[Federal Register Volume 67, Number 136 (Tuesday, July 16, 2002)]
[Notices]
[Pages 46665-46668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-17829]


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FEDERAL COMMUNICATIONS COMMISSION

[EB Docket No. 02-149; FCC 02-173]


In the Matter of Publix Network Corporations; Customer 
Attendants, LLC; Revenue Controls Corporations; SignTel, Inc.; and 
Focus Group, LLC (Publix Companies) Order To Show Cause and Notice of 
Opportunity for Hearing

AGENCY: Federal Communications Commission.

ACTION: Notice; Order to show cause and opportunity for hearing.

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SUMMARY: This document is an order for Publix Companies to show cause 
and give the Publix Companies the opportunity for a hearing before the 
Commission. The Commission has found that an evidentiary hearing is 
required to determine whether the Commission should revoke the 
operating authority of the Publix Companies, the Publix Companies and 
the principal or principals of the Publix Companies should be ordered 
to cease and desist from any future provision of interstate common 
carrier services without the prior consent of the Commission, the 
Publix Companies are entitled to any of the telecommunications relay 
services (``TRS'') fund monies that they requested or received from the 
TRS Fund, and a forfeiture against any or all of the Publix Companies 
is warranted and, if so, the amount of the forfeiture.

DATES: Effective July 16, 2002.

FOR FURTHER INFORMATION CONTACT: David Hunt, Attorney Advisor for 
Telecommunications Consumers Division, Enforcement Bureau (202) 418-
1522.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
document regarding EB Docket No. 02-149, released on June 19, 2002. The 
complete text of this document is available for inspection and copying 
during normal business hours in the FCC Reference Information Center, 
445 12th Street, SW., CY-A257, Washington, DC, 20554, and also may be 
purchased from the Commission's copy contractor, Qualex International, 
445 12th SW., CY-B402, Washington, DC, 20554, (202) 863-2893. It is 
also available on the Commission's website at http://www.fcc.gov/Daily_Releases/Daily_Business/2002/db0619/FCC-02-173A1.pdf.

Synopsis

A. Background

    1. Telecommunications relay services were created to bring to those 
with a hearing or speech disability the benefits of telecommunications 
service that had hitherto been unavailable to that segment of the 
public by ``provid[ing] the ability for an individual with a hearing or 
speech disability to engage in communication by wire or radio with a 
hearing individual in a manner that is functionally equivalent to the 
ability of an individual who does not have a hearing or speech 
disability to communicate using voice communication services by wire or 
radio.
    2. The Act requires each common carrier providing voice 
transmission services to provide TRS in accordance with the standards 
set forth in Section 64.604 of the Commission's rules. Carriers may do 
this either by providing TRS directly, or by contracting with a TRS 
provider. Section 64.604 of the Commission's rules established the TRS 
Fund, currently administered by the National Exchange Carrier 
Association (``NECA''), which reimburses TRS providers for the costs of 
providing interstate TRS. Carriers providing interstate 
telecommunications services must contribute to the TRS Fund on the 
basis of interstate end-user telecommunications revenues.
    3. Payments from the TRS Fund to TRS providers are based on 
schedules of payment formulae that NECA files annually with the 
Commission. These formulae are based on total monthly interstate TRS 
minutes of use (``MOU''), defined as the MOU for completed interstate 
TRS calls placed through a TRS center beginning after call set-up and 
concluding after the last message call unit. TRS providers are eligible 
to receive payments from the TRS Fund only if they are: (1) TRS 
facilities operated under contract with and/or by

[[Page 46666]]

