Survival of Duke Research Whistle-Blower Case Could Mean More Suits

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Dana A. Elfin

Duke University and two Duke researchers will have to face claims they defrauded the government on NIH research grants ( United States ex rel. Thomas v. Duke Univ. , M.D.N.C., No. 1:17-cv-00276-CCE-JLW, order 4/25/17 ).

Former Duke University employee Joseph M. Thomas sufficiently stated claims against Duke and the researchers, Judge Catherine C. Eagles of the U.S. District Court for the Middle District of North Carolina said in an April 25 order refusing the defendants’ bid to dismiss the suit.

The ruling means the case will proceed and Duke could be on the hook for $600 million as well as civil penalties for each false claim. The medical research community is closely watching the case because a whistle-blower win here could lead to a slew of similar suits being filed against research institutions.

Allegations: Data Were Falsified

Thomas sued the university under the False Claims Act (FCA), alleging former colleague Erin N. Potts-Kant, her supervisor, William Michael Foster, and the university falsified data to obtain more than 60 research grants totaling $200 million in funding from the National Institutes of Health and the Environmental Protection Agency.

The FCA is the primary civil remedy to redress false claims for funds and property under government programs and contracts. Whistle-blowers have increasingly been using the statute to bring research misconduct cases.

Thomas asked that Duke reimburse the U.S. government triple the amount of damages plus civil penalties for each false claim.

Suit’s Potential Impact

The case could have a huge impact on medical research cases if Thomas ultimately prevails.

“A significant victory by the whistle-blower here, although still a long way off, could create publicity and awareness of how other researchers might be able to use the False Claims Act going forward when they have similar allegations of misconduct in federally-funded research,” Callan G. Stein, a defense lawyer with Donoghue Barrett & Singal in Boston, told Bloomberg BNA May 1.

Stein’s litigation practice focuses on white-collar criminal defense, corporate and commercial civil litigation, health-care litigation, professional licensing matters, and research misconduct cases.

Similar Cases Could Follow

“A victory by the whistle-blower in this case may very well encourage more researchers to become so-called whistle-blowers and report perceived misconduct in connection with federal grants,” Stein said.

“Individual whistle-blowers who are successful under the False Claims Act stand to reap significant financial compensation, which could create an obvious financial incentive for researchers to report misconduct, especially if the misconduct is widespread and occurred over a lengthy period of time,” he said.

Meanwhile, even if research institutions win these cases, “significant expense may result during the discovery phase of such lawsuits,” Geoffrey M. Raux with Foley & Lardner LLP in Boston told Bloomberg BNA May 1. Raux’s practice concentrates on complex commercial and health care litigation matters, internal investigations, and government compliance.

Protective Measures Advised

The court’s order refusing to dismiss the case “reinforces the importance of maintaining a strong compliance program aimed at uncovering potential misconduct, and taking a proactive approach, where possible, in disclosing material issues to the government prior to the filing of a whistleblower lawsuit,” Raux added. “Universities looking to protect themselves against cases like this would be wise to take measures aimed at preventing all research misconduct, but in particular widespread fraud like that which is alleged here,” Stein said.

“Universities could also institute stricter procedures for submitting federal grants, provide more robust education concerning the importance of research integrity to both established and new researchers, and possibly even increase the monitoring of its researchers by hiring individuals to examine and supervise research or by incentivizing existing personnel to monitor each other,” he said.

Bloomberg BNA contacted the law firms representing the whistle-blower and Duke but the firms declined to comment on the case.

A pretrial hearing in the case is scheduled for June 21.

Case Transferred From Virginia

The case was originally filed in the U.S. District Court for the Western District of Virginia in 2013, but in 2016, that court granted Duke’s request to transfer the case to the U.S. District Court for the Middle District of North Carolina.

Thomas was represented by Gentry Locke Rakes & Moore, Roanoke, Va., and Brooks Pierce McLendon Humphrey & Leonard in Greensboro, N.C.Duke was represented by Norton Rose Fulbright US LLP, Washington and Woods Rogers PLC in Roanoke, Va.

Potts-Kant’s representation included Parry Tyndall White in Chapel Hill, N.C. Foster’s representation includes Parker Poe Adams & Bernstein LLP in Charlotte, N.C.

To contact the reporter on this story: Dana A. Elfin in Washington at delfin@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

For More Information

The order in the case is at http://src.bna.com/onU.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Health Care on Bloomberg Law