As companies of all types and sizes continue to deal with the potential legal implications of the COVID-19 pandemic for their businesses, Jackson Walker provides insights and resources on the COVID-19 Legal Resources & Insights site.

With billions of dollars distributed over the past 18 months through the Paycheck Protection Program (PPP) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, there was plenty of opportunity for fraudulent activity. Jackson Walker litigation partner Arthur Gollwitzer discusses how the U.S. Department of Justice has made the intersection between COVID relief and fraud—particularly healthcare fraud—one of their absolute highest priorities.

While there are examples of obvious fraud, even legitimate businesses may trigger investigations if they are not familiar with the complex and changing rules and regulations surrounding COVID relief funds. Should a business or individual be approached by the authorities, Art advises seeking legal counsel before speaking with a federal agent.

Greg Lambert: Hi, everyone. I’m Greg Lambert, and this is Jackson Walker Fast Takes. With the speed in which COVID-related relief programs are rolled out from the federal government, there was also plenty of opportunity for fraud. I asked Jackson Walker litigation partner Arthur Gollwitzer to come on the show and discuss the issue.

Art, thanks for taking the time to talk with me.

Arthur Gollwitzer: Oh, my pleasure.

Greg Lambert: Art, what is causing right now the federal government to set its crosshairs on COVID relief as well as the related healthcare fraud issues?

Arthur Gollwitzer: I think you hit the nail right on the head. In the past 18 months or so, we have a host of new government programs – all of which come with literally billions of dollars in aid – and there is concern about where that money is being spent and making sure it gets to individuals and businesses who need it the most. In particular, there’s the Paycheck Protection Program, the PPP loans, that I think received a lot of attention in the media. There’s also something called the CARES Act, which included subsidies and aid for certain kinds of businesses, particularly in the healthcare field. Along with those acts came a lot of money. So, I know from senior folks in the U.S. Attorneys’ offices—including here in Texas—that the Department of Justice has made the intersection between COVID relief and fraud, and healthcare fraud in particular, one of their absolute highest priorities.

Greg Lambert: Why the focus on healthcare fraud?

Arthur Gollwitzer: I think twofold, or maybe even more than two reasons. One, this is all being driven by a healthcare crisis. Two, there is a historical interest in avoiding fraud in healthcare, because even before COVID, the government spends a lot of money on healthcare through the Medicare and Medicaid programs, things like that. So, now you have an area that is highly regulated, traditionally a place where the government looks for fraud, and you throw billions of more dollars into it along with a whole bunch of new regulations. It’s an area where the government has a keen interest.

Greg Lambert: Art, you mentioned that this is a high priority on the federal government’s behalf. Are there some examples or circumstances that you know of that people should be aware of?

Arthur Gollwitzer: Absolutely. The various laws that were passed in the past 18 months in response to the COVID pandemic included appointing a Special Inspector General for Pandemic Relief. That’s literally his title. People refer to that as a SIGPR. The SIGPR has liaisons in most, if not all, U.S. Attorneys’ offices. For instance, in the Northern District of Texas in Dallas, there is an Assistant United States Attorney focused on criminal matters and an Assistant United States Attorney who handles civil lawsuits like civil fraud cases, both of whom are tasked with working with the SIGPR in their jurisdiction. That’s going on all over the country and all the districts in Texas as well as other cities around the country. Altogether in just the past year, more than 500 criminal cases have been charged or filed, and that number is just growing.

Greg Lambert: Art, are there specific things that they are looking at right now?

Arthur Gollwitzer: There are. These prosecutors and their law enforcement agents get their cases from a number of sources. The SIGPR’s website, for instance, has links where members of the public can simply report tips. Traditionally, U.S. Attorneys’ offices or law enforcement agencies like the FBI will get calls from the public about suspected criminal activity. They’re also doing more sophisticated stuff like data mining. This is an area where the government can look at a business and say, gee, your business depends on delivery of in-person medical services, but you’re in a city where providing such services was prohibited or discouraged during the months of April, May, June of 2020, for instance—how is it that your claims for reimbursement have gone up instead of down? Right? They can notice those trends. I can give an example that is almost too easy to believe. But you have cases here in Texas where people have been prosecuted for lying about the number of employees they have and inflating their payroll for purposes of receiving one of those PPP loans. Well, how does the government find that out? In some cases, it’s simply as easy as comparing Texas Workforce Commission data with what someone put on their loan application.

