How Much Is Too Much? Can a Ministerial Error Override the One-Year Downward Revision Deadline?

A well intentioned federal universal service contributor files a revised FCC Form 499-A just prior to, or on, the March 31st one-year revision deadline thinking that he/she will receive a downward adjustment of the form.  For some reason, the filer accidentally reports non-assessable revenue on an assessable line of the form.  Approximately four months later, the filer receives a true-up invoice from the Universal Service Administrative Company (“USAC”), but instead of finding a federal universal service fund credit on the invoice the filer finds a substantial additional federal universal service assessment.  The filer now may have good reason consider an FCC waiver request.  The FCC’s recently issued ATS Financial Hardship Order, available at https://prodnet.www.neca.org/publicationsdocs/wwpdf/da161089.pdf, specifies the circumstances under which such an error constitutes sufficient financial hardship such that the filer may seek a waiver of the one-year downward revision deadline.

With very limited exceptions, federal universal service contributors are required to file FCC Forms 499-A by April 1 of each year reporting their prior calendar year’s revenues.  A filer that discovers an error in the revenue reported on its FCC Form 499-A is required to correct that error by filing a revised form.  The FCC requires revisions that result in additional federal universal service contributions upon discovery of a revenue reporting error.  Ever since the Commission issued its One-Year Downward Revision Deadline Order, available at http://www.universalservice.org/_res/documents/about/pdf/fcc-orders/2004-fcc-orders/DA-04-3669.pdf, however, revisions that result in a reduction in federal universal service contributions must be filed by March 31 of the year after the original filing due date or the filer risks foregoing return of the amounts it overpaid to the federal universal service fund.

Such was the case for American Teleconferencing Services, Ltd. (“ATS”), a filer who determined upon receiving its true-up invoice from USAC, that it had inadvertently reported non-assessable foreign-to-foreign revenue on an assessable line of its revised 2012 FCC Form 499-A.  As a result, instead of receiving its anticipated refund, ATS was invoiced for additional federal universal service contributions.  Although ATS attempted to file a second revised 2012 FCC Form 499-A, USAC rejected the second revision as untimely because it was filed outside of the one-year downward revision deadline.  The FCC Wireline Competition Bureau sided with USAC, denying ATS’s waiver request of the one-year downward revision deadline.

Enter the ATS Financial Hardship Order.  Upon review, the full Commission overturned the FCC Wireline Competition’s Bureau’s decision, granted ATS’s waiver petition, and directed USAC to process ATS’s second revised 2012 FCC Form 499-A as if timely filed.  In so doing, the Commission enumerated a number of conditions that it found sufficiently compelling to demonstrate good cause for granting a waiver of the one-year downward revision deadline.  Specifically, the Commission noted that:

  1. ATS was able to demonstrate that it had to treat the additional federal universal service assessments as material and necessitating shareholder disclosure under SEC standards;
  2. ATS was able to provide information demonstrating the estimated per-share earnings impact of its error;
  3. ATS’s error involved non-assessable revenue that would not have resulted in any additional federal universal service contributions had ATS filed its second revised form correctly and, therefore, caused minimal harm to the federal universal service fund;
  4. ATS was not a filer that failed to submit its FCC Form 499-A at all, nor was it a filer that alleged it misunderstood the filing procedures, or was negligent in filing its FCC Form 499-A.  Rather, ATS timely submitted its initial 2012 FCC Form 499-A and first revision based on the best information available at the time;
  5. The time commitment involved with ATS developing the ability to more precisely identify its foreign-to-foreign revenues and improve its reporting practices resulted in ATS filing its first revised FCC Form 499-A only a few days before the FCC Form 499-A one-year downward revision deadline; and
  6. ATS’s inadvertent clerical mistake was made on a timely filed FCC Form 499-A revision and was the result of reporting otherwise non-assessable revenue on an assessable line of the form.

