MCI to settle overbilling claims

MCI will pay $27 million to settle claims that it overbilled government customers under the FTS 2001 contract, company officials said.

The money, the result of an agreement among MCI, the Justice Department and the General Services Administration, will reimburse unidentified agencies for excessive charges, according to a company statement.

"This agreement resolves a commercial billing dispute between MCI and GSA under the FTS 2001 contract," said an MCI spokesperson in a statement. "The dispute arose because the contract contained conflicting language regarding how certain charges should be assessed."

GSA officials were aware of the dispute in January when they chose not to bar the company from federal contracting, the statement reads. "MCI has kept GSA informed on the status of this matter," it states.

The situation is reminiscent of rival Sprint's settlement for $5.2 million last August. Sprint had been mistakenly billing customers at the market rate for services instead of the lower FTS 2001 rate, company officials said, and stopped as soon as the error was discovered.

MCI plans to emerge from bankruptcy later this month, according to sources. Officials finished filing documents with the Securities and Exchange Commission, including restated financial figures for 2001 and 2002, in mid-March. That was the final step it needed to take before emerging.