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Case 1:22-cv-00028-HYJ-PJG ECF No. 38-2, PageID.547 Filed 03/09/23 Page 1 of 12
EXHIBIT B
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SETTLEMENT AGREEMENT
This Settlement Agreement (“Agreement”) is entered into among the United
States of America, acting through the United States Department of Justice and on behalf
of the U.S. Small Business Administration (“SBA”) (collectively the “United States”);
the Michigan Education Special Services Association (“MESSA”); and the Mackinac
Center for Public Policy (the “Relator”) (hereafter collectively with the United States and
MESSA referred to as “the Parties”), through their authorized representatives.
RECITALS
A. MESSA is a non-profit 501(c)(9) corporation with its principal place of
business at 1475 Kendale Boulevard, East Lansing, Michigan 48826.
B. On January 11, 2022, the Relator filed a qui tam action in the United
States District Court for the Western District of Michigan captioned United States ex rel.
Mackinac Center for Public Policy v. The Michigan Education Association, et al., No.
1:22-cv-28, pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C.
§ 3730(b) (the “Civil Action”). The Relator alleged, among other things, that MESSA
submitted or caused the submission of false claims for payment in connection with the
federal Paycheck Protection Program (“PPP”), which was established pursuant to the
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.
C. The CARES Act, which was enacted in March 2020, was designed to
provide emergency financial assistance to millions of Americans suffering economic
effects caused by the COVID-19 pandemic. Section 1102(a)(2) of the CARES Act
amended Section 7(a) of the Small Business Act, 15 U.S.C. §§ 631-657u, and authorized
forgivable loans to eligible small businesses for job retention and certain other expenses,
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through the PPP. To obtain a PPP loan, a qualifying business must submit a PPP loan
application, which is signed by an authorized representative of the business. The loan
application requires the business to acknowledge the program rules and make certain
affirmative certifications to be eligible to obtain the PPP loan. A PPP loan application
must be processed by a participating lender. If a loan application is approved, the
participating lender funds the loan using its own money, which is 100% guaranteed by
the SBA. The SBA pays the lender a processing fee for each loan.
D. The United States contends that it has certain civil claims against the
MESSA arising from its submission of a PPP loan application and receipt of PPP loan
funds. Specifically, the United States contends MESSA was ineligible for a PPP loan at
the time it applied for and received the loan in 2020. As a result of the allegedly
improper application for, and receipt of, the loan, the United States contends that MESSA
caused the SBA to pay the lender a processing fee. The conduct described in this
Paragraph D is referred to below as the “Covered Conduct.”
E. On December 23, 2020, MESSA voluntarily returned the loan, plus
interest accrued to that date, to the lender.
F. This Settlement Agreement is neither an admission of liability by MESSA
nor a concession by the United States that its claims are not well founded.
G. Relator claims entitlement under 31 U.S.C. § 3730(d) to a share of the
proceeds of this Settlement Agreement and to Relator’s reasonable expenses, attorneys’
fees and costs.
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To avoid the delay, uncertainty, inconvenience, and expense of protracted
litigation of the above claims, and in consideration of the mutual promises and
obligations of this Settlement Agreement, the Parties agree and covenant as follows:
TERMS AND CONDITIONS
1. MESSA shall pay to the United States ONE HUNDRED TEN
THOUSAND, SIX HUNDRED TWENTY-TWO DOLLARS ($110,622.00) (“Settlement
Amount”) by electronic funds transfer pursuant to written instructions to be provided by
the U.S. Attorney’s Office for the Western District of Michigan no later than fourteen
(14) days after the Effective Date of this Agreement.
2. Relator claims entitlement to reasonable expenses, attorney’s fees, and
costs pursuant to 31 U.S.C. § 3730(d)(1) against MESSA. If Relator and MESSA are
unable to reach agreement on reasonable expenses, attorney’s fees, and costs absent
Court intervention, Relator may submit a fee petition to the United States District Court
for the Western District of Michigan seeking payment of its claimed reasonable expenses,
attorney’s fees, and costs against MESSA.
