Health System Settles for $8 Million Over Healthcare PPP Loan Fraud Allegations

The U.S. Department of Justice has reached an $8.8 million settlement with Carson Tahoe Health System, resolving allegations that the healthcare provider improperly secured Paycheck Protection Program (PPP) loans during the COVID-19 pandemic. According to the DOJ, Carson Tahoe and its affiliates—including Carson Tahoe Physician Clinics and Carson Tahoe Continuing Care Hospital—received four PPP loans despite allegedly exceeding size limits outlined in the Small Business Administration’s (SBA) affiliation rules.

What Does Healthcare PPP Loan Fraud Look Like?

Healthcare PPP loan fraud is when providers, clinics, or hospital systems get PPP loans by misrepresenting their eligibility. In the Carson Tahoe case, the health system allegedly failed to disclose affiliated entities, which pushed their overall size beyond PPP limits.

Though the SBA initially forgave their loans, post-disbursement audits and whistleblower reports exposed discrepancies. The government contended that Carson Tahoe wrongfully obtained over $7.2 million in loan principal and interest, plus lender fees.

As a healthcare worker, It is crucial to understand what qualifies as healthcare PPP loan fraud:

• Securing PPP loans despite exceeding employee count or SBA size limits
• Concealing or failing to report affiliated entities
• Adjusting payroll records or financial statements right before filing PPP applications
• Discussions about stacking multiple COVID-19 relief funds improperly

FCA and Whistleblowers

The False Claims Act (FCA) empowers individuals at every level of a healthcare organization to report fraud, including billing specialists, HR staff, payroll administrators, and other administrative employees who are often the first to spot suspicious activity. In the Carson Tahoe case, a whistleblower helped bring the issue to light.

While initial claims under the FCA are filed confidentially (or under seal), and the law provides strong anti-retaliation protection for whistleblowers, whistleblowers’ identities eventually become public during litigation as a general matter. If retaliation occurs, whistleblowers are entitled to remedies such as reinstatement, back pay, and additional damages. Additionally, whistleblowers who expose healthcare PPP loan fraud and other types of fraud may be eligible to receive between 15% and 30% of any recovered funds, a powerful incentive that acknowledges the risks they take and the value of their insider knowledge.

Miller Shah’s Role in FCA enforcement

As the federal government continues to prioritize aggressive enforcement of the False Claims Act under the current administration, law firms like Miller Shah LLP play a crucial role in assisting whistleblowers and supporting government investigations into PPP loan fraud. With extensive experience in complex FCA litigation and a proven track record of representing both whistleblowers and class plaintiffs, our attorneys are well-positioned to help uncover fraudulent schemes, build strong cases, and pursue recoveries on behalf of the government and affected individuals. At Miller Shah, we stand alongside our brave whistleblowers and the Department of Justice to hold wrongdoers accountable and recover taxpayer dollars lost to fraud.

In Modern Perfection, LLC et al. v. Bank of America, N.A., Miller Shah LLP represented plaintiffs who alleged that one of the largest PPP lenders in the country misled small businesses into inflating their loan amounts by falsely instructing them to include payments to 1099 workers as qualifying payroll expenses. When these borrowers later sought forgiveness, they were shocked to learn their loans were not fully forgivable, despite Bank of America’s initial representations.

When healthcare systems misuse pandemic relief funds, it’s not just the government that suffers—patients, employees, and communities all feel the impact. By partnering with an experienced FCA attorney, you can help expose fraud and potentially earn a financial reward for your courage. Coming forward isn’t easy, but with the right support, you can play a key role in stopping healthcare PPP loan fraud and protecting the resources that patients and providers truly need.