The Feds Are Investigating PPP Recipients: Are You Safe?
By Procopio Partner Robert G. Marasco
Earlier this year, in May, we wrote to inform you about the Paycheck Protection Program (PPP) and the dangers that come with it. One such danger was potential liability under the False Claims Act. While subsequent guidance suggested the risk had lessened, it appears the risk remains very real for a wide range of companies in all sorts of industries.
Word on the grapevine is that numerous whistleblower complaints under the False Claims Act have already been filed and federal prosecutor offices are investigating such claims. There’s nothing public yet because the complaints are filed under seal, but investigations have begun and people need to be prepared. To be sure, there have some public announcements about egregious conduct that has prompted criminal charges, but it is these sealed whistleblower complaints that lurk in the shadows as the biggest threat to business.
Whistleblower complaints under the False Claims Act, in the PPP context, could allege that a business receiving PPP funds was not eligible for any number of reasons. For example, such claims could include:
- The company had too many employees to qualify as a small business,
- The company did not have a sufficient need for the funds, or
- The company did not allocate the funds as required, among others.
Aspiring whistleblowers and their attorneys have been working diligently to try to catch companies that made a mistake with their PPP applications and the funds they received and to cash in on reporting them. In their zeal to find a “lottery ticket” case these whistleblowers will accuse companies that made no mistakes, but that nonetheless will be subject to government investigations and put in a position to defend themselves.
How do you prepare for such a scenario? Frankly, contact an attorney who can help assess your compliance with the PPP and help you prepare for a potential investigation even if you have been fully compliant. Much like we conduct fire drills to be prepared in case of an emergency, you should have a plan in place for addressing a government investigation.
Putting a government investigation plan in place will assist you even if you have done nothing improper as it will greatly assist you in bringing the investigation to an end as quickly as possible and saving significant resources. It should address everything from how your receptionist (or any employee) should react if approached by a government investigator to ensuring you have the appropriate insurance coverage in place to protect you from the enormous expenses generated by such investigations.
Please feel free to speak with your contact or anyone at Procopio if you would like assistance with your PPP concerns or preparing for or addressing government investigations generally.
Robert G. Marasco is the leader of Procopio’s Health Care practice group. He aids clients in a wide spectrum of business situations. In the civil context, he acts as an outside general counsel to a variety of businesses advising on various legal and business matters, and also leads the strategic litigation needs of these businesses, including guiding them through government investigations. In the health care context, Robert advises clients, including independent physician associations, foundation-based physician groups, and other medical practices on health care compliance and fraud and abuse, the Anti-Kickback Statute, the Stark Law, and defends clients against OIG health care audits and False Claims Act matters and governmental investigations. He also advises on compliance with health care privacy laws such as HIPAA and the California CMIA, investigates data privacy compliance, and responds to data breaches.