March 27, 2023 - Although the federal COVID-19 Public Health Emergency (the "PHE") is set to end on May 11, 2023, the same cannot be said for related legal and regulatory risks related to pandemic relief funding, which appear likely to ramp up. Since the onset of the PHE in January 2020, the federal government has rapidly distributed about $5 trillion in pandemic relief programs, including Medicare's Advance Payment Program, the Provider Relief Fund, and the Paycheck Protection Program (the "PPP").
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Now that the most immediate pandemic-related threats have abated, the U.S. Department of Justice ("DOJ"), private litigants, state attorneys general ("AGs"), and Congress are increasingly focused on identifying and punishing fraud arising out of the alleged misuse of these funds. The Biden administration put this issue front and center on March 2, 2023, by releasing a proposal to spend $1.6 billion to address pandemic-related fraud.
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As we'll discuss, companies that have received such funds should be prepared to demonstrate that those funds were used appropriately and should consider whether and how to take corrective actions if there are outstanding questions regarding the use of such funds. For investors, this means being attuned to such risks in connection with both new and existing investments.
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