Reflecting on Higher Education Compliance and Investigations Trends in 2023 and Looking Ahead to 2024

Foley Hoag LLP - White Collar Law & Investigations

This is the fifth in our 2024 Year in Preview series examining important trends in white collar law and investigations in the coming year. We will be posting further installments in the series throughout the next several weeks. Our previous post, "SEC to Continue Aggressive Enforcement Efforts in 2024 After Record-Setting 2023," can be found here.

2023 was a contentious year for higher education institutions. Whistleblowers, activists and other interested third parties doggedly pursued alleged research misconduct affecting renowned scholars and consequential studies. The federal government continued its use of sanctions and export controls as foreign policy tools, increasing the compliance complexity for research universities. Colleges were caught in the crosshairs of political activism regarding Israel and Palestine, called to defend their commitment to free speech and academic freedom while balancing the responsibility to maintain school environments free from antisemitism and Islamophobia, resulting in investigations from all sides. And several major universities confronted antitrust allegations, challenging some schools’ financial aid practices. 

As they tackled a slew of challenges on multiple fronts, all the while facing national spotlight, higher education and research institutions faced the overarching, and perhaps existential, quest to regain trust among diverse groups in our society. 

Against this backdrop, we take a moment to take stock of major issues impacting colleges, universities, and other leading research institutions. We also look ahead, anticipating the next tide of challenges to come in 2024. 

Research Misconduct Will Remain Under a Microscope
In 2023, allegations of data manipulation and plagiarism reverberated throughout academic communities across the country and, at times, made headlines that extended beyond research campuses and into broader society. We first highlight some cases regarding data manipulation, followed by a discussion of a growing trend in the use of AI to detect potential plagiarism. 

Whistleblowers, activists and other interested parties continue to raise claims of data manipulation, plagiarism or other research misconduct.
This past year saw a wide variety of cases alleging data manipulation. The allegations cut across a variety of research topics, ranging from an experimental drug for stroke patients to a behavioral-economics study on honesty. The parties raising the allegations also varied widely, and included not only peers within the same academic community, but also former lab members, so-called “watchdog” blog sites, and an undergraduate student journalist. Because such research is often inextricably intertwined with government grants or private funding that ties back to the potential commercialization of highly valuable products (e.g., cutting-edge drugs), bounties under the federal False Claims Act and stock market profiteering provide considerable financial incentives to surface allegations of misconduct. 

For example, Berislav Zlokovic, University of Southern California (“USC”) Chair and Professor of Physiology and Neuroscience, faced scrutiny after a group of whistleblowers, including Matthew Schrag, a Vanderbilt assistant professor and Elisabeth Bik, a Dutch microbiologist, alleged Zlokovic used fraudulent data to promote an experimental drug developed to limit brain damage after strokes. 

Schrag and Bik submitted a 113-page dossier to the National Institutes of Health (“NIH”) that pointed to evidence of alleged image manipulation, where some cells were supposedly erased and nuclei of others was obscured. Former members of Zlokovic’s lab also reported a culture of professional intimidation, claiming Zlokovic instructed his team to alter entries in lab notebooks.

In response, on November 16, 2023, NIH launched an investigation and paused the start of a $30 million trial for the experimental drug. USC also opened an internal investigation on Zlokovic. Because federal grant funds are allegedly involved, it is reported that some of the whistleblowers may file a federal False Claims Act lawsuit that could give them a portion of NIH funds that the government claws back if Zlokovic’s work is proven to be the product of fraud. 

In another case, the blog Data Colada raised questions regarding the research of Duke Professor of Psychology and Behavioral Economics Dan Ariely. In 2021, Ariely and his co-researchers released a study suggesting that people were less likely to lie on a form if they signed an honesty pledge at the top rather than the bottom. After other researchers reported they were unable to replicate the study, Data Colada investigated the study’s data and claimed it found certain anomalies, such as suspiciously “uniform” data points. 

In response, Duke conducted a full investigation, increased its oversight on Ariely’s Center for Advanced Hindsight, and required Ariely to participate in an eight-week course on professionalism and integrity. 

And in one of the most high-profile cases, an eighteen-year-old student journalist published allegations of research misconduct against Stanford University President Marc Tessier-Lavigne. A university investigation found an “unusual frequency of manipulation of research data and/or substandard scientific practices” by junior researchers in Tessier-Lavigne’s labs and concluded that Tessier-Lavigne “failed to decisively and forthrightly correct mistakes in the scientific record,” though the investigation also found that Tessier-Lavigne himself had not engaged in research misconduct. Following these allegations and investigation, Tessier-Lavigne stepped down as president of Stanford.

