More than a year has passed since U.S. Attorney General Merrick B. Garland established the COVID-19 Fraud Enforcement Task Force to utilize the resources of the U.S. Department of Justice (DOJ) and partner with various governmental agencies to combat COVID-19-related fraud. Since that time, the DOJ has touted its enforcement efforts in both the civil and criminal arenas, having criminally charged 1500 people (with 450 people convicted thus far) and opening civil investigations into more than 1800 individuals and entities. Additionally, the DOJ has seized $1.2 billion in relief funds.

In many cases, these DOJ investigations and prosecutions are not limited to the misuse of Paycheck Protection Program (PPP) loans and PPP loan fraud schemes but are also aimed at deterring and holding individuals accountable for healthcare-related COVID-19 fraud more generally. By all indications, recent enforcement actions indicate no slowdown in sight.

For example, on August 29, 2022, in the Middle District of Florida, a convicted felon pled guilty to a host of charges, including wire fraud and bank fraud, for his involvement in a $2.6 million COVID-related fraud scheme. The convicted felon had submitted false and fraudulent applications for various loans, including one for a PPP loan. The loan applications he submitted not only included numerous false representations related to his criminal history and number of employees, but also allegedly presented a fake commercial lease to obtain the loan. Moreover, he used the personally identifiable information, such as name, date of birth, driver license information and Social Security numbers, of people purported to work for him to submit fraudulent payroll and tax documents. The convicted felon’s fraudulent scheme led the private lender and Small Business Administration (SBA) to approve the loan and resulted in the deposit of approximately $2,617,447, which was then used to purchase residences, a boat, an engagement ring, stocks, and ammunition, all of which has now been forfeited to the federal government.

With regard to recent civil enforcement actions, the DOJ has been consistently alleging PPP fraud under the False Claims Act (FCA). In both civil and criminal enforcement actions, the main target has usually been borrowers engaged in PPP loan fraud. However, in a recent case out of Texas, the DOJ targeted the lender. In that case, a regional bank approved and processed a PPP loan despite the bank’s employees’ knowledge of a PPP loan applicant’s ineligibility to apply for the same. The bank agreed to pay $18,673.50 to “resolve allegations it improperly processed a PPP loan on behalf of an ineligible customer,” thereby making this the first FCA settlement with a PPP lender. This case demonstrates that witting or unwitting borrowers of PPP loans are not the only focus of the federal government – lenders and the extent of their knowledge as to the truth or falsity of these PPP applications are potential targets as well.

Most recently, on September 14, 2022, the DOJ announced the formation of three Strike Force teams to further bolster the DOJ’s ongoing efforts to address COVID-19 related fraud. As a show of force and coordinated effort, the Strike Force is comprised of several agencies, including the FBI, the Department of Labor Office of Inspector General, the Small Business Administration Office of Inspector General, the Department of Homeland Security Office of Inspector General, and Internal Revenue Service Criminal Investigations, thereby bringing combined fraud, cybercrime, and money laundering expertise to bear in enforcement efforts. The Strike Force teams will primarily operate in large cities including Los Angeles, Sacramento, Miami, and Baltimore. Attorney General Garland explained that the Strike Force Teams will “build on the Department’s historic enforcement efforts to deter, detect, and disrupt pandemic fraud wherever it occurs.”

As we have cautioned previously, it may become challenging for the government to discern between borrowers that intended and affirmatively acted to commit fraud and those that were well-intentioned but nonetheless failed to comply with this fast-tracked federal relief program. As a result, many unwitting borrowers or participants – and now even knowledgeable lenders – may find themselves caught in the DOJ’s fishnet of fraud charges with potentially severe consequences. It remains critical for business owners who loaned or received PPP funds to immediately review their compliance, mitigate any non-compliance, and address corrective measures and exposure to enforcement with the appropriate government agency.

Moreover, healthcare providers, owners and executives of medical businesses, physicians, and healthcare marketers and manufacturers should carefully track their billing practices, review their internal policies and procedures, train and audit staff, and institute safeguards, if necessary, to ensure COVID-19 relief funds are not being intentionally or negligently misused.

