Settlement agreement: United States and Sandeep S. Walia, M.D. and Walia PMC (PPP)

Summary

Settlement Agreement among the United States (acting through the Department of Justice on behalf of the Small Business Administration), Sandeep S. Walia, M.D. (Dr. Walia) and Sandeep S. Walia, M.D., a Professional Medical Corporation (Walia PMC). The United States contends that Walia PMC and Dr. Walia knowingly caused a false claim by certifying, in a May 13, 2020 loan note for $430,000, that the borrower application certifications remained true, after Walia PMC had accepted a $283,300 PPP loan on April 18, 2020. Walia PMC agrees to repay the $430,000 PPP loan to FI-2, plus interest, in the amount of $434,377. Walia PMC ($58,335) and Dr. Walia ($11,665) agree to pay the United States $70,000. The United States signature block is dated April 19, 2021.

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“Settlement agreement: United States and Sandeep S. Walia, M.D. and Walia PMC (PPP).” Original at www.justice.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/settlement-agreement-united-states-and-sandeep-s-walia-m-d-and-walia-p-76cc9c9104/, SHA-256 f6e5b4c6da115da7a1d8bf232ec004a6669b19035fba473cbb9cf2ff86bb0dfd.

Full text

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 United

States Small Business Administration ("SBA") (collectively, the "United States"), Sandeep S.

Walia, M.D., ("Dr. Walia"), and Sandeep S. Walia, M.D., a Professional Medical Corporation

("Walia PMC"), through their authorized representatives. The United States, Dr. Walia, and

Walia PMC are collectively referred to as the "Parties."

RECITALS

A. Walia PMC is a California Professional Medical Corporation with a principal

executive office in Bakersfield, California. Walia PMC is a medical practice that provides

ophthalmology services to patients.

B. Dr. Walia is the owner, Chief Executive Officer, Chief Financial Officer, and

Secretary ofWalia PMC.

C. The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was

enacted on March 27, 2020, to provide emergency assistance to individuals, families, and

businesses affected by the coronavirus pandemic. Section 1102(a)(2) of the CARES Act

amended Section 7(a) of the Small Business Act, 15 U.S.C. § 631 et seq., to establish the

Paycheck Protection Program ("PPP"). 15 U.S.C. § 636(a)(36). The SBA administers the PPP

to provide relief expeditiously to small businesses experiencing economic hardship because of

coronav1rus measures.

D. During the first round of the PPP, which ran from March 2020 through August

2020, no eligible borrower was permitted to receive more than one PPP loan. 85 Fed. Reg.

20813. The SBA determined that, during the first round of the PPP, limiting borrowers to one
loan was necessary to help ensure that as many eligible borrowers as possible could obtain a PPP

loan. Id This limitation helped advance Congress' goal of keeping workers paid and employed

across the United States in 2020. Id.

E. On April 4, 2020, Walia PMC submitted an application for a PPP loan to a

financial institution in Bakersfield, California (FI-1) for $474,937, which was ultimately

approved for $283,300. On April 6, 2020, Dr. Walia submitted a second application for a PPP

loan for $430,000 through an online business loan broker, which referred Dr. Walia's application

to a financial institution in Berkeley Heights, New Jersey (FI-2). Both applications were

submitted under the same business name and Employer Identification Number (EIN).

F. On April 17, 2020, Dr. Walia executed a note for a $283,300 PPP loan with FI-I,

which disbursed the loan proceeds to Walia PMC on April 18, 2020.

G. On May 13, 2020, after Walia PMC received the proceeds from its first PPP loan,

Dr. Walia executed a note for a second PPP loan in the amount of $430,000 from FI-2, which

disbursed the loan proceeds to Walia PMC on May 14, 2020.