So, there’s a variety of sources for claims, and the last one I should touch on is the False Claims Act. This has been with us for a while. The False Claims Act is a civil statute where the government or a whistleblower can bring a case for fraud claiming that the service provider made a false claim to the government for payment—either didn’t deliver the services they said they were delivering or overcharged for them. Well, the claimant – the whistleblower – gets a percentage of the recovery. So, there’s an incentive to bring those cases. Then the plaintiff’s lawyers also know that, so they’ll take their cut. Those cases are flagged for the government, because the government can choose to intervene and handle the case if it chooses to do so. So, now you have a civil lawsuit that the government can step into and, at the same time now, the criminal authorities might look at it and say, ‘Is this just a civil violation, or is there a crime here?’

Greg Lambert: Is there anything that businesses should be doing to protect themselves at this point?

Arthur Gollwitzer: Absolutely. For the most part, legitimate businesses aren’t worried about lying about their payroll, right? That’s a more traditional crime and not what a legitimate commercial entity is doing. What we sometimes are concerned about for our clients are what I would call traps for the unwary, where there are regulations and a dense thicket of regulations that have to be complied with when you ask the government for money. Those regulations have changed and become more complex over the past year-and-a-half. The government has changed its rules for telemedicine, for instance. The government requires all sorts of certifications when you ask for a PPP loan or when you seek reimbursement under the CARES Act. Because those regulations are changing, the best thing someone can do is speak with one of our healthcare professionals upfront, right? Get guidance on what the new regulations are, how to set up best practices for dealing with them, how to have set up a compliance program—make sure employees aren’t making mistakes, either one-off mistakes or a pattern of mistakes that might trigger a government investigation. So, the bottom line is we encourage clients to be proactive. We want the clients to speak with our attorneys who are focused on the healthcare industry, so that they don’t get a knock on the door from law enforcement and, frankly, so they don’t need my services as a litigator.

Greg Lambert: So, what should businesses be doing to protect themselves should they be approached by the authorities?

Arthur Gollwitzer: If approached by the authorities, the first answer is simple: seek legal counsel. One of the most common ways for otherwise law-abiding folks to get in trouble—get in criminal trouble—is simply by making false statements to the government. Even if someone thinks, ‘I haven’t done anything wrong. I’ll just speak with the law enforcement agents who have knocked on my door, and I’ll make this go away.’ There’s dangers there. It really is safer. The agents generally will understand when someone says, ‘Look, I’d be happy to speak with you. I’d really like to have my lawyer present first.’ In fact, I can think of a recent example in my own practice where a client was contacted by the FBI, and simply sitting down with her and the agent, rather than her answering questions on the fly with no other witness present and no preparation, was just a wiser course of action.

Greg Lambert: Well, Art Gollwitzer, thanks again for your insights on these COVID-related relief programs.

Arthur Gollwitzer: Appreciate the opportunity. Thank you.

For additional JW Fast Takes podcasts and webinars, visit JW.com/Fast. Follow Jackson Walker LLP on LinkedIn, Twitter, Facebook, and Instagram.

The music is by Eve Searls.

This podcast is made available by Jackson Walker for informational purposes only, does not constitute legal advice, and is not a substitute for legal advice from qualified counsel. Your use of this podcast does not create an attorney-client relationship between you and Jackson Walker. The facts and results of each case will vary, and no particular result can be guaranteed.

For questions about investigations related to COVID relief and fraud, please contact Arthur Gollwitzer or any member of Jackson Walker’s White Collar Defense & Government Enforcement team. For specific assistance or more information concerning PPP loans, please contact John Wittenberg or Lindsey Berwick. Additional information on the CARES Act, the PPP, and other COVID-19 stimulus may be found at JW.com/Coronavirus.

Related Resources:

• JW Coronavirus Insights & Resources microsite »
• JW Fast Takes podcasts and webinars »
• JW Paycheck Protection Program insights »
• Sign Up for JW eAlerts »

Please note: This article and any resources presented on the JW Coronavirus Insights & Resources site are for informational purposes only, do not constitute legal or medical advice, and are not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Jackson Walker. The facts and results of each case will vary, and no particular result can be guaranteed.