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W.Va. Attorney General Fires Back at Frontier, U.S. Attorney

CHARLESTON — The West Virginia Attorney General pushed back in a court filing on efforts by parties in a lawsuit against Frontier West Virginia to prevent the state from recouping millions in penalties from a botched broadband implementation nearly a decade ago.

Frontier – which is being sued by Bridgeport-based internet provider Citynet – and the U.S. Attorney’s Office for the Southern District of West Virginia filed responses Nov. 22 to a motion to intervene in the case by the Attorney General’s Office.

The state is seeking $4.9 million in penalties and fees from Frontier after the state paid $4.6 million to the federal government due to misuse of a grant for broadband internet expansion. Frontier, the subcontractor on the project, was accused by the Inspector General’s Office for the U.S. Department of Commerce for marking up invoices to the state by as much as 35 percent and charging the state millions in indirect costs that were not allowable.

Citynet filed suit against Frontier in 2014 under the False Claims Act. Frontier is accused of allegedly misusing $40.5 million in federal grant funding to build a statewide broadband network only benefiting Frontier.

Attorneys for Frontier argued that the Attorney General’s Office didn’t properly file its motion and wasn’t clear on what they were seeking in the motion. Assistant Attorney General Curtis Capehart, in his Nov. 27 filing, said the state’s motion was clear.

“The state believed that this was a clear demonstration of the nature of its interest in this litigation being one of equitable subrogation (right of party that has paid for a loss to recover money from a party that caused the loss) relative to any party found to be liable under the False Claims Act,” Capehart wrote.

“Indeed, the state’s intent in seeking intervention is to see that the funds it has paid are recovered in the event that FCA liability is proven here as no other current party represents this concern.”

Attorneys for the federal government, in their response to the Attorney General’s motion, argued the state should directly file suit against Frontier to be compensated for the $4.6 million penalty. In response, Capehart argues that if Frontier is found to have engaged in fraudulent behavior, it should bear the cost of the penalty.

“The core concern of the state’s motion is that this proceeding will determine whether there was fraud relative to the grant and that, in the event that fraud is proven relative to any party, that party is the proper party to bear costs that, at present, have been borne by the state’s taxpayers,” Capehart wrote.

“The state’s requested inclusion in this matter is an effort to present the issue now (rather than later) to safeguard such claim against other calls of untimeliness.”

The U.S. Attorney’s Office also argued that the False Claims Act prohibits third parties, such as the state, from intervening in the Citynet suit. Capehart said the prohibition doesn’t apply to states.

“The state…is not a ‘person’ or a ‘private party’ under the FCA,” Capehart wrote. “Congress normally uses the word ‘person’ to broadly encompass any natural and artificial entities… But there is a ‘longstanding interpretive presumption that ‘person’ does not include’ state sovereigns.”

In 2009, the state applied for a $126 million stimulus grant through the Broadband Technology Opportunities Program for broadband expansion in West Virginia.

Frontier, the sub-recipient of the grant, was supposed to build middle-mile fiber connections and allow competitors to also access these lines at lower rates.

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