MIDLAND, Mich. — Michigan’s largest teachers union and its health insurance affiliate were required to pay the U.S. government over $200,000 in reimbursements and fines after taking $12.5 million in federal loans for which they were ineligible. The Paycheck Protection Program loans were intended to help small businesses afford to pay their employees during the initial COVID-19 shutdowns.
The Michigan Education Association and MESSA, its health insurance arm, will also pay the Mackinac Center for Public Policy $77,000 in attorneys fees for uncovering the wrongdoing. The Mackinac Center filed a lawsuit under the federal False Claims Act to hold the union and its affiliate accountable by forcing them pay fines and fully reimburse taxpayers for their actions.
“The Michigan Education Association applied for money intended for struggling businesses during the height of the pandemic,” said Joseph G. Lehman, president of the Mackinac Center for Public Policy. “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, like the MEA and MESSA, were clearly prohibited from receiving PPP funds. The Mackinac Center was eligible as a 501(c)(3) nonprofit, but did not 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 eligibility requirements of the program and asserted they were eligible for the loans. Money from the program ran out within weeks. While the union and MESSA eventually returned the improper funds in December 2020, taking them in the first place denied eligible businesses from receiving them.
This case follows successful efforts by the Mackinac Center to oppose the inappropriate use of power by government officials and special interests during the COVID-19 pandemic. Others include obtaining records from the Michigan Department of Health and Human Services about the true number of nursing home deaths; striking down onerous business penalties handed down by the Michigan Occupational Safety and Health Administration; and the Michigan Supreme Court’s ruling that Gov. Gretchen Whitmer’s unilateral executive actions were unconstitutional.
“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,” said Lehman. “The fees will be used to advance school choice and educate Michigan teachers about their right to opt out of union membership and dues.”
View the complaint here. View the settlement documents here and here.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
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