 FCC Enforcement Bureau Request. 217 See, e.g., Rural Health Care Support Mechanism, WC Docket No. 02-60, Order, 30 FCC Rcd 230, at para. 1-3 (2015). See also Form 466 Instructions, Block 6 (stating that the source of the documentation and the date must be clearly identifiable on the document) and Form 466; USAC, Rural Health Care, Telecommunications Program, Health Care Providers, Documentation, http://www.usac.org/rhc/telecommunications/health-care- providers/documentation.aspx (last visited Sept. 25, 2017). 218 See, e.g., FY2016 Form 466, HCP 10800, FRN 1685520, Block 6, No. 41 (July 5, 2016) (urban rate of $ ); DCX_00017672; FY2016, Form 466, HCP 15737, FRN 1685620, Block 6, No. 41 (July 8, 2015); DCX_00017672. Compare DCX_00017776 with DCX_00017672. See also Appendix B; Appendix G. Federal Communications Commission FCC 18-9 31 issued a $ urban rate letter for healthcare provider River Valley for “Ethernet Access” at a bandwidth of 100Mbps and a 36-month contract term.242 This same $ urban rate was apparently also available in Myrtle Beach, South Carolina but under a longer contract term of 60 months. Healthcare provider Little River Loris Medical (Little River) received USF support based on DataConnex urban rate letters that indicated that the “monthly charge” for Ethernet Access at a bandwidth of 100Mbps for a 60-month contract term was $ .243 DataConnex also issued urban rate letters in reliance on these ACC Business sales quotes for Little River’s Point to Point-Fiber service at bandwidths of both 50Mbps and 100Mbps under a 60-month contract term of $ ($ for each terminating point).244 75. Finally, it appears that DataConnex issued the urban rate letters it claims were based on the Jackson Zoo and Hardee’s Restaurant sales quotes245 without having possession of these sales quotes or a reasonable basis for relying on this purported urban rate. On August 10, 2016, Blahnik emailed Miles and asked for “copies of the documents that we are using for our Urban Rates” for Mississippi and Missouri.246 McMasters told Miles,“[t]his is part of the audit therefore we are on a very tight deadline.”247 When Miles could not locate the urban rate documents, McMasters told him, “[w]e are looking for the AT&T or Windstream or whoever the urban rate is from, not the DCX one.”248 Miles later sent McMasters two documents labeled “Hardees [sic] urban rate for MO.pdf” and “Jackson Zoo urban rate for MS.pdf.”249 DataConnex represented to the Commission that it relied on the Jackson Zoo and Hardee’s Restaurant documents to support urban rate letters in connection with 51 FRNs for FY2016 and at least 50 FRNs for FY2015.250 Nonetheless, the emails between DataConnex and HCU/H&H staff above appear to indicate that DataConnex did not possess these Jackson Zoo and Hardee’s Restaurant documents until August 2016, and only sought to obtain them after they were requested by the USAC contract auditor.251 (Continued from previous page) 13, 2015, 100Mbps MPLS service for a monthly access charge of $ ). See FY2016 Form 466, HCP 22233, FRN 1687499, Block 6, No. 41 (Aug. 18, 2016) (attaching DataConnex Service Quote dated Mar. 2, 2016, Ethernet service at 100Mbps for a monthly access charge of $ ). See also Appendix G. 242 See FY2016 Form 466, HCP 22233, FRN 1687499, Block 6, No. 41 (Aug. 18, 2016) (attaching DataConnex Service Quote dated Feb. 11, 2016, 100Mbps Ethernet service for a monthly access charge of $ ). 243 See FY2016 Form 466, HCP 26328, FRN 1685554, Block 6, No. 41 (July 6, 2016) (attaching DataConnex Service Quote dated Sept. 25, 2015, 100Mbps Ethernet Access service for a monthly access charge of $ ). 244 See FY2016 Form 466, HCP 26328, FRN 1685553, Block 6, No. 41 (July 6, 2016) (attaching DataConnex Service Quote dated Sept. 1, 2015, 50Mbps Point to Point - Fiber service for a monthly access charge of $ (two circuits at $ for each circuit) and FY2016 Form 466, HCP 26328, FRN 1685558, Block 6, No. 41 (July 6, 2016) (attaching DataConnex Service Quote dated Aug. 13, 2015, 100Mbps Point to Point - Fiber service for a monthly access charge of $ ). 245 See supra Section III.B.1. 246 See Email from William Blahnik, DataConnex, to Shawn Miles, HCU (Aug. 10, 2016, 8:56 a m.). HCC09580. 247 See Email from Justin McMasters, Aptus, to William Blahnik, DataConnex, and Shawn Miles, HCU (Aug. 10, 2016, 8:59 a m.). HCC09580. 248 Email from Justin McMasters, Aptus, to Shawn Miles, HCU (Aug. 10, 2016, 9:31 a.m.). HCC09580. 249 Email from Shawn Miles, HCU, to Justin McMasters, Aptus, and William Blahnik, DataConnex (Aug. 10, 2016, 12:43 p.m.). HCC09579. 250 Information on file in EB-IHD-15-00020296. See also 5.19.2017_DataConnex Initial Response to 5.8.2017 FCC Enforcement Bureau Request; and 6.7.2017_DataConnex Revised Response to 5.8.2017 FCC Enforcement Bureau Request. 251 As noted above, the Investigation indicates that these sales quotes appear to have been created only after supporting documentation was requested in connection with the USAC audit and backdated to July 2015. See supra Section III.B.1. However, if DataConnex failed to retain the Jackson Zoo and Hardee’s Restaurant sales quotes, (continued….) Federal Communications Commission FCC 18-9 32 C. DataConnex Apparently Submitted Payment Requests to USAC That Were Based on Contracts Tainted by Violations of Applicable Rules and/or Were Based on Invalid Urban Rate Documentation and in so Doing Falsely Implied Compliance with Commission Rules 76. In order to receive payments from the USF in connection with services it rendered through the RHC Program, DataConnex submitted to USAC approximately one payment request per month.252 These payment requests contained DataConnex’s name, Service Provider Information Number (SPIN), SPIN invoice number, date, total amount requested, and an itemized list for each specific payment request (including funding year, HCP number, Funding Request Number, HCP Entered Billing Account number, whether the payment request was for multiple months, the support date for the month(s) DataConnex sought payment, and the support amount to be paid by USAC).253 77. From at least April 2015 through July 2017, DataConnex submitted monthly payment requests via USAC’s MyPortal system in connection with services it rendered in the RHC Program.254 In submitting each payment request, DataConnex certified that “the information contained in this invoice is correct and that the health care providers and Billed Account Numbers listed above have been credited with the amount shown under ‘Support Amount to be Paid by USAC.”255 DataConnex further submitted its monthly payment requests after it was warned that “[p]ersons willfully making false statements on the invoice can be punished by fine or forfeiture under the Communications Act, 47 U.S.C. Secs. 502, 503(b), or fine or imprisonment under Title 18 of the United States Code, 18 U.S.C. Sec. 1001.”256 78. When DataConnex certified its funding requests through the MyPortal system, it represented that the support amounts contained on its payment requests to USAC were calculated in accordance with the Health Care Provider Support Schedule (HSS), which was issued by USAC for each of the respective Funding Request Numbers (FRNs) listed on the payment request. The HSS lists the approved monthly support amounts for each billing cycle, as well as the telecommunications service type, bandwidth, FRN, SPIN, funding start date, funding end date, Form 465 application number, HCP number, funding year, HCP name, HCP Entered Billing Account Number, and other information associated with the computation and basis for payment in the RHC Program.257 The HSS is sent to all account holders and the service provider.258 In determining the support amount contained on the HSS, which is then incorporated into the service providers’ monthly payment requests, USAC uses the information contained in the Form 466, as well as the rural and urban rates previously provided to USAC.259 79. As a result, in submitting its monthly payment requests to USAC, DataConnex apparently relied upon contracts it obtained as a result of its apparent violations of the Commission’s competitive (Continued from previous page) rather than apparently issuing urban rate letters without valid underlying documentation or a reasonable basis for relying on this urban rate, DataConnex would apparently violate Section 54.619 of the Commission’s Rules by failing to retain documentation related to its compliance with program rules. 252 See, e.g., Appendix D. 253 Id. 254 Information on file in EB-IHD-15-00020296; see also Appendix D. 255 Information on file in EB-IHD-15-00020296. 256 Id. 257 See, e.g., Health Care Provider Support Schedule (HSS), Sabine Comprehensive Health Clinic, FRN 16766501 (Jul. 8, 2016); see also supra Section II.A. 258 Id. 259 Id. Federal Communications Commission FCC 18-9 33 bidding, and the Commission’s rules governing false, misleading, and unsubstantiated urban rates, and in doing so falsely implied compliance with the Commission’s rules. IV. DISCUSSION 80. Based upon the evidence developed in the Investigation, we conclude that DataConnex apparently willfully and repeatedly violated sections 201(b) and 254(h)(1)(A) of the Act and sections 54.603, 54.605, 54.609, and 54.615 of the Commission’s Rules.260 By apparently engaging in conduct that placed the service provider in the position to influence the healthcare provider’s award of an ostensibly competitive bid and requesting USF support payments based on these contracts, DataConnex apparently violated sections 201(b) and 254(h)(1)(A) of the Act and sections 54.603 and 54.615 of the Commission’s Rules. By requesting USF payments for services that were based on apparently false, forged, misleading, and unsubstantiated documents to support its urban rates, DataConnex apparently violated sections 201(b) and 254(h)(1)(A) of the Act and sections 54.605 and 54.609 of the Commission’s Rules. For multiple years and continuing through the present, and, as a direct result of these apparent violations, DataConnex was awarded many contracts from healthcare providers and received millions of dollars in improper payments from the Fund.261 As discussed above, we find these apparent violations are documented in payment requests DataConnex submitted to USAC within one year of the release of this NAL.262 A. DataConnex Apparently Falsely Implied Compliance with the Rural Health Care Program Rules, and Acted Unreasonably and Unjustly, When Requesting Payment for Services Rendered under Contracts that Undermined the Integrity of the Competitive Bidding Process 81. As the Commission has repeatedly stated, competitive bidding rules are vital to ensuring that the USF is “used wisely and efficiently” across USF-funded programs, and that healthcare providers “are aware of cost-effective alternatives” to ensure fiscal responsibility and to limit waste, fraud, and abuse of the Fund.263 Fundamental to this is the Commission’s requirement that RHC Program contracts be awarded through a competitive bidding process.264 A critical requirement of the competitive bidding process is to ensure that it is conducted in a manner such that no bidder receives an unfair advantage over 260 See 47 U.S.C. §§ 201(b), 254(h)(1)(A); 47 CFR §§ 54.603, 54.605, 54.609, 54.615. 261 See supra Section III.A. 262 See supra Sections III.A, III.C; Appendix D. 263 Federal-State Joint Board on Universal Service First Report and Order, Report and Order, 12 FCC Rcd. 8776, 9133-34, paras. 686, 688 (1997); see also Schools and Libraries Universal Service Support Mechanism, Fifth Report and Order, 19 FCC Rcd 15808, 15813 at para. 13 (2004) (stating that the Commission is committed to deterring inappropriate uses of universal service monies and to rapidly detect and address potential misconduct including waste, fraud, and abuse.); Rural Health Care Support Mechanism, Report and Order, 27 FCC Rcd 16678, 16778, paras. 229-30 (2012) (“[C]ompetitive bidding furthers the competitive neutrality requirement . . . of the Act by ensuring that universal service support does not disadvantage one provider over another . . . [A]ll entities participating in the [RHC Program] must conduct a fair and open competitive bidding process prior to submitting a request for funding . . .”); and Schools and Libraries Universal Service Support Mechanism, Third Report and Order and Second Further Notice of Proposed Rulemaking, 18 FCC Rcd 26912, 26939, para. 66 (2003) (Schools and Libraries Third Report and Order) (stating that the competitive bidding process is critical to preventing waste, fraud, and abuse of program resources). 264 47 CFR § 54.603(a). See also Federal-State Joint Board on Universal Service First Report and Order, Report and Order, 12 FCC Rcd 8776, 9133-34, paras. 