Continued COVID-19 fraud enforcement brings cautionary lessons

It has been over five years since the COVID-19 pandemic started and Congress passed the CARES Act to provide economic relief to a socially-distanced and radically changed work world.

Since then, it has been an all-too-common news headline showing arrests and high-dollar settlements involving those who fraudulently obtained (or misused) pandemic relief funds designed to save the ailing economy. Investigations into abuse of these massive relief programs continue.

On July 15, 2025, the Department of Justice (DOJ) announced a settlement with a major airline to resolve allegations that the airline violated the False Claims Act (FCA) by exceeding the compensation limits it agreed to as part of its participation in the Payroll Support Program (PSP). The PSP was designed to allow airlines to continue paying employees while travel stalled during the first year of the pandemic. PSP funds were awarded on certain conditions, including limits on use of pandemic recovery funds to pay executive compensation, and required a host of certifications of compliance with those conditions.

The settlement agreement alleges that the airline “incorrectly calculated compensation limits under the PSP agreements” and then awarded executive compensation exceeding limitations imposed by the PSP terms and conditions. The DOJ further alleges that the airline violated the FCA by (a) inaccurately certifying compliance with PSP requirements in quarterly reports submitted to the government, and (b) not notifying the government of the error once it was discovered, which would have given the government the right to demand the return of funds (a so-called “reverse false claim”).

There are several noteworthy points in this settlement agreement. First, the government is clearly still actively investigating CARES Act programs. And many Administration officials who helped shepherd the CARES Act legislation – and administer its programs – in 2020 are now back in position to oversee investigations of those programs. It is, therefore, critical for companies to ensure proper document retention protocols. No one should assume the era of CARES Act investigations has passed.

Second, the government always said that the FCA and whistleblowers would be a major enforcement tool for pandemic relief fund misuse, and this settlement is another example that this promise rings true. Specifically, this settlement results from claims brought by a whistleblower under the FCA’s qui tam provisions – the long-standing but controversial law allowing citizen whistleblowers to sue alleged government fraudsters on behalf of the government. The DOJ recently affirmed its commitment to working with whistleblowers and offering the financial incentives that motivate them – some whistleblowers and their attorneys obtain up to 30 percent of the government’s recovery.

Third, the DOJ’s press release states, “[o]ur criminal investigators have been at the center of this investigation as a core part of our responsibility to safeguard the integrity and efficiency of Treasury programs and operations.” The fact that the DOJ acknowledges that criminal investigators were “at the center of this” civil FCA matter should serve as a stark reminder that every civil FCA investigation must be treated as potentially implicating criminal liability.

Norton Rose Fulbright’s experienced lawyers represent businesses and executives in civil and criminal government investigations. Our lawyers have served in all levels of state and federal government, have led the investigation and prosecution of unlawful activity and have served in an array of regulatory agencies. If you find yourself involved in a government investigation, or if you receive a government subpoena or civil investigative demand (CID), our team will defend your interests aggressively and effectively.

Chris Cooke is a former Special Counsel to the Special Inspector General for Pandemic Recovery.

Jay Dewald is a former federal prosecutor.