Dental office pays over $6.3 million amid FCA allegations
Practice accused of receiving improper PPP loans
Three founders and former owners of West Coast Dental Administrative Services, LLC, which operates a network of dental offices in Southern California, agreed to pay $6.3 million to resolve allegations that they knowingly violated the False Claims Act in connection with improper loans under the Paycheck Protection Program.
The U.S. alleged that the dental office and six of its affiliated dental practices received seven improper second draw PPP loans and subsequent forgiveness of these loans based on false certifications that the companies qualified for the loans even though the dental practices collectively employed more than 300 individuals and were thus ineligible, according to a news release from the U.S. Department of Justice.
PPP is an emergency loan program established in March 2020 under the Coronavirus Aid, Relief and Economic Security Act to support small businesses struggling to pay employees and other business expenses during the COVID-19 pandemic. Second draw loans were strictly limited to businesses with 300 employees or less.
The U.S. also alleged that the dental practices failed to disclose common ownership of the affiliated dental practices, and that one entity, City Real Estate Holdings, Inc., received forgiveness of its loan amount because it is a passive business operated for investment purposes. City Real Estate Holdings has paid an additional $35,149.82 to resolve its potential liability under the FCA in connection with a separate PPP loan, according to the release.
“PPP loans were intended to support small businesses facing difficult economic times due to the COVID-19 pandemic,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Justice Department will continue to hold borrowers who improperly received and sought forgiveness of PPP loans accountable for their actions.”
The claims resolved by the settlement are allegations only and there has been no determination of liability.
For information about the ADA’s COVID-19 advocacy efforts, visit ADA.org/COVID19-Advocacy.
