After numerous headlines, press releases, and law enforcement efforts, including the Department of Justice’s new COVID-19 Fraud Strike Force teams, there may be increased traffic at the intersection between allegations of PPP loan fraud and whistleblower activity. Being accused of wrongdoing poses many issues for employers, including potential claims for whistleblower retaliation, under both state and federal law.
Most states provide some form of protection against whistleblower retaliation. In addition, the federal statute most likely to apply to whistleblower claims related to PPP loan fraud is the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., which is enforced by the Department of Justice.
Under the FCA, any person who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” to the United States, or who “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim, may be liable for a violation of the statute. 31 U.S.C. § 3729(a)(1)(A)-(B). The statute defines a “claim” as “any request or demand . . . for money or property” made to the United States. 31 U.S.C. § 3729(b)(2)(A). A North Carolina federal district court recently applied that definition in Nario v. National OnDemand, Inc., and found that “fraudulently demanding money from the United States through the PPP loan program would constitute a ‘claim’ under the FCA.”
The FCA also forbids employers from...
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