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July 19 — Columbia University agreed to pay $9.5 million to settle government allegations that it incorrectly billed the NIH for research grant costs, marking the second time in two years that the university has settled such a civil suit ( United States ex rel. John Doe v. Columbia Univ., S.D.N.Y., No. 13-cv-5028, settlement announced 7/14/16 ).
According to filings in the U.S. District Court for the Southern District of New York, the government alleged that, from July 1, 2003, through June 30, 2015, Columbia applied its “on-campus” indirect cost rate—instead of the much lower “off-campus” indirect cost rate—when seeking federal reimbursement for 423 National Institutes of Health grants when the research was primarily performed at off-campus facilities owned and operated by the state of New York and by New York City.
The U.S. District Court for the Southern District of New York approved the settlement July 13 in response to the parties' stipulation and dismissed the litigation. The government announced the settlement the next day. In addition to a payment of $9.5 million, Columbia admitted under the settlement that it applied the incorrect rate and submitted erroneous certified reports to the NIH.
In October 2014, the university settled another case alleging that it billed the NIH for HIV- and AIDS-related grants work that was actually performed for different projects. For that settlement, the university paid the government $9 million (13 MRLR 741, 11/5/14).
A university spokesman told Bloomberg BNA in a July 19 e-mail that Columbia believed in good faith that it was appropriate to apply an “on campus” indirect cost rate to research performed by Columbia faculty in certain buildings owned by the state or city that are located on its medical center campus, and that Columbia openly and consistently disclosed the rate applied to these buildings in its grant applications.
“The government disagreed with the University’s approach and took the position that a lower ‘off campus' indirect cost rate was appropriate. We are pleased to put this dispute behind us and resolve the matter. Columbia looks forward to continuing to work cooperatively with its valued research partners in government,” the spokesman said.
Preet Bharara, the U.S. attorney for the Southern District of New York, said in a statement, “All institutions that receive federal grant money must abide by applicable rules and regulations governing the use of the funds and the extent to which costs incurred by the institution are reimbursable.”
Scott J. Lampert, special agent in charge of the New York Region of the Office of Inspector General for the Department of Health and Human Services, added, ”Money gained by such behavior deprives other research programs of funds that could yield life-altering new treatments. We will continue to work with our law enforcement partners to ensure institutions who engage in wrongful activity are held accountable.”
In connection with the filing of the litigation and settlement, the government joined a private whistle-blower lawsuit that had been filed under seal under the False Claims Act. The suit alleged violations of the FCA, payment by mistake of fact and unjust enrichment.
As alleged in the complaint, a university engaged in federally funded research recovers its indirect costs for a particular research project by applying the relevant facilities and administrative (F&A) rate for the project to a subset of its direct costs it incurred in connection with the project. The HHS and educational institutions negotiate one F&A rate for research primarily performed on-campus and a separate F&A rate for research primarily performed off-campus. The latter is generally lower than the former to account for the fact that when conducting research off-campus, educational institutions don't incur the indirect facilities-related costs that they would otherwise incur if the activities were performed on-campus.
From July 1, 2003, through June 30, 2015, the complaint said, Columbia's on-campus F&A rate was about 61 percent of total costs, while its off-campus F&A rate was 26 percent, and its modified off-campus F&A rate, which is applied to research conducted off-campus but within a certain proximity of the Columbia campus, was 29.4 percent.
According to the complaint, Columbia personnel questioned whether it was appropriate to apply the on-campus F&A rate to the NIH grants based on their understanding that the buildings owned by the New York State Psychiatric Institute and by the City of New York where the research was primarily being performed were off-campus locations.
“Notwithstanding these internal concerns,” the complaint said, “Columbia continued to apply the On-Campus F&A Rate to the NIH Grants and did not reach out to HHS to discuss the propriety of this practice.”
Columbia didn't say on the applications for the NIH grants that the research would be primarily performed off-campus and, instead, frequently included the main address for the College of Physicians & Surgeons in the section of the application that was supposed to list the primary performance location, the government said.
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