Last month, The Economist published a call to action titled, “There is a worrying amount of fraud in medical research: And a worrying unwillingness to do anything about it.” The article is the latest in a sequence of alarms that some clinical researchers might not be as squeaky clean as we would hope them to be. Senior DOJ officials have in turn emphasized in public remarks that investigating clinical research shortcomings is now a Justice Department priority, with the whistleblower bar following suit.
What exactly are clinical researchers doing to merit this scrutiny? And what can academic medical centers and other universities and hospitals do to protect themselves against the misconduct of their researchers?
What DOJ is Investigating
There are a number of things related to clinical research that can draw the attention and ire of the Justice Department.
First and foremost, according to public statements by DOJ officials, clinical trial fraud is a top priority of DOJ’s consumer protection branch. Some of the clinical trial fraud that DOJ is pursuing is straightforward, while other types are more nuanced.
For an example of straightforward clinical trial fraud, in September of 2022, three Florida medical clinic owners were indicted for allegedly fabricating clinical trial data in at least four ways: by (1) enrolling subjects in the trial who the defendants knew did not meet eligibility criteria, (2) falsifying laboratory results, (3) falsifying medical records, and (4) falsely representing that subjects were taking the drug being studied when, in fact, they were not. The indictment alleges that these defendants did all of this to boost profits from the clinical trial.
But nuanced types of fraud are being brought by DOJ as well. For example, a CEO of a biotech company went to trial and was convicted of disseminating misleading information about the efficacy of a particular drug. According to DOJ, the CEO announced that the drug’s clinical trial saw results that the drug reduced mortality, when in fact, as the DOJ claims to have proved at trial, the clinical trial showed no such reduction.
Another nuanced type of fraud targeted by DOJ is grant fraud. The federal government is a major source of grant funds, and accepting federal grants means compliance with the terms of the grant. Non-adherence invites DOJ scrutiny. Cases are brought against those misusing grant funds for myriad reasons, including the January 2023 settlement involving a New York researcher that submitted personal travel expenses for scuba destinations and his own birthday party to the National Institutes of Health as “facilities and administrative costs” associated with a grant to study HIV.
Another hot-button area of enforcement deals with clinical researchers who fail to disclose ties to foreign governments. In recent years, DOJ brought many cases against researchers who obtained federal grants but who also did not disclose relationships with Chinese universities. These cases, brought as part of what some in DOJ call the China Initiative or the Thousand Talents Initiative, charge the researchers with false statements in the grant applications that require listing ties to foreign governments and universities.
How These Cases Impact Universities and Hospitals
While many cases of clinical trial fraud, grant fraud, and false statements on grant applications are targeted at the individuals involved in the fraud or false statements, DOJ also frequently targets hospitals and universities that are connected with the individuals.
For example, in the grant fraud example above where the researcher billed the National Institutes of Health for scuba and birthday trips, the researcher’s employer, a New York college, ended up consenting to judgment against it in federal court and to pay $200,000 to resolve its False Claims Act allegations. Ties with foreign governments can also lead to universities’ False Claims Act exposure, which led to one recent Ohio university settling with DOJ and agreeing to pay $875,000 over a professor’s failure to disclosure foreign ties while applying for Army, NASA, and National Science Foundation grants.
The biggest risk to universities and hospitals, however, is when their researchers falsify clinical data paid for by grant funds. The 2019 DOJ settlement with Duke University for $112 million remains the primary example of how the actions of employees can irreparably harm an institution. In that case, for over a decade a research technician was alleged to have falsified or fabricated data and research results, causing additional grant funds to be deployed to the Duke lab by the National Institutes of Health and the Environmental Protection Agency.
What is clear from these cases is that universities and hospitals must be aware that they have liability if their employees commit fraud or make false statements. Investing in a robust compliance program to root out fraud is critical, in order to both reduce False Claims Act risk and to save institutional reputation. Contact your Husch Blackwell attorney today with questions.
 “There is a worrying amount of fraud in medical research: And a worrying unwillingness to do anything about it.” The Economist (Feb. 22, 2023), available at https://www.economist.com/science-and-technology/2023/02/22/there-is-a-worrying-amount-of-fraud-in-medical-research.
 United States v. Montalvo Villa et al., Case No. 1:22-cr-20431, Doc. 3 (S.D. Fla. Sept. 15, 2022) (indictment).
 Press Release, DOJ, “Former InterMune CEO Sentenced for False & Misleading Statements Related to Pulmonary Fibrosis Drug’s Clinical Tests,” Apr. 14, 2011, available at https://www.justice.gov/opa/pr/former-intermune-ceo-sentenced-false-misleading-statements-related-pulmonary-fibrosis-drug-s.
 United States ex rel. English v. Parsons-Kietikko et al., Case No. 1:19-cv-07705-RA, Doc. 15 (S.D.N.Y. Jan. 27, 2023) (stipulation and order of settlement).
 See, e.g., United States v. Mingqing Xiao, Case No. 4:21-cr-40039-JPG, Doc. 1 (S.D. Ill. Apr. 21, 2021) (indictment).
 United States ex rel. English v. Parsons-Kietikko et al., Case No. 1:19-cv-07705-RA, Doc. 20 (S.D.N.Y. Jan. 27, 2023) (stipulation and order of settlement).
 Press Release, DOJ, “Ohio State University Pays Over $875,000 to Resolve Allegations that It Failed to Disclose Professor’s Foreign Government Support,” Nov. 10, 2022, available at https://www.justice.gov/opa/pr/ohio-state-university-pays-over-875000-resolve-allegations-it-failed-disclose-professor-s.
 Press Release, DOJ, “Duke University Agrees to Pay U.S. $112.5 Million to Settle False Claims Act Allegations Related to Scientific Research Misconduct,” Mar. 25, 2019, available at https://www.justice.gov/opa/pr/duke-university-agrees-pay-us-1125-million-settle-false-claims-act-allegations-related.