3. Subject to the exceptions in Paragraph 5 (concerning reserved claims)
below, and upon the United States’ receipt of the Settlement Amount, the United States
releases MESSA from any civil or administrative monetary claim the United States has
for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the
Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; or the common law
theories of breach of contract, payment by mistake, unjust enrichment, and fraud.
4. Upon the United States’ receipt of the Settlement Payment described in
Paragraph 1 above, Relator, for itself and for its heirs, successors, attorneys, agents, and
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assigns, fully and finally releases MESSA, along with its officers, directors, trustees,
agents, and employees, from any and all claims, known or unknown, that the Relator has,
or could have brought, in the Civil Action.
5. Notwithstanding the releases given in Paragraph 3 of this Agreement, or
any other term of this Agreement, the following claims and rights of the United States are
specifically reserved and are not released:
a. Any liability arising under Title 26, U.S. Code (Internal Revenue
Code);
b. Any criminal liability;
c. Except as explicitly stated in the Agreement, any administrative
liability or enforcement right, or any administrative remedy,
including the suspension and debarment rights of any federal
agency;
d. Any liability to the United States (or its agencies) for any conduct
other than the Covered Conduct;
e. Any liability based upon obligations created by this Agreement;
and
f. Any liability of individuals.
6. Relator and its heirs, successors, attorneys, agents, and assigns shall not
object to this Agreement but agree and confirm that this Agreement is fair, adequate, and
reasonable under all the circumstances, pursuant to 31 U.S.C. § 3730(c)(2)(B). In
connection with this Agreement and this Civil Action, Relator and its heirs, successors,
attorneys, agents, and assigns agree that neither this Agreement, any intervention by the
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United States in the Civil Action in order to dismiss the Civil Action, nor any dismissal
of the Civil Action, shall waive or otherwise affect the ability of the United States to
contend that provisions in the False Claims Act, including 31 U.S.C. §§ 3730(d)(3) and
3730(e), bar Relator from sharing in the proceeds of this Agreement. Moreover, the
United States and Relator and its heirs, successors, attorneys, agents, and assigns agree
that they each retain all of their rights pursuant to the False Claims Act on the issue of the
share percentage, if any, that Relator should receive of any proceeds of the settlement of
its claim(s). The Relator’s claim to a share of the proceeds of the settlement amount
described in Paragraph 1 is addressed by separate agreement.
7. Subject to Paragraph 2 above, Relator, for itself, and for its heirs,
successors, attorneys, agents, and assigns, releases MESSA, and its officers, directors,
trustees, agents, and employees, from any liability to Relator arising from the filing of the
Civil Action.
8. MESSA waives and shall not assert any defenses MESSA may have to
any criminal prosecution or administrative action relating to the Covered Conduct that
may be based in whole or in part on a contention that this Agreement bars a remedy
sought in such criminal prosecution or administrative action, under the Double Jeopardy
Clause in the Fifth Amendment of the Constitution, or under the Excessive Fines Clause
in the Eighth Amendment of the Constitution.
9. MESSA fully and finally releases the United States, its agencies, officers,
agents, employees, and servants, from any claims (including attorneys’ fees, costs, and
expenses of every kind and however denominated) that MESSA has asserted, could have
asserted, or may assert in the future against the United States, its agencies, officers,
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agents, employees, and servants, related to the Covered Conduct or the United States’
investigation or prosecution thereof.
10. a. Unallowable Costs Defined: All costs (as defined in the Federal
Acquisition Regulation, 48 C.F.R. § 31.205-47) incurred by or on behalf of MESSA, and
its present or former officers, directors, employees, shareholders, and agents in
connection with:
(1) the matters covered by this Agreement;
(2) the United States’ audit(s) and civil investigation(s) of the
matters covered by this Agreement;
(3) MESSA’s investigation, defense, and corrective actions
undertaken in response to the United States’ audit(s) and
civil investigation(s) in connection with the matters
covered by this Agreement (including attorneys’ fees);
(4) the negotiation and performance of this Agreement;
(5) the payment MESSA makes to the United States pursuant
to this Agreement and any payments that MESSA may
make to Relator, including costs and attorneys fees,
are unallowable costs for government contracting purposes (hereinafter referred to as
“Unallowable Costs”).
b. Future Treatment of Unallowable Costs: Unallowable Costs will
be separately determined and accounted for by MESSA, and MESSA shall not charge
such Unallowable Costs directly or indirectly to any contract with the United States.
