SO-CAL Dental Offices Pay $6.3 Million Settlement for Misuse of COVID-19 Relief Loans

Posted August 9, 2024

Not looking so sunny for one Southern California Dental company. Yesterday (August 8) it was announced that West Coast Dental Administrative Services LLC (previously known as West Coast Dental Services Inc.), along with its former founders and owners, have agreed to pay $6.3 million to resolve allegations of violating the False Claims Act .

This will settle accusations related to the improper acquisition of Paycheck Protection Program (PPP) loans intended for small businesses during the COVID-19 pandemic.

The PPP was established under the CARE Act to aid small businesses struggling to cover payroll and other expenses amidst the economic downturn caused by the pandemic, and this (not-so-small) business allegedly used the program improperly for financial gain. The program provided forgivable loans to businesses, but strict eligibility criteria were in place to ensure that only genuinely small businesses could benefit. In 2021, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act introduced a second round of loans, limiting applicants to those with 300 employees or fewer.

West Coast Dental and its affiliated practices came under scrutiny for allegedly securing seven improper second-draw PPP loans, based on false certifications that they met the eligibility criteria, despite employing more than 300 individuals across their network. The allegations also include the failure to disclose common ownership among the affiliated offices in their applications, which is a key requirement under the PPP rules. (I don’t think we need the next two paragraphs about that City Real Estate company, so I just cut those.)

Principal Deputy Assistant Attorney General Brian M. Boynton emphasized the importance of the PPP loans for current businesses that need it, stating, “PPP loans were intended to support small businesses facing difficult economic times due to the COVID-19 pandemic. . . . The Justice Department will continue to hold borrowers who improperly received and sought forgiveness of PPP loans accountable for their actions.”

US Attorney Martin Estrada for the Central District of California also weighed in on the case, noting, “Companies such as these that depleted crucial pandemic-assistance funding will be held accountable under the False Claims Act. This resolution evidence our office’s earnest commitment to ensure that companies act with the utmost integrity and compunction.”

The COVID-19 pandemic hit small businesses hard. According to a report by Yelp in September 2020, approximately 60% of businesses that temporarily closed due to the pandemic were ultimately unable to reopen. The pandemic resulted in over many permanent business closures in the United States during the first few months alone. Many small businesses struggled to access PPP loans in time, and depletion of funds by ineligible companies exacerbates the problem.

If you have information about COVID-19 fraud and would like to speak to a member of the Constantine Cannon whistleblower lawyer team, please Contact us for a Confidential Consultation. Your information could be crucial to the next big settlement!