Deep dive into: FCC aims to ensure "only living and lawful Americans" get Lifeline benefits

There’s another battle unfolding between the Federal Communications Commission and California over the state’s distribution of federal Lifeline money. FCC Chairman Brendan Carr is proposing new nationwide eligibility rules to counter what he calls California’s practice of giving benefits to dead people.

California officials say the FCC allegations are overblown, and that there is simply “lag time between a death and account closure” rather than widespread failures in its Lifeline enrollment process. Meanwhile, the only Democratic commissioner on the FCC alleges that Carr’s plan to change eligibility rules uses “cruel and punitive eligibility standards” that will raise prices on many people who are still very much alive and eligible for the program.

Carr’s office said this week that the FCC will vote next month on rule changes to ensure that Lifeline money goes to “only living and lawful Americans” who meet low-income eligibility guidelines. Lifeline spends nearly $1 billion a year and gives eligible households up to $9.25 per month toward phone and Internet bills, or up to $34.25 per month in tribal areas.

Carr’s proposal is a Notice of Proposed Rulemaking (NPRM) that seeks public comment on a number of potential changes. It proposes collecting full Social Security numbers from applicants, using the Citizenship and Immigration Services’ Systematic Alien Verification for Entitlements program to verify eligibility, preventing states from using their own verification processes, and other changes.

“A recent Inspector General advisory shows that Lifeline providers received nearly $5 million in federal dollars to provide phone or Internet service to more than 116,000 dead people in the three opt-out states,” Carr said. “Over 80 percent of those scams took place in California alone. That type of waste, fraud, and abuse is completely unacceptable.”

“Opt-out states” are those that use their own processes to verify eligibility instead of the National Lifeline Accountability Database. The FCC already revoked California’s opt-out status in November over allegations that California was not complying with program rules. Texas and Oregon are the other opt-out states.

The California Public Utilities Commission (CPUC) this week said that “people pass away while enrolled in Lifeline—in California and in red states like Texas. That’s not fraud. That’s the reality of administering a large public program serving millions of Americans over many years. The FCC’s own advisory acknowledges that the vast majority of California subscribers were eligible and enrolled while alive, and that any improper payments largely reflect lag time between a death and account closure, not failures at enrollment.”

The CPUC said it is “misleading—and political—to single out California. This is a nationwide issue, not a California scandal.” California Gov. Gavin Newsom’s office reposted the statement with a short message that said, “The facts!”

Carr said at a press conference after yesterday’s FCC meeting that “Governor Newsom has put out a lot of misinformation… including claiming that this was essentially just natural lag between people being on a program dying and the account being shut down, but that’s not what the inspector general report found at all.”

Analysis & Development

The FCC Inspector General report said between 2020 and 2025, phone and Internet providers claimed subsidies for 116,808 deceased subscribers. It said that 81 percent of the claims were in California, 17 percent in Texas, and 2 percent in Oregon.

“Two-thirds (or 77,446) died after they were enrolled into Lifeline, and providers continued to seek support for an average of 4.4 months after their deaths,” the report said. “Though Lifeline is a one per household benefit, program qualification is based on an individual household member’s eligibility. Therefore, if the eligibility of a household was based on a now-deceased subscriber, continued household eligibility should be verified as soon as practical after the subscriber’s death to avoid improper payments.”

Nearly $5 million was disbursed for these deceased people over five years, or about $1 million a year in a program that spends nearly $1 billion a year on benefits for nearly 9 million households.

Carr wrote in his response to Newsom that the FCC Inspector General report “specifically identified the tens of thousands of people that were enrolled AFTER THEY HAD ALREADY DIED.” The Inspector General report wasn’t quite so certain that the number is in the tens of thousands, however.

The report said that “at least 16,774 (and potentially as many as 39,362) deceased individuals were first enrolled and claimed by a provider after they died.” The Inspector General’s office could not determine “whether the remaining 22,588 deceased subscribers were first claimed before or after their deaths as the opt-out states do not report enrollment date information.”

Carr also wrote in his response to Newsom that “payments to providers for people that died or may have died before enrollment went on for over 50 months in cases and for several months on average.” The Inspector General report did say that “providers sought reimbursement for subscribers enrolled after their deaths for 1 to 54 months, with an average of 3.4 months,” but didn’t specify which state or states hit the 54-month mark.

Carr has continued addressing the topic throughout the week. “For the record, my position is that the government should not be spending your money to provide phone and Internet service to dead people. Governor Newsom is taking the opposite position, apparently,” he wrote yesterday.

When asked if the FCC will penalize California, Carr said at yesterday’s press conference yesterday that “we are looking at California and we’re going to make sure that we hold bad actors accountable, and we’re going to look at all the remedies that are on the table.”

Future Impact

Anna Gomez, the FCC’s one Democrat, said that Carr’s proposed rulemaking “goes well beyond” what’s needed to protect the integrity of Lifeline. “By proposing to use the same cruel and punitive eligibility standards recently imposed for Medicaid coverage, the Commission risks excluding large numbers of eligible households, including seniors, people with disabilities, rural residents, and Tribal communities, from a proven lifeline that millions rely on to stay connected to work, school, health care, and emergency services,” she said.

At yesterday’s press conference, Gomez called the plan “a likely attempt to tip the scales against perceived political enemies of this administration.” With the FCC targeting California, “the issues that arise with a larger state are being weaponized and amplified to call for wholesale provisions of this proven and effective” program, she said.

Gomez said she supports “targeted reforms” to fight fraud, but the FCC proposal “risks turning connectivity into a political tool instead of treating it like the essential service it is.” She said the FCC plan would end up “taking away support from eligible subscribers, not just taking it away from fraudulent uses… It’s imposing new requirements, it’s going to delay benefits for a lot of subscribers, and it’s going to lead to a lot of subscribers dropping out because it becomes so complex.”

Gomez said the $9.25 monthly Lifeline benefit is already not enough, particularly given that Congress ended a different program that provided $30 a month to people with low incomes.

Carr argued that his plan will lower prices for people who pay Universal Service charges on their phone bills. “This is paid for by a charge that shows up on your phone bill,” he said after yesterday’s meeting. “If those charges are going to pay for dead people’s phone and Internet service, that’s an artificial inflation on your phone service. So by getting rid of dead people and other fraud, that’s going to help drive down the actual price you pay every month.”

Carr’s Notice of Proposed Rulemaking is scheduled to be issued after a February 18 vote. Finalizing rules usually takes at least a few months after an NPRM.

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