United States: Research Misconduct: New Enforcement Actions and Developments

Originally published August 31, 2005

On May 27, 2005, Reed Smith issued a client memorandum discussing the federal government’s recent focus on the area of research fraud, and predicting increased investigative and enforcement activity in this area.1 Since then, there have been several important developments: the journal Nature reported that one-third of surveyed scientists admitted to "misbehavior" in the last three years; the federal government announced that the Mayo Clinic will pay $6.5 million to resolve allegations of research grant fraud; Cornell University’s medical school agreed to pay $4.4 million to settle charges of research grant fraud; and the United States Attorney for Massachusetts announced that he has charged a clinical study coordinator with fraud for falsifying follow-up calls during a pharmaceutical company’s clinical trial. This memorandum discusses these recent events and their implications for those who receive federal research dollars.

i. Journal Finding: Prevalence Of Research Fraud Is Considerable

The June 9, 2005 issue of Nature reported on a survey of several thousand early- and mid-career researchers who have received funding from the National Institutes of Health (NIH). More than onethird of those surveyed admitted to committing some form of research misconduct. Meredith Wadman, One in Three Scientists Confesses to Having Sinned, 435 Nature 718 (2005); Brian C. Martinson et al. Commentary: Scientists Behaving Badly, 435 Nature 737 (2005). While less than 1.5% reported plagiarism or falsification, the journal noted that 15.5% had "changed the design, methodology or results of a study in response to pressure from a funding source; 12.5% admitted overlooking others’ use of flawed data; and 7.6% said they had circumvented minor aspects of requirements regarding the use of human subjects." Id. Although not all of these actions necessarily meet the federal government’s definition of fraud ("fabrication, falsification or plagiarism"), see 42 C.F.R. § 93.103, they are indicative of the potential for liability among recipients of federal research grants. Moreover, the survey will likely further pique the government’s interest in this emerging area of enforcement.

ii. Mayo Foundation Pays $6.5 Million To Settle Grant Fraud Charges

The Department of Justice (DOJ) announced in late May that the Mayo Foundation (Foundation), the parent organization of the Mayo Clinic, paid the United States $6.5 million to "resolve allegations that it charged the government under federal grants for research costs unrelated to the research projects sponsored by those grants." Press Release, U.S. Department of Justice, Parent Organization of Mayo Clinic Pays U.S. $6.5 Million to Settle Grant Fraud Investigation (May 26, 2005). See also United States ex rel. Long v. Mayo Foundation, D. Minn., No. CV02-522-ADM/SRN settlement announced May 26, 2005. The charges and settlement were based on the hundreds of grants the Mayo Clinic receives each year from NIH and other federal agencies. DOJ and a whistleblower (an accounting executive who received $1.3 million from the settlement) had accused the Foundation of applying funds from grants in which the project was under-budget to projects that had run over-budget. As a result, the Foundation allegedly received more money from the government than the amount to which it was entitled. DOJ further noted that "The government’s investigation showed not only improperly transferred expenses, but also that Mayo had an accounting system unable to monitor and manage charges made to federal grant awards in the manner required by federal law." Press Release, U.S. Department of Justice, May 26, 2005. These allegations signify that the government is not only interested in outright fraud, but – as with health care providers – in organizations’ systems of internal checks and audits and overall approaches to compliance.

iii. Cornell University’s Weill Medical College Settles Fraud Charges For $4.3 Million

In a case similar to that of the Mayo Clinic, Cornell University paid over $4.3 million to the government to resolve allegations of research fraud. A professor in the university’s school of medicine accused her superiors of using funds from a $23 million NIH grant to pay the salaries of nurses who also treated non-research patients in New York-Presbyterian Hospital’s pediatric wing. United States v. Weill Medical College of Cornell University, S.D.N.Y., No. 03-6761, settlement approved June 21, 2005. The professor also accused the hospital and the school of listing in its grant application "phantom nurses" who supposedly were employed by the hospital. Id. Finally, the professor’s qui tam lawsuit accused the university of deliberately misstating the number of hospital days research subjects would require and improperly concentrating control of NIH grants in a few members of the faculty. Id.

Cornell’s settlement is particularly noteworthy because one of the central accusations – shifting study funds to cover other hospital operations when the study’s expenses are under budget – is thought to occur routinely. Indeed, the Mayo Clinic faced similar charges, and Brian Martinson, one of the authors of the Nature article discussed above, noted that scientists frequently re-allocate funds from over-funded to under-funded projects. Molly Lass, Cornell University Pays $4.3 Million Settlement for Grant Fraud Allegations, 17 Health News Daily, August 19, 2005. This practice reportedly is viewed by many as proper because it ensures efficient use of limited resources, without causing harm to any individual or project. Id. Thus, for example, nurses hired for a research project who have extra time may be sent to other areas of the hospital requiring extra assistance. Martinson speculates that few institutions, if any, actually return excess grant funds to the government as required. Id.

iv. Study Coordinator Accused Of False Statements

The Food and Drug Administration (FDA) and the United States Attorney for Massachusetts charged Anne Butkovitz, a clinical study coordinator, with making false statements regarding follow-up safety calls to human subjects enrolled in a recent study. Press Release, U.S. Department of Justice, Clinical Study Coordinator for Pediatric Drug Charged with Fraud (May 25, 2005). According to the Information (the charging document), the researcher was responsible for contacting the parents of children taking an experimental vaccine to inquire about "serious adverse experiences" (SAEs). Information, United States v. Butkovitz, Case No. 05-CR-10128-DPW (D. Ma.) The government alleged that the coordinator never made these contacts but instead falsified records to indicate that contact had been made and that no SAEs had been reported. Id. The U.S. Attorney reported that if Ms. Butkovitz is convicted, she could be imprisoned for five years, serve three years of supervised release, and pay a $250,000 fine. Press Release, U.S. Department of Justice, May 25, 2005.

v. Conclusion

These developments concern three distinct but related areas of research misconduct – Butkovitz was accused of outright fabrication, the Mayo Clinic and Cornell University settled cases alleging improper accounting of research funds, and the Nature study inquired about areas of ethical doubt that may or may not reach the level of a federal crime but are nevertheless alarming given their prevalence. Occurring within weeks of each other and within months of the University of Alabama settling a research fraud case, the University of Vermont settling a research fraud case, and the Department of Health and Human Services publishing new research misconduct rules (all discussed in our earlier memorandum), the emerging trend is clear. The government, whistleblowers, and the media alike are taking a new and robust interest in research fraud. Rules will be interpreted broadly, and investigations will be conducted aggressively.

In light of these events and the apparent prevalence of ethically questionable activities, institutions that receive federal grants or require federal approval to conduct medical research should take steps to evaluate their internal monitoring and training systems. Furthermore, policies should be carefully reviewed to determine whether any seemingly routine practices could lead to charges of research misconduct; audit procedures should be evaluated to ensure they are rigorous enough to identify individual misconduct; and employees should be trained in appropriate compliance measures. One seemingly innocent policy or one unethical employee can expose the entire company, university, or organization to civil and criminal charges.


1 The memorandum is available on the internet at http://www.reedsmith.com/library/publicationView.cfm?itemid=98672.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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