Almost all Lifeline dead-subscriber claims ran through three states

The FCC's Lifeline program subsidizes phone and internet service for low-income households, administered by the Universal Service Administrative Company (USAC).▸ Since 2013, USAC has run a national database, NLAD, that checks new enrollees against death records and screens out duplicate sign-ups. Three states -- California, Texas, and Oregon -- were allowed to opt out and use their own systems instead. A January 2026 FCC Inspector General advisory⧉ found that between December 2020 and September 2025, providers in those three states claimed Lifeline subsidies for 116,808 deceased subscribers, worth nearly $5 million. Separately, FCC's own compliance audit⧉, released in May 2025, found the program's improper-payment rate rose from 2.18 percent in fiscal 2023 to 5.98 percent in fiscal 2024 -- and FCC's own analysis traced 80 percent of that year's $46.9 million in improper payments to a cause fully within the agency's control.

NLAD, the national enrollment database, was built in 2013-2014 specifically to catch duplicate and ineligible sign-ups; when the FCC layered on a separate eligibility-verification system (the National Verifier) in 2018-2019, it again let the opt-out states keep using their own processes.▸ The result is a parallel enrollment pipeline for California, Texas, and Oregon that the FCC's central death-matching and duplicate-detection tools never see. USAC does run a second-line check -- a monthly death screen applied to all subscribers, opt-out states included, before it reimburses providers -- but that backstop is where most of the failures below were caught, after the fact, rather than prevented at enrollment. FCC has since revoked California's opt-out status.

California accounts for 81 percent of the 116,808 deceased subscribers OIG identified, a matching exercise it ran against Treasury's Do Not Pay database.▸ Two-thirds of those subscribers, 77,446, died after they were already enrolled -- an unavoidable timing gap in any subsidy program. But at least 16,774 were enrolled and claimed by a provider only after they had already died, and providers kept billing for them anyway, for an average of 3.4 months, collecting more than $500,000. For the remaining 22,588, OIG couldn't determine which came first, because the opt-out states don't report enrollment dates to USAC at all -- providers billed this group for an average of 8.5 months after death, worth about $1.5 million.

USAC's monthly reimbursement death-check has caught a lot: OIG calculates it blocked 1.3 million enrollment and reimbursement attempts for dead people between 2018 and 2024, preventing an estimated $29 million to $137 million in improper payments.▸ But OIG's new analysis shows it's still missing people in real time -- in September 2025 alone, providers sought and were paid for more than 11,000 deceased opt-out-state subscribers, over 5,500 of whom had died before they were ever enrolled. FCC OIG has pursued individual cases before: in 2022, a Lifeline provider responsible for more than 23,000 deceased enrollments repaid over $16.5 million and entered a three-year compliance plan under a False Claims Act settlement. OIG also found more than 270,000 instances since December 2020 where the same subscriber -- matched on name, birthdate, and partial Social Security number -- was billed twice in one month, some in two opt-out states at once and some split between an opt-out state and an NLAD state, worth nearly $5.5 million.

The opt-out-state fraud OIG investigated is one slice of a larger pattern.▸ Under a separate federal law, an independent auditor examines FCC's improper-payment rate across its highest-risk programs every year. That audit, covering all Lifeline claims nationwide (not just the opt-out states), found the program's improper-payment rate jumped from 2.18 percent in fiscal 2023 to 5.98 percent in fiscal 2024 -- missing FCC's own 2.10 percent reduction target so badly that FCC's response was to raise next year's target to 4.70 percent rather than hold the line. A sister program, the Universal Service Fund's High-Cost Legacy subsidy for rural carriers, moved the same direction: 2.88 percent to 4.45 percent, also missing its target.

What makes Lifeline's jump notable is where the auditors traced it.▸ Of the $46.9 million in improper payments FCC reported for fiscal 2024, $37.8 million -- 80 percent -- was attributed to inaccurate manual eligibility reviews performed by USAC's own review staff, not to fraud by outside providers or applicants. That exact failure mode also drove $10.4 million in errors the year before; it more than tripled. The fix USAC had planned -- mandatory retraining for the reviewers -- wasn't actually delivered until July 2024, ten months into the fiscal year it was supposed to fix, and USAC never ran a cost-benefit analysis of what else might work faster.

The High-Cost Legacy program's failure looked different but landed in the same place: of its $81.75 million in improper payments, $80.26 million -- 98 percent -- went to carriers whose supporting financial paperwork either didn't match what auditors could verify ($42.60 million, the same documentation problem the prior year's audit had already flagged) or wasn't submitted at all ($37.66 million, a newly identified root cause for FY2024).▸ The auditors also found FCC's own improper-payment reporting had errors of its own: a months-long double-count in one data feed, an overreported figure for one program of $890,000, and a combined $1.14 million underreported across two others -- all submitted to the government's public payment-accuracy website.

FCC OIG's recommendations center on closing the information gap between the opt-out states and the national system: require those states to share enrollment and transfer data with NLAD and the National Verifier, register their sales agents in the FCC's tracking database, and collect full Social Security numbers from applicants -- a recommendation OIG first made in 2016.▸ The compliance auditors' recommendations are narrower and program-specific: a cost-benefit analysis of new eligibility-review tools for Lifeline, and a root-cause analysis, more frequent monitoring, and a phased reduction-target plan for the High-Cost Legacy program.