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The U.S. Justice Department said Monday the Michigan Education Association, a labor union which represents about 120,000 educators and other school personnel, and its health care administrator paid nearly $226,000 to settle claims that they applied for and received federal pandemic loans they shouldn’t have.
In a news release, the department said the union, also known as the MEA, and the Michigan Education Special Services Association (MESSA) agreed to settle allegations that they had violated federal law “by applying for and obtaining loans under the Paycheck Protection Program for which they knew or should have known they were ineligible.”
The program was created by Congress in March 2020 to help businesses and certain other entities hit by the COVID-19 pandemic pay employees and other expenses. Organizations such as the MEA and MESSA were ineligible for the loans, the Justice Department said.
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The allegations were initially brought against the MEA and MESSA under the False Claims Act by the Midland-based Mackinac Center for Public Policy, a research organization that promotes free markets and limited government.
In a release last week, the MEA called it a “frivolous, politically motivated lawsuit” from a group “with a decades-long record of attacking public school educators and their unions.” The MEA noted that it and its bank believed it was eligible for the loans under the rules published by the federal government when they were taken out and that they were paid back with interest before the Mackinac Center brought its claim.
The MEA paid back $6.4 million and MESSA paid back $6.1 million. But the Justice Department said the Small Business Administration still had to pay lender fees in connection with the loans. Ultimately, the parties settled with MEA paying $115,265 and MESSA paying $110,622 to resolve the claims against them.
In its release, the MEA said it settled to avoid “the litigation cost to MEA members and the waste of federal justice resources” and maintained that it didn’t engage in any wrongdoing.
The Mackinac Center last week also said the MEA will pay its attorney fees and defended its claim. “They took these funds, for which they were clearly ineligible, while shuttered restaurants, stores, other businesses and their workers struggled to stay afloat,” Mackinac Center President Joseph Lehman said in a statement.
Contact Todd Spangler: tspangler@freepress.com. Follow him on Twitter@tsspangler.
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