News Story

Mackinac Center awarded $77K for reporting that MEA improperly took COVID-19 relief money

MEA and MESSA improperly took $12.5 million in COVID relief money through Paycheck Protection Program

In January 2022, the Mackinac Center Legal Foundation sued the Michigan Education Association and its insurance affiliate, the Michigan Education Special Services Association. The foundation sued under the federal False Claims Act after both union entities improperly sought and were granted $12.5 million in COVID-19 relief money through the Paycheck Protection Program.

Fourteen months later, the case was settled in the Mackinac Center’s favor. The MEA and its affiliate must pay $200,000 in reimbursements and fines.

The two union organizations will also pay the Mackinac Center $77,000 for its role in uncovering the wrongdoing.

The U.S. Department of Justice took over the case from the Mackinac Center.

The Paycheck Protection Program was never intended for 501(c)(5) nonprofits like the MEA or 501(c)(9) nonprofits like MESSA.

But both organizations sought and received money anyway. In April 2020, the MEA and MESSA both applied for PPP funding. The MEA received $6.4 million while MESSA received $6.1 million, for a total of $12.5 million.

In December 2020, the two say, they returned the funds.

The Mackinac Center filed its action because when the MEA and MESSA took the funds, that denied other businesses the money they needed after being shut down by government order.

“By doing this, we wanted to make sure that all that stuff was taken care of, instead of taking them at their word,” said Patrick Wright, director of the Mackinac Center Legal Foundation.

In a statement, the MEA called a lawsuit it settled frivolous, adding that it was expensive.

“MEA did not engage in any wrongdoing, which is notable compared to news coverage about bad actors who used PPP loans to enrich themselves,” read the MEA statement.

Joseph G. Lehman, president of the Mackinac Center, hailed the settlement.

“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 in a statement.

Lehman added: “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.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.