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c. Treatment of Unallowable Costs Previously Submitted for
Payment: Within 90 days of the Effective Date of this Agreement, MESSA shall identify
and repay by adjustment to future claims for payment or otherwise any Unallowable
Costs included in payments previously sought by MESSA or any of its subsidiaries or
affiliates from the United States. MESSA agrees that the United States, at a minimum,
shall be entitled to recoup from MESSA any overpayment plus applicable interest and
penalties as a result of the inclusion of such Unallowable Costs on previously-submitted
requests for payment. The United States, including the Department of Justice and/or the
affected agencies, reserves its rights to audit, examine, or re-examine MESSA’s books
and records and to disagree with any calculations submitted by MESSA or any of its
subsidiaries or affiliates regarding any Unallowable Costs included in payments
previously sought by MESSA, or the effect of any such Unallowable Costs on the amount
of such payments.
11. This Agreement is intended to be for the benefit of the Parties only.
12. Upon receipt of the payment described in Paragraph 1, above, the United
States and the Relator shall promptly sign and file in the Civil Action a Joint Stipulation
of Dismissal of the Civil Action as against MESSA pursuant to Rule 41(a)(1), with
prejudice, except as provided in Paragraph 2 above.
13. Each Party shall bear its own legal and other costs incurred in connection
with this matter, including the preparation and performance of this Agreement, except as
provided in Paragraph 2 above.
14. Each Party and signatory to this Agreement represents that it freely and
voluntarily enters into this Agreement without any degree of duress or compulsion.
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15. This Agreement is governed by the laws of the United States. The
exclusive jurisdiction and venue for any dispute relating to this Agreement is the United
States District Court for the Western District of Michigan. For purposes of construing
this Agreement, this Agreement shall be deemed to have been drafted by all Parties to
this Agreement and shall not, therefore, be construed against any Party for that reason in
any subsequent dispute.
16. This Agreement constitutes the complete agreement between the Parties.
This Agreement may not be amended except by written consent of the Parties.
17. The undersigned counsel represent and warrant that they are fully
authorized to execute this Agreement on behalf of the persons and entities indicated
below.
18. This Agreement may be executed in counterparts, each of which
constitutes an original and all of which constitute one and the same Agreement.
19. This Agreement is binding on MESSA’s successors, transferees, heirs, and
assigns.
20. This Agreement is binding on Relator’s successors, transferees, heirs, and
assigns.
21. All parties consent to the United States’ disclosure of this Agreement, and
information about this Agreement, to the public.
22. This Agreement is effective on the date of signature of the last signatory to
the Agreement (“Effective Date of this Agreement”). Facsimiles of signatures shall
constitute acceptable, binding signatures for purposes of this Agreement.
[SIGNATURE PAGES BELOW]
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03/01/23
DocuSign Envelope ID: 60656D88-2078-499F-AB73-508ACB57FD79
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MICHIGAN EDUCATION SPECIAL SERVICES ASSOCIATION
2/27/2023
DATED: BY: _____________________________
Ross Wilson, Executive Director
MICHIGAN EDUCATION SPECIAL SERVICES
ASSOCIATION
DATED: 2/28/2023 BY: _____________________________
MICHAEL E. CAVANAUGH
RYAN K. KAUFFMAN
Fraser Trebilcock
124 W. Allegan Street, Ste. 1000
Lansing, MI 48933
Counsel for Michigan Education Special Services
Association
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RELATOR - MACKINAC CENTER FOR PUBLIC POLICY
DATED: <23 BY:
Jose/h G. man, President
K1NAC CENTER FOR PUBLIC POLICY
DATED: 03/01/2023 BY:
JAMES R. PETERSON
Miller Johnson
45 Ottawa Ave. SW, Ste. 1100
Grand Rapids, MI 49503
Counselfor Relator Mackinac Centerfor Public
Policy
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