H. The United States contends that, on May 13, 2020, Walia PMC and Dr. Walia

knowingly caused a false claim, and knowingly made a false statement material to a false or

fraudulent claim, to be made to the SBA. When Dr. Walia signed the loan note with FI-2 on

May 13, 2020, Walia PMC and Dr. Walia certified that "[all] certifications, authorizations, and

representations made by the Borrower ... in the [PPP] Borrower Application Form ... submitted

to Lender remain true and accurate as of the date of this Note." This certification was false. In

their Borrower Application Form, Walia PMC and Dr. Walia certified that, "[d]uring the period

beginning on February 15, 2020 and ending on December 31, 2020, the Applicant has not and

will not receive another loan under the [PPP]." As of the date of the loan note on May 13, 2020,

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this statement was no longer true nor accurate because on April 18, 2020, Walia PMC had

accepted a PPP loan for $283,300 from FI-1. The United States contends that Walia PMC and

Dr. Walia knew, deliberately ignored, or recklessly disregarded that Walia PMC was not entitled

to a second PPP loan, let alone PPP funds totaling $713,300. FI-2 subsequently applied to the

SBA to request a loan guaranty for its PPP loan to Walia PMC. In its application, FI-2

represented to the SBA that "[Walia PMC] has not received another [PPP] loan." As a result, the

SBA guaranteed the loan and paid FI-2 a fee of $12,900 for processing the $430,000 PPP loan to

Walia PMC. This conduct is referred to herein as the Covered Conduct.

I. Walia PMC has not sought forgiveness from FI-1 or FI-2 for either PPP loan that

it received.

J. The United States contends that it has certain civil claims against Walia PMC and

Dr. Walia for violating the False Claims Act, 31 U.S.C. § 3729-3733 ("FCA"). Based on these

claims, the United States contends that Walia PMC and Dr. Walia are jointly and severally liable

to the United States for damages and penalties totaling $85,362 under the FCA. The United

States also contends that Walia PMC was ineligible to receive a second PPP loan for $430,000.

K. This Settlement Agreement is neither an admission ofliability by Walia PMC or

Dr. Walia nor a concession by the United States that its claims are not well founded.

L. To avoid the delay, uncertainty, inconvenience, and expense of protracted

litigation of the above claims, consistent with the cooperation provided by Dr. Walia and Walia

PMC in resolving this matter, and in consideration of the mutual promises and obligations of this

Agreement, the Parties agree and covenant as follows:

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TERMS AND CONDITIONS

1. Walia PMC agrees to repay its PPP loan to FI-2, plus interest, in the amount of

four hundred and thirty-four thousand, three hundred and seventy-seven dollars ($434,377),

within fourteen (14) days of the receipt of wiring instructions from FI-2 after the Effective Date

of this Agreement.

2. Walia PMC and Dr. Walia agree to pay the United States the respective sums set

forth below, totaling seventy thousand dollars ($70,000) (the "Settlement Amount"), by

electronic funds transfer pursuant to written instructions to be provided by the Office of the

United States Attorney for the Eastern District of California. Walia PMC and Dr. Walia shall

pay the Settlement Amount in the following manner:

a. Within fourteen (14) days of the receipt of wiring instructions after the

Effective Date of this Agreement, Walia PMC will make a payment to the United States in the

amount of fifty-eight thousand three hundred and thirty-five dollars ($58,335). Twelve thousand

nine hundred dollars ($12,900) of the Settlement Amount constitutes restitution from Walia

PMC.

b. Within fourteen (14) days of the receipt of wiring instructions after the

Effective Date of this Agreement, Dr. Walia will make a payment to the United States in the

amount of eleven thousand six hundred and sixty-five dollars ($11,665).

3. Subject to the exceptions in Paragraph 3 (concerning reserved claims) below, and

conditioned upon the United States' receipt of the Settlement Amount, the United States releases

Walia PMC, together with its current and former parent corporations; direct and indirect

subsidiaries; brother or sister corporations; divisions, current or former corporate owners; and the

corporate successors and assigns of any of them, and Dr. Walia from any civil or administrative

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monetary claim the United States has for the Covered Conduct under any of the following: the

FCA, 31 U.S.C. §§ 3729-3733; FIRREA, 12 U.S.C. § 1833a; the Program Fraud Civil Remedies

Act, 31 U.S.C. §§ 3801-3812; or common law theories of breach of contract, payment by

mistake, unjust enrichment or fraud. Together, Walia PMC and Dr. Walia are deemed the

"Released Parties."

4. 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, 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 except Dr. Walia.