686, 688 (1997) (“Consistent with the Joint Board’s recommendation for eligible schools and libraries, we conclude that eligible health care providers shall be required to seek competitive bids for all services eligible for support pursuant to section 254(h) by submitting their bona fide requests for services to the Administrator [for posting]”). Federal Communications Commission FCC 18-9 34 another bidder.265 The Commission has held that the RHC Program Rules, “including the competitive bidding rules, apply to all applicants and service providers.”266 As service providers have long been aware, the Commission will take action against such service providers that seek to secure an unfair advantage in competing for contracts supported by the USF or otherwise engage in conduct that threatens to damage the integrity of USF programs in violation of the Commission’s Rules.267 The Commission has repeatedly made clear that compliance with its bidding rules is a prerequisite for receipt of payments from the Fund and that those who violate the competitive bidding rules are not entitled to payment.268 In light of this precedent, it is also clear that where parties seek reimbursement from the Fund, they impliedly represent that they have not violated the Commission’s competitive bidding rules in a manner that would disqualify them from reimbursement.269 Separately and independently, it is an unjust and 265 See, e.g., Mastermind Order, 16 FCC Rcd 4028 (finding that the FCC Form 470 contact person influences an applicant's competitive bidding process by controlling the dissemination of information regarding the services requested and, when an applicant delegates that power to an entity that also participates in the bidding process as a prospective service provider, the applicant impairs its ability to hold a fair competitive bidding process). See also Requests for Review of Decisions of the Universal Service Administrator by Hospital Networks Management, Inc., Manchaca, TX, 31 FCC Rcd 5731, 5742 para. 20 (Wireline Comp. Bur. 2016) (“The principles underlying the Mastermind Order and other orders addressing fair and open competitive bidding not only apply to the E-rate program . . ., but also to participants in the rural health care program. Indeed, the mechanics of the bidding processes in the rural health care and E-rate programs are effectively the same.”) (internal citation omitted); Request for Review, Franciscan Skemp Waukon Clinic, Waukon, IA, 29 FCC Rcd 11714, 11717 at para. 9 (Wireline Comp. Bur. 2014) (finding that signing a Telecom Program contract before the expiration of the 28-day waiting period impairs the applicant’s ability to hold a fair and open competitive bidding process.). 266 Rural Health Care Support Mechanism, Report and Order, 27 FCC Rcd. 16678, 16737, para. 126 (2012). The Commission’s competitive bidding requirements date back to the inception of the USF and have always applied to service providers. In July 1997, the Commission granted a limited waiver to the competitive bidding rules for contracts signed before the competitive system became fully operational, noting that the exemption applied to “schools, libraries, and service providers.” Federal-State Joint Board on Universal Service, Order on Reconsideration, 12 FCC Rcd. 10095, 10098, paras. 9-10 (1997). In December 1997, the Commission extended the limited waiver of the competitive bidding rules rules regarding support for existing contracts to the rural health care program to “reduce potential confusion on the part of program participants and providers.” Federal-State Joint Board on Universal Service, Fourth Order on Reconsideration 13 FCC Rcd. 2372, 2445, para. 219 (1997). 267 Service providers have been on notice that funding commitments resulting from contracts awarded in violation of the competitive bidding rules will be rescinded and the disbursed funds recovered. In 2007, the Commission noted that “the danger of waste, fraud, and abuse by service providers is as great as the danger of such conduct by rural health care providers” and advised that “funds disbursed from the rural health care support mechanism in violation of a Commission rule that implements the statute or a substantive program goal will be recovered and that sanctions, including enforcement actions would be appropriate in cases of waste, fraud, and abuse…”. Comprehensive Review of the Universal Service Fund Management, Administration, and Oversight, Report and Order, 22 FCC Rcd. 16372, 16385-86, paras. 26, 30 (2007) (Comprehensive Report and Order). See, e.g., Rural Health Care Support Mechanism, Report and Order, 27 FCC Rcd. at 16678, para. 126 (“To the extent there are violations of the competitive bidding rules, such as sharing of inside information during the competitive bidding process, USAC will adjust funding commitments or recover any disbursed funds through its normal process.”). See, e.g., Mastermind Order, 16 FCC Rcd 4028 ; see also Request for Review of Decisions of the Universal Service Administrator by Joseph M. Hill, Trustee in Bankruptcy for Lakehills Consulting, LP., CC Docket No. 02-6, Order, 26 FCC Rcd 16586 (2011). 268 See, e.g., Rural Health Care Support Mechanism, Report and Order, 27 FCC Rcd. at 16678, para. 126; Comprehensive Report and Order, 22 FCC Rcd. at 16385-86. 269 See Lazo Technologies, 26 FCC Rcd at 16661 (affirming denial of “payment for the invoices at issue because the underlying contract for the E-rate services was tainted by a bribery scheme that violated the Commission’s competitive bidding requirements and program rules”); see also Universal Health Services, Inc., 136 S.Ct. at 1999, 2001 (“When, as here, a defendant makes representations in submitting a claim but omits its violations of statutory, regulatory, or contractual requirements, those omissions can be a basis for liability if they render the defendant's representations misleading with respect to the goods or services provided.”). Federal Communications Commission FCC 18-9 35 unreasonable practice under Section 201(b) of the Act for a service provider to seek payment pursuant to an agreement it knows is tainted by violations of the Commission’s competitive bidding rules.270 82. It is a common practice throughout the RHC Program for healthcare providers to retain consultants to assist in navigating the competitive bidding process and the RHC Program generally. The role of consultants in the RHC Program has been a longstanding focus of the Commission, and in particular the risk that service providers and consultants may engage in financial relationships and business practices that would undermine the required competitive bidding process.271 Ten years ago, in requiring that consultants be disclosed to USAC and the Commission, we wrote that such disclosure is necessary to “identify and prosecute individuals that may seek to manipulate the competitive bidding process or engage in other illegal acts.”272 The facts uncovered by the Investigation demonstrate that this is apparently the case with DataConnex, which acted in concert with HCU/H&H and in so doing unduly influenced the competitive bidding process and gained an unfair advantage over other bidders and potential bidders, and was awarded contracts for services based on which DataConnex submitted payment requests to USAC. Such conduct violates sections 54.603 and 54.615 of the Commission’s Rules and sections 201(b) and 254(h)(1)(A) of the Communications Act. 83. The Investigation established that DataConnex obtained dozens of contracts from healthcare providers for services supported by the Fund as a result of its multiyear financial relationship with HCU/H&H whereby it referred healthcare providers to HCU in exchange for contract awards.273 In doing so, DataConnex apparently unduly influenced the procurement process of the HCPs and violated sections 54.603 and 54.615 of the Commission’s Rules requiring a competitive bidding process for these services as a condition to obtaining USF support for these services. 84. As outlined above, DataConnex regularly referred healthcare providers to HCU in order for healthcare providers to obtain consulting services.274 When DataConnex provided healthcare providers with the names of other consultants along with HCU, DataConnex’s referrals oftentimes favored HCU.275 When DataConnex provided a list of consultants to healthcare providers, DataConnex emphasized its prior relationship with HCU and Miles as well as the satisfaction of their mutual clients and advised the healthcare providers it had no experience with the other consultants.276 Although DataConnex identified other consultants to healthcare providers, HCU was the only consultant mentioned positively to healthcare providers.277 In most instances, those healthcare providers that DataConnex referred to HCU retained HCU as their consultant.278 This conduct violates sections 54.603 and 54.615 because DataConnex gained an unfair advantage over other bidders and potential bidders and impaired the HCPs’ ability to hold a fair and competitive procurement process. 85. In HCU’s marketing materials, it held itself out to healthcare providers as an independent 270 47 U.S.C. § 201(b). 271 See supra notes 265-267. For example, if the consultant serves as the contact person and is affiliated with a prospective bidder, he/she may not provide information to other bidders of the same type and quality he/she provides to his/her preferred bidder or may discourage prospective bidders from submitting a bid. Moreover, a close affiliation between a contact person/consultant and a service provider could result in de facto preselection of that healthcare provider, notwithstanding the requirement for awarding contracts by competitive bidding. 272 Rural Health Care Support Mechanism, Order, 22 FCC Rcd. 20360, 20415, para. 104. 273 See supra Section III.A. See also Appendix F. 274 See supra Section III.A.2. 275 See id. 276 Email from Justin McMasters, Aptus, to , Ocoee (Mar. 9, 2015, 9:37 p.m.). HCC20815. 277 Id. 278 See supra Section III.A. Federal Communications Commission FCC 18-9 36 consulting firm that prides itself on having no relationships with any service providers or other vendors.279 In reliance on these assurances of independence, healthcare providers retained HCU to assist in the solicitation of bids, the weighing of competing bids, the filing of program forms, and virtually all other aspects of the healthcare providers’ participation in the RHC Program.280 These assurances of independence were apparently false. Instead, HCU/H&H and DataConnex apparently engaged in a longstanding financial relationship that brought a windfall to both DataConnex and Howard, HCU’s and H&H’s sole owner. 86. This relationship provided incentives for DataConnex to refer healthcare providers to HCU and to make payments to H&H. In exchange, HCU-represented healthcare providers selected DataConnex as their service providers giving HCU an incentive to steer clients to DataConnex during the competitive bidding process. Under this arrangement, DataConnex made payments totaling $222,110.94 to H&H over a two-year period, and HCU-represented healthcare providers awarded dozens of contracts to DataConnex, through competitive bidding processes that were not competitive.281 In addition to several lump sum payments of over $20,000, DataConnex made regular monthly payments to H&H of $5,000, plus additional amounts tied to six specific healthcare providers.282 Such conduct violates sections 54.603 and 54.615 of the Commission’s Rules as DataConnex provided HCU with a financial incentive to steer the HCPs to its proposed telecommunications solutions and gave DataConnex an unfair advantage over other bidders and potential bidders during the procurement process. 87. Internal company emails show key DataConnex/Aptus employees and key HCU/H&H employees discussed the overarching transactional and financial relationship between the companies, the plan for DataConnex to steer healthcare providers to HCU, the plan for HCU to steer healthcare providers to DataConnex to increase each other’s RHC Program revenue, and specific dollar breakdowns of the fees DataConnex would pay to H&H that were to serve as partial payments towards healthcare providers’ consulting fees to HCU, which thereby increased HCU’s revenue and provided the appearance of lowering HCU’s consulting costs to healthcare providers to make HCU more financially attractive to healthcare providers.283 For example, after healthcare provider Iberia Comprehensive rejected HCU’s proposed $550 per month fee, HCU lowered Iberia Comprehensive’s consulting fee to $100 per month and DataConnex began paying H&H $400 per month, with invoices that contain notations to indicate DataConnex’s $400 monthly payments were in connection with services provided to Iberia Comprehensive.284 Similar notations appear in invoices H&H issued to DataConnex for other healthcare providers represented by HCU that were serviced by DataConnex—including healthcare providers Gulf Coast, AEH, Access Family, and Community Counseling Services—further indicating that it was a widespread practice for DataConnex to pay H&H to apparently offset any loss of revenue to HCU caused by the reduced fees charged to some DataConnex clients.285 This conduct impaired the ability of the HCPs to conduct the required competitive bidding process and violates Sections 54.603 and 54.615 of the Commission’s Rules governing the competitive bidding process and the selection of service providers in 279 See supra Section II.B.3; III.A. 280 See id. 281 See supra Sections II.B, III.A; Appendix A. 282 See supra Section III.A; Appendix A. 283 See supra Section III.A. 284 See supra Section III.A.5. 