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Photo of Christopher D. Adams Christopher D. Adams

Chair, Criminal Defense & Regulatory Compliance Practice Group

Mr. Adams concentrates his practice in the areas of criminal defense, internal investigations, attorney ethics matters and disciplinary proceedings, and complex commercial litigation. With a national practice that has encompassed the representation of high profile…

Chair, Criminal Defense & Regulatory Compliance Practice Group

Mr. Adams concentrates his practice in the areas of criminal defense, internal investigations, attorney ethics matters and disciplinary proceedings, and complex commercial litigation. With a national practice that has encompassed the representation of high profile individuals, Mr. Adams has served as counsel to professional athletes, elected officials and candidates for public office, political campaigns, and numerous public and private business entities.

In the healthcare sector, Mr. Adams has successfully defended physicians charged with crimes in federal and state court, as well as in front of the Board of Medical Examiners (BME). He has negotiated the relicensure of physicians whose licenses were revoked by the BME and assisted in the development of re-entry plans in conjunction with the BME and the Office of the Attorney General. In addition, he has defended physicians in Medicare debarment proceedings and negotiated their re-entry into the Medicare program.

With a demonstrated track record of success in taking on difficult matters, Mr. Adams has tried cases in state and federal courts throughout the country. His experience includes appearances before the U.S. District Courts for the District of New Jersey, Northern District of California, Middle District of Florida, Northern District of Illinois, District of South Dakota, and the U.S. Court of Appeals for the Third Circuit. He has argued significant matters before the New Jersey Supreme Court and Appellate Division, and before other state courts including those in Florida and Alabama.

Contact information:

cadams@greenbaumlaw.com | 732.476.2692 | vCard  | LinkedIn

For more information visit the Greenbaum, Rowe, Smith & Davis LLP website.

Photo of Rachel A. Frost Rachel A. Frost

Associate, Litigation and Healthcare Departments

Ms. Frost concentrates her practice in the areas of commercial and healthcare litigation, criminal defense, internal investigations, and regulatory compliance. She assists in the representation of numerous public and private business entities, private individuals, elected officials and candidates…

Associate, Litigation and Healthcare Departments

Ms. Frost concentrates her practice in the areas of commercial and healthcare litigation, criminal defense, internal investigations, and regulatory compliance. She assists in the representation of numerous public and private business entities, private individuals, elected officials and candidates for public office. Ms. Frost’s experience includes drafting discovery requests and responses, various pre-trial motions, briefs and other legal documents, researching complex legal issues, and attending depositions and pre-trial conferences.

Ms. Frost has prior experience in the practice areas of real estate and corporate transactions, redevelopment and land use, financial development and economic incentives, and related litigation.

Contact information:

rfrost@greenbaumlaw.com | 732.476.2470 | vCard  | LinkedIn

For more information visit the Greenbaum, Rowe, Smith & Davis LLP website.

Photo of Robert B. Hille Robert B. Hille

Partner, Healthcare and Litigation Departments

Mr. Hille focuses his practice in litigation, with a particular emphasis on trial advocacy. His areas of concentration include insurance, healthcare law, professional liability and ethics, and white-collar criminal matters, including those related to professional ethics. Mr. Hille…

Partner, Healthcare and Litigation Departments

Mr. Hille focuses his practice in litigation, with a particular emphasis on trial advocacy. His areas of concentration include insurance, healthcare law, professional liability and ethics, and white-collar criminal matters, including those related to professional ethics. Mr. Hille has extensive trial expertise that encompasses insurance defense and coverage cases, healthcare disputes, professional liability defense, fraud and abuse, and regulatory issues.

Mr. Hille’s white-collar experience includes involvement in both state and federal investigations, including those related to healthcare fraud and abuse and the taking of fraudulent payments from government entities. He also represents legal professionals in District Ethics Committee (DEC) and Office of Attorney Ethics (OAE) investigations and prosecutions, including matters before the Disciplinary Review Board (DRB) and New Jersey Supreme Court. In that regard, Mr. Hille has represented clients in matters ranging from dismissal or diversion to disbarment.

Certified by the Supreme Court of New Jersey as a Civil Trial Attorney, Mr. Hille has served as an amicus representative for professional and business associations on a number of matters before the Supreme Court. He has published and lectured widely in his areas of concentration.

Contact information:

rhille@greenbaumlaw.com | 973.577.1808 | vCard  | LinkedIn

For more information visit the Greenbaum, Rowe, Smith & Davis LLP website.