As a fallout from these investigations and others in the past year, federal funding agencies are viewing research studies past, present, and future with increased skepticism and heightened scrutiny. As 2024 makes its way, we expect a rising probe into academic research across all disciplines from federal agencies and whistleblowers from all backgrounds, and an increased appetite to ferret out potential data manipulation. 

AI is increasingly used to identify potential plagiarism. 
The past year also surfaced a notable trend relating to AI that we foresee influencing how individuals attempt to detect potential plagiarism in 2024. 

For example, Bik, an image-forensics specialist and one of the researchers who raised concerns with Zlokovic’s work, reportedly uses an AI-based software called ImageTwin, which is said to scan images in a paper and then compare them with other images. The ubiquitous nature of these types of technologies will undoubtedly lead to more allegations and the need for more investigations. 

Research Institutions Likely to Confront Complex Cross-Border Compliance Issues 
Cross-border compliance issues continue to increase in complexity and scope. Russia’s invasion of Ukraine moves into its third year, Iran continues to assist Russia’s war effort and support U.S.-designated terrorist organizations in the Middle East, and national security and economic issues with China grow ever more complex. As the U.S. and other western nations expand their efforts to use sanctions and export controls as foreign policy tools, the compliance landscape involving Russia, China, and Iran (as well as other countries) continues to evolve dramatically, increasing the compliance complexity for research universities and other higher education institutions. 

In addition, early in 2023 the federal government launched the Disruptive Technology Strike Force as a way of reinvigorating investigation and compliance efforts in the wake of the discredited “China Initiative.” The Strike Force represents a collaboration between the Department of Justice and the Department of Commerce, who describe the initiative as part of a “whole-of-government approach” to targeting illicit actors, strengthening supply chains, and protecting critical technologies from being acquired or used by nation-state adversaries such as China, Russia, Iran, and North Korea. One of the Strike Force’s stated goals is to foster partnerships with the private sector in protecting U.S. advanced technologies from illegal acquisition and use by nation-state adversaries. The Strike Force is focused on technologies that could advance military capabilities or mass surveillance programs that enable human rights abuses, including, for example, those related to supercomputing and exascale computing, artificial intelligence, advanced manufacturing equipment and materials, quantum computing, and biosciences. We expect Strike Forces around the country to continue to reach out to a wide range of private sector actors, including research universities and labs, to gain a better understanding of the landscape and to target enforcement activities more effectively. 

Colleges Will Continue to Face Tensions Among Title VI, Free Speech, and Academic Freedom Claims 
The ongoing Israel-Palestine conflict presents uniquely challenging enforcement issues for universities. Contrasted with other moments of increased activism and student or faculty-led protests on campus, both groups here are protected classes entitled to Title VI’s guarantees of an educational environment free from discrimination and harassment. Higher education institutions have an obligation to ensure that students are not subject to disparate treatment or a hostile environment based on their real or perceived identities as Jewish, Muslim, Israeli, Palestinian, or Arab, all the while balancing an increased focus on academic freedom and the importance of free speech rights on campus. The result is an environment that can often feel almost impossible to navigate without the institution being on the receiving end of a complaint, lawsuit, or reputational scrutiny.

Department of Education’s Office for Civil Rights expected to continue seeing an increase in Title VI complaints. 
In the months since Hamas’ attack on Israel on October 7, 2023 and the ongoing war in Gaza, the Department of Education’s Office for Civil Rights (“OCR”) has received a downpour of Title VI complaints related to the law’s protections for students based on real or perceived shared ancestry or ethnic characteristics. The Department of Education is investigating more than three dozen colleges regarding complaints that the institutions allegedly failed to properly address instances of antisemitism or Islamophobia. 

In response to the surge in Title VI complaints and general reports of bias-motivated incidents on campuses, OCR released a Dear Colleague Letter on November 7, 2023. In this Dear Colleague Letter, OCR expressed an “alarming rise in disturbing antisemitic incidents and threats to Jewish, Israeli, Muslim, Arab, and Palestinian students on college campuses” and reminded education institutions of their “legal responsibility under Title VI of the Civil Rights Act of 1964 . . . to provide all students a school environment free from discrimination based on race, color, or national origin, including shared ancestry or ethnic characteristics.” 

