U.S. District Judge Charles Breyer, Northern District of California (Hillary Jones-Mixon / The Recorder)
SAN FRANCISCO — A federal judge didn’t seem inclined Friday to let Sprint escape a false claims charge brought by U.S. government officials upset over high wiretap bills.
The government claims Sprint Communications Inc. charged $21 million too much to carry out court-ordered surveillance. It’s trying to hold Sprint accountable under the False Claims Act, which would subject the phone and Internet service provider to treble damages and civil penalties.
At a hearing Friday morning before U.S. District Judge Charles Breyer, attorneys for Sprint argued the statute isn’t applicable. “There is no false statement of any kind in the invoices,” said David Taylor, a Perkins Coie partner, who was joined by Williams & Connolly partner Edward Barnidge. Taylor’s argument seemed to leave Breyer perplexed.
“Isn’t the false statement first that I’m entitled to this money?” he asked. “You’re saying that’s not a false claim, and I’m trying to figure out why it’s not.”
Phone and Internet service providers can bill law enforcement agencies for the cost of complying with court-ordered wiretaps and other forms of surveillance. But in 2006, the Federal Communications Commission banned those companies from billing for related upgrades they made to their equipment and facilities. In U.S. v. Sprint, 14-962, the government contends Sprint continued to charge for those upgrades from 2007 to 2010, overbilling such federal agencies as the Federal Bureau of Investigation, the Drug Enforcement Agency, the U.S. Marshals Service, Immigration and Customs Enforcement and the Bureau of Alcohol, Tobacco and Firearms.
“First, [Sprint] had knowledge that these costs were not recoverable,” Assistant U.S. Attorney Steven Saltiel said. “And second, it hid the unrecoverable costs in its charges.”
Taylor argues the bills hid nothing. Sprint was not required to itemize its bills and explain where every charge came from, so it didn’t, he said, relying on Gonzalez v. Planned Parenthood of L.A., 05-8818. In that case, a district judge in Los Angeles found overcharging the government is not enough to impose False Claims Act liability unless it is committed in conjunction with a lie.
But Planned Parenthood didn’t hide any of its charges, Breyer pointed out.
The government has also filed unjust-enrichment and payment-by-mistake actions against Sprint.
Breyer suggested he may postpone his ruling until the two sides have had a chance to meet and confer. He asked both teams of lawyers to try and agree on a magistrate judge to lead mediation talks.
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