285 See, e.g., Invoice, H&H Advisors, LLC to DataConnex (Oct. 1, 2016). HH_01658. See also supra Section III.A.5. Federal Communications Commission FCC 18-9 37 the RHC Program—violations of which DataConnex was aware when it submitted invoices for payment under such contracts.286 88. As a result of this relationship, DataConnex had the inside track in the competitive bidding process as HCU controlled the distribution of information to potential bidders and participated in the establishment of the bid evaluation criteria and the contract selection process while having a financial interest in DataConnex being awarded the contract. The investigation showed that HCU apparently agreed that DataConnex would be awarded Telecom Program contracts prior to the filing of the Form 465 and before 28-day competitive bidding period started as required by section 54.603 of the Commission’s Rules.287 Healthcare provider AEH’s agreement with HCU provided it could cancel its agreement with HCU if healthcare provider AEH did not award a contract to DataConnex giving HCU a financial interest in the healthcare provider’s selection of DataConnex in violation of sections 54.603 and 54.615 of the Commission’s Rules.288 Additionally, in violation of sections 54.603 and 54.615 of the Commission’s Rules, HCU apparently prepared at least one bid matrix that assessed competing bids without the participation or even knowledge of the healthcare provider, which first learned of the bid matrix during the course of an interview conducted by the Enforcement Bureau.289 89. The Investigation has uncovered that the following healthcare providers (HCPs), represented by HCU, awarded DataConnex Telecom Program contracts from FY2014 through FY2016: • Keefe Memorial Hospital (HCP No. 10328); • Morris County Hospital (HCP No. 10436); • Aaron E. Henry Community Health Services Center – Tunica (HCP No. 10789); • Access Family Health Services (HCP No. 11422); • Aaron E. Henry Community Health Services Center – Clarksdale (HCP No. 11510); • Aaron E. Henry Community Health Services Center – Batesville (HCP No. 11511); • Scott County Dental Clinic (HCP No. 11959); • Iberia Comprehensive Community Health Center (HCP No. 13166); • Abbeville Community Health Center (HCP No. 14689); • Ocoee Regional Health Corporation (HCP No. 16027); 286 See e.g., Mastermind Order, 16 FCC Rcd 4028; see also Requests for Review of Decisions of the Universal Service Administrator by Hospital Networks Management, Inc., Manchaca, TX, 31 FCC Rcd 5731, 5742 para. 20 (Wireline Comp. Bur. 2016) (“The principles underlying the Mastermind Order and other orders addressing fair and open competitive bidding not only apply to the E-rate program . . ., but also to participants in the rural health care program. Indeed, the mechanics of the bidding processes in the rural health care and E-rate programs are effectively the same.”) (internal citation omitted); Request for Review, Franciscan Skemp Waukon Clinic, Waukon, IA, 29 FCC Rcd 11714, 11717 at para. 9 (Wireline Comp. Bur. 2014) (finding that signing a Telecom Program contract before the expiration of the 28-day waiting period impairs the applicant’s ability to hold a fair and open competitive bidding process.). The Commission’s Rules governing competitive bidding in the RHC Program also incorporate by reference all applicable state and local laws. See 47 CFR § 54.603(a) (“To select the telecommunications carriers that will provide services eligible for universal service support to it under the Telecommunications Program, each eligible health care provider shall participate in a competitive bidding process pursuant to the requirements established in this section and any additional and applicable state, Tribal, local, or other procurement requirements.”) (emphasis added). 287 See supra Section III.A.4. 288 See supra Section III.A.4. 289 See id. Federal Communications Commission FCC 18-9 38 • Aaron E. Henry Community Health Services Center – Mobile (HCP No. 16112); • Aaron E. Henry Community Health Services Center – Quitman School (HCP No. 16113); • Aaron E. Henry Community Health Services Center – Tunica School (HCP No. 16114); • Ocoee Regional Health Corporation – Bledsoe (HCP No. 16115); • Ocoee Regional Health Corporation – Grundy (HCP No. 16116); • Ocoee Regional Health Corporation – Meigs (HCP No. 16117); • Ocoee Regional Health Corporation – Rhea (HCP No. 16118); • Region One Mental Health Center – Cheryl Street (HCP No. 16780); • Merryville Community Health Center (HCP No. 18219); • Cedar County Family Clinic (HCP No. 25077); • Cedar County Memorial Hospital (HCP No. 25078); • Cedar County Memorial Hospital Medical Mall Clinic (HCP No. 25421); • Houlka Medical Clinic (HCP No. 26977); • Community Counseling Services (HCP No. 30911); • Community Counseling Services (HCP No. 30913); • Community Counseling Services (HCP No. 30915); • Community Counseling Services (HCP No. 30916); • Community Counseling Services (HCP No. 30917): • Region One Mental Health Center – Tunica (HCP No. 36880); • Region One Mental Health Center – Charleston (HCP No. 36918); • Region One Mental Health Center – Locust Street (HCP No. 36925); • Region One Mental Health Center – Rosa Fort (HCP No. 36937); • Region One Mental Health Center – Humphrey Street (HCP No. 36973); • Region One Mental Health Center – Clarksdale (HCP No. 36976); • Aaron E. Henry Community Health Services Center – MJ Edwards (HCP No. 38302); • Sabine Comprehensive Health Clinic (HCP No. 39855); • SEMO Health Network - East Prairie Dental Center (HCP No. 44060); • Gulf Coast Mental Health Center - Stone County Satellite Office (HCP No. 44192); • SWLA Center for Health Services – Crowley (HCP No. 46808); • SWLA Center for Health Services – Oberlin (HCP No. 46809); • Marshall Medical Centers – Morgan (HCP No. 48295); • Marshall Medical Centers – South Dekalb (HCP No. 48297); • Marshall Medical Centers – Guntersville (HCP No. 48299); • Marshall Medical Centers – Grant (HCP No. 48302); and Federal Communications Commission FCC 18-9 39 • Langley Health Services (HCP No. 48646).290 90. For the one year prior to the release of this NAL, DataConnex submitted seven invoices to USAC that contained 195 payment requests in connection with the contracts these HCU-represented healthcare providers awarded DataConnex, and through which DataConnex received $740,830 in support payments from the Fund.291 Such payment requests included certain representations about the services provided and also falsely implied compliance with the Commission’s RHC Program rules, including sections 54.603 and 54.615, which concern the competitive bidding process. 91. The payment of funds—in this instance, more than $200,000 in a two-year period—by a service provider to a company under common ownership with a consultant that purports to solely represent the interests of healthcare providers in the RHC Program placed DataConnex in the position to influence the healthcare provider’s award of bids. The Commission, through its Administrator – USAC, would not have authorized payment of these funds but for the contracts awarded to DataConnex pursuant to a competitive bidding process that was neither fair nor open. 92. As a result of the conduct described above which impaired the ability of the HCPs to conduct the required competitive bidding process and for which DataConnex received USF support payments, DataConnex is in apparent violation of Section 254(h)(1)(A) of the Act and Sections 54.603 and 54.615 of the Commission’s Rules governing the competitive bidding process and the selection of service providers in the RHC Program—violations of which DataConnex was aware when it submitted invoices for payment under such contracts.292 For the same reasons, DataConnex apparently acted unjustly and unreasonably in violation of Section 201(b) of the Act by requesting payment for services provided under a contract that was tainted by practices that violated the Commission’s competitive bidding rules.293 B. DataConnex Apparently Falsely Implied Compliance with the Rural Health Care Program Rules, and Acted Unreasonably and Unjustly, When Requesting Payment for Services Rendered Based on Apparently False, Forged, Misleading, and Unsubstantiated Urban Rate Documents 93. Section 254(h)(1)(A) of the Act requires telecommunications providers to “provide telecommunications services which are necessary for the provision of health care services . . . at rates that 290 Information on file with EB-IHD-15-00020296. 291 Id. See also Appendix D. 292 See e.g., Mastermind Order, 16 FCC Rcd 4028; see also Requests for Review of Decisions of the Universal Service Administrator by Hospital Networks Management, Inc., Manchaca, TX, 31 FCC Rcd 5731, 5742 para. 20 (Wireline Comp. Bur. 2016) (“The principles underlying the Mastermind Order and other orders addressing fair and open competitive bidding not only apply to the E-rate program . . ., but also to participants in the rural health care program. Indeed, the mechanics of the bidding processes in the rural health care and E-rate programs are effectively the same.”) (internal citation omitted); Request for Review, Franciscan Skemp Waukon Clinic, Waukon, IA, 29 FCC Rcd 11714, 11717 at para. 9 (Wireline Comp. Bur. 2014) (finding that signing a Telecom Program contract before the expiration of the 28-day waiting period impairs the applicant’s ability to hold a fair and open competitive bidding process.). The Commission’s Rules governing competitive bidding in the RHC Program also incorporate by reference all applicable state and local laws. See 47 CFR § 54.603(a) (“To select the telecommunications carriers that will provide services eligible for universal service support to it under the Telecommunications Program, each eligible health care provider shall participate in a competitive bidding process pursuant to the requirements established in this section and any additional and applicable state, Tribal, local, or other procurement requirements.”) (emphasis added). Although we do not reach the issue of whether DataConnex violated applicable state or other local laws through its apparent relationship with HCU and H&H, we note that such violations are possible in this and other cases. 293 47 U.S.C. § 201(b). Federal Communications Commission FCC 18-9 40 are reasonably comparable to rates charged for similar services in urban areas.”294 As outlined above, the Enforcement Bureau uncovered evidence that DataConnex issued and willfully caused healthcare providers to submit to USAC apparently false, misleading, and unsubstantiated urban rate documents to increase the amount of money DataConnex obtained from the Fund in respects clearly in violation of sections 54.605 and 54.609 of the Commission’s rules.295 It apparently did so in at least three different ways: (1) DataConnex proffered urban rate letters for Mississippi and Missouri to healthcare providers and/or their consultants, and which were submitted to USAC, that relied on two forged and false AT&T sales quotes; (2) DataConnex proffered urban rate letters to healthcare providers, their consultants, and USAC that misrepresented the true cost of urban telecommunications service, and misleadingly relied on only one component of service, not the total cost of service as required by our Rules, in order to deflate its urban rates; and (3) DataConnex proffered urban rate documents without possessing the supporting or underlying documentation or a reasonable basis for relying on this purported urban rate.296 Each of these categories of conduct gives rise to apparent violations of the Commission’s Rules governing urban rates in the Telecom Program. 94. Section 54.605 of the Commission’s rules mandates how service providers are to calculate urban rates. If the rural site is located within the standard urban distance,297 “the urban rate for that service shall be a rate no higher than the highest tariffed or publicly available rate charged to a commercial customer for a functionally similar service in any city with a population of 50,000 or more in that state, calculated as if it were provided between two points within the city.”298 If the rural site is located beyond the standard urban distance, then “the urban rate for that service shall be a rate no higher than the highest tariffed or publicly-available rate charged to a commercial customer for a functionally similar service provided over the standard urban distance in any city with a population of 50,000 or more in that state.”299 Section 54.609 of the Commission’s rules provides that amount of support that is provided through the Telecom Program for an eligible service is based on the difference, if any between the urban rate and the rural rate charged for the service as defined by the Commission’s rules.300 As used in the Commission’s Rules governing the Telecom Program, the “rate” refers to the entire cost of a service, end-to-end to the customer and does not refer to the cost of each element or sub-element of a telecommunications service.301 95. First, DataConnex issued urban rate letters for healthcare providers located in Mississippi and Missouri that relied on sales quotes that were purportedly issued by AT&T.302 However, AT&T has no record that it issued the Jackson Zoo or Hardee’s Restaurant sales quotes that DataConnex claims supported its urban rate letters, nor does AT&T appear to offer services to commercial customers in those areas for $ as stated on DataConnex’s urban rate letters. The AT&T sales quotes on which DataConnex relied therefore appear to be false and forged. By issuing urban rate letters based on apparently false and forged documents, which were then submitted to USAC with Form 466s requesting 294 47 U.S.C. § 254(h)(1)(A). 295 47 CFR §§ 54.605, 54.609. 296 See supra Section III.B. 297 “The ‘standard urban distance’ for a state is the average of the longest diameters of all cities with a population of 50,000 or more within the state.” 47 CFR § 54.605(c). 298 47 CFR § 54.605(a). 299 47 CFR § 54.605(b). 300 See 47 CFR §§ 54.605, 54.607, 54.609. 301 See Federal-State Joint Board on Universal Service, Report and Order, 12 FCC Rcd. 8776, 9128-9129, at paras. 674, 675 (1997); see also 47 CFR §§ 54.605, 54.607 and 54.609. 