For Immediate Release - March 07, 2016

Telecom Company To Pay More Than $8 Million To Resolve False Claims Allegations Involving Agreement With MassDOT

Company Allegedly Concealed Amount it Owed and Withheld Rent Payments

BOSTON – A Colorado-based telecommunications and Internet service provider company has agreed to pay more than $8 million to resolve allegations it improperly withheld rental payments to the Massachusetts Department of Transportation (MassDOT) under an agreement that allows it to run fiber optic cables alongside state highways, Attorney General Maura Healey announced today.

The settlement agreement resolves the AG’s Office’s allegations that Level 3 Communications, LLC (Level 3) breached its contract with MassDOT and violated the Massachusetts False Claims Act by concealing the amount it owed the state agency and knowingly avoiding its annual rent obligations.

“We allege that this company intentionally took steps to avoid paying the rent owed to MassDOT under their agreement,” AG Healey said. “Taxpayer dollars are at stake when a state agency doesn’t get the money it is owed. Our office will hold accountable companies that attempt to short change state agencies and continue to make sure they are operating within Massachusetts law.”

“We very much appreciate the Attorney General’s Office representation in helping us to recover the money owed to MassDOT,” said MassDOT Secretary and CEO Stephanie Pollack. “MassDOT must receive appropriate compensation for the use of its property and the Attorney General’s actions have assured that MassDOT lessees comply with their obligations.”

In 2000, MassDOT and Level 3 entered into a 30-year agreement in which Level 3 agreed to pay MassDOT annual rent in exchange for the right to install and maintain conduits to run fiber optic cables alongside several Massachusetts highways.

Pursuant to the contract between the parties, Level 3’s annual rent obligation is based on, among other things, the number and length of fiber optic cables it installed and is subject to potential offset for certain in-kind benefits to MassDOT. Level 3 is also required to provide MassDOT annual certifications reflecting the number of fiber optic cables it installed in the conduits.

According to the AG’s Office, after several years of payment, Level 3 ceased making payments, claiming it had failed to take the offsets to which it was entitled.

The AG’s Office began investigating this matter after it was referred by MassDOT in 2014. The AG’s Office alleges that in 2006, when payments to MassDOT should have resumed, Level 3 allegedly ignored multiple inquiries from MassDOT about the outstanding rent and failed to provide MassDOT with the required annual fiber optic cable certifications.

Under the terms of this settlement, Level 3 will immediately pay $7 million to the Commonwealth, of which more than $4.3 million in contract damages will be paid to MassDOT and $2.7 million will be paid to resolve the AG’s Massachusetts False Claims Act allegations. Level 3 will also pay an additional $1.2 million in contract damages to MassDOT over the next four years of the agreement and will resume making annual rent payments due under the contract.

This matter was handled by Assistant Attorney General Julia Bell Andrus and Division Chief Gillian Feiner, with assistance from Assistant Attorney General Jenny Wojewoda, Attorney Meghan MacKenzie and Paralegal Krista Roche, all of the AG’s False Claims Division, Juliana Rice and Jim Sweeney of the AG’s Government Bureau, Kristen Salera of the AG’s Investigations Division and members of MassDOT’s Real Estate & Development and Legal offices.