While the CARES Act is a critical step to protect our nation’s small businesses amid the coronavirus pandemic, it could affect you and your business in two surprising ways. First, this massive increase in government spending will undoubtedly lead to more whistleblower claims under the False Claims Act (FCA). Second, government oversight of this stimulus plan will lead to government investigations that could expose you and your business to criminal liability.
The FCA allows whistleblowers who uncover fraud against the government to bring a civil action to recover funds on behalf of the government and share in any recovery. While the majority of FCA litigation currently centers on Medicare and Medicaid fraud, the FCA is implicated wherever there is fraud affecting government assets. The CARES Act places $500 billion in government assets into the public sphere. Such an influx of public funds will undoubtedly spawn countless whistleblower actions for years to come.
The creation of a large stimulus plan, like the CARES Act, and the related government oversight will expose many individuals and businesses to potential criminal liability. In fact, the program comes with a new special inspector general, in charge of oversight. Additionally, CARES Act benefits are contingent on numerous conditions. Individuals and businesses should be careful not to run afoul of these regulations and subject themselves to costly government investigations.