AT&T, Verizon to pay $116M for overcharging government entities

A Sacramento judge has tentatively approved a whistleblower complaint settlement under which AT&T Inc. and Verizon Communications Inc. would pay $116 million.

The complaint under the California False Claims Act said the companies had overcharged government entities on wireless services.

The sides were to meet virtually today with Sacramento County Superior Court Judge Judy Holzer Hersher to approve the agreement in State of California v. Cellco Partnership, 34-2012-00127517-CL-MC-GDS (Sac. Super. Ct., filed July 5, 2012).

According to a declaration signed Monday by the plaintiff's counsel Amanda K. Bonn, with Susman Godfrey LLP in Los Angeles, AT&T will pay $47.9 million and Verizon will pay $68.2 million. The money will be split among some 300 state and local government entities that received services under the agreements. Sprint Corp. signed a separate settlement agreement in the case earlier this year.

"The court finds the settlement is fair, reasonable, in the best interests of the parties involved, and in furtherance of the public purposes" behind the False Claims Act, Holzer wrote in her tentative ruling Tuesday.

In a third amended case filed last year, Susman argued the two telecom giants won multibillion-dollar start contracts by promising to recalibrate their charges on a quarterly basis to ensure each customer under the blanket agreement is signed up for the most efficient plan for their usage.

According to whistleblower, Jeffrey Smith, the carriers violated these agreements. Smith founded a company called eOnTheGo that examined the payments the state made and found the companies were not honoring their agreements over several years.

-- Malcolm Maclachlan