National disasters bring out the best in some of us, and the worst in others. While health care workers battle heroically on the front lines of the coronavirus pandemic, fraudsters seek to profit off the pain of their fellow citizens. The False Claims Act (”FCA”) frequently has been used by the federal government as an enforcement tool to address such misconduct, including after Hurricane Katrina to recover disaster relief funds taken by fraudulent contractors, and after the 2008 Financial Crisis to hold accountable financial institutions for the fraudulent sale of defective mortgage loans to government-sponsored entities like Fannie Mae.
The same can be expected in connection with the current crisis presented by the coronavirus pandemic, as government investigations into the use of emergency relief funding authorized to confront the crisis are initiated. In a March 16 memorandum issued to all United States Attorneys, the Attorney General directed that every U.S. Attorney’s Office “prioritize the detection, investigation, and prosecution of all criminal conduct related to the current pandemic.” And while many of the fraud examples included in the memo (such as the sale of fake cures for COVID-19 and phishing emails from entities posing as the World Health Organization or the Centers for Disease Control and Prevention) would not be expected to impact federal or state treasuries, it is easy to imagine other frauds, including large-scale ones, that could be directed at government programs and be suitable for prosecution under the FCA and its various state analogs.
Given the disproportionate impact the virus has had on nursing homes and senior facilities, there could be claims arising from allegations of substandard care amounting to “worthless services” that could be actionable under the FCA. Certain emergency waivers granted under certain conditions for the Stark Self-Referral Law and HIPAA privacy rule could also lead to allegations of fraud if such waivers are obtained or utilized under false pretenses. Moreover, the flood of new government funding created through emergency legislation passed by Congress in recent weeks allocates hundreds of millions of dollars for pandemic-related purposes to various agencies, including, among others, the Federal Emergency Management Agency, Department of Health and Human Services, Department of Veterans Affairs, Department of Transportation and Department of Housing and Urban Development. Millions of dollars in funding also has been set aside for funding-related oversight and investigation by Offices of Inspector General, as such massive public spending obviously creates fresh opportunities for fraud against the government by those seeking to exploit the current crisis for personal gain.
If you are aware of fraud being perpetrated against the government arising from the current health crisis, the FCA may be available to you in pursuing claims on the government’s behalf and sharing in any resulting recovery. If you think you may have evidence of such fraud, and wish to discuss the potential for instituting a lawsuit under the FCA, please call or use the contact form on this website (https://kaiserfirm.com/contact-us/) and you will be contacted promptly for an evaluation of your allegations.
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