Delta has paid $8.1 million to settle claims that the company violated conditions US Congress placed on federal relief funds provided to the airline under the Payroll Support Program (PSP) during the COVID-19 pandemic.
The PSP was created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide financial support to airlines and other businesses. This money came in the form of grants and low-interest loans issued and administered by the US Treasury Department.
Under the terms of the PSP, companies that accepted federal relief money had to impose compensation caps on highly paid executives.
The US Attorney’s Office of the Northern District of Georgia said an investigation began when a third-party financial researcher filed a whistleblower lawsuit under the False Claims Act. This is referred to as a qui tam suit.
This act is a federal law that imposes civil liability on any person who submits false claims to the federal government or its contractors.
In this case, the whistleblower alleged that Delta violated the terms of the PSP. To obtain PSP funding, businesses were required to limit compensation paid to executives who had earned more than $425,000 in 2019. This condition was imposed by Congress to prevent executives from receiving substantial compensation packages after their companies accepted taxpayer-funded support.
Delta received approximately $11.9bn in PSP funds, including at least $8.2bn in the form of grants that did not have to be repaid. To receive this money, Delta agreed to abide by the CARES Act’s compensation caps until April 2023.
However, the whistleblower alleged that, between March 2020 and April 2023, Delta paid some corporate officers amounts that exceeded the caps set by the agreements. Delta then allegedly falsely certified its compliance with the caps and failed to notify the Treasury Department of its breach of the agreement.
This case was investigated by the US Attorney’s Office for the Northern District of Georgia, the Civil Division’s Commercial Litigation Branch, and the US Department of the Treasury, Office of Inspector General.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Airline Economics has reached out to Delta for comment.