Carson Tahoe Health Settles PPP Loan Allegations for $8.8M

Carson Tahoe Health Settles PPP Loan Allegations for $8.8M

Introduction

Carson Tahoe Health System, along with its affiliates Carson Tahoe Physician Clinics and Carson Tahoe Continuing Care Hospital, has agreed to pay $8,876,475.45 to settle allegations regarding ineligibility for Paycheck Protection Program (PPP) loans.

The settlement was announced by the Acting U.S. Attorney, reflecting a significant recovery of taxpayer dollars.
Allegations of PPP Loan Ineligibility

The Paycheck Protection Program was created by Congress in March 2020 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide financial relief to small businesses impacted by the COVID-19 pandemic. To qualify for a loan, businesses had to meet specific eligibility criteria, including limits on business size under the Small Business Administration's (SBA) affiliation rules. The U.S. government contends that Carson Tahoe Health System and its affiliated entities exceeded the size restrictions and were therefore ineligible to receive the PPP loans they obtained.

Details of the Loans and Forgiveness

In May 2020, Carson Tahoe Health System and its affiliates received a total of $5,077,011 in PPP loans. These loans were later forgiven by the SBA after the companies submitted their forgiveness applications. Additionally, in February 2021, Carson Tahoe Physician Clinics applied for a second PPP loan of $2 million, which was also forgiven in September 2021. The four loans collectively led to $7,267,009 in disbursements, including the forgiven loan principal, interest, and lender fees.

Government's Efforts to Enforce PPP Compliance

“This settlement returns millions of taxpayer dollars to the government and demonstrates our ongoing commitment to enforcing the Paycheck Protection Program’s rules,” said the Acting U.S. Attorney. The settlement is seen as a positive outcome of federal agencies’ efforts, including the SBA and the U.S. Attorney’s Office, to pursue recovery from businesses that improperly obtained government relief funds.

Whistleblower Lawsuit and Settlement Terms

The settlement originates from a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act. These provisions allow private individuals, known as relators, to sue on behalf of the government and receive a portion of the recovery. The whistleblower in this case will receive a share of the settlement.

No Determination of Liability

It is important to note that the claims resolved by this settlement are merely allegations, and no formal determination of liability has been made. The matter was handled by the Assistant U.S. Attorney for the Eastern District of California.