There are no signs that tensions on campuses will quell in 2024. In fact, on January 22, 2024 advocacy groups Louis D. Brandeis Center for Human Rights Under Law and Jewish on Campus filed a complaint with OCR against American University. Alleging Title VI violations, the complaint contains witness statements from twelve anonymous American University students who were allegedly “threatened, marginalized, shunned, and made to feel unwelcome in their dormitories, classrooms, and social spaces throughout the campus.” 

Just seven days later, another advocacy group filed a complaint with OCR. This time, the Muslim Legal Fund of America (“MLFA”) filed a complaint with OCR on behalf of a dozen Harvard students. MLFA’s complaint demanded an immediate investigation into Harvard’s alleged failure to protect these students from harassment, intimidation, and threats based on their identities as Palestinian, Arab, Muslim, and supporters of Palestinian rights. 

Students are raising Title VI claims in court. 
In addition to filing complaints with OCR, students are also suing universities in federal courts. For example, two current students sued the University of Pennsylvania on December 5, 2023 under Title VI for allegedly “subject[ing] [Jewish students] to a pervasively hostile educational environment” and “plac[ing] plaintiffs and other Jewish and Israeli students at severe emotional and physical risk.” In November 2023, students also sued the University of California Berkeley and New York University for alleged violations of Title VI based on antisemitism following the October 7 attack. A former student sued Carnegie Mellon University under Title VI on December 13, 2023 based on antisemitism, although her factual allegations do not stem from the October 7 attack. 

Students are defending their First Amendment right to advocate on campuses. 
In one very high-profile case, a pro-Palestine student group filed for declaratory and injunctive relief against Florida Governor Ron DeSantis and other state officials, including the Chancellor of the State University System of Florida, Raymond Rodrigues, and members of the Florida Board of Governors of the State University System. See Students for Justice in Palestine at the University of Florida v. Rodrigues et al., 1:23-cv-00275. According to the complaint, Rodrigues released a memorandum, in consultation with DeSantis, calling on colleges in Florida’s state university system to “deactivate” their Students for Justice in Palestine chapters. 

Raising a First Amendment challenge, the pro-Palestine student group argued that Rodrigues’ memorandum violates the First Amendment’s protections against viewpoint-based restrictions on speech and association. The student group also argued that Rodrigues’ charge to “deactivate” pro-Palestine student groups stifles “pro-Palestinian advocacy on campus at a time when the Palestine-Israel conflict is a matter of vital public discourse and concern.” 

Just last month, the Florida court denied the request for preliminary injunction, finding that the student group lacked standing because it failed to demonstrate a substantial likelihood of establishing an injury-in-fact. The court based this decision on the determination that neither DeSantis, Rodrigues, nor the Board of Governors have the authority to punish student organizations. Instead, the Boards of Trustees of its constituent universities have such authority, but the record lacked any evidence that the Boards of Trustees had taken any steps to “deactivate” the student group. In February, the Court dismissed the complaint against all defendants. 

Professors are raising concerns around academic freedom. 
Adding to rising tensions on campus, professors have also raised academic freedom challenges, surfacing concerns about colleges’ restrictions on political speech. For example, the Department of Women’s, Gender and Sexuality Studies at Barnard College posted a statement on its departmental website titled “Solidarity with Palestine.” Two days later, Barnard administrators removed the statement from the departmental website and subsequently updated the College’s political activity policy. In response, the New York Civil Liberties Union (“NYCLU”) sent a letter to Barnard College President Laura Rosenbury, raising free speech and academic freedom concerns. While faculty members, with the help of the NYCLU, are working with the College to see if it is possible to republish a similar statement on the College’s website that comports with the new political activity policy, it remains to be seen whether a compromise can be reached, and if so, whether other interested parties will raise challenges to any statement that results from such a resolution. 

As the Israel-Palestine conflict continues and devastation, fears, and anxieties continue to mount, colleges will have to be particularly careful and nimble about ensuring all members of their community experience not only an environment free from discrimination and harassment, but also an environment that maintains and safeguards spirited dialogue for all viewpoints represented within their community. 

