Update Your Compliance Programs to Address Increased Federal Scrutiny of Academic Research and Grant Funding

by Holland & Knight LLP

The federal government has stepped-up its enforcement efforts in the areas of academic research and grant funding. Just this week, Northwestern University agreed to pay $2.93 million to settle a federal whistleblower suit charging that one of its former researchers misused funds from a cancer research grant from the National Institutes of Health (NIH). In light of this increased government scrutiny, educational institutions are well-advised to respond by updating their compliance programs. The U.S. Department of Justice and its law enforcement partners, such as the Health and Human Services (HHS) Office of Inspector General and the National Science Foundation (NSF) Office of Inspector General, have been cracking down hard on research fraud and the mishandling of federal and private funds by research institutions. This enforcement initiative is fueled by shrinking grants, increased resources for investigation and prosecution, and a few notable government successes. In combination, these forces pressure educational institutions to ensure legal compliance.

This alert briefly explains the federal government's recent enforcement efforts, how those efforts impact higher education, and what institutions can do to maximize compliance and minimize risk.

Increasingly Competitive Landscape

More researchers today are competing for a declining pool of federal research dollars. For example, the NIH will seek to make average awards at fiscal year 2011 levels or lower and the NSF funds only about a quarter of the proposals submitted. The scarcity of research dollars, combined with the continuing need for faculty and researchers to obtain sustaining grant funds, provides strong incentives for fraudulent and unfair conduct in academic research.

What Is the Government Doing?

The advent of additional agency resources, growing use of whistleblower suits, and prosecutors' growing interest in research fraud has led to an unprecedented level of enforcement activity in the last few years. In the past three years in Massachusetts alone, there has been a criminal conviction of a doctor for falsifying research based on private grants, a criminal conviction of professor for falsifying information on an NIH grant application and an administrative sanction of another professor for publishing articles with false data paid for by federal grants. The federal Office of Research Integrity (ORI) has reported ever increasing numbers of administrative enforcement actions based on findings of research misconduct. (See the ORI case summaries Web page.)

What Issues Are Attracting Government Scrutiny?

There are four primary areas of concern that the federal government is focusing on:

  1. embezzlement/theft of federal research dollars
  2. false statements in connection with obtaining or maintaining federal research dollars
  3. false claims/bills for payment
  4. mismanagement of federal funds

Misconduct in these areas can include criminal activity — such as stealing grant funds for personal use, to unintentional wrongdoing, such as an accounting mistake meriting no government action.

What Forms of Government Contact Raise Compliance/Enforcement Risk?

Most enforcement actions with respect to academic research/grant fraud have started at the agency level, typically the Office of Inspector General of HHS, NSF, or another federal agency. Some of these investigations are spawned by routine audits, while others result from complaints to the agencies. These agencies now possess a greater range and depth of personnel and capabilities to address complicated fraud claims. Consequently, institutions under investigation should not assume that the government will be unable to deal effectively with complex science or accounting data.

What Are the Current Hot Button Issues for the Government?

The prevailing hot topic for government enforcement in the research/grant fraud area appears to be Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants. Most relevant to the higher education community are the STTR grants because this program creates funding for joint venture opportunities between small businesses and nonprofit research institutions.

A recent example of government enforcement of STTR grants is the prosecution of a professor at Morgan State University in Maryland who was charged with fraud in connection with obtaining $200,000 in grant funds from the NSF's STTR program. This criminal case is pending in federal court in Baltimore and represents a joint effort between the U.S. Attorney's Office in Maryland and NSF's Office of Inspector General. Manoj Kumar Jha was a full time professor at Morgan State University. On behalf of a business that he owned, he submitted a proposal to STTR for enhancing certain models used by highway planners to optimize routes. According to the indictment, Jha represented that he would take leave from his professorship to perform work on this project and that he would use the funds in furtherance of the project. The indictment charges that Jha stayed on full time at Morgan State, misrepresented his contribution to the project and used the funds for personal items, including mortgage and credit card payments.   

In This Enforcement Landscape, What Steps Should a Research Institution Take?

Up-front investments in compliance programs, and routine upkeep through audit and monitoring, will yield returns in reducing the risk and impact of government inquiry. For many reasons, including cost and control, it is preferable to invest in a voluntary compliance program than to have one mandated by the government as part of the resolution of a government investigation.

While there is no one-size-fits-all program for effective compliance, there are certain features that effective programs share. The best programs have clear and sensible written policies and a culture in which compliance is an ongoing team effort. Of paramount importance is how the program is audited and monitored, as well as how the organization responds to issues or problems that are detected by the auditing and monitoring.

The U.S. Attorney's Manual Comment at §9-28.800 on Corporate Compliance Programs offers some useful guidance:

While the Department recognizes that no compliance program can ever prevent all criminal activity by a corporation's employees, the critical factors in evaluating any program are whether the program is adequately designed for maximum effectiveness in preventing and detecting wrongdoing by employees and whether corporate management is enforcing the program or is tacitly encouraging or pressuring employees to engage in misconduct to achieve business objectives. The Department has no formulaic requirements regarding corporate compliance programs. The fundamental questions any prosecutor should ask are: Is the corporation's compliance program well designed? Is the program being applied earnestly and in good faith? Does the corporation's compliance program work? In answering these questions, the prosecutor should consider the comprehensiveness of the compliance program; the extent and pervasiveness of the criminal misconduct; the number and level of the corporate employees involved; the seriousness, duration, and frequency of the misconduct; and any remedial actions taken by the corporation, including, for example, disciplinary action against past violators uncovered by the prior compliance program, and revisions to corporate compliance programs in light of lessons learned.

This formulation highlights the importance of the day-to-day functioning of the compliance system, rather than the mere words in the manuals. Institutions should put this information to use by asking themselves these questions about their compliance programs — before these same questions are posed by federal agents.

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.

© Holland & Knight LLP | Attorney Advertising

Written by:

Holland & Knight LLP

Holland & Knight LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.