How does the False Claims Act apply to government research grants?
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How the False Claims Act Applies to Government Reseach Grants
The False Claims Act (FCA) is a powerful tool used by the government to combat fraud against taxpayer dollars. It allows both the federal government and whistleblowers to file lawsuits against entities that knowingly submit false claims to get paid by the government. The FCA has become an increasingly common way for the government to go after research institutions like universities and medical centers for grant fraud.
The federal government invests tens of billions of dollars every year into scientific research grants. Nearly every major research university and medical center in the U.S. recieves significant grant funding from federal agencies like the National Institues of Health (NIH), National Science Foundation (NSF), Department of Defense (DoD), and more. With so much taxpayer money going into research grants, it’s essential that recipients follow the rules and spend grant funds properly.
Unfortunatly, some grant recipients cut corners or deliberately commit fraud. Common types of research grant fraud include falsifying data in grant applications or progress reports, double-billing expenses, misspending grant funds for unallowed purposes, and failure to disclose conflicts of interest. While not all violations are intentional, institutions can face major FCA penalties even for reckless disregard of grant requirements.
How the FCA Works
The FCA allows both the federal government and whistleblowers to file lawsuits alleging that an entity or person knowingly submitted false claims to the government in order to get paid. The law includes strong anti-retaliation protections for whistleblowers. Under the FCA, the defendant can be liable for triple damages plus substantial penalties for each false claim. Some major universities have paid hundredss of millions in FCA settlements for grant fraud.
The FCA defines a “claim” very broadly. Courts have held that any request for payment from the government qualifies as a claim, even just submitting a progress report or financial report related to a grant. FCA liability requires that the claim was objectively “false” in some way, and that the defendant knew or deliberately ignored signs that it was false. Negligence or honest mistakes are generally not enough for FCA liability.
Some examples of false claims in the research grant context include:
- Fabricating or falsifying data in a grant application or progress report
- Requesting funding for research that was never actually conducted
- Charging grant accounts for unallowed expenses like lavish travel or unrelated research costs
- Failing to disclose conflicts of interest like outside corporate funding sources
- Deliberately overlooking evidence of research misconduct or improper billing
The FCA allows whistleblowers to file qui tam lawsuits on behalf of the government for FCA violations. The whistleblower can recieve 15-30% of any recovery. The DOJ has authority to take over the lawsuit or decline to pursue it. But declination doesn’t prevent the whistleblower from proceeding on their own.
Major FCA Recoveries for Grant Fraud
In recent years, the government has ramped up FCA enforcement against research institutions for grant-related violations. Here are some major examples:
- Duke University paid $112 million to settle claims that a research technician falsified or fabricated data in dozens of NIH grant applications and progress reports. The misconduct allegedly affected over 60 grants.
- Columbia University paid $9.5 million to resolve allegations that two researchers committed fraud by falsifying data in NIH and DoD grant submissions over nearly a decade.
- Harvard University paid $10 million to settle claims that a professor breached conflict-of-interest rules and submitted false claims on NIH and EPA grants.
- MIT and Brigham and Women’s Hospital paid $10 million related to a research cardiologist who allegedly failed to disclose hundreds of thousands in income from pharmaceutical companies while working on NIH grants.
In addition to big-dollar settlements, the government has also pursued criminal charges against individual researchers. In one high-profile case, a Duke University research technician was sentenced to 5 years in prison for falsifying or fabricating data in applications for federal grants.
Avoiding FCA Liability for Research Grants
The stakes are high for institutions that receive federal research grants. Here are some tips to help avoid FCA liability:
- Provide regular training to researchers and admin staff on proper grants management and compliance with federal rules.
- Implement strong internal controls and oversight for how grants are administered and billed.
- Document grant expenses properly and retain detailed records of how funds are used.
- Develop robust processes to prevent, detect, and correct any improper billing or noncompliance.
- Require researchers to disclose all potential conflicts of interest and outside funding sources.
- Promptly investigate any suspected misconduct or misspending, and report to authorities as appropriate.
Having strong compliance programs and internal controls can help institutions avoid major FCA liability down the road. But whistleblowers also play a critical role by stepping forward when they see signs of deliberate fraud or recklessness. The FCA provides a powerful incentive for insiders to report grant fraud through the qui tam process. With billions in research grants at stake, universities and other institutions need to ensure they are properly safeguarding taxpayer funds.