302 DCX_00017767; DCX_00017768. Federal Communications Commission FCC 18-9 41 USF support, and which formed the basis for the payment requests DataConnex submitted to USAC, DataConnex apparently violated sections 54.605 and 54.609 of the Commission’s Rules and sections 201(b) and 254(h)(1)(A) of the Communications Act.303 96. Second, DataConnex apparently misrepresented the urban rates for certain services by disregarding the more expensive component of the carrier-issued service quote in its urban rate letters.304 In doing so, DataConnex misrepresented the actual cost of urban area services, and thereby drastically reduced its urban rate. For the ACC Business sales quotes, DataConnex used only the $ “port” charge and ignored any costs associated with the more expensive “cir” charge. In the Jackson Zoo sales quote, DataConnex ignored the $ “access charge” and used only the “port” charge of $ in its urban rate letters. Finally, in the Airespring sales quotes, which contained one line item for $ per month for port costs and an additional charge of $ per month for loop costs, DataConnex apparently ignored the $ per month component and only relied on the $ per month component to misrepresent its urban rate. These baseless and/or partial charges, chosen with precision to support dubious urban rate quotes, and represent a concerted effort, in apparent violation of sections 54.605 and 54.609 of the Commission’s Rules, to artificially deflate the urban rate to increase the margins between the urban rate and the rural rate, and therefore increase the amount of money DataConnex received from the USF. As a result of this conduct, DataConnex also violated sections 201(b) and 254(h)(1)(A) of the Communications Act. 97. Third, DataConnex issued urban rate letters without the legally required documentation to substantiate the claimed rates.305 DataConnex engaged in this apparent conduct in several ways. DataConnex apparently supported many of its urban rates for various service types and bandwidths throughout the Southeast region of the United States based upon an ACC sales quote for ASE-Switched Ethernet Service in Tennessee at bandwidths of 10 Mbps, 50 Mbps, and 100 Mbps and emails in which an AT&T employee speculated that these rates could apply to other states if a series of conditions were met and additional approvals obtained. It does not appear that the relevant conditions were met for the described ACC services, nor did DataConnex provide any documentation showing that the conditions were met. Nor does it appear that DataConnex obtained sales quotes from ACC for any other state, for any other service type, or for any other bandwidth. By issuing urban rate letters based on unsubstantiated urban rates, which were then submitted to USAC with Form 466s requesting USF support, and which formed the basis of the payment requests submitted by DataConnex to USAC, DataConnex apparently violated sections 54.605 and 54.609 of the Commission’s Rules and sections 201(b) and 254(h)(1)(A) of the Communications Act. 98. Similarly, DataConnex issued the urban rate letters in reliance on the Jackson Zoo and Hardee’s Restaurant documents prior to their creation and without a reasonable basis for relying on these purported urban rates. DataConnex only apparently obtained supporting documentation for these urban rate letters once it was requested in a July 2016 USAC audit. In an attempt to substantiate its previously issued urban rates, in August 2016, Blahnik contacted Miles at HCU/H&H and stated that DataConnex was “needing to get copies of the documents that we are using for our urban rates.”306 McMasters reiterated that DataConnex needed the documents “ASAP” because “[t]his is part of the audit therefore we are on a very tight deadline.”307 In return, Miles sent McMasters the two apparently false and forged 303 Even if a third party unrelated to DataConnex forged the Jackson Zoo and Hardee’s Restaurant sales quotes, DataConnex’s issuance of urban rate letters based on these sales quotes still runs afoul of the Commission’s Rules. A service provider is under no obligation to issue urban rate letters to its customers but when it does so, it must have a justifiable basis for representing that the rates are available to commercial customers in the urban area. 304 See Appendix G. 305 See Appendix E. See also 47 CFR § 54.619. 306 Emails between McMasters, Blahnik, Harrison, Breazeale, RE: Urban Rates (Aug. 10, 2016). See also supra Section III.B.3 at para. 307 Id. 75. Federal Communications Commission FCC 18-9 42 urban rate documents purportedly issued by AT&T,308 which DataConnex then submitted to USAC as part of its response to the audit.309 Prior to August 2016, when Miles supplied DataConnex with documents to substantiate its urban rates, DataConnex made representations to USAC, without a justifiable basis for doing so, about its urban rate quotes in connection with receiving USF support payments which is in violation of sections 54.605 and 54.609 of the Commission’s Rules and sections 201(b) and 254(h)(1)(A) of the Communications Act. 99. In total, the Enforcement Bureau has identified 419 payment requests that DataConnex submitted that arise from one or more of the three categories of apparent urban rate violations DataConnex committed.310 Such payment requests included certain representations about the services provided and also falsely implied compliance with the Commission’s RHC Program rules, including the rules applicable to the offering of reasonably comparable urban rates. Therefore, as described above, DataConnex apparently violated Sections 54.605 and 54.609 of the Commission’s Rules. Separately and independently, DataConnex apparently violated Section 201(b) of the Communications Act by unjustly and unreasonably seeking payment for services rendered based on such urban rate documents.311 DataConnex also violated Section 254(h)(1)(A) of the Act, which requires it to seek USF payment for only the difference between the cost of services provided to HCPs in a given state and reasonably comparable rates for similar services in urban areas of the same state.312 V. PROPOSED FORFEITURE 100. For the violations at issue here, Section 503(b)(2)(B) of the Act authorizes the Commission to assess a forfeiture penalty against a telecommunications carrier of up to $196,387 for each violation or each day of a continuing violation, up to a statutory maximum of $1,963,870 for a single act or failure to act.313 The Commission retains the discretion to issue forfeitures on a case-by-case basis, under its general forfeiture authority contained in Section 503 of the Act. In determining the appropriate forfeiture amount, we consider the factors enumerated in Section 503(b)(2)(E) of the Act, including “the nature, circumstances, extent, and gravity of the violation and, with respect to the violator, the degree of 308 Id. 309 See Letter from William Blahnik, DataConnex to Albert Lucas, BCA Watson Rice, LLP, (Aug. 22, 2016). See also Letter from Deepika Ravi, Harris, Wiltshire & Grannis, LLP to David M. Sobotkin, FCC and Mary Beth DeLuca, FCC (Jan. 27, 2017). 310 See supra Section III.B; Appendix B, Appendix C. To the extent any payment request falls into more than one of these categories, the payment requests have been de-duplicated to avoid proposing any forfeiture more than once for any given payment request. 311 47 U.S.C. § 201(b). 312 47 U.S.C. § 254(h)(1)(A). 313 See 47 U.S.C. § 503(b)(2)(B); 47 CFR § 1.80(b)(2). These amounts reflect inflation adjustments to the forfeitures specified in Section 503(b)(2)(B) ($100,000 per violation or per day of a continuing violation and $1,000,000 per any single act or failure to act). The Federal Civil Penalties Inflation Adjustment Act of 1990, Pub. L. No. 101-410, 104 Stat. 890, as amended by the Debt Collection Improvement Act of 1996, Pub. L. No. 104-134, Sec. 31001, 110 Stat. 1321 (DCIA), requires the Commission to adjust its forfeiture penalties periodically for inflation. See 28 U.S.C. § 2461 note (4). The Commission most recently adjusted its penalties to account for inflation in 2016. See Amendment of Section 1.80(b) of the Commission’s Rules, Adjustment of Civil Monetary Penalties to Reflect Inflation, DA18-12 (Enf. Bur. 2018) (ordering inflation adjustments effective January 5, 2018). DataConnex filed an FCC Form 499 with the Commission in which it described its principal communications function as Competitive Access Provider/Competitive Local Exchange Carrier and conducted its business as a Competitive Access Provider/Competitive Local Exchange Carrier and as a reseller of telecommunications services. See FCC Form 499, DataConnex, LLC (filer ID 830632). Federal Communications Commission FCC 18-9 43 culpability, any history of prior offenses, ability to pay, and such other matters as justice may require,”314 as well as our forfeiture guidelines.315 101. Deterring the conduct outlined here and the importance of preserving the Fund for the critical mission of the RHC Program are of paramount importance to the Commission. The Commission must propose significant forfeitures when—as apparently set forth here—a service provider apparently works in concert with a consultant that is supposed to be representing the best interests of healthcare providers but instead steers contracts to a service provider and provides misleading and unsubstantiated urban rate documents to USAC to increase the amount of USF payments it receives. This apparent conduct undermines the fundamental operation of the RHC Program and therefore warrants a significant proposed forfeiture. 102. Based on the facts and record before us, we have determined that DataConnex’s apparent violations involve: (i) falsely implying compliance with the Commission’s competitive bidding process and urban rate rules when submitting claims for payment;316 (ii) engaging in an unjust and unreasonable practice in violation of Section 201(b) of the Act by knowingly submitting invoices for payment based on contracts tainted by violations of the Commission’s competitive bidding rules;317 (iii) falsely implying compliance with the Commission’s rules concerning the calculation of urban rates; and (iv) engaging in an unjust and unreasonable practice in violation of Section 201(b) by seeking payment for services rendered based on urban rate documents that are false, forged, misleading, and unsubstantiated.318 We find these apparent violations occurred, at a minimum, beginning in 2014 and continued through the present as a result of DataConnex’s submission of misleading payment requests to USAC in connection with contracts it received as a result of its multiyear financial relationship with H&H and HCU, and DataConnex’s submission of payment requests to USAC in connection with those FRNs supported by false, forged, misleading, and unsubstantiated urban rate documents it submitted. As explained above, each invoice submission for each claim for payment was tainted by illegal conduct and falsely implied compliance with the requisite Commission rules because DataConnex knowingly failed to disclose its noncompliance with essential program requirements which, if disclosed to the agency, would have resulted in the nonpayment of those claims.319 Thus, the payment of these claims was directly caused by DataConnex’s submission of these false and misleading invoices. 103. As set forth below, the Commission proposes a forfeiture penalty as follows: (1) a base 314 47 U.S.C. § 503(b)(2)(E). 315 See 47 CFR § 1.80(b)(8); Note to Paragraph (b)(8): Guidelines for Assessing Forfeitures. 316 47 CFR §§ 54.603, 54.609. See also 47 U.S.C. § 254(h)(1)(A). These important and material requirements are essential to the Commission’s payment of support under the RHC Program. See, e.g., Universal Health Services, Inc. v. U.S., 136 S.Ct. 1989, 2001 (2016). In its decision, the Court discussed the established principle that “‘[a] representation stating the truth so far as it goes but which the maker knows or believes to be materially misleading because of his failure to state additional or qualifying matter’ is actionable.” Id. at 1999 (quoting Restatement (Second) of Torts section 529, p. 62 (1976)).” 317 47 U.S.C. § 201(b). 318 47 CFR §§ 54.609, 54.615. See also 47 U.S.C. § 254(h)(1)(A). Even though counts (i) and (ii) are conceptually separate and independent violations, we are treating them as one category of violations for purposes of a proposed forfeiture because they arose out of the same conduct. For the same reason, we treat counts (iii) and (iv) as one category of violations for purposes of calculating a proposed forfeiture. 319 See United States ex rel. Marcus v. Hess, 317 U.S. 537, 542-43 (1943) (finding unlawful conduct perpetuated with only one goal in mind, payment at excessive rates for services provided through collusive bidding). In Hess, the court explained, “The government’s money would never have been placed in the joint fund for payment to respondents had its agents known the bids were collusive . . . . This fraud did not spend itself with the execution of the contract. Its taint entered into every swollen estimate which was the basic cause for payment of every dollar paid . . . .” Id. at 543. Federal Communications Commission FCC 18-9 44 forfeiture of $20,000 per payment request related to the apparently wrongful conduct contained in each invoice that DataConnex filed between February 8, 2017 and July 5, 2017, for each category of alleged violations; and (2) an upward adjustment of the base forfeiture equal to three times the amount DataConnex improperly requested and/or received from the Fund in connection with these payment requests. 104. In connection with DataConnex’s apparent violations, DataConnex submitted eight invoices to USAC which contained 614 separate payment requests, all of which requests are within the one-year statute of limitations period, that arose from contracts it received as a result of conduct that apparently violated the Commission’s competitive bidding rules or that arose from urban rates that DataConnex issued that were apparently false, forged, misleading, or unsubstantiated.320 As further described below, we propose a forfeiture penalty of $18,715,405 for these apparent violations. A. Proposed Forfeiture Amount for DataConnex’s Apparent Violations of the Commission’s Competitive Bidding Rules and Sections 254(h)(1)(A) and 201(b) of the Communications Act 105. The Commission’s Rules require service providers to participate in, and obtain contracts from healthcare providers as a result of, a competitive bidding process. When service providers such as DataConnex enter into an undisclosed financial relationship with a healthcare provider’s consultant, such service providers receive reimbursements from the Fund to which they are not entitled under the RHP Program’s rules—even where there are no other bidders for a given Form 465 request for bids. Without the requisite level playing field and transparency mandated by the Commission’s Rules requiring a competitive bidding process, the RHC Program would be, as it apparently was here, susceptible to fraud, and inside dealing. Such an outcome would present a severe threat to the continued functioning of the RHC Program and would prevent it from serving its fundamental purpose of allowing rural healthcare facilities to enjoy the same advances in telecommunications technology so critical to 21st century medicine as their urban counterparts. 