Research institutions face growing false claims threat

Most compliance officers and others charged with overseeing medical research are well aware of recent actions by federal agencies such as the Food and Drug Administration and the Office of Human Research Protections that police clinical research. However, many are less familiar with the looming threat of the False Claims Act, warns Paul Kalb, who heads up the health care practice of the Washington, DC-based law firm Sidley and Austin.

Not only are the penalties associated with the False Claims Act potentially huge, the incentives for whistle-blowers are enormous, he cautions.

Kalb points out that federal grant monies are accompanied by the recipient’s contractual obligations to use the money appropriately. When grant recipients accept reimbursement from the National Institutes of Health and other federal agencies, they do so with certification, he notes. "To the extent that monies have been used in ways that were not intended, those claims for reimbursement arguably are false and can give rise to liability under the False Claims Act," he warns.

The False Claims Act also can be used another way, says Kalb. Recipients of federal grant monies accept those funds subject to an agreement to abide by a dozen separate regulatory obligations, including regulations governing conflicts of interest and scientific misconduct. "If they seek reimbursement for the research without having fully complied with those regulatory obligations, then arguably the claims for reimbursement are false, he asserts.

Kalb says that several lawsuits in recent years have adopted the notion that noncompliance with a regulatory scheme that is a condition of reimbursement renders claims for reimbursement false. While those lawsuits have not involved enormous sums, he predicts they may become more common before too long.

David Hoffman, Assistant U.S. Attorney for the Eastern District of Pennsylvania, agrees that the key ingredient implicating the False Claims Act is the certification process. "When you are certifying to the government that certain things are happening, that is not just a rubber stamp," he asserts. "From the government’s perspective, those certifications have meaning, and that is how you get to the application of the False Claims Act."

Hoffman says research institutions must establish systems to identify rogue employees internally before the government does. "That is especially the case now that Medicare is becoming more involved in paying for human subjects. The potential conflicts with researchers having an interest in licensing fees and royalties if things go well are very troublesome."

If you want to know where government enforcement agencies spend their time, you can simply follow the money, says former Department of Justice attorney John Bentivoglio, now of Arnold and Porter in Washington, DC. "With the increasing amount of federal dollars going to biomedical research, if history is any guide, there will be an increasing amount of interest from the federal government in this area," he asserts.

Adding to that threat are issues that involve risk to patients, Bentivoglio says. Also high on the list are conflicts of interest and arrangements between industry and clinical investigators that might violate the anti-kickback statute.