Judge: TracFone owes Ky. $4.7 million

LOUISVILLE — The largest prepaid cellphone company in the country owes Kentucky more than $4.7 million in unpaid 911 emergency fees dating to 2003, a federal judge in Kentucky ruled Thursday.

U.S. District Judge John G. Heyburn ordered Miami-based TracFone Wireless to pay the state because it didn't remit the service fee starting eight years ago, when the company argued that the fees did not apply to prepaid wireless providers.

Heyburn said that despite changes in the law, Kentucky was entitled to collect $2.5 million in unremitted fees from November 2003 through July 2006, $2 million in fees not paid to the state collected from direct sales from July 2006 through June 2011 and $139,000 in fees collected from indirect sales from July 2006 through September 2009.

Heyburn also ruled that TracFone owes Kentucky $425,000 in attorney's fees.

Heyburn noted that the Kentucky Commercial Mobile Radio Service, which oversees wireless emergency 911 service, could have either let the issue slide or settled for a "nominal amount," but decided to pursue a lawsuit to enforce and clarify the law.

Messages left for the Kentucky board and TracFone were not immediately returned.

The Kentucky Commercial Mobile Radio Service, which oversees wireless emergency 911 service, sued TracFone in 2008, seeking more than $6 million from the company. TracFone, which had about 200,000 subscribers in 2008, when the suit was filed, paid Kentucky the 0.70-cent-per-connection fee for wireless 911 service from 1999 through October 2003.

In November 2003, TracFone stopped the 911 service payments to the state, arguing that the charge did not apply to prepaid service providers because it did not send monthly bills to customers.

The Kentucky legislature changed the law governing the 911 service fees in 2006, aiming to cover prepaid services such as TracFone, allowing the cellphone company to choose one of several methods of collecting and remitting the fees.

The company did not pay the fees, however, even after choosing a method.