On March 27, the President signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The $2 trillion stimulus package is the largest in American history and will make available hundreds of billions of dollars in loans and assistance to distressed companies. Companies seeking relief under the Act should be aware that any assistance will likely be subject to significant oversight.
Emergency infusions of government funding into the economy are typically followed by significant investigations—by both oversight entities created specifically for this purpose, and the standard constellation of law enforcement organizations and Congressional committees—into alleged waste, fraud, and abuse associated with the funds. These investigations, which can extend for years, offer a cautionary tale for companies as they now assess whether to seek and accept government funds or alter their operations in light of changing regulatory requirements. Now is the time for companies to ensure that they are proceeding with due caution as they develop plans related to the CARES Act and other federal coronavirus response efforts.
This alert first outlines several practical considerations for in-house counsel and compliance officials responsible for understanding the risks that accompany participation in the programs created by the CARES Act. It then goes on to describe in detail the oversight authorities contained in the CARES Act and identify potential False Claims Act risks posed by participating in the legislation's new programs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
