The Secretary of the U.S. Department of Health and Human Services recently added government contractors to the list of entities eligible for immunity from liability under the Secretary’s March 17, 2020, Public Readiness and Emergency Preparedness Act (“PREP Act”) declaration.  The PREP Act protects individuals and companies from liability for death or other tort-like harm in connection with the pandemic response, except for cases involving “willful misconduct.”  Under the recent amendment, government contractors acting with authorization from an executive department or agency—or who could be so authorized—are protected from liability when they prescribe, administer, deliver, distribute, or dispense Covered Countermeasures, as long as they meet the other requirements of the Act.  Covered Countermeasures could include the COVID-19 vaccine or personal protective equipment like respirators.  We wrote previously about the evolving list of masks and respirators qualifying as Covered Countermeasures here, here, and here.   
Continue Reading Authorized Government Contractors Now Covered Persons Under the PREP Act

On July 15, 2020, the Department of Justice (“DOJ”) charged Andrew Marnell with bank fraud in connection with $8.5 million worth of Paycheck Protection Program (“PPP”) loans he obtained for fake business expenses, that were then spent on gambling and stock market bets, incurring millions of dollars in losses.  See United States v. Marnell, No. 2:20-mj-03313-DUTY (C.D. Cal. Jul. 15, 2020).
Continue Reading DOJ Cracks Down on COVID-Relief Fraud

Whistleblowers are a common character in investigations into governmental abuse.  They famously have exposed covert government surveillance programs, political corruption scandals, and even led to the impeachment of the president of the United States.  Some statutes also empower whistleblowers to bring claims against private businesses on behalf of the government for financial misconduct involving fraud, waste, and abuse.  In the wake of the COVID-19 pandemic, we expect to see a surge of new whistleblower claims alleging misconduct under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  Whistleblower claims could be detrimental or even fatal for businesses already struggling to recover from the economic impact of COVID-19.  Now more than ever, businesses must understand the risks and prepare for the inevitable emergence of whistleblowers to protect themselves from future claims.  
Continue Reading Prepare for a Perfect Storm of COVID-19 Whistleblower Claims

On June 4, 2020, the Jury Subgroup of the COVID-19 Judicial Task Force of the U.S. federal courts issued a report (the “Report”) containing recommendations for conducting jury trials and convening grand juries during the pandemic.  Although many federal courts have continued to hold remote hearings and conferences over the last few months, jury trials have largely been suspended across the country to protect the safety of potential jurors and court personnel.  However, as government stay-at-home orders are lifted and courts prepare to reopen their doors, advocates have called for the reinstatement of jury trials to maintain litigants’ constitutional rights and preserve public confidence in the courts.  Convened to recommend directives and policy changes related to the COVID-19 health emergency, the Task Force is made up of federal judges, clerks, attorneys, and executives from a number of circuits across the U.S.
Continue Reading COVID-19 Judicial Task Force Proposes Protocols to Reinstate Jury Trials

With the Department of Justice’s (DOJ) decision to drop charges against Michael Flynn, materiality has come to the forefront of popular legal discourse.  At the same time, prosecutors and whistleblowers will carefully consider enforcement/false claims actions against entities who may have wrongfully received relief funds under the Coronavirus Aid, Recovery, and Economic Stability Act (CARES Act).  Such actions likely will turn on whether alleged misrepresentations were materially false.  Those applying for CARES Act funds, such as those under the Paycheck Protection Program (PPP), must ensure all of their representations and certifications are truthful.  However, those accused of making misrepresentations in order to receive government funds may find refuge in a more narrow view of the materiality requirement.
Continue Reading Materiality Concerns For CARES Act Enforcement Cases

Immunity under the Public Readiness and Emergency Preparedness (“PREP”) Act is a moving target for government contractors and other companies manufacturing or distributing personal protective equipment (PPE) in the COVID-19 public health response. We wrote previously about new liability protections afforded to manufacturers and distributors of certain face masks approved by National Institute for Occupational Safety and Health (“NIOSH”) through the Families First Coronavirus Response Act, and the later expanded scope of that protection provided by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and amended PREP Act declaration by Department of Health and Human Services. Until recently, the list of devices eligible for liability immunity seemed to be continuously growing as the COVID-19 public health response required more and more PPE. But last week, the Food and Drug Administration (“FDA”) took a significant step back, retracting its Emergency Use Authorization (“EUA”) for respirators from 75 manufacturers in China, which previously had been approved for use in the response to COVID-19. This retraction has the additional effect of disqualifying government contractors, and other companies that distribute newly unauthorized respirators, from PREP Act immunity in connection with these devices.
Continue Reading Not So Fast – FDA Retracts Authorization for Some Respirators Made in China

On May 4, 2020, the Securities and Exchange Commission (“SEC”) issued a temporary final rule easing some restrictions on small businesses seeking to raise capital pursuant to Regulation Crowdfunding (“Reg CF”).  The SEC made the move in response to feedback from its Small Business Capital Formation Advisory Committee and other outreach conducted by SEC staff regarding the industry’s urgent need for expedited access to capital while maintaining investor protections as the COVID-19 pandemic persists.
Continue Reading SEC Offers Limited Rule Relief to Spur Small Business Crowdfunding During Pandemic

The devastating economic impact of the COVID-19 pandemic already has set in, with the future of thousands of businesses hanging in the balance.  Big and small businesses alike are finding it difficult to cope with the downturn.  The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provisions related to small business loans provide a glimmer of hope.  Among other forms of economic relief, the CARES Act created the $349 billion Paycheck Protection Program (“PPP”) to provide funding to assist small businesses impacted by the pandemic.  After the initial allocation of PPP funds was exhausted the President signed a bill providing an additional $484 billion in relief, including $310 billion for the PPP, on April 24, 2020[1].  It may turn out for some businesses, however, that these provisions will be nothing more than fool’s gold.  The U.S. Small Business Administration (“SBA”) loan programs, including the PPP under the CARES Act, only are available to qualifying businesses that strictly comply with complex rules related to the size of the business, including its employee count, financial condition, affiliations, control and ownership, and industry classifications.  Businesses that reflexively jumped at the SBA money grab without discipline or compliance are at risk of aggressive government enforcement that surely will follow.
Continue Reading Small Business Money Grab Under the CARES Act Brings Enforcement Risks

The novel coronavirus (“COVID-19”) pandemic has given Department of Veterans Affairs (“VA”) contractors several powerful new tools in their toolbelts, and VA contractors should not leave available protections on the table. VA contractors, including those supplying medical devices under the MSPV-NG bridge contract and pharmaceuticals on a VA Federal Supply Schedule (“FSS”), now can negotiate for extraordinary limitations on liability (in addition to some provided by statute), among other opportunities. Particularly for contractors providing goods and services used in the COVID-19 pandemic response, it is crucial to understand both new protections available and other changes to the rules of VA contracting.
Continue Reading COVID-19 Changes Contracting at the VA