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How the False Claims Act Helps Fight Fraud in Federal Research Grants

How the False Claims Act Helps Fight Fraud in Federal Research Grants

How the False Claims Act Works

The FCA imposes liability on any person or entity that knowingly submits false claims, makes false records or statements, avoids obligations to pay the government, or conspires with others to violate the law. The U.S. Department of Justice pursues FCA cases involving a wide variety of fraud against the government, from Medicare fraud to defense contractor fraud. Research grant fraud is one specific area of focus.

Under the FCA, whistleblowers can file qui tam lawsuits accusing their employer or other entity of defrauding the government through federal grants. The whistleblower, known as the “relator,” files the case under seal to allow the government time to investigate. If the government decides to intervene, it takes over primary prosecution of the case. Whether the government intervenes or not, the relator can receive 15-30% of the recovered funds as a reward for bringing the fraud to light.

Defendants found liable under the False Claims Act face treble damages – three times the amount of money that the government lost due to the fraud. They also face stiff civil penalties currently set at $11,803 to $23,607 per false claim. With billions in research grants issued every year, these damages and penalties can add up quickly, creating a strong deterrent to grant fraud.

Elements of False Claims in Grant Fraud

Not every minor mistake or internal policy violation involving federal grants will necessarily violate the False Claims Act. However, FCA liability often arises when:

• Researchers make materially false statements in grant applications to obtain funding they aren’t entitled to receive.
• Institutions fail to disclose known violations like data falsification or plagiarism that would undermine the validity of the research and the grant.
• Researchers bill grant programs for time and expenses they didn’t actually incur, like phantom research subjects or equipment purchases.
• Institutions fail to pay back grant funds that they improperly spent or could not properly account for.

The FCA’s knowledge standard is very broad, requiring only that the defendant acted “knowingly” or in “deliberate ignorance” or “reckless disregard” of the truth. So even if an institution did not actively participate in or condone the fraud, it can still face liability for turning a blind eye. This creates incentives for proactive grant compliance and oversight.

Role of Whistleblowers in Exposing Grant Fraud

Whistleblowers have played a crucial role in uncovering grant fraud, whether they are individual researchers, university employees, or even competitors in the scientific community. Under the False Claims Act’s qui tam provisions, whistleblowers can report fraud and misuse of federal funds while retaining their anonymity. They are also protected from retaliation under the FCA and other laws.

Some whistleblowers are motivated by outrage at seeing public money wasted or concern for research integrity. Others may come forward after their own careers have been derailed by an institution’s efforts to cover up research misconduct. Regardless of their reasons, whistleblower cases have exposed numerous instances of grant fraud that may otherwise have gone undetected for years.

For example, whistleblower Paul Feldman, a medical doctor, brought qui tam cases against two prominent HIV/AIDS researchers who manipulated data, embezzled grant funds, and committed other acts of fraud. These cases resulted in settlements of $19 million from Cornell University and $14 million from Columbia University. [5] Such outcomes show the power of whistleblowers to hold institutions accountable when internal compliance systems break down.

Grant Fraud Prevention and Compliance

The threat of False Claims Act liability has spurred many universities and research institutions to strengthen their compliance programs relating to federal grants. Robust compliance includes clear policies, training for personnel, diligent oversight of research billing and expenditures, thorough investigation of suspected violations, and protection for whistleblowers who come forward.

Some institutions have appointed specialized research compliance officers to develop and enforce standards across numerous departments and grants. Clear communication about prohibited practices and the consequences helps prevent problems. Prompt follow-up on suspected irregularities also minimizes potential False Claims Act exposure.

In addition, the federal government has stepped up oversight and auditing of grant expenditures. Stricter scrutiny makes it more likely that False Claims Act cases will be detected and prosecuted. But increased transparency also allows grant recipients to identify and address issues before they become FCA violations.