Atlantic County Health System Settles Allegations of Improper Paycheck Protection Program Loan

Shore Memorial Health System will pay $3.15 million in settlement with the U.S. government over an improper PPP loan.

NEW JERSEY - An Atlantic County health system has reached a settlement agreement with the United States government over allegations that it improperly received a Paycheck Protection Program (PPP) loan, U.S. Attorney Philip R. Sellinger announced today.

The case centers around Shore Memorial Physicians’ Group (SPG), an affiliate of Shore Memorial Health System Inc., which applied for and received a $2.78 million PPP loan. The loan, intended to provide financial relief to small businesses during the COVID-19 pandemic, was allegedly obtained under false pretenses. According to the U.S. government, SPG was not eligible for the loan because its affiliation with Shore Memorial Health System meant it did not qualify as a small business under the PPP guidelines.

After receiving the loan, SPG also sought and obtained forgiveness for the full amount. The U.S. Attorney's Office alleges that this action violated the False Claims Act, which prohibits entities from making fraudulent claims to government programs.

In resolving the matter, Shore Memorial Health System has agreed to pay $3.15 million to the United States. The settlement also resolves a lawsuit filed under the whistleblower provision of the False Claims Act. This provision allows private individuals, known as relators, to file suits on behalf of the government and receive a portion of the recovery. In this case, the whistleblower will receive $315,000 from the settlement.

Shore Memorial Health System fully cooperated with the investigation, which was conducted by special agents from the Small Business Administration's Office of Inspector General, led by Supervisory Criminal Investigator Angelo Palmeri in New York. The government’s legal team was represented by Assistant U.S. Attorney Paul W. Kaufman of the Healthcare Fraud Unit.

This case underscores the government's ongoing commitment to investigating and addressing fraud related to COVID-19 relief programs. Individuals with information about potential fraud can report it to the Department of Justice’s National Center for Disaster Fraud by calling 866-720-5721 or submitting a report online at justice.gov.