by Scott McClallen
Michigan’s largest teachers union and its health insurance affiliate must repay the U.S. government more than $200,000 after taking $12.5 million in federal loans for which they were ineligible.
Lawmakers intended Paycheck Protection Program loans to help small businesses afford to pay their employees during the initial COVID-19 shutdowns.
The Mackinac Center for Public Policy sued the Michigan Education Association and Michigan Education Special Services Association, its health insurance arm, on Jan. 11, 2022.
The MCPP filed its lawsuit under the federal False Claims Act to make the MEA and MESSA pay fines and fully reimburse taxpayers.
The settlement requires MESSA to repay the federal government $110,622 within 14 days of the effective date of March 1, and the MEA to pay $115,265.
The settlement additionally requires the groups to pay MCPP $77,000 in attorneys fees for uncovering the wrongdoing. Additionally, the federal government will award the Center $23,000 for discovering the improper loans.
“The Michigan Education Association applied for money intended for struggling businesses during the height of the pandemic,” MCPP President Joseph G. Lehman said in a statement. “The union and MESSA obtained some of the largest PPP loans in the country. They took these funds, for which they were clearly ineligible, while shuttered restaurants, stores, other businesses and their workers struggled to stay afloat.”
Private businesses and some nonprofits were eligible for the loans, but 501(c)(5) and 501(c)(9) organizations were prohibited from receiving PPP funds. The Mackinac Center was eligible as a 501(c)(3) nonprofit but didn’t apply for assistance.
In April 2020, the MEA and MESSA both applied for PPP funding. The MEA received $6.4 million while MESSA received a $6.1 million loan. Officials of both organizations certified that they had read the program’s eligibility requirements and asserted they were eligible for the loans. The union and MESSA eventually returned the improper funds in December 2020 but taking them denied eligible businesses from receiving them.
The case follows the MCPP striking down Gov. Gretchen Whitmer’s COVID rules in October 2022 and obtaining records from the Michigan Department of Health and Human Services about the actual number of nursing home deaths.
“The Mackinac Center repeatedly defended Michigan citizens from government overreach during the COVID-19 pandemic, and now we’ve helped protect federal taxpayers from union misconduct,” Lehman said. “The award and fees will be used to advance school choice and educate Michigan teachers about their right to opt out of union membership and dues.”
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org.
Photo “Teacher” by airfocus.