updated 5/5/2004 9:30:33 AM ET 2004-05-05T13:30:33

MCI has agreed to pay $27 million to settle claims it improperly charged the government for costs related to a federal contract, the Justice Department announced Tuesday.

The settlement was approved by the U.S. Bankruptcy Court, which is presiding over the financial restructuring of the company once known as WorldCom Inc., of which MCI was a part. This month, the company now known only as MCI emerged from bankruptcy and shed more than $35 billion in debt.

The civil settlement resolves Justice Department allegations that MCI knowingly passed to the government certain fees and costs from 1999 to 2004 that were in excess of the amounts allowed under its contract with the General Services Administration.

The allegations were brought by a whistle-blower under the False Claims Act, which allows private citizens to sue on behalf of the United States.

"This settlement illustrates the Justice Department's determination to recover funds that are owed to the United States," said Peter Keisler, assistant attorney general for the civil division.

MCI spokesman Peter Lucht said any errors in billing were not intentional and pointed out that GSA has reinstated MCI to bid for new government contracts.

"The dispute essentially involved differing interpretations over contract language," he said. "MCI's position was asserted in good faith and the company had worked with GSA to resolve this over the past months."

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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