/>iIn last year’s edition of EnforceMintz, we predicted that 2024 would bring an increase in False Claims Act (FCA) enforcement activity related to COVID-19 pandemic fraud. Those predictions proved correct. The COVID-19 Fraud Enforcement Task Force (CFETF), in conjunction with five COVID Fraud Enforcement Strike Forces and other government agencies, has resolved many significant criminal and civil pandemic fraud cases over the past year. In April 2024, the CFETF released a COVID-19 Fraud Enforcement Task Force 2024 Report (the CFETF Report) describing the CFETF’s recent efforts and including a plea for more fraud enforcement funding, which suggests that additional enforcement activity is on the horizon. While that funding request has thus far gone unheeded, we expect more civil pandemic fraud enforcement actions (and continuing criminal actions) in 2025.
Civil and Criminal Paycheck Protection Program (PPP) Fraud Enforcement
Since 2020, criminal PPP fraud has dominated COVID-19 fraud enforcement headlines, and 2024 was no different. Criminal fraud schemes have concerned common fact patterns involving fraudsters who (i) obtained funding to which they were not entitled, (ii) submitted false certifications or inaccurate information in a loan application, or (iii) submitted false certifications or inaccurate information in seeking loan forgiveness. However, in the past year, civil PPP fraud enforcement has begun to evolve.
In 2024, criminal PPP fraud enforcement broke up multiple COVID-19 fraud rings involving actors who fraudulently obtained loans for fictitious businesses, packed PPP applications with false documentation (provided in exchange for kickbacks), and falsely certified information regarding the number of employees and payroll expenses that would entitle them to PPP funding. Typical charges in these cases included wire fraud, bank fraud, making false statements to federally insured financial institutions, conspiracy, and money laundering.
On the civil side, PPP fraud enforcement seemed to increase in 2024. Interestingly, some civil PPP fraud cases involved schemes similar to criminal actions. Often the government’s decision to pursue such cases as civil, criminal, or both depends on the evidence of intentional fraud. For example, in January 2024, a clinic and its owners agreed to a $2 million judgment in connection with multiple fraudulent acts, including PPP fraud arising from their certification that they were not engaged in illegal activity and that their business suffered quarterly or year-over-year losses, therefore entitling them to PPP funding. In October 2024, one FCA recovery totaling $399,990 involved a home health agency and its owner who received two PPP loans after certifying that the company would receive only one. More recently, in December 2024, a private asset management company and its owner agreed to pay $680,000 to settle FCA allegations brought by a relator. The company and its owner allegedly falsely certified that PPP loans were economically necessary and included false statements in the information submitted when seeking forgiveness for the loan. Cases of this nature apparently did not rise to the level of criminal wrongdoing, in the government’s view.
A number of civil PPP fraud FCA cases from the past year involved increasingly complex theories and allegations. These more complicated fact patterns require years of investigation and are expensive. As a result, such fraud enforcement actions may have a “long tail” and continue for years to come.
For example, in May 2024, a private lender of PPP loans agreed to resolve allegations that it knowingly awarded inflated and fraudulent loans to maximize its profits, then sold its assets and bankrupted the company. The lawsuit was initiated by whistleblowers (known under the FCA as “relators”), including an accountant and former analyst in the lender’s collection department. As part of the settlement with the lender, the United States received a general unsecured claim in the bankruptcy proceeding of up to $120 million.
More recently, in December 2024, the United States intervened in a complaint against certain former executives of the lender who allegedly violated the FCA by submitting and causing the submission of false claims for loan forgiveness, loan guarantees, and processing fees to the Small Business Administration (SBA) in connection with lender’s participation in the PPP. When we discussed this case previously, we noted that we expected to see similar cases in the future brought against private lenders who failed to safeguard government funds. More broadly, we expect the trend of increasingly complex civil PPP fraud actions will continue in 2025.
Fraud Enforcement Involving Programs Administrated by the Health Resources and Services Administration (HRSA)
Provider Relief Fund (PRF) and Uninsured Program (UIP) fraud enforcement picked up in 2024. As described in the CFETF Report, the CFETF has leveraged an interagency network to make strategic improvements in how it investigates fraud. (Interagency collaboration is another theme from 2024, which we discuss more here.) The CFETF Report also describes a department-wide effort by the Department of Justice (DOJ) to roll out database tools to all US Attorney’s Offices to detect and investigate fraud. According to the CFETF Report, DOJ has analyzed more than 225 million claims paid by HRSA, the entity that dispensed PRF and UIP loans during the height of the pandemic. Closer investigatory scrutiny has led to increased enforcement actions.
PRF Fraud
Criminal PRF fraud enforcement resembled PPP enforcement from prior years, which was often based on theft or misappropriation theories. These enforcement actions often include charges against PRF recipients who either (i) retained funds to which they were not entitled or (ii) used PRF funds for ineligible expenses, like luxury goods. For example, in April 2024, a defendant who operated a primary care clinic pleaded guilty to theft and misappropriation of PRF funds. The defendant had certified that PRF funds would be used by the clinic only to prevent, prepare for, and respond to COVID-19. Despite making this representation, the clinic operator used the PRF funds for personal purposes, including cash withdrawals and the purchase of personal real estate, a luxury vehicle, a boat, and a trailer.
