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$522,458 Rebate Ordered in California Prisoner Phone Overcharges
The California Public Utilities Commission (PUC) ordered MCI Telecommunications Corp. (MCI) to offset $522,458 in overcharges it made between June 14, 1996, and July 12, 1999, on MCI California Maximum Security Calls (i.e., California prisoner collect calls) by proportionately reducing the cost it charges for future such calls during its current contract with the California Department of Corrections (CDC). Although it was ruled that refunding the excess charges to the actual users would be impractical, individual users who have their own billing records may apply for personal refunds.
The May 2001 Order was the settlement reached by MCI, the PUC, and the complainant Utility Consumer Action Network (UCAN), a San Diego based ratepayer advocacy group. UCAN had filed a complaint in June 1999 stating that MCI had failed to bill its tariff rates, among other tariff violations, for California prisoners' collect calls. But because the details of the violations and the methodology for the calculation of the settlement amount were kept secret ("confidential" appendices B and C to the Settlement Agreement), it is impossible to say with any certainty that full amends were, in fact, made.
PLN readers should note that this settlement covers those California prisons under MCI's contract, yet that may not be the sole contract for all thirty-four of California's prisons. Some simple arithmetic shows that the one half million dollars involved here may be but a fraction of the sums involved. For example, if only half of CDC's 160,000 prisoners make one phone call per week, at an average cost of $10, the annual revenue stream would exceed $41 million.
It is widely reported in the press that CDC bids their phone contracts to the highest bidder; that is, to the bidder who offers CDC the greatest kickback. These reports state that this kickback amounts to a whopping 4044% of the gross telephone revenue billed for CDC prisoner collect calls. Forty percent of this $41 million amounts to over $16 million kicked back annually to CDC. Although UCAN's PUC complaint addresses only violations of PUC approved tariffs, one can only wonder if $522,458 repays all the inequities in the phone company's remaining $25 million cut of the pie, given that they have no qualms about overcharging $16 million annually for the privilege of getting the contract.
If these kickbacks were the burden of wealthy individuals, or of corporations who could write them off as charitable donations, perhaps one could turn the other cheek. But just the opposite is true: those forced to pay this "piper" are those least able to paythe typical lowincome families of prisoners.
Recognizing the rehabilitative value of prisoner phone contact with their families, the Settlement Agreement proposed that one use of the $522,458 could be a grant to Friend's Outside, a toprated 55 yearold nonprofit California corporation devoted to aiding prisoners' families to visit their incarcerated loved ones. With chapters at each of California's thirty-four prisons, Friends Outside could apply the proposed grant towards bus and rail fares to help needy families travel to distant prisons where their loved ones are housed.
Alternatively, the Settlement Agreement authorizes the PUC to opt for the offset against future phone charges, or to simply gift the money to the California state general fund (that is, on top of the 40% annual kickback!).
The PUC announced it had selected the Offset Plan, with the proviso that individual claimants who presented their billing records could get actual refunds. Since the nature of the overcharges and settlement calculation terms were kept secret, it is hard to say how much an individual customer might recover. But, if your family paid such overcharges on a weekly basis, it might well be worth the effort for them to apply. For more information, one contact person is Mr. Julio Ramos, Office of Ratepayer Advocates, California Public Utilities Commission, 505 Van Ness Ave., San Francisco, CA 94102; telephone: (415) 7034742.
The May 2001 Order was the settlement reached by MCI, the PUC, and the complainant Utility Consumer Action Network (UCAN), a San Diego based ratepayer advocacy group. UCAN had filed a complaint in June 1999 stating that MCI had failed to bill its tariff rates, among other tariff violations, for California prisoners' collect calls. But because the details of the violations and the methodology for the calculation of the settlement amount were kept secret ("confidential" appendices B and C to the Settlement Agreement), it is impossible to say with any certainty that full amends were, in fact, made.
PLN readers should note that this settlement covers those California prisons under MCI's contract, yet that may not be the sole contract for all thirty-four of California's prisons. Some simple arithmetic shows that the one half million dollars involved here may be but a fraction of the sums involved. For example, if only half of CDC's 160,000 prisoners make one phone call per week, at an average cost of $10, the annual revenue stream would exceed $41 million.
It is widely reported in the press that CDC bids their phone contracts to the highest bidder; that is, to the bidder who offers CDC the greatest kickback. These reports state that this kickback amounts to a whopping 4044% of the gross telephone revenue billed for CDC prisoner collect calls. Forty percent of this $41 million amounts to over $16 million kicked back annually to CDC. Although UCAN's PUC complaint addresses only violations of PUC approved tariffs, one can only wonder if $522,458 repays all the inequities in the phone company's remaining $25 million cut of the pie, given that they have no qualms about overcharging $16 million annually for the privilege of getting the contract.
If these kickbacks were the burden of wealthy individuals, or of corporations who could write them off as charitable donations, perhaps one could turn the other cheek. But just the opposite is true: those forced to pay this "piper" are those least able to paythe typical lowincome families of prisoners.
Recognizing the rehabilitative value of prisoner phone contact with their families, the Settlement Agreement proposed that one use of the $522,458 could be a grant to Friend's Outside, a toprated 55 yearold nonprofit California corporation devoted to aiding prisoners' families to visit their incarcerated loved ones. With chapters at each of California's thirty-four prisons, Friends Outside could apply the proposed grant towards bus and rail fares to help needy families travel to distant prisons where their loved ones are housed.
Alternatively, the Settlement Agreement authorizes the PUC to opt for the offset against future phone charges, or to simply gift the money to the California state general fund (that is, on top of the 40% annual kickback!).
The PUC announced it had selected the Offset Plan, with the proviso that individual claimants who presented their billing records could get actual refunds. Since the nature of the overcharges and settlement calculation terms were kept secret, it is hard to say how much an individual customer might recover. But, if your family paid such overcharges on a weekly basis, it might well be worth the effort for them to apply. For more information, one contact person is Mr. Julio Ramos, Office of Ratepayer Advocates, California Public Utilities Commission, 505 Van Ness Ave., San Francisco, CA 94102; telephone: (415) 7034742.
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Related legal case
Case Name Unknown
| Year | 2001 |
|---|---|
| Level | Regulatory |
| Conclusion | Settlement |
| Damages | 522458 |
| Injunction Status | N/A |