States Slam 'Harsh' FCC Denial of Lifeline National Verifier Waivers

Some low-income people in states required to switch may need to go through manual verification to continue getting the subsidized phone and broadband service, at least until Universal Service Administrative Co. can connect more state databases to the NV, experts said. That can take more time than automatic NV USAC verification.

“We’re exploring our options,” said Purvis. Vermont may talk to the other states, he said. “We’re hopeful that the FCC is correct that there won’t be any loss to Lifeline customers through reverification, but the data suggest that maybe we will see some loss.” Vermont subscribers declined after implementing the national Lifeline accountability database (NLAD), he noted.

Vermont learned it's part of Wednesday’s hard launch in a Sept. 23 FCC public notice (see 1909230046), said Purvis. “Although we’ve known the national verifier is coming, the actual notice and final date that was set for it was only noted the month before.” The FCC didn’t tell the department its waiver was denied until 4:47 p.m. local time Tuesday, about 20 minutes after we asked him for comment. “I got the email as I was walking out the door of my office.”

The FCC declined to comment on overall criticism about the order, saying the document "speaks for itself.” USAC also declined to comment. Nebraska Commissioner Crystal Rhoades (D) had ripped the order. Georgia Public Service Commission Chairman Bubba McDonald (R) declined comment.

New York, Connecticut

New York came in for criticism, as did other affected states.

New York's Department of Public Services "is deeply disappointed." It's "considering potential next steps," a spokesperson emailed Wednesday evening. "Without an extension of the hard launch of the National Verifier in New York, otherwise qualified customers with financial hardships may be denied" service. Another state's commissioner hypothesized an appeal route could be asking FCC members to reverse the staff decision.

It “was a very mean-spirited order,” said Richard Berkeley, New York Public Utility Law Project (PULP) executive director. The document recounting issues including in New York wasn’t “necessary to the actual decision,” Berkeley said. “They’re not legal arguments, they’re personal arguments.”

The decision “may have been wrongly decided,” and residents will “suffer,” emailed a spokesperson for Gov. Ned Lamont (D). “While we applaud that national data is now being used for automated eligibility determination, more than 30% of individuals who are otherwise validly eligible will now need to go through manual verification and are likely to be denied. We believe the harms of the hard launch … at this time are significant, and that a short delay would have had no deleterious effects.” The state remains “committed to working with USAC to stand up an automated eligibility system” soon, he added.

“We’re clearly disappointed,” said Vermont DPS’ Purvis. “We thought that what we asked for was reasonable, and we’ve been working very well and very positively with USAC to get our database connected and in place. We’re simply asking for a little bit more time to make sure that we didn’t lose any Lifeline recipients’ coverage.” The state agency wanted a six-month extension, “confident we would have an agreement” by then, Purvis said. “We’ve done everything and are working on everything the best we can.”

FCC Frustration

NARUC thinks NV rollout should be “slowed down until many of those databases can be hooked up and it can really function the way that it was intended to,” said Chris Nelson, South Dakota Public Utilities Commission vice chairman. The concept “is sound and it is what needs to happen,” added Nelson, a Republican who is on NARUC’s board and on its Telecom Committee. “The FCC and USAC probably underestimated the difficulty of getting all the databases plugged into it to make it a truly national verifier. And that’s what we are struggling with.” Databases in many states “need to be hooked up,” he added.

In South Dakota, which switched to the NV earlier in 2019, Nelson hasn’t heard of major problems from customers or telecoms. He found the order ”understandable” in criticisms of states: “I appreciate when someone is pretty forthright in what they’re trying to tell me. And they certainly were.” USAC says it’s ready to connect to available state databases, and the commissioner's frustrated his state’s Department of Social Services isn’t ready. DSS data can determine Supplemental Nutrition Assistance Program eligibility, which in turn can dictate if one can get Lifeline, the commissioner noted. The PUC is “trying to make everything work, but that key database is not under our jurisdiction,” Nelson said. DSS didn’t comment. Other members of NARUC's Telecom Committee didn't comment.

FCC “frustration with the states is understandable,” emailed Kelley Drye’s John Heitmann on behalf of the National Lifeline Association. “Too many have done too little to protect their low-income, Lifeline eligible consumers by not prioritizing and facilitating National Verifier access to state SNAP databases.” The FCC and USAC got access to SNAP databases in 12 states or territories, he noted. “The order indicates that about 1/3 of all Lifeline applicants or subscribers are not able to be verified electronically -- and that less than 10% successfully navigate the manual review process. Failure rates of greater than 75% on securing SNAP database access, greater than 33% on electronic verification, and greater than 90% on manual verification provide strong indication that the National Verifier is not meeting its goals.”

“Rather than unapologetically marching forward, the FCC should hit the pause button on National Verifier hard launches," the attorney added. He said the agency should "engage in an honest and fully transparent review of what is going on here and how it threatens the Lifeline program’s primary goals.” TracFone declined to comment.

Why Hurry?

NARUC General Counsel Brad Ramsay doesn't "understand why giving states a couple more months is a problem." Some are "expending a lot of state resources trying to set up a connection, but are still subject to State approval procedures almost as byzantine as the federal government's," he emailed. It's "odd to penalize" what's "likely a not insignificant number of qualifying subscribers in those states," Ramsay added. "The FCC is losing an opportunity to oversee the program efficiently." It lacks data on the impact of the Centers for Medicare & Medicaid Services (CMS) connection that took effect last month, he said.

NARUC sees flaws with the order, Ramsay emailed. It “seems to suggest the specious argument that the difference in verification rates between States with a State database connection and those that do not, could be that, on average, fraud and abuse is occurring disproportionally in all States without connections,” Ramsay said. “The FCC should consider a delay in the hard launch” in remaining states of California, Florida, Illinois, Ohio, Minnesota, Oregon, Texas and Wisconsin, he said. “The data the FCC has in hand shows an undeniable negative impact on qualified applicants in States that lack state database connections.”

Giving states additional time on CMS Medicaid-state data transfer testing and addressing questions like cybersecurity and customer confidentiality wouldn’t hurt NV rollout and additional accountability that comes with it, said one member of the National Association of State Utility Consumer Advocates Telecom Committee.

“That you brought the service live doesn’t mean that you are done testing, particularly given the fact that states are slowly connecting to it,” said NASUCA Telecom Committee's Berkeley, also of PULP. “To the extent that states needed more time to make sure that they could get as good as possible a match” given higher manual match rejection rates in some states “doesn’t seem unreasonable” to him. States that haven’t sought NV delay may not seek one now, “having looked at how nasty that order is,” he said.