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Texas Man Charged for Allegedly Filing False PPP Loan Applications

Headlines that Matter for Companies and Executives in Regulated Industries

COVID Relief Program Fraud Charges

DOJ continues to announce charges against defendants accused of fraud in connection with allegedly false loan applications submitted under the Paycheck Protection Program (PPP) administered and guaranteed by the Small Business Administration (SBA) under the CARES Act.

Texas Man Charged for Allegedly Filing False PPP Loan Applications

On July 14, 2020, DOJ announced that a defendant was charged in a criminal complaint filed in the Southern District of Texas for allegedly obtaining more than $1.1 million in PPP loans by submitting fraudulent loan applications to federally insured banks. The defendant allegedly submitted the applications on behalf of a barbeque company and a landscaping company and falsely claimed that the companies had numerous employees and hundreds of thousands of payroll expenses when, in fact, neither company had employees or wages consistent with the applications. The defendant was charged with making false statements to a financial institution, wire fraud, bank fraud, and engaging in unlawful monetary transactions.

The DOJ press release can be found here.

Washington, DC General Contractor Charged with Filing False PPP Loan Applications

On July 13, 2020, DOJ announced that the owner of a residential construction contracting firm based in Washington, D.C., was charged in a criminal complaint filed in the District of Columbia with allegedly submitting false loan applications to a bank seeking more than $400,000 in forgivable PPP loans guaranteed by the SBA under the CARES Act. The defendant allegedly submitted IRS forms that listed disbursements made to independent contractors that contained social security numbers that were either invalid or assigned to other people. The defendant also allegedly provided a tax return to the financial institution that showed gross income that was inconsistent with his tax return. The defendant was charged with making false statements to a financial institution.

The DOJ press release can be found here.

Florida Man Charged with Filing False PPP Loan Applications and Health Care Fraud

On July 10, 2020, DOJ announced that a defendant was charged in a criminal complaint filed in the Southern District of Florida with allegedly submitting fraudulent PPP loan applications to federally insured financial institutions, other SBA–approved lenders, and the SBA in the name of a durable medical equipment company, R&S Pharmacy Inc. The defendant allegedly submitted fake tax documents and doctored profit-and-loss statements in support of the loan applications. The defendant also allegedly submitted false and fraudulent claims to Medicare for orthotic braces that were medically unnecessary, ineligible for reimbursement, and/or not provided as represented. The defendant was charged with wire fraud, conspiracy to commit health care fraud, payment of healthcare-related kickbacks, and making false statements to a financial institution.

The DOJ press release can be found here.

Significant False Claims Act Settlements

Universal Health Services Agrees to Pay $122 Million to Resolve False Claims Act Allegations

On July 10, 2020, the Department of Justice (DOJ) announced that Universal Health Services, Inc. (UHS) and a UHS facility located in Georgia agreed to pay a total of $122 million to resolve False Claims Act (FCA) allegations relating to alleged billing for medically unnecessary inpatient behavioral health services, failing to provide adequate and appropriate services, and paying illegal inducements to federal health care beneficiaries. UHS, which is based in Pennsylvania, reportedly owns and provides management and administrative services to nearly 200 acute care inpatient psychiatric hospitals and residential psychiatric and behavioral treatment facilities across the nation.

The settlement with UHS resolves 18 cases in various judicial districts brought under the qui tam provisions of the FCA. $117 million of the settlement funds resolve DOJ allegations that UHS hospitals and facilities submitted false claims to Medicare, Medicaid, TRICARE, the Department of Veterans Affairs, and the Federal Employee Health Benefit programs. The whistleblower share of this portion of the settlement will be $15,862,457.03. The UHS facility agreed to pay the United States and the State of Georgia $5 million to resolve allegations that it provided free or discounted transportation services to induce Medicare or Medicaid beneficiaries to seek treatment from its programs, as set forth in a separate qui tam lawsuit in the Northern District of Georgia. The whistleblower share of this portion of the settlement will be $861,853.64.

The DOJ press release can be found here.

Skilled Nursing Facilities Agree to Pay $16.7 Million to Resolve False Claims Act Allegations

On July 13, 2020, DOJ announced that Longwood Management Corporation and 27 affiliated skilled nursing facilities (collectively, “Longwood”) agreed to pay $16.7 million to resolve allegations that they violated the FCA by submitting false claims to Medicare for rehabilitation therapy services that were not reasonable necessary. Longwood allegedly pressured therapists to increase the amount of therapy provided to patients to meet pre-planned targets for Medicare revenue, which were set without regard to the patients’ individual therapy needs.

Longwood also agreed to enter into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General that requires an independent review organization to annually assess the medical necessity and appropriateness of therapy services billed to Medicare.

The DOJ press release can be found here.

Our Analysis

What You Should Know About the Second Edition of the DOJ’s and SEC’s FCPA Resource Guide

The Criminal Division of the US Department of Justice (DOJ) and Enforcement Division of the US Securities and Exchange Commission (SEC) recently published its second edition of A Resource Guide to the US Foreign Corrupt Practices Act (the “Updated Guide”), which was originally released in November 2012. Though the FCPA itself has not changed in the past eight years, there have been several notable enforcement actions, governmental policies, and judicial decisions. The Updated Guide attempts to capture those updates, as well as more recent statistical data.

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