Update: AT&T has responded to the DOJ’s lawsuit. Here’s what they had do say:

AT&T has followed the FCC’s rules for providing IP Relay services for disabled customers and for seeking reimbursement for those services. As the FCC is aware, it is always possible for an individual to misuse IP Relay services, just as someone can misuse the postal system or an email account, but FCC rules require that we complete all calls by customers who identify themselves as disabled.

For more information, click here.

Original Story:

The U.S. Department of Justice announced today that it has filed a lawsuit against AT&T. The complaint accuses AT&T of overbilling the government for its Internet Protocol Relay (IP Relay) services. AT&T allegedly deliberately avoided adopting policies that would cut down on the number of fraudulent calls in order to continue receiving reimbursement from the government.

The IP Relay system allows the deaf to communicate via phone with hearing people by relaying typed messages via the internet. The FCC reimburses IP Relay providers (AT&T, in this case) for such calls, but only when they are placed from within the United States. Due to an abundance of fraudulent calls made as part of credit card scams, the FCC adopted a rule in 2009 that required IP Relay providers to verify the name and mailing address of those who were placing the calls.

AT&T, however, did not comply with that order. In fact, the government says, AT&T deliberately instituted a registration system that did not comply with the FCC’s rules out of fear that the volume of fraudulent calls (for which AT&T was getting reimbursed $1.30 per minute) would drop. According to the complaint, such calls made up as much as 95% of all IP Relay calls. By continuing to bill for these calls instead of adopting a registration system that complied with FCC rules, AT&T may have received millions of dollars worth of federal reimbursements to which it had no right. In doing so, the complaint says, AT&T violated the False Claims Act.

Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division, said that “[f]ederal funding for Telecommunications Relay Services is intended to help the hearing- and speech- impaired in the United States,” and vowed that the Justice Department “will pursue those who seek to gain by knowingly allowing others to abuse this program.” David J. Hickton, U.S. Attorney for the Western District of Pennsylvania, said “[t]hose who misuse funds intended to benefit the hearing- and speech-impaired must be held accountable.”

The Justice Department filed the suit today under the whistleblower provision of the False Claims Act, which allows private citizens to sue corporations for fraud on behalf of the government. The government then has the option to take over the case. In this case, the original suit was filed in 2010 by Constance Lyttle, a communications assistant who worked in a call center for AT&T’s IP Relay system.

A request for comment from AT&T has not yet been answered.