106. In total, the Investigation uncovered evidence that demonstrates that DataConnex apparently violated the Communications Act and the Commission’s Rules and Orders requiring a competitive bidding process in the Telecom Program, and DataConnex submitted 195 payment requests resulting from such conduct.321 Consistent with our treatment of similar alleged rule violations, we apply a base forfeiture of $20,000 per payment request related to this apparent wrongful conduct contained on each invoice that DataConnex filed within one year prior to the release of this NAL,322 for a total base forfeiture of $3,900,000. 107. The loss to the Fund within the last year prior to the release of this NAL as a result of contracts DataConnex received in apparent violation of the Communications Act and the Commission’s Rules governing competitive bidding in the Telecom Program for those healthcare providers represented by HCU is $740,830.323 Therefore, due to the substantial harm to the Fund as well as the substantial economic gain to DataConnex, we propose an upward adjustment of the base forfeiture equal to three times the amount DataConnex improperly received from the Fund within the last year prior to the release 320 See infra Appendix D. Where a single payment request involved apparent competitive bidding and urban rate violations, such a payment request is only counted once. 321 See infra Appendix D. See 47 U.S.C. §§ 201(b) and 254(h)(1)(A). See also 47 C.F.R. §§ 54.603 and 54.615. 322 This upward adjustment is consistent with the Commission’s prior treatment of similar alleged rule violations involving intentional and repeated conduct as is the case here. See Network Services Solutions, Amendment to Notice of Apparent Liability and Order, 32 FCC Rcd. 5169, 5171-3 (June 7, 2017) (NSS Amendment). 323 See Appendix D. Federal Communications Commission FCC 18-9 45 of this NAL,324 or $2,222,490, for a total proposed forfeiture amount of $6,122,490 for DataConnex’s apparent violations. B. Proposed Forfeiture Amount for DataConnex’s Apparent Violations of the Commission’s Rules Governing Urban Rates and Sections 254(h)(1)(A) and 201(b) of the Communications Act 108. The reliance on apparently false and forged urban rates and the issuance of various apparently false, misleading, and unsubstantiated urban rate letters used to calculate USF support are egregious acts of misconduct, and the Commission proposes a commensurate forfeiture. The Commission, in the RHC Program and elsewhere, relies on program participants to act with integrity in submitting documents used to determine support from the Fund. 109. Therefore, the Commission proposes (1) a base forfeiture of $20,000 for each payment request related to this wrongful conduct contained in each invoice that DataConnex filed within one year prior to the release of this NAL for which DataConnex provided apparently misleading and/or unsubstantiated urban rate documents, or urban rate documents that relied on apparently forged or false rates as the basis of DataConnex’s claims from the Fund; (2) an upward adjustment of the base forfeiture equal to three times the amount DataConnex improperly received from the Fund as a result of its misconduct within the last year prior to the release of this NAL.325 110. The record before the Commission shows DataConnex submitted 419 payment requests that rely upon apparently false, forged, misleading, and unsubstantiated information from DataConnex. We apply a base forfeiture of $20,000 per payment request, for a total base forfeiture of $8,380,000.326 DataConnex received $1,404,305 from the Fund within the last year prior to the release of this NAL as a result of this conduct,327 and we accordingly propose an upward adjustment to $4,212,915, for a total proposed forfeiture amount of $12,592,915 for DataConnex’s apparent violations of the Communications Act and the Commission’s Rules governing urban rates.328 VI. CONCLUSION 111. In sum, considering DataConnex’s apparent violations, we propose a total forfeiture penalty of $18,715,405. 112. In addition, considering DataConnex’s apparent egregious misconduct and demonstrated harm to the Fund from the apparent violations, we order DataConnex to submit a report within 30 days of release of this NAL explaining why the Commission should not initiate proceedings against DataConnex to revoke its Commission authorizations. 113. While DataConnex still has an opportunity to respond to the apparent violations identified in this NAL, we recognize that the proposed forfeiture discussed herein may cause uncertainty for those healthcare providers that have selected DataConnex as their service provider. Accordingly, we will consider using our discretion to waive Section 54.603(b) of the Commission’s Rules to provide these 324 See NSS Amendment, 32 FCC Rcd. at 5171-73. 325 Both the base forfeiture amount and the proposed upward adjustment are consistent with the Commission’s prior treatment of alleged violations, involving the Commission’s rules governing urban rates where the conduct is intentional and repeated. See id. 326 See supra Section III.B; Appendix B, Appendix C, Appendix D. 327 See Appendix D. 328 See 47 U.S.C. §§ 201(b) and 254(h)(1)(A). See also 47 C.F.R. §§ 54.605 and 54.609. Federal Communications Commission FCC 18-9 46 healthcare providers with the option of selecting a new service provider if needed to help alleviate any disruption in service.329 VII. ORDERING CLAUSES 114. Accordingly, IT IS ORDERED that, pursuant to Sections 503(b) of the Act, and 1.80 of the Rules,330 DataConnex, LLC is hereby NOTIFIED of this APPARENT LIABILITY FOR A TOTAL FORFEITURE AND ORDER in the amount of $18,715,405 for apparently willfully and repeatedly violating Sections 254(h)(1)(A) and 201(b) of the Act and Sections 54.603, 54.605, 54.609, and 54.615 of the Commission’s Rules.331 115. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the Rules,332 within thirty (30) calendar days of the release date of this Notice of Apparent Liability for Forfeiture and Order, DataConnex SHALL PAY the full amount of the proposed forfeiture or SHALL FILE a written statement seeking reduction or cancellation of the proposed forfeiture consistent with paragraph 117 below. 116. Payment of the forfeiture must be made by check or similar instrument, wire transfer, or credit card, and must include the NAL/Account number and FRN referenced above. DataConnex shall also send electronic notification of payment to Rakesh Patel at Rakesh.Patel@fcc.gov, to Mary Beth DeLuca at MaryBeth.DeLuca@fcc.gov, and to David M. Sobotkin at David.Sobotkin@fcc.gov on the date said payment is made. Regardless of the form of payment, a completed FCC Form 159 (Remittance Advice) must be submitted.333 When completing the FCC Form 159, enter the Account Number in block number 23A (call sign/other ID) and enter the letters “FORF” in block number 24A (payment type code). Below are additional instructions you should follow based on the form of payment you select: • Payment by check or money order must be made payable to the order of the Federal Communications Commission. Such payments (along with the completed Form 159) must be mailed to Federal Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000, or sent via overnight mail to U.S. Bank – Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO 63101. • Payment by wire transfer must be made to ABA Number 021030004, receiving bank TREAS/NYC, and Account Number 27000001. To complete the wire transfer and ensure appropriate crediting of the wired funds, a completed Form 159 must be faxed to U.S. Bank at (314) 418-4232 on the same business day the wire transfer is initiated. • Payment by credit card must be made by providing the required credit card information on FCC Form 159 and signing and dating the Form 159 to authorize the credit card payment. The completed Form 159 must then be mailed to Federal Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000, or sent via overnight mail to U.S. Bank – Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO 63101. Any request for making full payment over time under an installment plan should be sent to: Chief Financial Officer—Financial Operations, Federal Communications Commission, 445 12th Street, S.W., 329 Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990); see also Rural Health Care Support Mechanism, DA 17-1006 (Wireline Comp. Bur. Oct. 12, 2017), 2017 WL 4571148; Rural Health Care Universal Support Mechanism, 32 FCC Rcd. 1328 (Wireline Comp. Bur. 2017). 330 47 U.S.C. § 503(b); 47 CFR § 1.80. 331 47 U.S.C. §§ 201(b), 254(h)(1)(A); 47 CFR §§ 54.603, 54.605, 54.609, 54.615. 332 47 CFR § 1.80. 333 An FCC Form 159 and detailed instructions for completing the form may be obtained at http://www.fcc.gov/Forms/Form159/159.pdf. Federal Communications Commission FCC 18-9 47 Room 1-A625, Washington, D.C. 20554.334 If you have questions regarding payment procedures, please contact the Financial Operations Group Help Desk by phone, 1-877-480-3201, or by e-mail, ARINQUIRIES@fcc.gov. 117. The written statement seeking reduction or cancellation of the proposed forfeiture, if any, must include a detailed factual statement supported by appropriate documentation and affidavits pursuant to Sections 1.16 and 1.80(f)(3) of the Rules.335 The written statement must be mailed to the Office of the Secretary, Federal Communications Commission, 445 12th Street, SW, Washington, DC 20554, ATTN: Enforcement Bureau, Federal Communications Commission and must include the NAL/Acct. No. referenced in the caption. The written statement shall also be emailed to Rakesh.Patel@fcc.gov, MaryBeth.DeLuca@fcc.gov, and David.Sobotkin@fcc.gov. 118. The Commission will not consider reducing or canceling a forfeiture in response to a claim of inability to pay unless the petitioner submits: (1) federal tax returns for the most recent three- year period; (2) financial statements prepared according to generally accepted accounting principles (GAAP); or (3) some other reliable and objective documentation that accurately reflects the petitioner’s current financial status. Any claim of inability to pay must specifically identify the basis for the claim by reference to the financial documentation submitted. 119. IT IS FURTHER ORDERED that DataConnex shall respond to the order in paragraph 112 within thirty (30) calendar days of the release date of this Notice of Apparent Liability for Forfeiture and Order. 120. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability for Forfeiture and Order shall be sent by certified mail, return receipt requested, and first-class mail to William Blahnik, Chief Executive Officer,336 DataConnex, LLC, PO Box 1209, Brandon, FL 33509. FEDERAL COMMUNICATIONS COMMISSION Marlene H. Dortch Secretary 334 See 47 CFR § 1.1914. 335 47 CFR §§ 1.16, 1.80(f)(3). 336 William Blahnik has also been identified to the Commission as the CEO of DataConnex. See FCC Form 499 Filer Database, Detailed Information (Apr. 3, 2017), http://apps.fcc.gov/cgb/form499/499detail.cfm?FilerNum=830632 (last visited Oct. 27, 2017). Federal Communications Commission FCC 18-9 48 APPENDIX A PAYMENTS MADE BY DATACONNEX TO H&H ADVISORS Date Outbound Account Inbound Account Amount December 23, 2014 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $30,000 February 11, 2015 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,000 March 18, 2015 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,000 May 7, 2015 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $490.32 May 7, 2015 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,000 May 7, 2015 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,400 June 17, 2015 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,400 July 27, 2015 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $14,198.04 August 10, 2015 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $9,850 September 30, 2015 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,850 October 20, 2015 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $10,100 November 10, 2015 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $8,100 December 10, 2015 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $8,100 Federal Communications Commission FCC 18-9 49 January 19, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $3,100 January 19, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $20,000 February 23, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $23,100 March 11, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $8,422.58 April 8, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,100 June 6, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,100 June 6, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,100 July 11, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,100 August 22, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,100 September 14, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,100 October 17, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $6,700 November 10, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,900 December 13, 2016 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,900 Federal Communications Commission FCC 18-9 50 January 20, 2017 DataConnex, Bank, account ending * H&H Advisors, Bank, account ending * $5,900 TOTAL: $222,110.94 Federal Communications Commission FCC 18-9 51 APPENDIX B FY2016 FRNs SUPPORTED BY APPARENTLY FORGED JACKSON ZOO AND HARDEE’S RESTAURANT SALES QUOTES HCP Number HCP Name FRN 10789 Aaron E. Henry Community Services