As the government distributes funds from the largest stimulus package in its history, entities across the US can learn from previous stimulus relief programs so as to avoid errors and When the COVID-19 pandemic hit with unforeseen force earlier this year, Congress acted fast to distribute much needed stimulus money to a wide variety of recipients. But, as the relief funds were being dispersed, the rules and regulations around receipt and use of the funding continued to evolve, making compliance efforts incredibly challenging. There is a vast amount of public pressure to scrutinize companies that received funding which, based on lessons from the 2008 financial crisis, will lead to a significant increase in government investigations, whistleblower activity and enforcement actions. While companies continue to operate in “triage” mode, it is important to work proactively with your advisers to navigate the relief program rules and, most importantly, ensure effective programs are in place to ensure compliance.
Historical Relief Efforts Provide Useful Like the CARES Act, the 2008 Troubled Asset Relief Program (TARP) was enacted to provide relief funding to a wide range of entities, and along with that funding came entirely new government agencies tasked to pursue and punish recipients of funding that were either ineligible, made misrepresentations in their applications and/or misused the funds. 380 defendants were convicted of a crime; 24 enforcement actions were brought against financial institutions and other organizations; and more than $11 billion was recovered in TARP related investigations. Over a decade later, we can predict a similar level of enforcement activity in connection with recent relief funding, including through actions brought under the False Claims Act (FCA), one of the government’s most powerful civil enforcement tools.
Compliance programs vary across organizations, but all can be tailored to help mitigate risk. For some organizations, this may be the first time receiving government funds, and dealing with associated compliance Others may have be accustomed to government funding and reimbursement and have more sophisticated compliance mechanisms in place. Either way, an organization should evaluate its compliance programs, policies and procedures in light of any relief it has received, including via the Provider Relief Fund, the Medicare Accelerated/Advance Payment Program, the Paycheck Protection Program and the Federal Reserve Main Street Loan Program. Compliance measures can be taken now to help ensure organizations comply, both now and in the future, with the terms and conditions associated with these programs and mitigate enforcement risk.