While the Commission limited its holding in the ATS Financial Hardship Order to ATS’s particular circumstances, a filer who finds itself in a similar predicament should consider filing a request for waiver with the FCC.  Moreover, even where a filer does not meet the circumstances set forth in the order, if it notices an error in its FCC Form 499-A reporting after the one-year downward revision deadline that would result in reduced contributions, a conversation with USAC and review of FCC precedent may be in order.  For filers who face a contribution obligation as a result of an FCC Form 499-A error that amounts to a significant portion of their annual revenue or multiple times their actual obligations, USAC, with the oversight of the FCC, has put in place an administrative procedure that may apply depending on the dollar amount of the additional federal universal service contributions at issue.  Moreover, precedent demonstrates that the FCC has granted waivers of the one-year downward revision deadline to at least some filers who have made ministerial or clerical errors that have resulted in a significant increase in federal universal service contributions.

Disclaimer

This blog post is a publication of Bradley Hagen & Gullikson, LLC.  The purpose of this blog post is to inform our clients, colleagues, and friends of recent federal universal service legal developments.  This blog post is not intended to be, nor should it be used as, a substitute for specific legal advice as Bradley Hagen & Gullikson, LLC only provides legal counsel to its clients, and only in response to specific factual inquiries regarding particular situations.

Too Little, Too Late? Lessons from the Momentum Telecom Inc. Admonishment Order

The Federal Communications Commission’s (“FCC”) cumbersome nature has been a bit of sore spot with telecommunications providers and their counsel.  Does an order issued by the FCC Enforcement Bureau (“EB” or “Bureau”) last week, however, demonstrate that the FCC’s cumbersome processes might occasionally work to the benefit of telecommunications providers?

On July 22, 2016, the FCC EB issued an admonishment order (“Order”) to Momentum Telecom, Inc. (“Momentum” or “Company”), chastising the Company for failing to timely and fully contribute to the federal Universal Service Fund (“USF”) for over twelve (12) months.  The Order expressed explicit concern with Momentum’s pattern of habitual late payment of its federal USF obligations.

Although Momentum exhibited behaviors commonly on the FCC EB’s “naughty” list, Momentum managed to escape an FCC forfeiture penalty altogether.  Specifically, even though Momentum had been delinquent in its federal USF contributions for nearly two years, the FCC EB determined that the one-year statute of limitations set forth in FCC Rule 1.80(c)(4) prevented the Bureau from pursuing a forfeiture penalty because the “appropriate notice” was not issued within one (1) year of the violation.

Of particular interest is the fact that the FCC EB seems to have pegged July 1, 2015 (the date on which Momentum had been delinquent in its federal USF contributions for nearly two years) as the applicable date for purposes of calculating the statute of limitations.  Although not discussed in any detail, presumably the “appropriate notice” in this case is the Order (adopted on July 21, 2016 and released on July 22, 2016).  So, it appears that the Momentum Order just barely squeaked in past the one-year deadline, saving Momentum a minimum forfeiture penalty of $322,665.75.

Make no mistake – the FCC EB’s Order did not exempt Momentum from making all of its delinquent federal USF contributions.  Nor did it create a statute of limitations for those contributions.  In fact, the FCC EB was adamant that Momentum should be “sanctioned” for its habitual late payment of its federal USF contributions and warned the Company that future violations could result in substantial monetary fines.

Nonetheless, the Momentum Order provides some valuable lessons regarding the statute of limitations for forfeiture penalties related to federal USF contributions.  First, make sure you know the start date the FCC EB is using for purposes of the statute of limitations.  Knowing this information, and being able to refute it, could come in handy in enforcement negotiations or an appeal.  Second, make sure you are clear about what the FCC considers “appropriate notice.”  As with the statute of limitations start date, this information could help potentially reduce or eliminate a penalty.  Finally, before you submit to a treble damage penalty calculation (as established in the FCC’s 2015 Forfeiture Policy Statement), do some quick math to determine whether you can avail yourself of the one-year forfeiture penalty deadline exemption.