certified state TRS programs pursuant to Sec. 64.605; (2) TRS 
facilities owned by or operated under contract with a common carrier 
providing interstate services pursuant to Sec. 64.604; or (3) 
interstate common carriers offering TRS pursuant to Sec. 64.604. To be 
entitled to payments from the TRS fund, TRS providers must submit 
monthly reports of interstate MOU to NECA.
    4. As required by the Act, the Commission has established mandatory 
minimum standards for all TRS providers. Congress mandated certain of 
these standards, such as the requirement to operate seven days a week, 
24 hours per day pursuant to Sec. 64.604(b)(4) and the prohibition on 
keeping records of or disclosing the content of TRS calls pursuant to 
Sec. 64.604(a)(2). The Commission's implementing rules also cover 
matters such as training, typing speed, and communication competence 
for the communication assistants. Besides employee qualifications, TRS 
hardware and access requirements are outlined, as well as reporting 
functions, payments, contribution computation, and complaint 
procedures.
    5. The Publix Companies have, since 1999, been collecting 
reimbursements from the TRS Fund for purportedly providing TRS service 
eligible for compensation under the Commission's rules. The Publix 
Companies began operating what they described as a TRS center in 
January 1999 and began submitting MOU reports to NECA in February of 
that year. From that period until April 2001, the Publix Companies 
submitted 8,014,815 MOU to NECA as a basis for payment from the TRS 
Fund. The last billing statement they sent to NECA for compensation 
from the TRS Fund was dated August 13, 2001, and covered purported TRS 
MOU for July 2001. The Publix Companies have received reimbursements in 
excess of $6 million.
    6. A random audit of the Publix Companies' TRS operations by NECA 
in 2001 raised significant questions of whether their relay operations 
entitled them for the TRS Fund payments that they had requested and 
received. On June 25, 2001, the Enforcement Bureau (``EB'') issued a 
subpoena for documents to Publix Network (``EB Subpoena''), together 
with a letter of inquiry. The Publix Companies responded to both EB and 
the Common Carrier Bureau (CCB) on July 23, 2001. In its response to 
CCB, Publix Network stated that once it was given notice of CCB's 
concerns, it had ``worked diligently to adjust its operations.'' Publix 
Network further stated that its management believed that Publix Network 
had always been operating ``in substantial compliance with the TRS 
minimum standards.''
    7. Based on the NECA audit and on the responses received from the 
Publix Companies to the Commission's inquiries, it appears that the 
Publix Companies have collected millions of dollars in payments from 
the TRS Fund without actually having provided TRS services that would 
have qualified them for reimbursement. It appears that the Publix 
Companies did not actually provide TRS as defined by the Commission's 
rules, thus raising a threshold issue about their eligibility for 
compensation from the TRS Fund. Moreover, there appears to be pervasive 
misconduct and violations of Commission rules by the Publix Companies. 
It appears that the Publix Companies violated numerous operational, 
technical, and functional requirements set forth in the Commission's 
TRS rules, submitted inflated bills for reimbursement and other false 
and inadequate data to the TRS Fund Administrator, and made repeated 
misrepresentations to the Commission. Considered in their totality, it 
appears that the actions of Publix Network and related companies may 
have constituted not only multiple, technical violations of the Act and 
the Commission's rules, but also a deliberate scheme to obtain TRS Fund 
payments for which these companies were not eligible. In view of the 
apparent pattern of pervasive misconduct and violations, it appears 
that the Publix Companies are not qualified, and should not be 
authorized, to operate as common carriers in the future.

B. Discussion

    8. The Publix Companies are eligible to receive payments from the 
TRS Fund, if at all, only to the extent that they are an interstate 
common carrier ``offering TRS pursuant to Section 64.604.'' It appears 
that the services for which the Publix Companies have sought TRS Fund 
reimbursement fundamentally do not constitute TRS at all. Moreover, to 
the extent that any TRS was actually provided by the Publix Companies, 
it appears that it was not ``TRS pursuant to Sec. 64.604,'' because the 
Publix Companies did not substantially comply with the requirements of 
that rule.
    9. The Commission's definition of TRS requires communication 
between an individual with a hearing or speech disability and an 
individual without any such disability. It appears that almost all of 
the purported calls for which the Publix Companies have sought 
reimbursement occurred solely between employees of the Publix 
Companies, and that the CAs did not function as transliterators, but 
initiated and directed the calls to other employees of the Publix 
Companies. Thus, these calls were, in effect, calls solely between 
persons with hearing or speech disabilities.
    10. It appears that the calls Publix Companies reported to NECA did 
not involve calls between persons with hearing or speech disabilities 
and those without such disabilities. The calls appear to have followed 
two patterns. In the first, Publix Companies' CAs would place a call to 
several assistant developers (``ADs'') who were in the employ of Dr. 
Raanan Liebermann, President of the Publix Network Corporation, through 
Focus Group, and would ask the ADs several questions as per a prepared 
``script.'' These scripted conversations would last four to eight hours 
a day, five days a week. The ADs, however, were, according to the 
Publix Companies, all persons with hearing or speech disabilities, and 
thus required no TRS to communicate among themselves. It appears that 
the CAs functioned as participants, initiators of these calls. However, 
payments are only available for interstate TRS calls that are placed by 
TRS users. In the second pattern, it appears that a moderator was 
involved in the conference calls along with the CAs and ADs. These 
moderators were employees of Dr. Liebermann through another of the 
Publix Companies, SignTel. Apparently, the moderator would call as many 
as six CAs of the Publix Companies, who in turn would usually contact 
as many as five ADs each. When a moderator was involved in the call, it 
appears the he or she would read out the questions per the script, and 
the CAs would type out via TTY the questions for the ADs. When the ADs 
responded, however, it appears that the responses were not always 
forwarded to the moderators. Thus, it appears that the moderator may 
have served only to create the appearance of actual relay service. 
Calls such as these do not constitute TRS because they do not 
facilitate communications between persons with hearing or speech 
disabilities and persons without such disabilities.
    11. The Administrative Law Judge is directed to determine whether 
the service for which the Publix Companies requested and received 
payments met the definition of TRS in the Act and the Commission's 
rules; whether the Publix Companies offered TRS pursuant to Section 
64.604, including but not limited to whether they met the operational, 
technical and functional standards, and met the training, 
confidentiality, and equal access to

