Prestigious Universities and Research Institutions Commit Grant Fraud Too

By Sherrie Savett

Major universities rely on government grant money to supplement their revenues from tuition, endowments, and contributions. Purely research entities which are not full universities and where there is little or no tuition revenue depend even more heavily on government grant money, especially in the area of medical and scientific research. The National Institutes of Health (“NIH”) provides major grant money to such institutions to promote medical and scientific research.

False Time and Effort Reporting

The frauds often occur in the area of “effort reporting”. In applying for and receiving ongoing funding for multi-year grants, the NIH requires accurate reporting of the amount of effort expected to be expended by the principal investigators (“PIs”) and the other researchers on a specific grant.

If a PI exaggerates the amount of time and effort (usually required to be expressed as a percentage of all the PI’s working time) to be spent on an existing awarded grant, the government is being defrauded because it is not getting the benefit of its bargain.

The grant application is evaluated based on many things, but one important element is the amount of the PI’s time that will be spent on the research. If the PI or his top assistants represent, for example, that a 50% effort is to be expended on a particular grant each year over a multi-year period, but in fact only 35% is spent, the government is being defrauded.

False Claims Motivated by Institutions

Most PIs have multiple responsibilities outside of fulfilling the research promised in an awarded or several awarded grants. For example, PIs have teaching and administrative responsibilities and are also urged to, or in some entities required to, write new grant proposals to keep the flow of government money coming into the university or research institution.

The government grant payments may only cover awarded grants and not new grant applications or applications for renewals of existing awarded grants. NIH grants do not cover teaching and administrative time, unless it is directly related to the approved grant.

If an institution puts pressure on its PIs to cover 100% of their salaries (a maximum of approximately $185,000 per year) and also expects such PIs to write and research new grant applications and perform administrative duties, there is a high probability of fraud which violates the False Claims Act (FCA). These false claims are motivated by the institutions.

Compliance functions must be enforced strictly within these universities and research institutions to avoid false effort reporting, which leads to cheating the government out of the crucial research that was the basis for the grant awarded. If the accounting functions and forms within the institution seeking the government grant funds are ambiguous or vague about which time is allocated to the active government grant versus other functions, the institution is likely to be held responsible for FCA violations which involve return of grant money unlawfully obtained, treble damages, and statutory damages of over $11,000 for each false claim.

If you have discovered evidence of fraud committed against the government, you may be entitled to a substantial reward and the legal protections afforded to whistleblowers under state and federal laws. The attorneys at Berger Montague are nationally recognized for their work in Whistleblower/Qui Tam actions. For more information or to schedule your confidential consultation, contact us online or call us at (844) 781-3088.