Key Considerations for Development of a Community Broadband Network

Rapid deployment of high-speed broadband service to many large and mid-sized cities throughout the United States has led rural communities to believe that they are left out because incumbent providers have not committed to expending the necessary capital to upgrade antiquated networks.  Rather than doing nothing or waiting for cable television companies to improve their existing networking, many communities are considering the options available to develop community broadband networks.

Regardless of the size and resources of a community or the deployment options that a community may have, it is important to develop a general approach for the process and adjust the approach as necessary as the process proceeds. Because each community broadband project is unique the process suggested below is for guidance purposes only to get the process underway.

  1. Create a project team: Although policy makers within a city are responsible for ensuring the authority exists for the development of upgrading the existing networks and affordable access to them, it is important to unite additional players and key stakeholders in the process.
  2. Identify and set community goals by identifying the needs for high-speed Internet access through surveys and needs assessment.
  3. Identify existing providers and the current available services and prices for the services they provide. Engage with these providers, it may be in their best interest to work with a community than compete.
  4. Conduct an assessment to identify the existing infrastructure and any available services that exist.
  5. Review and streamline existing zoning, permitting and construction processes.
  6. Review fee and tax structure to identify what incentives, if any, can be provided to potential providers.
  7. Identify target time periods for network deployment.
  8. Identify whether proposed network is for the specific community only or will surrounding communities in region be included in the network by engaging with neighboring cities, towns and counties.
  9. Consider bringing in a consultant to help assess and organize information gathered and provide guidance on various business/entry models including: legal analysis, development of a feasibility study, developing a business model(s), and review proposals that would meet the business model and assist in negotiating terms of agreement.
  10. Consider and review available financing options including sources for capital funding. There are many funding sources that may be available to a community including federal and state funding. Consider public-private models rather than relying exclusively on municipal funding.

Kristin Berkland Joins Bradley Hagen & Gullikson, LLC as Telecommunications Attorney

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Kristin Berkland

Kristin Berkland

Bradley Hagen & Gullikson, LLC, is pleased to announce that former Universal Service Administrative Company (USAC) Assistant General Counsel, Kristin Berkland, has joined the firm as a telecommunications partner.

While with USAC, Ms. Berkland provided legal counsel to the USAC division responsible for billing, collecting, and disbursing over $7 billion in federal universal service revenues annually. Ms. Berkland also worked with the Federal Communications Commission (FCC) Wireline Competition and Enforcement Bureaus in the application of federal universal service reporting and contribution regulations and assisted with federal universal service E-Rate waste, fraud, and abuse matters. Ms. Berkland regularly participated in and provided legal oversight for USAC contributor and beneficiary audits, giving her a unique and unparalleled insight into the USAC audit process.

Prior to joining Bradley Hagen & Gullikson, LLC, Ms. Berkland worked for the law firm of Dorsey & Whitney, LLP where she helped telecommunications providers comprehend and comply with their federal universal service reporting and contribution requirements and counseled federal universal service beneficiaries and service providers regarding participation in the High Cost, E-Rate, and Lifeline programs. She has represented major school districts in federal E-Rate matters, including USAC E-Rate audits. Ms. Berkland has also handled complex Telephone Consumer Protection Act (TCPA) regulatory compliance matters and sheparded clients through the complex domestic and international Section 214 authorization process, including providing counsel regarding how to navigate the complicated “Team Telecom” review process. Ms. Berkland also has experience in energy regulatory, antitrust, and complex litigation matters. Ms. Berkland will continue to offer her unique blend of federal universal service and Section 214 licensing services at Bradley Hagen & Gullikson, LLC.

Ms. Berkland received her B.A. in International Studies, with honors, from the University of North Carolina at Chapel Hill and her J.D., magna cum laude, from the Catholic University of America, Columbus School of Law in Washington D.C.

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Visit Bradley Hagen & Gullikson’s website for more information.
Contact Kristin directly at kristin@bradleylawmn.com.