But what about Students for Fair Admissions?
In one of the most monumental cases from the past year, the Supreme Court held in SFFA v. Harvard College and SFFA v. University of North Carolina that Harvard and University of North Carolina’s admission policies violated the Equal Protection Clause of the Fourteenth Amendment (in UNC’s case) and Title VI (in Harvard’s case). Zeroing in on Justice Gorsuch’s concurrent opinion, where he drew the connection between Title VI and Title VII, opponents of affirmative action began immediately challenging diversity, equity, and inclusion (“DEI”) policies in the employment context. For example, Attorney Generals of thirteen states issued a cease-and-desist letter to Fortune 100 CEOs, alleging “racial discrimination is commonplace among Fortune 100 companies and others” and advocacy group America First Legal filed dozens of letters with the Equal Employment Opportunity Commission, alleging that companies are implementing discriminatory DEI policies in violation of Title VII.

While the immediate aftermath of SFFA has largely focused on corporate America’s DEI programs, we expect the focus will return to higher education institutions, especially once results of the first post-SFFA admissions cycle are released. 

Universities will also have to brace for discrimination claims that extend beyond admissions practices, as litigants are poised to launch claims against universities with programs and scholarships for underrepresented and disadvantaged students. For example, in November 2023, another advocacy group known as the Equal Protection Project (“EPP”) filed a complaint against the University of Colorado (“CU”) in Boulder and Denver with OCR. Specifically, EPP alleges that the CU-Boulder and CU-Denver violate the Equal Protection Clause and Title VI by participating in the McNair Scholarship Program, a federal program for students from underrepresented groups. More complaints like EPP’s are expected to come in 2024.

Other universities may face increased pressure to settle in antitrust lawsuits. 
Back in 2022, former students filed an antitrust lawsuit against seventeen private universities (the “Universities”). See Henry et al v. Brown University et al., 1:22-cv-125. Plaintiffs claimed that the Universities purportedly colluded on financial aid awards by allegedly sharing confidential data about financial aid and admissions and agreeing on a methodology to determine students’ financial aid. Plaintiffs further claimed that, as a result of the alleged conduct, Universities reduced the amount of financial aid to about 200,000 financial-aid recipients and “artificially inflated the net price of attendance for students receiving financial aid.” 

Plaintiffs claimed that the Universities were not entitled to an antitrust exemption because this exemption applies to agreements between universities in which all students are admitted on a need-blind basis. According to plaintiffs’ claims, the Universities considered prospective students’ financial circumstances when deciding whether to admit students. 

Plaintiffs sought compensation for themselves and a class of U.S. citizens or permanent residents who enrolled in the Universities’ full-time undergraduate programs, received need-based financial aid, paid for tuition, room, and board not fully covered by financial aid, and first enrolled in one of the Universities’ full-time undergraduate programs at the time the Universities respectively implemented the purported agreed-upon methodology. Plaintiffs alleged most of the Universities implemented the methodology in 2003, while other Universities allegedly implemented it later, in 2004, 2019, and 2021, respectively. The class also included parents, legal guardians, and other family members who paid the Universities on behalf of students. 

On July 7, 2022, the Antitrust Division of the Department of Justice (“DOJ”) filed a Statement of Interest, contending that plaintiffs “adequately alleged” that the Universities’ purported agreement on a common methodology violated the Sherman Act. The DOJ also contended that the Universities’ argument that the antitrust exemption protects those who lack actual knowledge that other member schools are not need-blind “stretches” the exemption “beyond its extent” and “superimposes an intent requirement on the application of the [e]xemption.” About a month later, the Court denied the Universities’ motion to dismiss.

Since then, settlement agreement negotiations have been underway. On April 19, 2023, the University of Chicago was the first to announce its decision to settle and agreed to pay $13.5 million to class members. As part of the settlement agreement, the University of Chicago agreed to cooperate with plaintiffs on certain discovery matters by providing documents and facilitating witness interviews which may help plaintiffs’ case against other Universities. 

At the start of the new year, several other universities followed suit, with Brown, Columbia, Duke, Emory, and Yale agreeing to a combined settlement payment of $104.5 million. On February 23, 2024, Dartmouth, Northwestern, Rice, and Vanderbilt reached settlements totaling $166 million. With seven Universities remaining in the lawsuit, we expect more settlement negotiations as the year progresses. 

As we wait for more potential settlements, we take a moment to recognize the lesson that this antitrust case teaches: While the nature of higher education is inherently collegial, there is a limit to the level of collaborative decision-making and coalition-building that is permissible among universities without running afoul of antitrust laws. Moving forward, schools should take care to ensure they are not improperly overextending their collaboration and coordination. This applies not only to issues like financial aid and admissions practices, but also potentially to other issues including athletics, hiring, and institutional policies and practices.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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