Liability of Whistleblowers for Retaliation Under the False Claims Act for PPP Loan Recipients | PilieroMazza PLLC
Earlier this year my colleague Matt Feinberg and I reviewed the False Claims Act (FCA) Statistics for 2020. We predicted that the Paycheque Protection Program (PPP) and other small business loan programs launched through the CARES (Coronavirus Aid, Relief, and Economic Security) law would generate a sharp increase in new reports. on FCA affairs. This month, a former employee of a government contracting company filed a lawsuit against the company under the federal FCA’s anti-retaliation clause and state whistleblower laws from Florida. This trial serves as a reminder to PPP loan recipients to ensure they are using the funds correctly. Otherwise, the recipients risk being enforced under the FCA: not only by the federal government and qui tam reporters, but also under its whistleblower provisions.
The applicant in Rucker was the personal assistant to the CFO of Great Dane Petroleum Contractors, Inc. (“Great Dane”). According to her lawsuit, she observed that Great Dane claimed and collected over $ 2 million in federal money under the P3. Then, Great Dane would have abused these sums “for purposes not foreseen by the federal program”, while fraudulently modifying the payroll to give the impression that it complied with the requirements of the PPP when it did not. not knowingly done. The complainant reportedly reported these acts to the CEO and chairman of Great Dane. She was subsequently put on administrative leave and dismissed. Therefore, the complaint alleges, “as a direct and immediate result of the opposition and the filing of a complaint of [Great Dane’s] violations of the law, which included the defendant fraudulently obtaining and retaining PPP funds, the defendant subjected the plaintiff to adverse employment action.[.]”
In order to prevent companies from using the threat of economic retaliation to silence whistleblowers, the FCA provides that any employee who is discriminated against in terms of their employment due to legal acts committed under the FCA – including reporting FCA violations – has the right to receive “all remedies necessary to make this employee.” . . together.” In Rucker, the complainant therefore asks to be reinstated, to receive restitution for her loss of salary, her initial salary and compensatory damages.
This lawsuit follows indications from the Department of Justice (DOJ) that it intends to enforce the FCA against fraudulent schemes arising from the receipt of PPP loans. Throughout 2020, the DOJ announced charges against companies and individuals for fraudulently obtaining PPP funds, and in January 2021, it announced its first settlement of a civil case for PPP loan fraud. The violations alleged by the DOJ to date range from individuals forming bogus businesses to receive PPP loans, to legitimate business owners spending the funds on luxury items for themselves rather than paying their employees. Since the release of loans under the PPP, the Inspector General of Small Business Administration has expressed concern that the program may be vulnerable to “Pervasive” fraud. And, as we continue to anticipate a surge in FCA litigation due to the increase in cases and investigations opened by the DOJ in 2020, it remains crucial that grantees take action to ensure they have properly used and documented their receipt and application of PPP loans.
Government contractors should seek to avoid costly and damaging FCA and fraud litigation, including whistleblower claims, by developing a clear understanding of their obligations under the PPP and implementing a process. sound audit to ensure the accuracy of government payment requests. In addition, companies should take allegations of employee PPP loan fraud seriously, thoroughly investigate and document the findings of the investigation. Even when a whistleblower complaint turns out to be unfounded or misguided, the company must avoid taking adverse employment action against that person in order to comply with FCA’s anti-retaliation provisions.
 Rucker v. Grand Dane Petroleum Contractors, Inc., N ° 2: 21-cv-207 (MD Fla. March 10, 2021).
 13 USC § 3730 (h).