Exposed Michigan teachers union’s illegal COVID claims
The Mackinac Center Legal Foundation blew the whistle on an illegal scheme by Michigan’s largest teachers union and its health insurance affiliate to claim emergency pandemic funds they were explicitly forbidden from taking. The Michigan Education Association and Michigan Education Special Services Association received $12.5 million in federal loans under the Paycheck Protection Program, which was designed to help small businesses keep paying their employees during the initial COVID-19 shutdowns.
The law that created the program prohibited certain nonprofit categories from receiving funds. The MEA is classified as a 501(c)(5) nonprofit and MESSA as a 501(c)(9). Both were ineligible for Paycheck Protection loans, and the Department of Justice began an investigation after the Mackinac Center filed a lawsuit under the federal False Claims Act.
“The United States contended that these organizations knew or should have known they were ineligible to receive their PPP loans, and that they caused the Small Business Administration to pay lender fees to the bank that processed the loans,” the Justice Department’s Civil Division announced after the two organizations agreed to settle the case.
Paycheck Protection funds ran out in a matter of weeks, meaning the money the union and its affiliate illegally took did not go to deserving businesses. But the two entities were required to return the loans and pay the U.S. government more than $200,000 in reimbursements and fines. The MEA and MESSA were also required to pay the Mackinac Center for Public Policy $77,000 in attorney fees for uncovering the misconduct.