Pension Benefit Available for Wartime Veterans

If you or your loved one is a wartime veteran, there is a little known pension benefit that may be available.  This benefit was earned by wartime veterans under the following circumstances:

  • You served for 90 days or more in active duty service;
  • You were discharged for service under other than dishonorable conditions;
  • You meet certain income and net worth guidelines; and
  • You are 65 years or older or have a permanent and total non-service-connected disability, or in a nursing home, or receiving Social Security Disability Benefits.

The pension benefit is not only a monetary benefit, it also provides an additional Aid and Attendance benefit, if necessary.  This could include coverage for in-home nursing care and care facilities.  For additional information you can watch this video from the VA.

 

Adrian Herbst and Leslie Herbst-Saporito Join Bradley Law Firm

We are pleased to announce that Adrian Herbst and Leslie Herbst-Saporito have joined Bradley Hagen & Gullikson as partners. They will join Mike Bradley in his telecommunications practice at the firm. Both are coming from the well-respected municipal telecommunications law firm of Baller Herbst Stokes & Lide.

“I am so pleased to have Adrian and Leslie join our team,” said Mike Bradley. “No one in Minnesota has more municipal telecommunications legal experience than Adrian Herbst. It is a real honor to have him join us.” Adrian brings over 30 years of municipal telecommunications legal experience to the firm. He served as the City Attorney for the City of Bloomington for many years before going into private practice. He has been a leading attorney in municipal cable franchising, rights-of-way management, and municipal broadband planning. Indeed, Adrian negotiated many of the initial cable television franchises in the Twin Cities.

Adrian has also been a leader in many municipal organizations.  Adrian has served as President of the Minnesota Trial Lawyers Association and Vice President of the League of Minnesota Cities.  He is a charter member of the National Association of Telecommunications Officers and Advisors (NATOA), as well as various other legal organizations including the International Municipal Lawyers Association (IMLA), the Federal Communications Bar Association, and the Telecommunications Committee of the Minnesota State Bar Association. Adrian is a member of the State Bar of Minnesota.  Like Mike Bradley, Adrian holds the highest AV rating with Martindale‑Hubbell.

Leslie, Adrian’s daughter, is an emerging municipal telecommunications attorney in her own right. She has assisted local governments throughout the country on all aspects of cable service franchising and telecommunications rights-of-way management issues. She is experienced in drafting, negotiating and enforcing cable and telecommunications franchises and revising right-of-way ordinances.

“I feel very fortunate to have the opportunity to work with Leslie,” said Adrian Herbst proudly. “I have known and consulted with Mike for many years on municipal telecommunications issues. I’m excited about the synergies of our practices.”

Most recently Leslie has been working on competitive cable franchises for municipal clients in Minnesota.  “Our firm has been a leader in helping cities negotiate competitive cable franchises resulting in wire-line cable television competition for the first time ever in the Twin Cities,” said Bradley, “Leslie’s experience will build on that success.”

In the coming months and years, local governments will be challenged to ensure their residents have access to adequate broadband services. This issue particularly affects rural areas. Many cities are also facing a rise in cell tower applications as mobile phone companies look to increase their coverage and bandwidth for consumers. This increase in demand coupled with recent changes to the law require local governments to reassess its current approach to cell towers. According to Leslie, “it’s an exciting time to be representing local governments on telecommunications issues with recent developments, such as competition in cable, cell tower and broadband planning. I think the firm is in a great position to help local governments navigate successfully through these issues.”

Bradley Hagen & Gullikson is a Twin Cities based law firm located in Woodbury, Minnesota.

