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COVID Relief Funds Misspent During Health Crisis

-Editorial

Years after the COVID health crisis, some of the federal money allocated for emergency use has been wrongly used for fraudulent purposes. For this reason, the federal government has initiated action to take misspent money back and punish those that did it.

According to an investigation by the Associated Press, fraudsters potentially stole more than $280 billion in COVID-19 relief funding; another $123 billion was wasted or misspent. Combined, the loss represents 10% of the $4.2 trillion the U.S. government has so far disbursed in COVID relief aid. In addition, the U.S. government has charged more than 2,230 defendants with pandemic-related fraud crimes and is conducting thousands of investigations.

The Department of Justice announced earlier this year criminal charges against 18 defendants in nine federal districts across the United States for their alleged participation in various fraud schemes involving healthcare services that exploited the COVID-19 pandemic and allegedly resulted in over $490 million in COVID-19-related false billings to federal programs and theft from federally funded pandemic programs.

In connection with the enforcement action, the department seized over $16 million in cash and other fraud proceeds. The Center for Program Integrity of the Centers for Medicare & Medicaid Services (CPI/CMS) separately announced today that it took adverse administrative actions in the last year against 28 medical providers for their alleged involvement in COVID-19 schemes.

“The Justice Department will not tolerate those who exploited the pandemic for personal gain and stole taxpayer dollars,” said Attorney General Merrick B. Garland. “This unprecedented enforcement action against defendants across the country makes clear that the Department is using every available resource to combat and prevent COVID-19 related fraud and safeguard the integrity of taxpayer-funded programs.”

The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, is a $2.2 trillion economic stimulus bill passed by the 116th U.S. Congress and signed into law by President Donald Trump on March 27, 2020, in response to the economic fallout of the COVID-19 pandemic in the United States.

The spending primarily includes $300 billion in one-time cash payments to individual people who submit a tax return in America (with most single adults receiving $1,200 and families with children receiving more), $260 billion in increased unemployment benefits, the creation of the Paycheck Protection Program that provides forgivable loans to small businesses with an initial $350 billion in funding (later increased to $669 billion by subsequent legislation), $500 billion in loans for corporations, and $339.8 billion to state and local governments.

The original CARES Act proposal included $500 billion in direct payments to Americans, $208 billion in loans to major industries, and $300 billion in Small Business Administration loans.

As a result of bipartisan negotiations, the bill grew to $2 trillion in the version unanimously passed by the Senate on March 25, 2020. It was passed by the House via voice vote the next day, and was signed into law by President Donald Trump on March 27. It was originally introduced in the U.S. Congress on January 24, 2019, as H.R. 748 (Middle Class Health Benefits Tax Repeal Act of 2019). To comply with the Origination Clause of the Constitution, the Senate then used H.R. 748 as a shell bill for the CARES Act, changing the content of the bill and renaming it before passing it.

Unprecedented in size and scope, the legislation was the largest economic stimulus package in U.S. history, amounting to 10% of total U.S. gross domestic product. The bill is much larger than the $831 billion stimulus act passed in 2009 as part of the response to the Great Recession. The Congressional Budget Office estimates that it will add $1.7 trillion to the deficits over the 2020–2030 period, with nearly all the impact in 2020 and 2021.

Lawmakers refer to the bill as “Phase 3” of Congress’s coronavirus response. The first phase was the Coronavirus Preparedness and Response Supplemental Appropriations Act which provided for vaccine research and development. The Families First Coronavirus Response Act, which focused on unemployment and sick leave compensation, was phase 2. All three phases were enacted in the same month.

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