C.U. Will Pay $2.6M in Fraud Case

Weill Cornell Medical College has agreed to pay over $2.6 million to settle civil charges that Cornell defrauded the National Institutes of Health and the Department of Defense as it sought more than $14 million in federal research grants, Acting U.S. Attorney Lev Dassin announced earlier this month.
The settlement resolves the charges that the government had brought against Cornell for filing false claims for federal research grant money. Cornell knowingly made false records and false statements in order to get fraudulent claims paid or approved by the federal government in connection with NIH and Department of Defense grants, according to the government’s complaint.
The government specifically alleged that Dr. Lorraine Gudas, chair of the Department of Pharmacology at Cornell Medical College, and members of Cornell’s Office of Research and Sponsored Programs failed to disclose the full extent of Gudas’s various active research projects.
“These omissions deprived the government of its ability to assess the researcher’s ability to perform the projects in the grant applications,” Dassin stated in a press release earlier this month.
“Cornell made material misrepresentations of fact to the United States with knowledge of their falsity, or in reckless disregard of their truth, in connection with NIH grants,” the federal complaint stated. “By reason of Cornell’s false claims, the United States has been damaged in a substantial amount.”
The funding in question was money that Cornell and Gudas received since 1997 from eight NIH Public Health Service research grants, totaling more than $13 million, and one Department of Defense grant totaling more than $1 million.
The grant funding primarily involved biochemistry and cancer research, according to the University.
Federal funding guidelines and regulations require researchers to disclose their active projects and the amount of research time they plan to devote to each project to ensure that researchers have adequate time to complete a project and that the project is funded appropriately.
The government alleged that Gudas’s failure to disclose other grants she received allowed her to “over-commit” her professional time, which is prohibited by NIH guidelines.
The allegations of fraud were first exposed by a whistleblower, Taryn Resnick, who was a senior administrative assistant to Gudas. Resnick worked at the University for a little over 11 years until she resigned in August 2002 and subsequently filed a complaint under the False Claims Act in April 2004.
Resnick’s original complaint, according to court documents, levels more severe accusations against Gudas and Cornell.
Resnick alleged that Gudas “misrepresented which researchers were working on particular grants; misapplied and fraudulently accounted for grant funds; falsified data from her research; and submitted the same projects multiple times, even if they had been funded by other grants,” according to a court order by federal Judge William H. Pauley III.
These apparently more serious allegations were not included in the federal government’s case against Cornell.
The United States Attorney’s office and Cornell entered into a $2,606,751 settlement in September 2007 to resolve the federal fraud charges. The University said in a statement that it agreed to pay the $2.6 million, “in order to avoid further costly litigation with the government.”
While representatives for the NIH, the Department of Defense and the Department of Justice Civil Fraud Section approved the Settlement, Resnick objected to the terms of the settlement.
However, on March 5, Judge Pauley approved the settlement and denied Resnick’s objection, determining that it was “fair, adequate and reasonable under all the circumstances.”
Resnick’s attorney, Timothy McInnis, stated in an e-mail yesterday that he could not comment because the case is ongoing. Earlier this month, McInnis told The New York Post that “there still are issues to be litigated.”
The Post also reported that Resnick is eligible for up to 30 percent of the money recovered by the government as a result of her actions.
Cornell does not admit any liability or wrongful conduct in the settlement.
“All of the funded research in question was performed by Weill Cornell Medical College and resulted in numerous discoveries, publications and other contributions to the body of scientific and clinical knowledge,” the College said in a statement. “The government’s claims did not relate to the quality or scientific integrity of the research.”
John Rodgers, director of communication for Weill, said the College would not comment on the case beyond its written statement.
This is not the first time the Medical College has come under scrutiny for ethical or legal concerns regarding its research.
Last March, The New York Times revealed that lung cancer research conducted at Weill Cornell Medical College was funded by a tobacco company.
In 2005, WCMC paid a $4.4 million settlement to resolve charges raised by another whistleblower, Kyriakie Sarafoglou, who alleged that Cornell used a $23 million NIH research grant for private patient care when it was intended for childhood diseases research, according to the Wall Street Journal. Sarafoglou also claimed that the school enrolled inappropriate study subjects and filed false reports, the Journal reported in 2005.