 

Attorney Leslie Saporito

Leslie Herbst-Saporito

Attorney Adrian Herbst

Adrian Herbst

Attorney Mike Bradley

Mike Bradley

 

 

 

New Broadband Recommendations for Minnesota

The Minnesota Governor’s Task Force on Broadband has made a new set of policy recommendations to Governor Mark Dayton and the Minnesota legislature.  They include:

Update Minnesota’s statutory broadband speed goal – It is a state goal that no later than 2022 all Minnesota businesses and homes have access to high-speed broadband that provides minimum download speeds of at least 25 megabits per second and minimum upload speeds of at least 3 megabits per second. Also by 2026, it is a state goal that all Minnesota businesses and homes have access to at least one provider of broadband with download speeds of at least 100 megabits per second and upload speeds of at least 20 megabits per second.

Infrastructure grant program – The Task Force recommends appropriating $200 million to the Border-to-Border Broadband Development Grant Programing FY 2016-17. While this figure is a fraction of the total capital investment required to meet the state’s border-to-border broadband objective, it is an important contribution.

Create an Office of Broadband operating fund to promote broadband adoption and use – The Task Force recommends that the fund be managed by the Office of Broadband Development, at a specific amount to be determined between the Office of Broadband Development and the 47 National Broadband Map, available at http://www.broadbandmap.gov/rank/all/county/minnesota/percentpopulation/demographics-income-median-income/ascending/speed-download-greater-than-25mbps. 48 Provided by Marc Johnson of East Central MN Educational Cable Cooperative (ECMECC). 49 http://mn.gov/deed/images/education-superhighway.pdf, slide 23. 36 legislature, that will allow the Office to advance and support programs and projects aimed at promoting broadband adoption and use.

Increase telecommunications aid for schools and libraries – The Task Force recommends funding library telecommunications aid at $6.6 million in FY 2016-17, and increasing the telecommunications aid equity for schools to $9.75 million in FY 2016-17. This funding will expand the impact of the program in underserved areas of the state and help ensure every person has access to reliable broadband service.

Expand existing sales tax exemption for telecommunications equipment –The Task Force recommends the existing sales tax exemption for telecommunications equipment be made permanent to provide certainty to providers and enable thoughtful, future-oriented investment planning. Further, the Task Force believes policy makers should examine the possibility of expanding the exemption to include additional equipment, including fiber, conduit, poles, wires, and cable, that would assist in network development efforts.

Reform regulations of Minnesota’s telecommunications industry – The Task Force recommends reforming the regulatory framework underlying Minnesota’s telecommunications industry to reflect the modern communications era, bringing regulatory certainty, competitive equity, and relevance to an industry in the midst of dramatic change, while also addressing consumer protections.

Review existing permitting criteria to see where there might be opportunities for efficiencies – The Task Force recommends an administrative review of existing permitting requirements impacting broadband network deployment to determine where there may be opportunities to ensure the most efficient processes are in place. Uncertainty over permitting timelines and requirements can delay or prevent network deployments from moving forward.

Here is a link to the 2016 Governor’s Task Force on Broadband Annual Report.

TRICARE Travel Benefit for Combat-Related Disabilities

Military Retirees receiving Combat-Related Special Compensation (CRSC) may be entitled to reimbursement for travel-related expenses for travel greater than 100 miles from a referring provider’s location.  The travel must be for medically necessary, nonemergency specialty care for Combat-Related Disabilities.

All of the following requirements must be met to be eligible:

  • Receiving Retired, Retired Retainer, or Equivalent pay;
  • Received an award of CRSC from a CRSC Board;
  • Reside in the U.S. and covered under TRICARE Standard or TRICARE For Life;
  • Received a Referral from your Provider for care over 100 miles for the provider’s location for treatment of the combat-related disability.

To learn more about this benefit, go to the TRICARE webpage at www.tricare.mil.

Health Care Directive and POLSTS

Joe is 45 years old and in good health.  He is about to go into the hospital for a minor procedure and his clinic asks him if he has a health care directive.  What is it and why would Joe need one?

A health care directive is a document that tells your health care workers who should make medical decisions for you if you cannot.  In Joe’s case, he chooses his wife, Jane, to be his health care “agent.”   If there is a mishap with Joe’s surgery , and he is unconscious, Jane will decide, with the doctor’s advice, between various options for Joe’s care.

