Atlantic County Health System Settles Matter Alleging it Received Improper Paycheck Protection Program Loan

CAMDEN, N.J. - An Atlantic County health system entered into a settlement agreement with the United States resolving allegations that the non-profit company violated the False Claims Act by taking a loan from the Paycheck Protection Program (PPP) to which the company was not entitled, U.S. Attorney Philip R. Sellinger announced today.

According to the allegations in the complaint and the contentions of the United States contained in the settlement agreement:

Congress created the PPP in March 2020, as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to provide emergency financial support to the millions of Americans suffering the economic effects caused by the COVID-19 pandemic. The CARES Act authorized billions of dollars in forgivable loans to small businesses struggling to pay employees and other business expenses.

Shore Memorial Physicians' Group (SPG), an affiliate of the Shore Memorial Health System Inc., applied for and received a PPP loan for $2.78 million, even though it was ineligible for such a loan because it was affiliated with Shore Memorial Health System and was therefore not a small business within the meaning of the PPP program. Shore Memorial Physicians' Group thereafter sought and received forgiveness of the total amount of the loan.

Shore Memorial Health System fully cooperated in the investigation and resolution of this matter. In accordance with the terms of the settlement, Shore Memorial Health System agrees to pay the United States $3.15 million. The settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties, called relators, to file suit on behalf of the United States for false claims and share in a portion of the government's recovery. In this matter, the relator is receiving $315,000 as his share in the recovery.

U.S. Attorney Sellinger credits special agents of the Small Business Administration, Office of Inspector General, under the direction of Supervisory Criminal Investigator Angelo Palmeri in New York, with the investigation.

The government is represented by Assistant U.S. Attorney Paul W. Kaufman of the Healthcare Fraud Unit.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice's National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The qui tam case is captioned US ex rel. Zachary Holtzman v. Dr. David P. May; Shore Memorial Hospital d/b/a Shore Medical Center, 23-cv-3680 (JHR).