UIP Fraud
There were a number of noteworthy criminal UIP enforcement actions in 2024. In March 2024, a defendant was charged with filing fraudulent COVID-19 testing reimbursement, through the laboratory he managed, for COVID-19 testing that was never provided. The defendant allegedly obtained and used the personal identifying information of incarcerated or deceased individuals in connection with those claims. The indictment alleged that the defendant received $5.6 million in reimbursement and used those UIP funds to purchase property in South Florida.
Enforcement actions involving UIP funds involved significant alleged losses by the government. In February 2024, a defendant pleaded guilty to mail fraud and identity theft charges in what the government called “one of the largest COVID fraud schemes ever prosecuted.” The defendant and her co-conspirators filed more than 5,000 fraudulent COVID-19 unemployment insurance claims using stolen identities to unlawfully obtain more than $30 million in UIP fund benefits. To execute the scheme, the defendant and others created fake employers and employee lists using the personally identifiable information of identity theft victims. The defendant was sentenced to 12 years in prison, and seven co-conspirators have also pleaded guilty in connection with this large fraudulent scheme.
In one major civil FCA resolution, in June 2024, a group of affiliated urgent care providers agreed to pay $12 million to resolve allegations that they submitted or caused the submission of false claims for COVID-19 testing to the HRSA UIP. The government alleged that the providers knew their patients were insured at the time of testing (and in some instances had insurance cards on file for certain patients), yet they submitted claims (and caused laboratories to submit claims) to HRSA’s UIP for reimbursement. The resolution is noteworthy because the providers received a relatively low FCA damages multiplier as credit for cooperating with the government in its investigation under DOJ’s Guidelines for Taking Disclosure, Cooperation, and Remediation into Account in False Claims Act Matters. More information on DOJ’s efforts to encourage voluntary self-disclosure can be found in our related EnforceMintz article here.
Fraud Schemes Involving Respiratory Pathogen Panels
Fraud involving expensive respiratory pathogen panels (RPPs) has been in the spotlight since the beginning of the pandemic. In 2022, the Office of Inspector General for the Department of Health and Human Services (OIG) warned about laboratories with questionably high billing for tests submitted for reimbursement alongside COVID-19 tests, including RPPs. The OIG deemed this scenario as deserving of “further scrutiny.” Medicare reimbursed some outlier laboratories approximately $666 dollars for COVID-19 testing paired with other add-on tests while Medicare reimbursed approximately $89 for this same testing to the majority of laboratories. The trend in RPP fraud enforcement that we discussed last year continued in 2024: enforcement actions involved a mix of criminal and civil RPP fraud cases involving significant damages.
One laboratory owner was criminally charged with submitting $79 million in fraudulent claims to Medicare and Texas Medicaid for medically unnecessary RPP tests. The laboratory owner used the personal information of a physician — without the physician’s knowledge — to submit the claims even though the physician had no prior relationship with the test recipients, was not treating the recipients, and did not use the test results to treat the recipients. The government seized over $15 million in cash from this defendant.
In another case involving both criminal and civil charges, a Georgia-based laboratory and its owner agreed to pay $14.3 million to resolve claims that they paid independent contractor sales representatives volume-based commissions to recommend RPP testing to senior communities interested only in COVID-19 testing. The independent sales contractors used forged physician signatures and sham diagnosis codes to add RPP testing to requisition forms ordering only COVID-19 testing. The whistleblower in this case — the laboratory’s manager — is set to receive $2.86 million of the recovery.
As the government continues to deploy data analytics to identify outlier cases, we suspect enforcement actions involving COVID-19 companion testing will continue.
Future of COVID-19 Enforcement
Over four years from the enactment of the CARES Act, COVID-19 fraud enforcement continues to evolve. Since the beginning, the government has consistently pursued criminal cases involving misused or fraudulently obtained funds, fake COVID cures, and fake COVID testing. In 2022, the government extended the statute of limitations for PPP fraud from five to ten years, recognizing that more time was needed to investigate and prosecute fraud on these programs.
This past year, a broader range of pandemic fraud schemes were prosecuted criminally and civilly. These often data-heavy or analytics-based cases require a significant investment of time and resources. Recognizing the resources required for these more complicated matters, the CFETF called for increased funding and an extension of the statute of limitations for all pandemic-related fraud in the CFETF Report. As of the date of this publication, that request has not yet been answered. It thus appears the funding request will be determined by the new administration.
Despite uncertainty around future funding for COVID-19 fraud enforcement, we anticipate more criminal and high-dollar civil enforcement actions in 2025. The CFETF Report described 1,200 civil pandemic fraud matters pending as of April 1, 2024, for which DOJ had obtained more than 400 judgments or settlements totaling over $100 million. This leaves approximately 800 pending civil matters, and untold billions in fraudulently obtained funds still in the hands of fraudsters. Despite uncertainty around future fraud enforcement funding, as a general matter, fraud enforcement has bipartisan support. Either way, employees, related parties, and patient relators — with the support of sophisticated relator’s counsel — will likely continue to bring pandemic fraud cases in the coming years. Overall, COVID-19 fraud enforcement is unlikely to slow down in 2025.