Because any of us could become unable to make decisions, either temporarily, or permanently, every adult should have a health care directive.  There is no doubt that this document is the single most important estate planning document you can have.

Health Care Directives provide instructions to the person who will make medical decisions on your behalf. They are not just for deciding who will “pull the plug.”  In today’s world of medicine, there are many choices of treatment—some aggressive, others less so.  If Joe is unable to make his own decisions because he is too sick, his health care directive says who will make those decisions, including the decision of where to live.  The instructions contained in a Health Care Directive help Jane to make the kind of medical decisions that Joe would make if he were able.

Fast forward to the future—Joe is now 89 years old and suffering from Stage IV Lymphoma.   What happens when Joe collapses in his apartment?  Jane calls 911 because she is scared, but she knows that Joe would not want to be resuscitated.  What now?   If Joe had worked with his doctor and obtained a POLST (Provider Orders for Life Sustaining Treatment) and that POLST were easily available to the paramedics, those decisions would already be made and the paramedics would know whether to try CPR, or whether to intubate Joe.

POLSTs are provided only by physicians and nurse practitioners and are medical orders to other health care workers.  POLSTs are generally only for people who are approaching life’s end.  They do not replace Health Care Directives, but supplement them.  Like a Health Care Directive, photocopies and faxes of the POLST are valid.  Unlike a Health Care Directive, there is little flexibility in the POLST.  One must be even more careful and deliberate when completing a POLST than completing a Health Care Directive.

There are five sections to the POLST and 3 relate to care:

  • CPR vs. DNR
  • Goals for Treatment—comfort care to limited intervention to full intervention
  • Treatments—choices about use of antibiotics and nutrition/hydration

If there is a 911 situation, and the POLST is readily available for the paramedics, the first responders will follow the instructions of the POLST—at least in Richfield and in Minneapolis, MN.  Any care section not filled out will receive the presumption of aggressive treatment.  First responders will not take the word of a family member or other person that such a document exists—it must be provided.

What is a Trust?

According to Black’s Law Dictionary, a Trust is “A legal entity created by a grantor for the benefit of designated beneficiaries under the laws of the state and the valid trust instrument.” What that means is: think of a trust as a basket that you own. You are the ‘grantor’. The basket holds assets. The basket is the ‘legal entity.’ You use the assets for your own benefit. You are the ‘beneficiary’, and when you die, your assets go to your children; they become the beneficiaries.
So, a Trust has 3 players:

  • the Grantor—the person who owns the assets put into the trust
  • the Trustee—the person who manages the assets for the benefit of the beneficiaries
  • the Beneficiaries—the person(s) who benefit from the assets—either by receiving the income of the trust, or by receiving the assets from the trust.

If I create a trust today, I may put my house, my bank accounts and my investments into my trust. The trust actually owns my assets now, not me directly. I can still do anything I want with my assets—reinvest, sell, or even give them away, but when I do that, I am acting as the ‘trustee’—the person who manages the trust. I am also the beneficiary of my trust—I benefit from the assets of the trust.
Say that tomorrow I suffer a massive stroke, and am unable to manage my finances. I still have my trust, but I cannot be the trustee. That job will fall to my ‘successor trustee.’ That trustee has a job to manage the assets and look after my needs, because while I am no longer the trustee, I am still the beneficiary.
If I succumb to the effects of my stroke and die, I am no longer the beneficiary of my trust—the new beneficiaries will be the people I have named when I created my trust—much like a Will says who will receive probate assets. At this point, the trust will probably terminate.
Trusts may be useful for some people because they allow (if properly created and managed) the owner to avoid probate on death. This is especially useful if real property is owned in more than one state. Trusts also maintain privacy for the family of the deceased person. Before you set up a trust, be sure to talk to an attorney who is working for your best interests. Trusts do great things, but they are not always the best answer.