[[Page 46667]]

interexchange carriers required of TRS facilities; whether the Publix 
Companies violated Commission rules by providing inaccurate information 
(costs and minutes of use) to the TRS Fund Administrator; whether the 
Publix Companies made intentional misrepresentations or willful 
material omissions to the Commission; whether the Publix Companies 
should remain authorized to act as a common carrier; whether the Publix 
Companies are entitled to any portion of the payments from the TRS Fund 
that they requested or received; and whether piercing the corporate 
veil is appropriate to find the affiliated entities equally liable in 
this alleged scheme.

C. Conclusion

    12. In light of the totality of the information now before us, an 
evidentiary hearing is required to determine whether the continued 
operation of the Publix Companies as a common carrier would serve the 
public convenience and necessity within the meaning of Section 214 of 
the Act. Further, due to the potentially egregious nature of the Publix 
Companies' apparently unlawful activities, they will be required to 
show cause why an order to cease and desist from the provision of any 
interstate common carrier services without the prior consent of the 
Commission should not be issued. In light of the apparent violations 
outlined above, it also appears that a forfeiture should be levied 
against the Publix Companies. Moreover, because our investigation has 
raised substantial questions whether the Publix Companies are entitled 
to any of the payments that they have received and requested from the 
TRS Fund, we will specify an issue to determine the extent to which the 
Publix Companies are eligible for any payments.

