The federal government is the largest source of academic research and development funding in the U.S. The National Institutes of Health (NIH) and the National Science Foundation (NSF) provide the largest portions of federal research and development funding to U.S. colleges and universities, followed by the U.S. Department of Defense, U.S. Department of Energy, National Aeronautics Space Administration, and U.S Department of Agriculture. In all, some twenty-six separate federal departments and agencies award more than $120 billion in grants each year to fund basic research, applied research, advanced technology development, and similar projects. State governments also award a variety of grants.
The government has established requirements through statutes, regulations, and guidance documents that universities, colleges, and other research institutions must follow when applying for, administering, and reporting the results of federal research grants. Grant recipients must correctly document personnel expenses and the acquisition of research equipment and supplies, must compile, manage and report on the project’s budget, and must accurately report subaward amounts and recipients. These requirements are intended to ensure transparency and effective use of government funds, while helping to prevent waste, fraud, and abuse.
Common Grant and Research Fraud Schemes
Given the billions and billions of dollars that the government awards in the form of research and other grants, experience has shown that fraud — sometimes significant fraud — can and does occur at universities, colleges, foundations, and other institutions. Common examples of fraud in this area include:
- applications with false information about eligibility.
- false expense reports.
- tainted research results.
- overcharging the government for time or for materials.
- improper conflicts of interest in making subawards.
- spending grant funds on personal or other unauthorized expenses.
Successful Grant and Research Fraud Cases and Awards
A number of the nation’s most prestigious and well-known universities and institutions have been required to make significant repayments to the federal government. In the words of a U.S. Justice Department official: “Individuals and institutions that receive research funding from the federal government must be scrupulous in conducting research for the common good, and rigorous in rooting out fraud.” Successful FCA cases include:
- Providing false information in applications and progress reports: Duke University agreed to pay $112.5 million to settle allegations that it had submitted applications and progress reports that contained falsified information and data. This whistleblower received an award of $33,750,000.
- Mischarging with a higher F&A rate: Columbia University paid $9.5 million for improperly seeking and receiving federal cost reimbursement at the higher “on-campus” rate even though the research was primarily performed at off-campus facilities owned and operated by the State of New York and New York City, not by Columbia.
- Using funds for unauthorized expenses: Northwestern University paid almost $3 million to resolve allegations that one of its physicians submitted claims for reimbursement for professional and consulting services, subcontracts, food, hotels, travel, and other expenses that benefited the physician, his friends, and family. The physician separately paid $475,000 to settle the case.
- Failing to disclose overlapping grants: The University of California agreed to pay $499,700 to resolve allegations that the University of California at Davis submitted a variety of false and misleading statements in connection with obtaining duplicative and overlapping grants from more than one federal agency, causing each agency to award a grant it otherwise would not have.
- Failing to disclose conflicts of interests and using funds for unauthorized expenses: The Milton S. Eisenhower Foundation, a non-profit that specializes in issues involving inner cities and the disadvantaged, and its principal agreed to a settlement worth more than $150,000 to resolve allegations that they improperly used grant funds awarded by the Department of Justice to: (1) rent office space in Dr. Curtis’s home; (2) make subawards to organizations affiliated with the Foundation’s trustees; (3) engage in projects outside the scope of the Foundation’s grant budgets; (4) retain a lobbyist; and, (5) retain a Foundation trustee to provide consulting services.
How to Report Grant and Research Fraud
These are just a few examples of the sorts of cases that can be brought under the False Claims Act. A wide variety of misconduct can constitute fraud in the area of government grants and research. If you believe you have information regarding fraud, please contact us for a free, confidential consultation.