5. The Released Parties waive and shall not assert any defenses the Released Parties

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, 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, this Agreement bars a remedy sought in such criminal

prosecution or administrative action.

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6. The Released Parties fully and finally release 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 the Released Parties have asserted, could

have asserted, or may assert in the future against the United States, its agencies, officers, agents,

employees, and servants, related to the Covered Conduct and the United States' investigation and

prosecution thereof. The Released Parties hereby expressly waive all rights they may have by

virtue of Section 1542 of the California Civil Code, which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE
CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR OR RELEASED PARTY.

7. 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 the Released Parties and their

present or former officers, directors, employees, shareholders, and agents in connection with:

a. the matters covered by this Agreement;

b. the United States' civil investigation of the matters covered by this

Agreement;

c. the Released Parties' investigation, defense, and corrective actions

undertaken in response to the United States' civil investigation in connection with the matters

covered by this Agreement (including attorneys' fees);

d. the negotiation and performance of this Agreement; and

e. the payment the Released Parties make to the United States pursuant to

this Agreement,

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are unallowable costs for government contracting purposes (hereinafter referred to as

"Unallowable Costs").

8. Future Treatment ofUnallowable Costs: Unallowable Costs will be separately

determined and accounted for by the Released Parties, and the Released Parties shall not charge

such Unallowable Costs directly or indirectly to any contract with the United States.

9. Treatment ofUnallowable Costs Previously Submitted for Payment: Within 90

days of the Effective Date of this Agreement, the Released Parties shall identify and repay by

adjustment to future claims for payment or otherwise any Unallowable Costs included in

payments previously sought by the Released Parties or any of their subsidiaries or affiliates from

the United States. The Released Parties agree that the United States, at a minimum, shall be

entitled to recoup from the Released Parties 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 the Released Parties' books and

records and to disagree with any calculations submitted by the Released Parties or any of their

subsidiaries or affiliates regarding any Unallowable Costs included in payments previously

sought by the Released Parties, or the effect of any such Unallowable Costs on the amount of

such payments.

10. This Agreement is intended to be for the benefit of the Parties only.

11. Each Party shall bear its own legal and other costs incurred in connection with

this matter, including those incurred in the preparation and performance of this Agreement.

12. 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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13. This Agreement is governed by the laws of the United States. The exclusive

venue for any dispute relating to this Agreement is the United States District Court for the

Eastern District of California. 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.

14. This Agreement constitutes the complete agreement between the Parties. This

Agreement may not be amended except by written consent of the Parties.

15. The undersigned represent and warrant that they are fully authorized to execute

this Agreement on behalf of the persons and entities indicated below.

16. This Agreement may be executed in counterparts, each of which constitutes an

original and all of which constitute one and the same Agreement.

17. This Agreement is binding on the Released Parties' successors, transferees, heirs,

and assigns.

18. All Parties consent to the United States' disclosure of this Agreement, and

information about this Agreement, to the public.

19. This Agreement is effective on the date of signature of the last signatory to the

Agreement (the "Effective Date"). Facsimiles of signatures shall constitute acceptable, binding

signatures for purposes of this Agreement.

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THE UNITED STATES

DATED: April 19, 2021 PHILLIP A. TALBERT
Acting United States Attorney

BY: ~~
Matthew R. Belz
Assistant United States Attorney
Eastern District of California
501 I Street, Suite 10-100
Sacramento, California 95814
Tel: 916-554-2758

Attorneys for the United States

SANDEEP S. WALIA, M.D.

DATED:

SANDEEP S. WALIA, M.D., A PROFESSIONAL
MEDICAL CORPORATION

DATED: llhlht BY:
San eep S. Walia, M.D.
President and CEO of Sandeep S. Walia, M.D., a
Professional Medical Corporation

APPROVED AS TO FORM AND CONTENT

BY:
William C. Hahesy
The Law Offices of illiam C. Hahesy
5620 N. Palm Avenu -, Suite 400
Fresno, California 93 704
Tel: 559-579-1230

Attorney for Sandeep S. Walia, MD. and Sandeep S. Walia,
MD. , A Professional Medical Corporation

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