Center, Inc. - Tunica Clinic 16766461 10800 Yalobusha General Hospital 16855161 10800 Yalobusha General Hospital 16855171 10800 Yalobusha General Hospital 16855201 11422 Access Family Health 16766241 11510 Aaron E. Henry Community Services Center, Inc. - Clarksdale 16766431 11511 Aaron E. Henry Community Services Center, Inc. - Batesville Clinic 16766421 15737 Central Mississippi Civic Improvement Association, Inc. dba Jackson Hinds Copiah Comprehensive Health Complex 16856201 16113 Aaron E. Henry – Quitman 16766441 16114 Aaron E. Henry – Tunica 16766451 25077 Cedar County Family Clinic * 16870141 25078 Cedar County Memorial Hospital* 16870131 25519 Kings Daughter Medical Center 16804441 25519 Kings Daughter Medical Center 16804471 25519 Kings Daughter Medical Center 16813561 Federal Communications Commission FCC 18-9 52 HCP Number HCP Name FRN 25519 Kings Daughter Medical Center 16846771 25519 Kings Daughter Medical Center 16846811 25820 Jefferson Hospital 16856341 25820 Jefferson Hospital 16912951 25820 Jefferson Hospital 16955341 28265 Community Counseling Services 16767391 28265 Community Counseling Services 16767411 28265 Community Counseling Services 16870201 28265 Community Counseling Services 16870211 28265 Community Counseling Services 16870291 28265 Community Counseling Services 16870301 28265 Community Counseling Services 16870321 28265 Community Counseling Services 16870331 30493 Tippah County 16874931 30911 Community Counseling Services 16870261 30913 Community Counseling Services 16870271 30915 Community Counseling Services 16767531 Federal Communications Commission FCC 18-9 53 HCP Number HCP Name FRN 31556 Dr. Arenia Mallory 16881361 31556 Dr. Arenia Mallory 16881381 31556 Dr. Arenia Mallory 16881401 31556 Dr. Arenia Mallory 16881441 38144 KDMC Medical Clinic 16804541 38145 KDMC Sports Medicine 16804531 38146 KDMC Children’s Clinic 16804521 42473 KDMC Specialty Clinic 16804511 44749 Jackson-Hinds Utica 16855461 44749 Jackson-Hinds Utica 16856081 44749 Jackson-Hinds Utica 16856091 44749 Jackson-Hinds Utica 16856101 44749 Jackson-Hinds Utica 16856121 44749 Jackson-Hinds Utica 16856131 44749 Jackson-Hinds Utica 16856141 44749 Jackson-Hinds Utica 16856161 44749 Jackson-Hinds Utica 16856171 Federal Communications Commission FCC 18-9 54 HCP Number HCP Name FRN 44749 Jackson-Hinds Utica 16856191 44751 Jackson-Hinds – Edwards 16856301 *FRNs supported by Hardees Sales Quote Federal Communications Commission FCC 18-9 55 APPENDIX C FY2016 FRNs SUPPORTED BY ACC SALES QUOTES AS URBAN RATE DOCUMENTS HCP Number HCP Name FRN 13166 Iberia Comprehensive 16766521 13166 Iberia Comprehensive 16766531 13166 Iberia Comprehensive 16766541 13166 Iberia Comprehensive 16766551 13166 Iberia Comprehensive 16766571 14689 Abbeville Community Health 16766581 15050 Teche Action Board – Franklin 16816851 15050 Teche Action Board – Franklin 16816841 15050 Teche Action Board – Franklin 16816871 15050 Teche Action Board – Franklin 16816861 15050 Teche Action Board – Franklin 16816931 15050 Teche Action Board – Franklin 16816971 15112 Teche Action Board – Edgard 16817001 16017 Richland Parish Hospital or Delhi Hospital 16817021 16017 Richland Parish Hospital or Delhi Hospital 16854241 Federal Communications Commission FCC 18-9 56 HCP Number HCP Name FRN 18219 Merryville Community 16766511 22233 CHCA River Valley- Ratfliff 16874941 22233 CHCA River Valley- Ratfliff 16874961 22233 CHCA River Valley- Ratfliff 16874971 22233 CHCA River Valley- Ratfliff 16874991 22233 CHCA River Valley- Ratfliff 16875001 22233 CHCA River Valley- Ratfliff 16875031 22233 CHCA River Valley- Ratfliff 16875051 24999 Tensas Parish 16801891 24999 Tensas Parish 16801921 25024 Minden Health Center 16856941 25024 Minden Health Center 16856971 25024 Minden Health Center 16856991 25024 Minden Health Center 16857011 25024 Minden Health Center 16937611 26328 Little River Medical – Loris 16855531 26328 Little River Medical – Loris 16855541 Federal Communications Commission FCC 18-9 57 HCP Number HCP Name FRN 26328 Little River Medical – Loris 16855581 26328 Little River Medical – Loris 16855591 26328 Little River Medical – Loris 16855601 27559 Teche Action Clinic- Pierre 16817011 27561 Teche Action Clinic- West St. 16816991 38349 Teche Action Clinic – Galliano 16816981 39855 Sabine Comprehensive 16766501 43907 Capitol City Family Health 16846911 43907 Capitol City Family Health 16851231 43907 Capitol City Family Health 16851281 43907 Capitol City Family Health 16851321 43907 Capitol City Family Health 16851371 Federal Communications Commission FCC 18-9 58 APPENDIX D PAYMENT REQUESTS CHARGED DataConnex, LLC Service Provider Name SPIN 143045344 Service Provider Invoice Number 25 Invoice Date to RHCD (mm/dd/yy) 02/07/2017 Total Invoice Amount $599,564.98 Payment requests associated with apparent violations for falsely implying compliance with the Commission’s competitive bidding rules and section 201(b): FY HCP # FRN HCP Entered Billing Account # Multiple Months Support Date Support Amount to be Paid by USAC 2016 39855 16766501 1180 N 012017 $3,280.00 2016 16117 16767111 1014 N 012017 $3,654.29 2016 11959 16767241 1006 N 012017 $1,163.61 2016 30916 16767501 1101 N 012017 $1,361.60 2016 36880 16767791 1023 N 012017 $3,761.12 2016 25078 16870131 1214 N 012017 $4,510.00 2016 25077 16870141 1214 N 012017 $4,510.00 2016 44192 16883211 1059 N 012017 $4,536.37 2016 44192 16883311 1059 N 012017 $3,210.65 2016 44192 16883481 1059 N 012017 $3,197.81 2016 44192 16883521 1059 N 012017 $3,136.75 2016 44192 16883611 1059 N 012017 $3,124.26 2016 36973 16766121 1023 N 012017 $3,571.43 2016 13166 16766521 1004 N 012017 $3,239.00 2016 13166 16766571 1004 N 012017 $4,520.00 2016 36918 16767811 1023 N 012017 $3,478.20 2016 10436 16767871 1003 N 012017 $3,800.00 2016 44192 16883181 1059 N 012017 $4,487.70 2016 26978 16766311 1015 N 012017 $3,890.85 2016 11510 16766431 1001 N 012017 $4,510.00 2016 13166 16766551 1004 N 012017 $4,440.00 2016 36918 16767821 1023 N 012017 $1,898.30 2016 25078 16870121 1214 N 012017 $2,518.00 2016 44192 16883271 1059 N 012017 $3,706.13 Federal Communications Commission FCC 18-9 59 2016 11422 16766231 1015 N 012017 $4,785.45 2016 11422 16766261 1015 N 012017 $5,681.41 2016 26995 16766301 1015 N 012017 $3,891.15 2016 36937 16767781 1023 N 012017 $2,059.33 2016 36976 16767831 1023 N 012017 $3,695.41 2016 16780 16767851 1023 N 012017 $7,996.86 2016 25421 16870161 1214 N 012017 $4,510.00 2016 44192 16883581 1059 N 012017 $3,150.95 2016 11511 16766421 1001 N 012017 $4,510.00 2016 18219 16766511 1180 N 012017 $3,325.00 2016 13166 16766541 1004 N 012017 $3,285.00 2016 30915 16767531 1101 N 012017 $1,545.20 2016 11422 16766251 1015 N 012017 $3,891.15 2016 16114 16766451 1001 N 012017 $2,810.00 2016 16118 16767081 1014 N 012017 $3,654.29 2016 16115 16767131 1014 N 012017 $2,573.96 2016 36925 16767801 1023 N 012017 $3,695.41 2016 16116 16775181 1014 N 012017 $3,964.05 2016 11422 16766241 1015 N 012017 $5,198.60 2016 16027 16767101 1014 N 012017 $4,705.10 2016 30911 16870261 1101 N 012017 $3,045.85 2016 30913 16870271 1101 N 012017 $3,045.30 2016 44192 16883351 1059 N 012017 $3,154.67 2016 44192 16883561 1059 N 012017 $3,142.33 2016 11422 16766281 1015 N 012017 $4,775.70 2016 26977 16766291 1015 N 012017 $3,891.15 2016 16113 16766441 1001 N 012017 $2,810.00 2016 10789 16766461 1001 N 012017 $4,510.00 2016 13166 16766531 1004 N 012017 $3,279.00 2016 14689 16766581 1004 N 012017 $3,345.00 2016 30917 16767511 1101 N 012017 $1,361.60 2016 16780 16767841 1023 N 012017 $4,216.68 2016 27579 16877671 1194 N 012017 $4,985.00 2016 44192 16883381 1059 N 012017 $3,141.63 2016 44192 16883431 1059 N 012017 $3,150.86 Federal Communications Commission FCC 18-9 60 Payment requests associated with apparent violations for falsely implying compliance with the Commission’s urban rate rules and section 201(b): FY HCP # FRN HCP Entered Billing Account # Multiple Months Support Date Support Amount to be Paid by USAC 2016 10800 16855161 1061 N 012017 $3,117.56 2016 10800 16855171 1061 N 012017 $3,117.56 2016 10800 16855201 1061 N 012017 $2,762.50 2016 15050 16816841 1096 N 012017 $4,172.68 2016 15050 16816871 1096 N 012017 $4,640.00 2016 15050 16816931 1096 N 012017 $3,691.00 2016 15050 16816971 1096 N 012017 $3,716.08 2016 15112 16817001 1096 N 012017 $3,129.52 2016 15737 16856201 1091 N 012017 $3,645.00 2016 16017 16817021 1058 N 012017 $3,353.50 2016 16017 16854241 1058 N 012017 $4,640.00 2016 22233 16874941 1134 N 012017 $2,416.35 2016 22233 16874961 1134 N 012017 $2,348.01 2016 22233 16874971 1134 N 012017 $2,382.12 2016 22233 16874991 1134 N 012017 $3,218.40 2016 22233 16875001 1134 N 012017 $3,712.40 2016 22233 16875031 1134 N 012017 $2,384.57 2016 22233 16875051 1134 N 012017 $2,458.97 2016 24999 16801891 1082 N 012017 $1,265.00 2016 24999 16801921 1082 N 012017 $1,670.00 2016 25024 16856941 1978 N 012017 $4,670.00 2016 25024 16856971 1978 N 012017 $4,552.40 2016 25024 16856991 1978 N 012017 $4,650.00 2016 25024 16857011 1978 N 012017 $5,156.00 2016 25519 16804441 1065 N 012017 $2,232.80 2016 25519 16804471 1065 N 012017 $2,138.40 2016 25519 16813561 1065 N 012017 $2,232.80 2016 25519 16846771 1065 N 012017 $2,232.80 2016 25519 16846811 1065 N 012017 $2,232.80 2016 25820 16856341 1150 N 012017 $3,365.80 2016 26328 16855531 1157 N 012017 $2,628.48 2016 26328 16855541 1157 N 012017 $2,808.22 2016 26328 16855581 1157 N 012017 $3,564.67 2016 26328 16855591 1157 N 012017 $3,564.67 2016 26328 16855601 1157 N 012017 $3,564.64 Federal Communications Commission FCC 18-9 61 2016 27559 16817011 1096 N 012017 $3,181.56 2016 27561 16816991 1096 N 012017 $3,140.20 2016 28265 16767391 1101 N 012017 $3,369.25 2016 28265 16767411 1101 N 012017 $3,370.25 2016 28265 16870201 1101 N 012017 $2,668.00 2016 28265 16870211 1101 N 012017 $3,370.92 2016 28265 16870291 1101 N 012017 $2,670.75 2016 28265 16870301 1101 N 012017 $2,670.75 2016 28265 16870321 1101 N 012017 $3,368.00 2016 28265 16870331 1101 N 012017 $2,670.75 2016 30493 16874931 1083 N 012017 $3,635.00 2016 30911 16870261 1101 N 012017 $3,045.85 2016 30913 16870271 1101 N 012017 $3,045.30 2016 30915 16767531 1101 N 012017 $1,545.20 2016 31556 16881361 1114 N 012017 $3,635.00 2016 31556 16881381 1114 N 012017 $4,147.88 2016 31556 16881401 1114 N 012017 $4,154.38 2016 31556 16881441 1114 N 012017 $5,472.50 2016 38144 16804541 1065 N 012017 $2,033.70 2016 38145 16804531 1065 N 012017 $2,033.70 2016 38146 16804521 1065 N 012017 $2,033.70 2016 38349 16816981 1096 N 012017 $3,230.90 2016 42473 16804511 1065 N 012017 $2,033.70 2016 43907 16846911 Customer # 1057 N 012017 $5,196.00 2016 43907 16851231 1057 N 012017 $5,196.00 2016 43907 16851281 1057 N 012017 $3,276.00 2016 43907 16851321 1057 N 012017 $3,276.00 2016 43907 16851371 1057 N 012017 $3,762.00 2016 44749 16855461 1091 N 012017 $4,672.70 2016 44749 16856081 1091 N 012017 $3,248.00 2016 44749 16856091 1091 N 012017 $3,176.00 2016 44749 16856101 1091 N 012017 $3,316.80 2016 44749 16856121 1091 N 012017 $3,248.00 2016 44749 16856131 1091 N 012017 $3,176.00 2016 44749 16856141 1091 N 012017 $3,316.80 2016 44749 16856161 1091 N 012017 $3,176.00 2016 44749 16856171 1091 N 012017 $2,562.74 2016 44749 16856191 1091 N 012017 $2,562.74 2016 44751 16856301 1091 N 012017 $2,689.00 Federal Communications Commission FCC 18-9 62 DataConnex, LLC Service Provider Name SPIN 143045344 Service Provider Invoice Number 26 Invoice Date to RHCD (mm/dd/yy) 03/05/2017 Total Invoice Amount $599,564.98 Payment requests associated with apparent violations for falsely implying compliance with the Commission’s competitive bidding rules and section 201(b): FY HCP # FRN HCP Entered Billing Account # Multiple Months Support Date Support Amount to be Paid by USAC 2016 30913 16870271 1101 N 022017 $3,045.30 2016 44192 16883181 1059 N 022017 $4,487.70 2016 44192 16883211 1059 N 022017 $4,536.37 2016 44192 16883271 1059 N 022017 $3,706.13 2016 44192 16883581 1059 N 022017 $3,150.95 2016 11422 16766231 1015 N 022017 $4,785.45 2016 10789 16766461 1001 N 022017 $4,510.00 2016 28265 16767361 1101 N 022017 $3,361.64 2016 28265 16767371 1101 N 022017 $4,119.75 2016 30917 16767511 1101 N 022017 $1,361.60 2016 36976 16767831 1023 N 022017 $3,695.41 2016 28265 16870301 1101 N 022017 $2,670.75 2016 28265 16870331 1101 N 022017 $2,670.75 2016 44192 16883381 1059 N 022017 $3,141.63 2016 44192 16883521 1059 N 022017 $3,136.75 2016 11422 16766241 1015 N 022017 $5,198.60 2016 11422 16766251 1015 N 022017 $3,891.15 2016 11510 16766431 1001 N 022017 $4,510.00 2016 16113 16766441 1001 N 022017 $2,810.00 2016 28265 16767391 1101 N 022017 $3,369.25 2016 28265 16870211 1101 N 022017 $3,370.92 2016 28265 16870291 1101 N 022017 $2,670.75 2016 44192 16883311 1059 N 022017 $3,210.65 2016 44192 16883351 1059 N 022017 $3,154.67 2016 16117 16767111 1014 N 022017 $3,654.29 2016 14689 16766581 1004 N 022017 $3,345.00 2016 28265 16767411 1101 N 022017 $3,370.25 Federal Communications Commission FCC 18-9 63 2016 28265 16767431 1101 N 022017 $4,118.75 2016 36937 16767781 1023 N 022017 $2,059.33 2016 36925 16767801 1023 N 022017 $3,695.41 2016 25078 16870121 1214 N 022017 $2,518.00 2016 25078 16870131 1214 N 022017 $4,510.00 2016 25077 16870141 1214 N 022017 $4,510.00 2016 30911 16870261 1101 N 022017 $3,045.85 2016 11422 16766281 1015 N 022017 $4,775.70 2016 11511 16766421 1001 N 022017 $4,510.00 2016 13166 16766571 1004 N 022017 $4,520.00 2016 28265 16767421 1101 N 022017 $4,118.00 2016 16780 16767841 1023 N 022017 $4,216.68 2016 25421 16870161 1214 N 022017 $4,510.00 2016 44192 16883431 1059 N 022017 $3,150.86 2016 44192 16883481 1059 N 022017 $3,197.81 2016 44192 16883561 1059 N 022017 $3,142.33 2016 44192 16883611 1059 N 022017 $3,124.26 2016 26977 16766291 1015 N 022017 $3,891.15 2016 26995 16766301 1015 N 022017 $3,891.15 2016 26978 16766311 1015 N 022017 $3,890.85 2016 16114 16766451 1001 N 022017 $2,810.00 2016 13166 16766551 1004 N 022017 $4,440.00 2016 16118 16767081 1014 N 022017 $3,654.29 2016 11959 16767241 1006 N 022017 $1,163.61 2016 30915 16767531 1101 N 022017 $1,545.20 2016 36880 16767791 1023 N 022017 $3,761.12 2016 10436 16767871 1003 N 022017 $3,800.00 2016 16116 16775181 1014 N 022017 $3,964.05 2016 28265 16870201 1101 N 022017 $2,668.00 2016 27579 16877671 1194 N 022017 $4,985.00 2016 36973 16766121 1023 N 022017 $3,571.43 2016 18219 16766511 1180 N 022017 $3,325.00 2016 28265 16767441 1101 N 022017 $4,121.00 2016 28265 16870321 1101 N 022017 $3,368.00 2016 11422 16766261 1015 N 022017 $5,681.41 2016 39855 16766501 1180 N 022017 $3,280.00 2016 13166 16766531 1004 N 022017 $3,279.00 2016 28265 16767451 1101 N 022017 $4,118.75 2016 28265 16767461 1101 N 022017 $4,119.75 2016 36918 16767821 1023 N 022017 $1,898.30 2016 16780 16767851 1023 N 022017 $7,996.86 2016 13166 16766521 1004 N 022017 $3,239.00 2016 13166 16766541 1004 N 022017 $3,285.00 Federal Communications Commission FCC 18-9 64 2016 16027 16767101 1014 N 022017 $4,705.10 2016 16115 16767131 1014 N 022017 $2,573.96 2016 30916 16767501 1101 N 022017 $1,361.60 2016 36918 16767811 1023 N 022017 $3,478.20 2016 44060 16775111 1048 N 022017 $3,056.75 Payment requests associated with apparent violations for falsely implying compliance with the Commission’s urban rate rules and section 201(b): FY HCP # FRN HCP Entered Billing Account # Multiple Months Support Date Support Amount to be Paid by USAC 2016 10800 16855161 1061 N 022017 $3,117.56 2016 10800 16855171 1061 N 022017 $3,117.56 2016 10800 16855201 1061 N 022017 $2,762.50 2016 15050 16816841 1096 N 022017 $4,172.68 2016 15050 16816851 1096 N 022017 $3,662.16 2016 15050 16816861 1096 N 022017 $3,678.20 2016 15050 16816871 1096 N 022017 $4,640.00 2016 15050 16816931 1096 N 022017 $3,691.00 2016 15050 16816971 1096 N 022017 $3,716.08 2016 15112 16817001 1096 N 022017 $3,129.52 2016 15737 16856201 1091 N 022017 $3,645.00 2016 16017 16817021 1058 N 022017 $3,353.50 2016 16017 16854241 1058 N 022017 $4,640.00 2016 22233 16874941 1134 N 022017 $2,416.35 2016 22233 16874961 1134 N 022017 $2,348.01 2016 22233 16874971 1134 N 022017 $2,382.12 2016 22233 16874991 1134 N 022017 $3,218.40 2016 22233 16875001 1134 N 022017 $3,712.40 2016 22233 16875031 1134 N 022017 $2,384.57 2016 22233 16875051 1134 N 022017 $2,458.97 2016 24999 16801891 1082 N 022017 $1,265.00 2016 24999 16801921 1082 N 022017 $1,670.00 2016 25024 16856941 1978 N 022017 $4,670.00 2016 25024 16856971 1978 N 022017 $4,552.40 2016 25024 16856991 1978 N 022017 $4,650.00 2016 25024 16857011 1978 N 022017 $5,156.00 2016 25519 16804441 1065 N 022017 $2,232.80 2016 25519 16804471 1065 N 022017 $2,138.40 2016 25519 16813561 1065 N 022017 $2,232.80 Federal Communications Commission FCC 18-9 65 2016 25519 16846771 1065 N 022017 $2,232.80 2016 25519 16846811 1065 N 022017 $2,232.80 2016 25820 16856341 1150 N 022017 $3,365.80 2016 26328 16855531 1157 N 022017 $2,628.48 2016 26328 16855541 1157 N 022017 $2,808.22 2016 26328 16855581 1157 N 022017 $3,564.67 2016 26328 16855591 1157 N 022017 $3,564.67 2016 26328 16855601 1157 N 022017 $3,564.64 2016 27559 16817011 1096 N 022017 $3,181.56 2016 27561 16816991 1096 N 022017 $3,140.20 2016 28265 16767361 1101 N 022017 $3,361.64 2016 28265 16767371 1101 N 022017 $4,119.75 2016 28265 16767391 1101 N 022017 $3,369.25 2016 28265 16767411 1101 N 022017 $3,370.25 2016 28265 16870201 1101 N 022017 $2,668.00 2016 28265 16870211 1101 N 022017 $3,370.92 2016 28265 16870291 1101 N 022017 $2,670.75 2016 28265 16870301 1101 N 022017 $2,670.75 2016 28265 16870321 1101 N 022017 $3,368.00 2016 28265 16870331 1101 N 022017 $2,670.75 2016 30493 16874931 1083 N 022017 $3,635.00 2016 30911 16870261 1101 N 022017 $3,045.85 2016 30913 16870271 1101 N 022017 $3,045.30 2016 30915 16767531 1101 N 022017 $1,545.20 2016 31556 16881361 1114 N 022017 $3,635.00 2016 31556 16881381 1114 N 022017 $4,147.88 2016 31556 16881401 1114 N 022017 $4,154.38 2016 31556 16881441 1114 N 022017 $5,472.50 2016 38144 16804541 1065 N 022017 $2,033.70 2016 38145 16804531 1065 N 022017 $2,033.70 2016 38146 16804521 1065 N 022017 $2,033.70 2016 38349 16816981 1096 N 022017 $3,230.90 2016 42473 16804511 1065 N 022017 $2,033.70 2016 43907 16846911 Customer # 1057 N 022017 $5,196.00 2016 43907 16851231 1057 N 022017 $5,196.00 2016 43907 16851281 1057 N 022017 $3,276.00 2016 43907 16851321 1057 N 022017 $3,276.00 2016 43907 16851371 1057 N 022017 $3,762.00 2016 44749 16855461 1091 N 022017 $4,672.70 2016 44749 16856081 1091 N 022017 $3,248.00 2016 44749 16856091 1091 N 022017 $3,176.00 2016 44749 16856101 1091 N 022017 $3,316.80 Federal Communications Commission FCC 18-9 66 2016 44749 16856121 1091 N 022017 $3,248.00 2016 44749 16856131 1091 N 022017 $3,176.00 2016 44749 16856141 1091 N 022017 $3,316.80 2016 44749 16856161 1091 N 022017 $3,176.00 2016 44749 16856171 1091 N 022017 $2,562.74 2016 44749 16856191 1091 N 022017 $2,562.74 2016 44751 16856301 1091 N 022017 $2,689.00 Federal Communications Commission FCC 18-9 67 DataConnex, LLC Service Provider Name SPIN 143045344 Service Provider Invoice Number 27 Invoice Date to RHCD (mm/dd/yy) 04/05/2017 Total Invoice Amount $375,418.31 Payment requests associated with apparent violations for falsely implying compliance with the Commission’s competitive bidding rules and section 201(b): FY HCP # FRN HCP Entered Billing Account # Multiple Months Support Date Support Amount to be Paid by USAC 2016 16118 16767081 1014 N 032017 $3,654.29 2016 16027 16767101 1014 N 032017 $4,705.10 2016 16117 16767111 1014 N 032017 $3,654.29 2016 16115 16767131 1014 N 032017 $2,573.96 2016 11959 16767241 1006 N 032017 $1,163.61 2016 10436 16767871 1003 N 032017 $3,800.00 2016 44060 16775111 1048 N 032017 $3,056.75 2016 16116 16775181 1014 N 032017 $3,964.05 2016 25078 16870121 1214 N 032017 $2,518.00 2016 25078 16870131 1214 N 032017 $4,510.00 2016 25077 16870141 1214 N 032017 $4,510.00 2016 25421 16870161 1214 N 032017 $4,510.00 2016 27579 16877671 1194 N 032017 $4,985.00 Payment requests associated with apparent violations for falsely implying compliance with the Commission’s urban rate rules and section 201(b): FY HCP # FRN HCP Entered Billing Account # Multiple Months Support Date Support Amount to be Paid by USAC 2016 10800 16855161 1061 N 032017 $3,117.56 2016 10800 16855171 1061 N 032017 $3,117.56 2016 10800 16855201 1061 N 032017 $2,762.50 2016 15050 16816841 1096 N 032017 $4,172.68 2016 15050 16816851 1096 N 032017 $3,662.16 2016 15050 16816861 1096 N 032017 $3,678.20 Federal Communications Commission FCC 18-9 68 2016 15050 16816871 1096 N 032017 $4,640.00 2016 15050 16816931 1096 N 032017 $3,691.00 2016 15050 16816971 1096 N 032017 $3,716.08 2016 15112 16817001 1096 N 032017 $3,129.52 2016 16017 16817021 1058 N 032017 $3,353.50 2016 16017 16854241 1058 N 032017 $4,640.00 2016 15737 16856201 1091 N 032017 $3,645.00 2016 22233 16874941 1134 N 032017 $2,416.35 2016 22233 16874961 1134 N 032017 $2,348.01 2016 22233 16874971 1134 N 032017 $2,382.12 2016 22233 16874991 1134 N 032017 $3,218.40 2016 22233 16875001 1134 N 032017 $3,712.40 2016 22233 16875031 1134 N 032017 $2,384.57 2016 22233 16875051 1134 N 032017 $2,458.97 2016 24999 16801891 1082 N 032017 $1,265.00 2016 24999 16801921 1082 N 032017 $1,670.00 2016 25024 16856941 1978 N 032017 $4,670.00 2016 25024 16856971 1978 N 032017 $4,552.40 2016 25024 16856991 1978 N 032017 $4,650.00 2016 25024 16857011 1978 N 032017 $5,156.00 2016 25519 16804441 1065 N 032017 $2,232.80 2016 25519 16804471 1065 N 032017 $2,138.40 2016 25519 16813561 1065 N 032017 $2,232.80 2016 25519 16846771 1065 N 032017 $2,232.80 2016 25519 16846811 1065 N 032017 $2,232.80 2016 25820 16856341 1150 N 032017 $3,365.80 2016 26328 16855531 1157 N 032017 $2,628.48 2016 26328 16855541 1157 N 032017 $2,808.22 2016 26328 16855581 1157 N 032017 $3,564.67 2016 26328 16855591 1157 N 032017 $3,564.67 2016 26328 16855601 1157 N 032017 $3,564.64 2016 27559 16817011 1096 N 032017 $3,181.56 2016 27561 16816991 1096 N 032017 $3,140.20 2016 30493 16874931 1083 N 032017 $3,635.00 2016 31556 16881361 1114 N 032017 $3,635.00 2016 31556 16881381 1114 N 032017 $4,147.88 2016 31556 16881401 1114 N 032017 $4,154.38 2016 31556 16881441 1114 N 032017 $5,472.50 2016 38144 16804541 1065 N 032017 $2,033.70 2016 38145 16804531 1065 N 032017 $2,033.70 2016 38146 16804521 1065 N 032017 $2,033.70 2016 38349 16816981 1096 N 032017 $3,230.90 2016 42473 16804511 1065 N 032017 $2,033.70 Federal Communications Commission FCC 18-9 69 2016 43907 16846911 Customer # 1057 N 032017 $5,196.00 2016 43907 16851231 1057 N 032017 $5,196.00 2016 43907 16851281 1057 N 032017 $3,276.00 2016 43907 16851321 1057 N 032017 $3,276.00 2016 43907 16851371 1057 N 032017 $3,762.00 2016 44749 16855461 1091 N 032017 $4,672.70 2016 44749 16856081 1091 N 032017 $3,248.00 2016 44749 16856091 1091 N 032017 $3,176.00 2016 44749 16856101 1091 N 032017 $3,316.80 2016 44749 16856121 1091 N 032017 $3,248.00 2016 44749 16856131 1091 N 032017 $3,176.00 2016 44749 16856141 1091 N 032017 $3,316.80 2016 44749 16856161 1091 N 032017 $3,176.00 2016 44749 16856171 1091 N 032017 $2,562.74 2016 44749 16856191 1091 N 032017 $2,562.74 2016 44751 16856301 1091 N 032017 $2,689.00 Federal Communications Commission FCC 18-9 70 DataConnex, LLC Service Provider Name SPIN 143045344 Service Provider Invoice Number 28 Invoice Date to RHCD (mm/dd/yy) 05/04/2017 Total Invoice Amount $685,087.56 Payment requests associated with apparent violations for falsely implying compliance with the Commission’s competitive bidding rules and section 201(b): FY HCP # FRN HCP Entered Billing Account # Multiple Months Support Date Support Amount to be Paid by USAC 2016 16118 16767081 1014 N 042017 $3,654.29 2016 16027 16767101 1014 N 042017 $4,705.10 2016 16117 16767111 1014 N 042017 $3,654.29 2016 16115 16767131 1014 N 042017 $2,573.96 2016 11959 16767241 1006 N 042017 $1,163.61 2016 10436 16767871 1003 N 042017 $3,800.00 2016 44060 16775111 1048 N 042017 $3,056.75 2016 16116 16775181 1014 N 042017 $3,964.05 2016 25078 16870121 1214 N 042017 $2,518.00 2016 25078 16870131 1214 N 042017 $4,510.00 2016 25077 16870141 1214 N 042017 $4,510.00 2016 25421 16870161 1214 N 042017 $4,510.00 2016 27579 16877671 1194 N 042017 $4,985.00 2016 10328 16942651 1113 Y 042017 $35,911.21 Payment requests associated with apparent violations for falsely implying compliance with the Commission’s urban rate rules and section 201(b): FY HCP # FRN HCP Entered Billing Account # Multiple Months Support Date Support Amount to be Paid by USAC 2016 10800 16855161 1061 N 042017 $3,117.56 2016 10800 16855171 1061 N 042017 $3,117.56 2016 10800 16855201 1061 N 042017 $2,762.50 2016 15050 16816841 1096 N 042017 $4,172.68 2016 15050 16816851 1096 N 042017 $3,662.16 Federal Communications Commission FCC 18-9 71 2016 15050 16816861 1096 N 042017 $3,678.20 2016 15050 16816871 1096 N 042017 $4,640.00 2016 15050 16816931 1096 N 042017 $3,691.00 2016 15050 16816971 1096 N 042017 $3,716.08 2016 15112 16817001 1096 N 042017 $3,129.52 2016 15737 16856201 1091 N 042017 $3,645.00 2016 16017 16817021 1058 N 042017 $3,353.50 2016 16017 16854241 1058 N 042017 $4,640.00 2016 22233 16874941 1134 N 042017 $2,416.35 2016 22233 16874961 1134 N 042017 $2,348.01 2016 22233 16874971 1134 N 042017 $2,382.12 2016 22233 16874991 1134 N 042017 $3,218.40 2016 22233 16875001 1134 N 042017 $3,712.40 2016 22233 16875031 1134 N 042017 $2,384.57 2016 22233 16875051 1134 N 042017 $2,458.97 2016 24999 16801891 1082 N 042017 $1,265.00 2016 24999 16801921 1082 N 042017 $1,670.00 2016 25024 16856941 1978 N 042017 $4,670.00 2016 25024 16856971 1978 N 042017 $4,552.40 2016 25024 16856991 1978 N 042017 $4,650.00 2016 25024 16857011 1978 N 042017 $5,156.00 2016 25024 16937611 1084 Y 042017 $28,751.10 2016 25519 16804441 1065 N 042017 $2,232.80 2016 25519 16804471 1065 N 042017 $2,138.40 2016 25519 16813561 1065 N 042017 $2,232.80 2016 25519 16846771 1065 N 042017 $2,232.80 2016 25519 16846811 1065 N 042017 $2,232.80 2016 25820 16856341 1150 N 042017 $3,365.80 2016 25820 16912951 1150 Y 042017 $16,397.08 2016 26328 16855531 1157 N 042017 $2,628.48 2016 26328 16855541 1157 N 042017 $2,808.22 2016 26328 16855581 1157 N 042017 $3,564.67 2016 26328 16855591 1157 N 042017 $3,564.67 2016 26328 16855601 1157 N 042017 $3,564.64 2016 27559 16817011 1096 N 042017 $3,181.56 2016 27561 16816991 1096 N 042017 $3,140.20 2016 30493 16874931 1083 N 042017 $3,635.00 2016 31556 16881361 1114 N 042017 $3,635.00 2016 31556 16881381 1114 N 042017 $4,147.88 2016 31556 16881401 1114 N 042017 $4,154.38 2016 31556 16881441 1114 N 042017 $5,472.50 2016 38144 16804541 1065 N 042017 $2,033.70 2016 38145 16804531 1065 N 042017 $2,033.70 Federal Communications Commission FCC 18-9 72 2016 38146 16804521 1065 N 042017 $2,033.70 2016 38349 16816981 1096 N 042017 $3,230.90 2016 42473 16804511 1065 N 042017 $2,033.70 2016 43907 16846911 Customer # 1057 N 042017 $5,196.00 2016 43907 16851231 1057 N 042017 $5,196.00 2016 43907 16851281 1057 N 042017 $3,276.00 2016 43907 16851321 1057 N 042017 $3,276.00 2016 43907 16851371 1057 N 042017 $3,762.00 2016 44749 16855461 1091 N 042017 $4,672.70 2016 44749 16856081 1091 N 042017 $3,248.00 2016 44749 16856091 1091 N 042017 $3,176.00 2016 44749 16856101 1091 N 042017 $3,316.80 2016 44749 16856121 1091 N 042017 $3,248.00 2016 44749 16856131 1091 N 042017 $3,176.00 2016 44749 16856141 1091 N 042017 $3,316.80 2016 44749 16856161 1091 N 042017 $3,176.00 2016 44749 16856171 1091 N 042017 $2,562.74 2016 44749 16856191 1091 N 042017 $2,562.74 2016 44751 16856301 1091 N 042017 $2,689.00 Federal Communications Commission FCC 18-9 73 DataConnex, LLC Service Provider Name SPIN 143045344 Service Provider Invoice Number 29 Invoice Date to RHCD (mm/dd/yy) 06/05/2017 Total Invoice Amount $537,186.72 Payment requests associated with apparent violations for falsely implying compliance with the Commission’s competitive bidding rules and section 201(b): FY HCP # FRN HCP Entered Billing Account # Multiple Months