Skilled Nursing Facility Company Pays $18 Million to Settle PPP Loan False Claim Act Allegations

February 21, 2025

Bob Coleman
Founder & Publisher

Fraud Friday — Skilled Nursing Facility Company Pays $18 Million to Settle PPP Loan False Claim Act Allegations

A CPA and licensed nursing home administrator filed a false claim lawsuit in 2022 against Unified Care Services, alleging that 16 skilled nursing home facilities improperly received $15 million in PPP loans.

The lawsuit claims that Unified Care should have been treated as one entity due to common ownership of the affiliates, rather than as 16 individual small businesses.

The False Claims Act, originally passed during the Civil War in 1863, is designed to combat fraud against the federal government. It provides a legal mechanism through which individuals can file actions against companies receiving “improper” payments from the government.

Recently, the False Claims Act has been used to sue companies that, by definition, were not small businesses and were ineligible for receiving PPP loans.

In a false claim action, the government typically joins the lawsuit as a party to lend credibility to the allegations. This resulted in Southern California-based Unified Care Services and its owner, Emmanuel David, settling the allegations for $18 million without admitting any wrongdoing.

The Department of Justice and SBA state that false claims occur upon submission of the PPP loan application and when requesting loan forgiveness. Wells Fargo, the PPP lender, is not part of these lawsuits and is indemnified by the Safe Harbor clauses of the legislation that created the PPP Loan program in March 2020.

The whistleblower, Ashwani Chawla, received $2,070,000 in connection with the settlement.

When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications, including their size and number of employees. The settlement resolves allegations that Unified Care and its affiliates falsely certified they were small businesses with fewer than 500 employees when submitting their PPP loan and loan forgiveness applications in 2020. These applications allegedly failed to disclose that the entities applying were part of a larger chain of facilities that shared common ownership and control, rendering Unified Care and its affiliates ineligible for PPP loans.

The Unified Care affiliates covered by the settlement include: Unified Care Services LLC; Casa Montana LLC; Geri-Care Inc.; Geri Care V LLC; Pacific Palms Healthcare LLC; Foothill Care Center Inc.; Mount Megiddo LLC; Canyon Properties III LLC; Cloverleaf Enterprises Inc.; Foothill Care Center LLC; Foothill Care Center II LLC; David Kleis III LLC; David Kleis II LLC; Miramonte Enterprises LLC; and Washington Enterprises III LLC.

United States Attorney Martin Estrada states, “COVID-relief programs were designed to help people and businesses during the worst public health crisis this nation had seen in one century. My office will continue to pursue those who knowingly cheat taxpayers by violating PPP and other pandemic-related programs.”