Ordering Clauses

    13. Pursuant to Sections 4(i) and 214 of the Communications Act of 
1934, as amended, 47 U.S.C. 154(i) and 214, the principal or principals 
of the Publix Companies are directed to show cause why the operating 
authority bestowed on the Publix Companies pursuant to Section 214 of 
the Communications Act of 1934, as amended, should not be revoked.
    14. Pursuant to Section 312(b) of the Communications Act of 1934, 
as amended, 47 U.S.C. 312(b), the principal or principals of the Publix 
Companies are directed to show cause why an order directing them to 
cease and desist from the provision of any interstate common carrier 
services without the prior consent of the Commission should not be 
issued.
    15. The hearing shall be held at a time and location to be 
specified by the Chief Administrative Law Judge in a subsequent order. 
The ALJ shall apply the conclusions of law set forth in this Order to 
the findings that he makes in that hearing, upon the following issues:
    (a) To determine whether the service the Publix Companies provided 
met the definition of TRS under Sec. 225(a)(3) of the Act and 
Sec. 64.601(7) of the Commission's rules;
    (b) To determine whether the Publix Companies violated 
Sec. 64.604(a)(1) of the Commission's rules;
    (c) To determine whether the Publix Companies violated Section 
225(d)(1)(F) of the Act and Sec. 64.604(a)(2)(i) of the Commission's 
rules;
    (d) To determine whether the Publix Companies violated 
Sec. 64.604(b)(3) of the Commission's rules;
    (e) To determine whether the Publix Companies violated 
Sec. 64.604(b)(4) of the Commission's rules;
    (f) To determine whether the Publix Companies violated 
Sec. 64.604(c)(3) of the Commission's rules;
    (g) To determine whether the Publix Companies violated 
Sec. 64.604(c)(5)(iii)(C) of the Commission's rules;
    (h) To determine whether the Publix Companies violated 
Sec. 64.604(c)(5)(iii)(E) of the Commission's rules;
    (i) To determine whether the MOU generated by the Publix Companies 
constituted MOU compensable by the TRS Fund;
    (j) To determine whether the Publix Companies violated Section 
220(e) of the Act by not filing true and accurate data in FCC Form 499-
A;
    (k) To determine whether the Publix Companies engaged in a 
pervasive pattern of misrepresentation or lack of candor;
    (l) To determine whether the Publix Companies misrepresented or 
willfully omitted facts in written materials submitted to the 
Commission, in violation of 47 CFR. Section 1.17;
    (m) To determine whether, with respect to the issues (a) through 
(l) specified above, the Publix Companies knew or should have known 
that they were committing such violations, whether they acted with the 
intention of violating a known duty; and whether they acted 
negligently, or with gross neglect of a known duty;
    (n) To determine whether the Publix Companies substantially 
complied with the requirements of 47 CFR 64.604;
    (o) To the extent that the ALJ finds that the Publix Companies were 
eligible for any TRS Fund reimbursements they requested or received, to 
determine the number of MOU for which the Publix Companies were 
entitled to receive reimbursement from the TRS Fund;
    (p) To determine, in light of all the foregoing, whether Publix 
Network's authorization to operate as a common carrier should be 
revoked;
    (q) To determine whether, in light of all the foregoing, Publix 
Network, the Publix Companies, and/or its principals should be ordered 
to cease and desist from the provision of any interstate common carrier 
services without the prior consent of the Commission;
    (r) To determine whether, in light of the evidence adduced pursuant 
to the foregoing issues, Publix Network, Publix Relay, SignTel, RCC, 
Customer Attendants, Focus Group, and any other related company under 
the control and direction of Dr. Raanan Liebermann, should, for 
purposes of this proceeding, be considered one and the same entity.
    16. The Chief, Enforcement Bureau, shall be a party to the 
designated hearing. Pursuant to Section 312(d) of the Communications 
Act of 1934, as amended, both the burden of proceeding and the burden 
of proof shall be upon the Enforcement Bureau as to issues (a) through 
(r) inclusive.
    17. To avail themselves of the opportunity to be heard, the 
principal or principals of the Publix Companies, pursuant to 
Sec. 1.91(c) of the Commission's rules, shall file with the Commission 
within 30 days of the mailing of this Show Cause Order a written 
appearance stating that a principal or other legal representative from 
the Publix Companies will appear at the hearing and present evidence on 
the matters specified in the Show Cause Order. If the Publix Companies 
fail to file a written appearance within the time specified, the Publix 
Companies' right to a hearing shall be deemed to be waived. In the 
event that the right to a hearing a hearing is waived, the Presiding 
Judge, or the Chief, Administrative Law Judge if no Presiding Judge has 
been designated, shall terminate the hearing proceeding as to that 
entity and certify this case to the Commission in the regular course of 
business, and an appropriate order shall be entered.
    18. Irrespective of the resolution of the foregoing issues, the ALJ 
shall determine, pursuant to Section 503(b)(3)(A) of the Act, 47 U.S.C. 
503(b)(3)(A), whether an Order of Forfeiture shall be issued against 
any or each of the Publix companies and their principal(s) for having 
willfully and/or repeatedly violated Sections 1.17, 64.601(7), 
64.604(a)(1), 64.604(a)(2)(i), 64.604(b)(3), 64.604(b)(4), 
64.604(c)(3), 64.604(c)(5)(iii)(C), and/or

[[Page 46668]]

64.604(c)(5)(iii)(E) of the Commission's rules, 47 CFR 1.17, 64.601(7), 
64.604(a)(1), 64.604(a)(2)(i), 64.604(b)(3), 64.604(b)(4), 
64.604(c)(3), 64.604(c)(5)(iii)(C), and/or 64.604(c)(5)(iii)(E) and/or 
Sections 220(e), 225(a)(3) and 225(d)(1)(F) of the Act, 47 U.S.C. 
220(e), 225(a)(3) and 225(d)(1)(F). For each violation, the maximum 
potential forfeiture liability for the parties, joint and separately, 
shall be the statutory maximum of $120,000 per violation up to a total 
of $1,200,000 for each continuing violation committed by a common 
carrier. This figure is set based upon the seriousness of the alleged 
violations, the continuing nature of the alleged violations, the 
apparent culpability of each party, the information available to us 
concerning the financial condition of each party, and the ability of 
each party to profit from the alleged rule and/or statutory violations.
    19. This document constitutes a notice of opportunity for hearing 
pursuant to Section 503(b)(3)(A) of the Communications Act of 1934, as 
amended, 47 U.S.C. 503(b)(A), for the potential forfeiture liability 
outlined above.
    20. A copy of this order to show cause and notice of opportunity 
for hearing shall be sent by certified mail, return receipt requested, 
to Dr. Raanan Liebermann, Publix Network Corporation, 79 Bayard Avenue, 
North Haven, CT 06473, and Gerard Waldron, Esq., Covington & Burling, 
1201 Pennsylvania Avenue, NW., Washington, DC, 20004.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 02-17829 Filed 7-15-02; 8:45 am]
BILLING CODE 6712-01-P