United States: Whistleblowers On Campus: DOJ Adds Research Universities To Its False Claims Act Focus

Last Updated: December 15 2016
Article by Kevin P. McCoy, John E. Clabby, Joseph W. Swanson and Erin J. Hoyle

Federal funding is the grand prize for higher education research institutions. Each year, the federal government pumps hundreds of millions of dollars in research grants and awards into the university system. These funds are intended to help cure disease, develop technology, and advance the public good.

They also attract the unscrupulous. While hard figures are difficult to obtain, publicly-announced settlements have demonstrated that whistleblower claims put hundreds of millions of university dollars at risk. Whistleblowers, whether right or wrong, seek their own cut of any award the government wins, and any penalties it imposes when clawing back fraudulent monies. The claims center on improprieties in the applications for the grant money and misuse after it is received. As discussed below, recent cases have awarded staggering amounts.

False Claims Act Overview

The False Claims Act, 31 U.S.C. §§ 3729-33, (FCA) prohibits the submission of false or fraudulent claims to the government. The statute imposes civil liability for knowingly (1) submitting a false or fraudulent claim for payment; (2) causing such a claim to be submitted for payment; (3) making, using, or causing to make or use a false record or statement material to a false or fraudulent claim; (4) conspiring to get such a claim paid or approved; or (5) making a false record or statement to conceal or avoid an obligation to pay money to the government.

The FCA allows an individual, known as a "relator," to bring a civil action on behalf of the United States under the Act's whistleblower, or qui tam, provisions. A relator files the complaint under seal in a federal district court and serves the government with a copy of the complaint, as well as a written statement of all material evidence supporting the allegations. The complaint may remain sealed for 60 days while the government investigates the allegations. This seal is frequently extended for months or years before the case proceeds.

Prior to unsealing the complaint, the government notifies the relator and the court of whether it will become formally involved, or "intervene," in the case. If the government intervenes, the relator generally receives 15 to 25 percent of the government's recovery in the event of settlement or judgment in favor of the United States. If the government declines to intervene, the relator may independently proceed with the action and may receive 25 to 30 percent of any recovery. In addition, the relator is entitled to a separate award for reasonable attorney's fees and costs.

Recent Cases

FCA cases related to health care and defense contractor fraud commonly make news. The caselaw in these two areas is widely developed, and the Department of Justice (DOJ) has well-trained teams that police the public treasury. Meanwhile, research-university false claims are emerging as an area of interest for the DOJ, which is still finding its voice and mission on the FCA. These universities should understand the risk posed by this growing area of the law.

Recent cases involve two general categories of claims: university liability based on a false certification of compliance with the applicable rules and restrictions placed on receiving taxpayer money; and misuse of federal funds.

1. False certification claims.

Education Management Corp. – In 2015, the DOJ announced a $95.5 million settlement with EMC over allegations that it falsely certified compliance with Title IX of the Higher Education Act and related state statutes. The government claimed EMC pressured admissions personnel to violate the law by unlawfully compensating them based on the number of students they enrolled in the nationwide system of post-secondary schools operating under the EMC brand. Those schools included Art Institutes, South University, Argosy University and Brown-Mackie College. At its peak, EMC's system-wide enrollment surpassed 100,000. The government claimed EMC engaged in false certification as part of its effort to boost its main source of revenue — federal and state student aid dollars awarded to the school.

Phoenix University – Similarly, a 2009 whistleblower action resulted in a $78.5 million settlement with Phoenix University to resolve FCA claims based on allegations that the university had provided false certifications of compliance with the Higher Education Act. Here again, the alleged motivation centered on financial incentives given to recruiters to drive up university enrollment.

2. Misuse of government funds.

Duke University – In 2013, the university became the focus of government scrutiny after learning that a research professor had falsified research data as part of federally-funded studies. The whistleblower in the case, a former research colleague of the professor, brought the claims alleging that the university had been confronted with red flags concerning the integrity of the research results, but took no action to correct the situation. All the while, the whistleblower claims, research dollars surpassing $80 million continued to flow in. The university denies the claims and contends that it did not understand the scope of the professor's misconduct. When it did learn of the claims, it took corrective action, and provided its own notice to the government. Litigation continues. Regardless of the outcome, the university's efforts to investigate and defend these claims will be costly.

University of Florida – In 2015, the DOJ announced a $19.875 million settlement with the University of Florida following claims that the university improperly charged the U.S. Department of Health and Human Services for salary and administrative costs on federal grants. The claims centered on the process used to pay for university equipment and personnel, and whether the use of federal dollars for such expenses complied with grant purposes.

Compliance and Response

Maintaining a culture of compliance is key to minimizing FCA exposure. Effective compliance efforts may (1) reduce activity that could potentially be alleged in an FCA suit; and (2) hinder a relator's ability to prove the FCA's knowledge requirement. Effective compliance policies and procedures include processes that assist in the discovery, investigation, and remediation of improper activity. Upon discovery of a potential FCA violation, time is critical in responding to the issue and marshalling the facts so a complete investigation can be done and remedial actions taken. Additional compliance efforts include offering regular compliance training at all levels of the university, as well as instituting compliance audits and tracking the representations made to the government through certification statements. Finally, having a well-documented whistleblower policy, and a neutral, independent reporting line for investigations into such complaints can catch problems as they occur, rather than when federal investigators are at the door. Such a policy can also help insulate a university from the worst penalties and consequences of such false claims.


Federal awards to universities are critical to funding their missions. These mission-critical dollars, however, often come with many strings attached. The FCA is, and will remain, one of the government's most powerful tools for enforcing the myriad rules and regulations imposed on those who accept government funding. A robust compliance program that tracks certification and compliance, and plans for a response in the wake of an FCA violation, is critical for any university that accepts government dollars.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions