Note 20 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

20. COMMITMENTS AND CONTINGENCIES

The Company enters into purchase commitments with vendors in the ordinary course of business, including minimum purchase agreements. The Company also has long-term purchase contracts with vendors to support the on-going needs of its business. These purchase commitments and contracts have varying terms and in certain cases

may

require the Company to buy goods and services in the future at predetermined volumes and at fixed prices.

In

June 2017,

the Company received a letter from USAC’s auditors inquiring about past funding requests under the Rural Health Care program, all of which were previously approved by USAC. After clarifying the request, the Company responded to the auditors with the requested information through the remainder of

2017

and mid-way into

2018.

Late in

2018,

the auditors asked the Company to comment on preliminary audit findings, and the Company responded with a letter dated

December 21, 2018.

After more than a year without communications from the auditors, on

February 24, 2020,

the Company received a draft audit report from USAC. The draft audit report alleges violations of the FCC’s rules for establishing rural rates and urban rates, the provisioning and billing of ineligible services and products, and violations of the FCC’s competitive bidding rules. The Company was invited to comment on this draft audit report, and the Company intends to seek correction of numerous factual errors it believes are contained in that report. In addition, the Company has had conversations with USAC’s auditors and the Company is compiling a list of proposed clarifications, corrections and modifications to the draft audit report. As a result of these conversations and comments to be submitted by the Company, USAC’s auditors

may

revise their findings, including the amounts they recommend USAC seek to recover.  USAC’s auditors are expected to issue a final audit report incorporating the Company’s responses that will be sent to USAC’s Rural Health Care division to review and determine if corrective action would be appropriate. In the event that the Company disagrees with USAC’s final audit report, the Company can appeal that decision to USAC’s Rural Health Care division and/or the FCC. The Company intends to vigorously defend against the conclusions of the draft audit report and, if necessary, appeal the final audit findings. Based on these draft findings, the Company has determined that it is probable that resolution of these matters will result in the recognition of a contingent liability and charge to expense. The Company does

not

currently have sufficient information to reasonably estimate the amount, or a range, of the potential charge.

The Company is involved in various other claims, legal actions and regulatory proceedings arising in the ordinary course of business and establishes an accrual when a specific contingency is probable and estimable. The Company recorded litigation accruals totaling

$1,367

at

December 31, 2019

against certain current claims and legal actions. The Company also faces contingencies that are reasonably possible to occur that cannot currently be estimated. The Company believes that the disposition of these matters will

not

have a material adverse effect on the Company’s consolidated financial position, comprehensive income or cash flows. It is the Company’s policy to expense costs associated with loss contingencies, including any related legal fees, as they are incurred.