Support Date Support Amount to be Paid by USAC 2016 16118 16767081 1014 N 052017 $3,654.29 2016 16027 16767101 1014 N 052017 $4,705.10 2016 16117 16767111 1014 N 052017 $3,654.29 2016 16115 16767131 1014 N 052017 $2,573.96 2016 11959 16767241 1006 N 052017 $1,163.61 2016 10436 16767871 1003 N 052017 $3,800.00 2016 44060 16775111 1048 N 052017 $3,056.75 2016 16116 16775181 1014 N 052017 $3,964.05 2016 25078 16870121 1214 N 052017 $2,518.00 2016 25078 16870131 1214 N 052017 $4,510.00 2016 25077 16870141 1214 N 052017 $4,510.00 2016 25421 16870161 1214 N 052017 $4,510.00 2016 27579 16877671 1194 N 052017 $4,985.00 2016 10328 16942651 1113 N 052017 $4,733.62 Payment requests associated with apparent violations for falsely implying compliance with the Commission’s urban rate rules and section 201(b): FY HCP # FRN HCP Entered Billing Account # Multiple Months Support Date Support Amount to be Paid by USAC 2016 10800 16855161 1061 N 052017 $3,117.56 2016 10800 16855171 1061 N 052017 $3,117.56 2016 10800 16855201 1061 N 052017 $2,762.50 2016 15050 16816841 1096 N 052017 $4,172.68 2016 15050 16816851 1096 N 052017 $3,662.16 Federal Communications Commission FCC 18-9 74 2016 15050 16816861 1096 N 052017 $3,678.20 2016 15050 16816871 1096 N 052017 $4,640.00 2016 15050 16816931 1096 N 052017 $3,691.00 2016 15050 16816971 1096 N 052017 $3,716.08 2016 15112 16817001 1096 N 052017 $3,129.52 2016 15737 16856201 1091 N 052017 $3,645.00 2016 16017 16817021 1058 N 052017 $3,353.50 2016 16017 16854241 1058 N 052017 $4,640.00 2016 22233 16874941 1134 N 052017 $2,416.35 2016 22233 16874961 1134 N 052017 $2,348.01 2016 22233 16874971 1134 N 052017 $2,382.12 2016 22233 16874991 1134 N 052017 $3,218.40 2016 22233 16875001 1134 N 052017 $3,712.40 2016 22233 16875031 1134 N 052017 $2,384.57 2016 22233 16875051 1134 N 052017 $2,458.97 2016 24999 16801891 1082 N 052017 $1,265.00 2016 24999 16801921 1082 N 052017 $1,670.00 2016 25024 16856941 1978 N 052017 $4,670.00 2016 25024 16856971 1978 N 052017 $4,552.40 2016 25024 16856991 1978 N 052017 $4,650.00 2016 25024 16857011 1978 N 052017 $5,156.00 2016 25024 16937611 1084 N 052017 $3,454.59 2016 25519 16804441 1065 N 052017 $2,232.80 2016 25519 16804471 1065 N 052017 $2,138.40 2016 25519 16813561 1065 N 052017 $2,232.80 2016 25519 16846771 1065 N 052017 $2,232.80 2016 25519 16846811 1065 N 052017 $2,232.80 2016 25820 16856341 1150 N 052017 $3,365.80 2016 25820 16912951 1150 N 052017 $2,342.44 2016 26328 16855531 1157 N 052017 $2,628.48 2016 26328 16855541 1157 N 052017 $2,808.22 2016 26328 16855581 1157 N 052017 $3,564.67 2016 26328 16855591 1157 N 052017 $3,564.67 2016 26328 16855601 1157 N 052017 $3,564.64 2016 27559 16817011 1096 N 052017 $3,181.56 2016 27561 16816991 1096 N 052017 $3,140.20 2016 30493 16874931 1083 N 052017 $3,635.00 2016 31556 16881361 1114 N 052017 $3,635.00 2016 31556 16881381 1114 N 052017 $4,147.88 2016 31556 16881401 1114 N 052017 $4,154.38 2016 31556 16881441 1114 N 052017 $5,472.50 2016 38144 16804541 1065 N 052017 $2,033.70 2016 38145 16804531 1065 N 052017 $2,033.70 Federal Communications Commission FCC 18-9 75 2016 38146 16804521 1065 N 052017 $2,033.70 2016 38349 16816981 1096 N 052017 $3,230.90 2016 42473 16804511 1065 N 052017 $2,033.70 2016 43907 16846911 Customer # 1057 N 052017 $5,196.00 2016 43907 16851231 1057 N 052017 $5,196.00 2016 43907 16851281 1057 N 052017 $3,276.00 2016 43907 16851321 1057 N 052017 $3,276.00 2016 43907 16851371 1057 N 052017 $3,762.00 2016 44749 16855461 1091 N 052017 $4,672.70 2016 44749 16856081 1091 N 052017 $3,248.00 2016 44749 16856091 1091 N 052017 $3,176.00 2016 44749 16856101 1091 N 052017 $3,316.80 2016 44749 16856121 1091 N 052017 $3,248.00 2016 44749 16856131 1091 N 052017 $3,176.00 2016 44749 16856141 1091 N 052017 $3,316.80 2016 44749 16856161 1091 N 052017 $3,176.00 2016 44749 16856171 1091 N 052017 $2,562.74 2016 44749 16856191 1091 N 052017 $2,562.74 2016 44751 16856301 1091 N 052017 $2,689.00 Federal Communications Commission FCC 18-9 76 DataConnex, LLC Service Provider Name SPIN 143045344 Service Provider Invoice Number 30 Invoice Date to RHCD (mm/dd/yy) 07/05/2017 Total Invoice Amount $535,288.71 Payment requests associated with apparent for falsely implying compliance with the Commission’s competitive bidding rules and section 201(b): FY HCP # FRN HCP Entered Billing Account # Multiple Months Support Date Support Amount to be Paid by USAC 2016 16027 16767101 1014 N 062017 $4,705.10 2016 16117 16767111 1014 N 062017 $3,654.29 2016 16118 16767081 1014 N 062017 $3,654.29 2016 16115 16767131 1014 N 062017 $2,573.96 2016 10436 16767871 1003 N 062017 $3,800.00 2016 44060 16775111 1048 N 062017 $3,056.75 2016 16116 16775181 1014 N 062017 $3,964.05 2016 46809 16981611 1209 Y 062017 $3,983.68 2016 25078 16870121 1214 N 062017 $2,518.00 2016 25078 16870131 1214 N 062017 $4,510.00 2016 25077 16870141 1214 N 062017 $4,510.00 2016 25421 16870161 1214 N 062017 $4,510.00 2016 10328 16942651 1113 N 062017 $4,733.62 2016 48646 16975081 1232 N 062017 $2,193.90 2016 48646 16975121 1232 N 062017 $1,892.93 2016 48646 16975141 1232 N 062017 $1,892.93 2016 46809 16981561 1209 Y 062017 $3,961.31 2016 46809 16981671 1209 Y 062017 $5,213.96 2016 46809 16981721 1209 Y 062017 $4,948.79 2016 46808 16981771 1209 Y 062017 $3,221.66 Federal Communications Commission FCC 18-9 77 Payment requests associated with apparent violations for falsely implying compliance with the Commission’s urban rate rules and section 201(b): FY HCP # FRN HCP Entered Billing Account # Multiple Months Support Date Support Amount to be Paid by USAC 2016 10800 16855161 1061 N 062017 $3,117.56 2016 10800 16855171 1061 N 062017 $3,117.56 2016 10800 16855201 1061 N 062017 $2,762.50 2016 15050 16816841 1096 N 062017 $4,172.68 2016 15050 16816851 1096 N 062017 $3,662.16 2016 15050 16816861 1096 N 062017 $3,678.20 2016 15050 16816871 1096 N 062017 $4,640.00 2016 15050 16816881 1096 N 062017 $3,678.20 2016 15050 16816931 1096 N 062017 $3,691.00 2016 15050 16816971 1096 N 062017 $3,716.08 2016 15112 16817001 1096 N 062017 $3,129.52 2016 15737 16856201 1091 N 062017 $3,645.00 2016 16017 16817021 1058 N 062017 $3,353.50 2016 16017 16854241 1058 N 062017 $4,640.00 2016 22233 16874941 1134 N 062017 $2,416.35 2016 22233 16874961 1134 N 062017 $2,348.01 2016 22233 16874971 1134 N 062017 $2,382.12 2016 22233 16874991 1134 N 062017 $3,218.40 2016 22233 16875001 1134 N 062017 $3,712.40 2016 22233 16875031 1134 N 062017 $2,384.57 2016 22233 16875051 1134 N 062017 $2,458.97 2016 24999 16801891 1082 N 062017 $1,265.00 2016 24999 16801921 1082 N 062017 $1,670.00 2016 25024 16856941 1978 N 062017 $4,670.00 2016 25024 16856971 1978 N 062017 $4,552.40 2016 25024 16856991 1978 N 062017 $4,650.00 2016 25024 16857011 1978 N 062017 $5,156.00 2016 25024 16937611 1084 N 062017 $3,454.59 2016 25519 16804441 1065 N 062017 $2,232.80 2016 25519 16804471 1065 N 062017 $2,138.40 2016 25519 16813561 1065 N 062017 $2,232.80 2016 25519 16846771 1065 N 062017 $2,232.80 2016 25519 16846811 1065 N 062017 $2,232.80 2016 25820 16856341 1150 N 062017 $3,365.80 2016 25820 16912951 1150 N 062017 $2,342.44 Federal Communications Commission FCC 18-9 78 2016 26328 16855531 1157 N 062017 $2,628.48 2016 26328 16855541 1157 N 062017 $2,808.22 2016 26328 16855581 1157 N 062017 $3,564.67 2016 26328 16855591 1157 N 062017 $3,564.67 2016 26328 16855601 1157 N 062017 $3,564.64 2016 27559 16817011 1096 N 062017 $3,181.56 2016 27561 16816991 1096 N 062017 $3,140.20 2016 30493 16874931 1083 N 062017 $3,635.00 2016 31556 16881361 1114 N 062017 $3,635.00 2016 31556 16881381 1114 N 062017 $4,147.88 2016 31556 16881401 1114 N 062017 $4,154.38 2016 31556 16881441 1114 N 062017 $5,472.50 2016 38144 16804541 1065 N 062017 $2,033.70 2016 38145 16804531 1065 N 062017 $2,033.70 2016 38146 16804521 1065 N 062017 $2,033.70 2016 38349 16816981 1096 N 062017 $3,230.90 2016 42473 16804511 1065 N 062017 $2,033.70 2016 43907 16846911 Customer # 1057 N 062017 $5,196.00 2016 43907 16851231 1057 N 062017 $5,196.00 2016 43907 16851281 1057 N 062017 $3,276.00 2016 43907 16851321 1057 N 062017 $3,276.00 2016 43907 16851371 1057 N 062017 $3,762.00 2016 44749 16855461 1091 N 062017 $4,672.70 2016 44749 16856081 1091 N 062017 $3,248.00 2016 44749 16856091 1091 N 062017 $3,176.00 2016 44749 16856101 1091 N 062017 $3,316.80 2016 44749 16856121 1091 N 062017 $3,248.00 2016 44749 16856131 1091 N 062017 $3,176.00 2016 44749 16856141 1091 N 062017 $3,316.80 2016 44749 16856161 1091 N 062017 $3,176.00 2016 44749 16856171 1091 N 062017 $2,562.74 2016 44749 16856191 1091 N 062017 $2,562.74 2016 44751 16856301 1091 N 062017 $2,689.00 Federal Communications Commission FCC 18-9 79 APPENDIX E OVERVIEW OF URBAN RATE LETTERS SUPPORTED BY ACC SALES QUOTES Service City State Rate Term 100Mbps Point to Point Baton Rouge Louisiana $280 36 months 20Mbps Point to Point Port Allen Louisiana $280 36 months 100Mbps Ethernet Baton Rouge Louisiana $140 36 months 100Mbps Ethernet New Orleans Louisiana $140 36 months 20Mbps Switched Ethernet New Orleans Louisiana $140 36 months 50Mbps Point to Point – Fiber Myrtle Beach South Carolina $276 60 months 100Mbps Ethernet Myrtle Beach South Carolina $138 60 months 100Mbps Point to Point – Fiber Myrtle Beach South Carolina $276 60 months 20Mbps MPLS Little Rock Arkansas $138 36 months 100Mbps Ethernet Little Rock Arkansas $138 36 months 100Mbps MPLS Little Rock Arkansas $138 36 months Federal Communications Commission FCC 18-9 83 STATEMENT OF CHAIRMAN AJIT PAI Re: DataConnex, LLC, File No: EB-IHD-15-00020296. Abuse of the Rural Health Care program is egregious, among other reasons, because every dollar stolen through fraud is a dollar not used to bring telehealth services to rural and remote areas. So I’m pleased that we’re taking aggressive action against a company that we believe sought to scam the system. We allege that DataConnex flagrantly violated competitive bidding rules, falsified documents, and manipulated rates to inflate the funding it received. This conduct deserves a stiff penalty. And if the allegations set forth in the Notice of Apparent Liability are confirmed to be accurate, one will be imposed. As the saying goes, “Fool me once shame on you; fool me twice shame on me.” Well, DataConnex is the second Notice of Apparent Liability we’ve adopted in the past year involving the Rural Health Care program. This case again highlights the need for us to review that program. Just last month, we adopted a Notice of Proposed Rulemaking to explore ways we can stop waste, fraud, and abuse. This is especially critical because the program is hitting its current funding cap. Thank you to the staff for the excellent legwork on this case. From the Enforcement Bureau, Rizwan Chowdhry, MaryBeth Deluca, Loyaan Egal, Rosemary Harold, Keith Morgan, Rakesh Patel, David Sobotkin, and Geoffrey Starks. From the Wireline Competition Bureau, Regina Brown, Radhika Karmarkar, and Preston Wise. And from the Office of General Counsel, Jim Bird, Billy Layton, Linda Oliver, Bill Richardson, and Sally Stone. Federal Communications Commission FCC 18-9 84 STATEMENT OF COMMISSIONER MIGNON L. CLYBURN Re: DataConnex, LLC, File No.: EB-IHD-15-00020296 Today we propose a nearly $19 million forfeiture against a company that thumbed its nose at our agency’s rules. Through a web of underhanded deals, kickbacks, and falsified documents, DataConnex apparently took advantage of the Rural Healthcare program, the ratepayer, and the public trust. I always say that waste, fraud, and abuse must not be tolerated in any of our Universal Service programs, which is why this item has my full support. I am also pleased that we include language that would allow us to revoke DataConnex’s Commission authorizations if the findings in this Notice of Apparent Liability are upheld. No company is above the law, and if this company indeed has this level of disregard for our rules, it should not be allowed to receive one more dollar from the Universal Service Fund. I would also encourage our staff to work with relevant state and federal authorities to support bringing about criminal charges. The salacious conduct in this NAL is a solid factual base that could underpin further prosecution. I thank the hardworking staff of the Enforcement Bureau, and in particular the USF Strike Force, whose diligent investigative work is on display here. Federal Communications Commission FCC 18-9 85 STATEMENT OF COMMISSIONER BRENDAN CARR Re: DataConnex, LLC, File No. EB-IHD-15-00020296. Last month, the Commission proposed several changes to the Rural Health Care Program. We sought to incentivize prudent spending so that more Americans, regardless of where they live, have access to telemedicine and other advanced healthcare services. As we noted back then, the Rural Health Care Program serves important purposes, but for a number of reasons, the demand for Program dollars is now outpacing available funds. As such, the conduct that DataConnex apparently engaged in strikes me as particularly egregious. It appears that the company acted to defraud the Rural Health Care Program by relying on forged documents, misrepresenting pricing information, and colluding to undermine the competitive bidding process. Over the past two years, DataConnex received about $12 million in support from the Program. This made it one of the top five funding recipients over that period of time. And recall that demand for Program dollars exceeded the cap for the first time last year. This means that DataConnex’s apparently fraudulent scheme might have resulted in providers that are playing by the rules—and the potentially millions of consumers they serve—losing out on the valuable healthcare services made possible by the Program. Needless to say, we are not taking this conduct lightly. So I support the $18 million proposed fine, and I want to thank the Enforcement Bureau for its diligent work in investigating and now prosecuting this case. This item has my support.