Fraud in Federally-Funded Research Programs

Federally-Funded Research Programs

The federal government provides grants for research on a wide variety of topics. Sometimes grant recipients use grant funds to pay salaries or expenses for another research project, and then write those costs off as part of the federal grant, or they inflate their cost projections for conducting research projects in order to receive more money.

At academic medical centers, federal payments for research overhead, called indirect payments, total tens of millions of dollars per year. The government and the medical center determine a reasonable overhead rate for the hospital, then the government agrees to mark up each research grant by a fixed rate for the next year to cover incidental expenses. This usually includes items like heat and electricity bills and housekeeping for the part of the hospital used for the research, and sometimes even mortgage payments for lab buildings.

One of the largest qui tam settlements involving a research grant was against New York University Medical Center, which paid $15.5 million to the federal government. The government said the medical center provided a “false, inaccurate and incomplete picture” of its overhead costs for research projects. The center allegedly submitted to the government previously-paid waste disposal bills, inflated housekeeping bills, and bills for unrelated items counted as overhead for the project, such as food for the medical school commencement dinner.