Fraud is often virulent during crises, and the COVID-19 pandemic, caused by SARS-coronavirus-2 ("SARS-COV-2"), is no exception. The COVID-19 pandemic has created opportunities for various types of fraud, such as healthcare fraud, financial fraud, and fraud pertaining to government schemes and programs. In fact, as of March 2023, the United States Department of Labor had received more than 1,700 whistleblower complaints related to COVID-19.
COVID-19 Fraud in Healthcare
Healthcare industry scams related to coronavirus have taken multiple forms, from the sale of poorly designed or manufactured coronavirus tests to substandard medical equipment to companies' price-gouging, which involves raising prices on items and equipment that are in demand as a result of the pandemic.
Individuals and companies that seek to commit fraud against healthcare organizations in the wake of the pandemic put the health and safety of countless others at risk. If a company markets and sells a COVID-19 test that is poorly studied or that is ineffective, the resulting false negatives can contribute to an increase in the number of cases in a particular geographic area. Similarly, companies that market and sell faulty or substandard equipment such as ventilators or masks put healthcare providers and patients at risk of injury or needless exposure to the virus.
Another example of COVID-19 fraud directly affects consumers. The U.S. Department of Health and Human Services Office of Inspector General has reported instances of scammers contacting individuals, notably Medicare beneficiaries, to offer them COVID-19 tests. During the call, the fraudsters will ask the beneficiaries for private, identifying information, such as their Medicare numbers. The scammers can then use any personal information collected during the call to commit medical identity theft or to create false medical bills to send to the Medicare program.
CARES Act Fraud and PPP Fraud
In the wake of the COVID-19 pandemic, the government allocated more than $2 trillion worth of relief as part of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The goal of the CARES Act was to provide critical financial support to individuals, families, and businesses affected by the ongoing pandemic and economic downturn. The Paycheck Protection Program ("PPP") established by the CARES Act, is a loan specifically designed to provide a direct incentive for small businesses to keep their workers on the payroll. Under the PPP, the Small Business Administration ("SBA") allows for loan forgiveness if all employee retention criteria are met and if the relief funds received by the business are used for eligible expenses. The CARES Act and the PPP also present a significant fraud risk. Examples of CARES Act or PPP fraud include:
- Businesses applying for and receiving PPP loans, then not using the loan money to keep employees on their payroll.
- Businesses applying for and receiving PPP loans when they do not have employees. Falsifying expenses reported on a PPP loan application.
- Falsifying other information on CARES Act loan applications.
This unprecedented multi-trillion relief effort requires robust accountability measures to guard against fraud and abuse. Whistleblowers, who are often current or former employees of businesses indulging in fraudulent activities, play an integral role in ensuring that federal relief funds serve their intended purpose. Identifying and reporting instances of CARES Act or PPP fraud enabled the government to take swift action and allowed more businesses in need to get the money they were entitled to receive.
However, many times whistleblowers who come forward to report such wrongdoing face retaliation. As such, there are whistleblower protections in place to prevent retaliation.
A COVID-19 whistleblower may be protected by existing laws, such as the False Claims Act. Furthermore, the United States Senate and House of Representatives have introduced two new bills, the COVID-19 Whistleblower Protection Act and the Coronavirus Oversight and Recovery Ethics Act of 2020 ("CORE Act"), to provide protection to whistleblowers who report instances of COVID-19 fraud.
COVID-19 Fraud and the False Claims Act
The False Claims Act ("FCA" or "the Act") is a federal law that was first enacted in 1863. It has since become the most powerful tool used to combat fraud against the government.
Under the Act, a person who submits false claims to the government may be liable for up to three times the total damages sustained by the government as well as statutory penalties ranging from $11,463 to $23,331 for each claim submitted.
A notable provision of the False Claims Act is the qui tam provision, which allows any individual to file a suit on behalf of the United States' government. The individual filing the suit does not need to be a United States citizen. Although the wrongful conduct must cause a governmental entity to lose money in order for it to qualify as a claim under the False Claims Act, the conduct does not need to have taken place in the United States. If the suit is successful, whistleblowers who sue on behalf of the government are usually awarded between 15% and 30% of the proceeds from the lawsuit. The provision also provides protection to a whistleblower against retaliation.
COVID-19 Whistleblower Protection Act
In addition to the whistleblower protection provisions under the False Claims Act, the COVID-19 Whistleblower Protection Act also provides protection to individuals who report instances of fraud and wrongdoing related to the COVID-19 pandemic. These protections include protections against gag orders, requirements to ensure the confidentiality of a whistleblower, and the ability of a whistleblower to seek damages and compensation through a jury. The act extends these protections to employees or former employees of recipients of funds under legislation mean to address COVID-19.
Similarly, provisions in the CORE Act establish strong whistleblower protections for government employees, government contractors, and private sector workers, who may witness fraud or abuse. These provisions protect whistleblowers from retaliation and establish a safe and anonymous process for whistleblower claims to be investigated by the inspectors general ("IGs") assigned with pandemic relief oversight. The CORE Act also establishes a direct channel for whistleblowers to submit complaints directly to the Special Inspector General for Pandemic Relief ("SIGPR"), the Pandemic Relief Accountability Committee ("PRAC"), and the Congressional Oversight Commission.
Speak With a COVID-19 Whistleblower Attorney
If you know that someone is committing fraud, either having to do with the PPP or CARES Act or in a healthcare setting, you may have a case. If the actions of the fraudster are likely to cause the government to lose money, then you may be able to file a lawsuit under the False Claims Act.
The attorneys at Goldberg Kohn have the resources and experience required to protect the rights of whistleblowers and to help you effectively fight fraud against the United States government. To learn more about how our team of whistleblower attorneys can help you, contact us today to schedule a confidential and free consultation.