San Fernando Valley Rehab Center and Owner Ordered to Pay in Healthcare Fraud Case

A federal court in the Central District of California recently ruled against JMG Investments Inc. and its owner, Jeffrey Schwartz, finding that they violated the False Claims Act by improperly obtaining and retaining duplicate Paycheck Protection Program (PPP) loans during the COVID-19 pandemic. The court ordered the rehab center and its owner to pay $1,565,294.38 in damages and penalties for their misconduct, which included certifying eligibility for funds they were not entitled to receive.

Though the case stemmed from pandemic relief loan misuse rather than traditional healthcare billing, the enforcement action underscores the breadth of the FCA and government commitment to holding companies accountable for fraud that affects federal programs. The lawsuit was initiated in part through a qui tam whistleblower filing, highlighting the important role of private relators in bringing fraud to light and supporting recovery efforts on behalf of taxpayers.