On February 25, 2025, the U.S. Department of Justice filed a False Claims Act (FCA) complaint against an Idaho home health agency and its owner, alleging that a series of Paycheck Protection Program (PPP) loan applications were fraudulent because the home health agency did not disclose in the applications that the home health agency was making improper claims to Idaho Medicaid at the time it applied for the loans.

This FCA action is a notable reminder to healthcare providers that they must be careful in representations they make to the government. This post will explain what the home health agency and its owner are alleged to have done, and then end with some tips that healthcare providers can learn from the case.

How Medicaid Fraud Accusations Turned into PPP Loan False Statements

In April of 2020, like many other healthcare providers, an Idaho-based home health agency applied for a PPP loan during the early days of the COVID-19 pandemic. In that PPP loan application, the company made the same certifications that all other PPP loan applicants made. One of those certifications was: “Applicant is not engaged in any activity that is illegal under federal, state or local law.” The defendant had other companies that got PPP loans as well and ultimately is alleged to have received around $1.8 million in PPP loans, much of which was forgiven by the Small Business Administration (SBA).

Two years later, in 2022, the defendant was charged with and pled guilty to Medicaid fraud. The crux of the guilty plea was that the defendant billed Idaho Medicaid for services not provided or for services that were knowingly inflated in claims to Idaho Medicaid. A judge sentenced the defendant to 180 days in county jail and ordered restitution of around $146,000. But, critical to the PPP FCA theory, the time period that the defendant admitted to committing this crime was 2018 to 2021, which overlaps with the PPP applications.

In other words, when the defendant’s companies applied for PPP loans, her certifications of not engaging in “any activity that is illegal” were false. And the defendant admitted as much in her guilty plea, even though she was not charged until years later.

According to the Justice Department’s FCA complaint, the SBA would not have approved forgiveness of the PPP loans had it known that Miller’s companies were billing Idaho Medicaid for knowingly inflated services. In other words, the Justice Department says that the Medicaid claims were material to the SBA’s decisions to forgive the PPP loans.

Now that the Medicaid fraud plea is being considered in the FCA context, the prognosis for the defendant and her companies is dire. Her prior $146,000 restitution order could now be dwarfed by statutory trebling of the amount of forgiven PPP loans, if the Justice Department is successful. The Justice Department’s complaint states that it seeks $5.4 million from Miller and her companies, plus statutory penalties between $13,946 and $27,894 for each loan application in which the defendant and her companies certified it was not engaged in any illegal activity. That is a catastrophic consequence for a Medicaid-related crime that netted $146,000.

What can Healthcare Providers Learn from This PPP FCA Case?

First and foremost, this new PPP FCA case is a reminder that there are often collateral consequences to government enforcement. A guilty plea relating to improper Medicaid claims will certainly involve restitution and may often involve jail or prison time, but there are a host of other consequences that can flow from resolving a case with the government. Sometimes there are licensure implications; other times government bodies may revoke the ability to do business with them in the future, and perhaps even private companies may terminate relationships with the person or company resolving the case.

But here the consequences went even further, creating liability for a certification made in a PPP loan. When the defendant was pleading guilty to the improper Medicaid claims issue, she may not have recalled that two years earlier, she applied for PPP loans that contained certifications relating to illegal activity. But that does not alleviate the enforcement issues she is now facing. And so, the leading moral of this FCA case is that there are often unforeseen collateral consequences to government enforcement.

Second, recognizing that there are collateral consequences to changed circumstances that we might not think of, this case should be a reminder to take steps to think broadly about how changed circumstances change our obligations. When resolving government enforcement matters or taking major action that could impact other things, take stock of representations that have previously been made. Think about creditors, bondholders, and debt covenants. Think about contracts requiring notice if certain events occur. Think about all of the issues that could arise from changed circumstances.

Third, and relatedly, when circumstances change, think about the potential to proactively address issues. In many situations, damages can be mitigated by being proactive. If you suddenly realize you have government funds you’re not entitled to, you may be able to mitigate issues by voluntarily repaying the funds, or self-disclosing improper conduct to authorities. In the FCA context, the Justice Department has the ability to give significant credit to those self-disclosing improper conduct. But that self-disclosure credit is generally not available after an investigation starts; one cannot repay funds after they receive a Civil Investigative Demand or a subpoena and expect the investigation to disappear without further consequence. So being proactive and responding to changed circumstances is often the wisest course of action.

Finally, for those who find themselves under investigation, it is essential to find counsel with subject-matter knowledge. There are a series of potential defenses to FCA theories of liability, and not every misstatement to the government results is enforceable under the FCA. So it is critical for those with FCA issues to obtain counsel with the knowledge and experience to provide a meaningful defense.