Research Institute Settles Undisclosed Grant Allegations

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The Department of Justice announced today that Van Andel Research Institute (VARI) has agreed to pay $5,500,000.00 to resolve allegations that it violated the False Claims Act by submitting federal grant applications and progress reports to the National Institutes of Health (NIH) in which VARI failed to disclose Chinese government grants that funded two VARI researchers.  The settlement further resolves allegations that in a Dec. 21, 2018 letter, VARI made certain factual representations to NIH with deliberate ignorance or reckless disregard for the truth regarding the Chinese grants.

Andrew Birge, U.S. Attorney for the Western District of Michigan, said, “Our local institutions, like VARI, serve a vital role in raising West Michigan’s profile as a national player in cutting-edge biomedical research, but institutions everywhere must deal honestly and transparently when applying for U.S. government funding and respond appropriately when compliance issues arise. It’s unfair to other grant applicants and to the NIH for any institution to withhold requested information about whether the research that an institution wants the NIH to support may be getting funding from outside sources, specifically including foreign governments. False Claims Act penalties are harsh by design. I sincerely hope the word gets out on the importance of full disclosure with the government.”

“It is imperative that recipients of NIH grant funds properly report all sources of research support, financial interests and affiliations of individual researchers to ensure the proper and effective use of taxpayer dollars,” said Lamont Pugh III, Special Agent in Charge of HHS-OIG’s Chicago Region.  “HHS-OIG will continue to investigate allegations of failures to properly report information to ensure the integrity of Departmental programs.”

Obtaining research funding from NIH is a highly competitive process, with only a small portion of eligible applications receiving funding each year.   Nondisclosures and false statements to granting agencies are especially harmful because they distort competition, disadvantage applicants who play by the rules, and undermine agencies’ decision-making on the use of their limited resources.

As part of its grants application process, NIH requires recipient institutions to disclose all financial resources—including any other research grants—that are available to researchers and other key research personnel in support of their research endeavors (known as “Other Support” disclosures).  Other Support disclosures allow NIH to independently evaluate, among other things, whether research submitted for taxpayer support is being funded by another source.  During the term of a grant, NIH also requires recipient institutions to disclose whether certain aspects of federally-funded research will be, or have been, performed outside of the United States (known as “Foreign Component” disclosures). Research institutions, which apply for NIH grants on behalf of researchers and groups of collaborating researchers, make these Other Support and Foreign Component disclosures on or in connection with NIH forms.

VARI is an independent research institute in Grand Rapids, Michigan.  Between Jan. 1, 2012, and Aug. 31, 2019, VARI received NIH grants for two researchers, including a researcher identified here as “Professor 1.”  The government alleged that in applying for the NIH grants, and in submitting claims for federal grant funds, VARI did not disclose any foreign research funding for those researchers or any foreign components of their NIH-sponsored research.  The government alleged, however, that both researchers received research funding from Chinese sources while VARI was applying for and receiving NIH funds on their behalf.  The government specifically alleged that between Jan. 2012 and Dec. 2018, Professor 1 received grants and research support from a variety of Chinese sources, including the People’s Republic of China’s Thousand Talents Program.  The Thousand Talents Program is in place with the purpose of returning talent, research, and technology to China for China’s benefit.

The government claimed that between Jan. 2012 and June 2018, VARI should have known about these foreign grants and disclosed them to NIH.  The government alleged that while VARI had institutional policies and procedures in place to address conflicts of interest, VARI did not take adequate additional steps to investigate the researchers’ foreign funding sources despite receiving specific information about their Chinese affiliations.  The government claimed, for example, that a Chinese institution sent VARI a letter stating that Professor 1 was receiving “generous support” from the Chinese Thousand Talents Program.  The government also alleged that VARI knew that Professor 1 held a directorship at a Shanghai-based research institute—a collaboration between VARI and the Shanghai Institute of Materia Medica—that would involve Professor 1 applying for Chinese research grants to support work at the foreign institution.

The government claimed that VARI learned about certain of Professor 1’s Chinese grants in June 2018 while reviewing a press release for one of Professor 1’s publications.  The government claimed that rather than confirming and disclosing the information to the NIH, VARI removed references to those grants from the proposed funding attributions in its press release.  The government alleged that shortly thereafter, VARI received an Aug. 20, 2018 letter from NIH Director Francis S. Collins, M.D., Ph.D. that reminded recipient institutions of the need to disclose “support coming from foreign governments or other foreign entities” for their researchers.

The government alleged that VARI then received a Nov. 30, 2018 e-mail from NIH that cited specific concerns about potential nondisclosures relating to Professor 1.  The government claimed that VARI did not disclose Professor 1’s Chinese grants to NIH even after receiving this correspondence.

The government claimed that VARI instead retained an outside consulting firm, and, relying on that firm’s advice, sent a Dec. 21, 2018 letter to NIH in which VARI stated that it was not required to disclose information about Professor 1’s foreign grants because “there was no undisclosed overlap of any budgetary resources, commitment, or scientific endeavor” between the Chinese grants and the NIH grants.  NIH, however, requires disclosure of all financial resources available in support of an individual’s research endeavors.  The government further alleged that VARI, in representing to the agency that “there was no undisclosed overlap” between the Chinese grants and the NIH grants, did not know whether that statement was true.

U.S. Attorney Birge added that institutions concerned about a prior statement on a grant application should know that it is Department of Justice policy that entities or individuals that make “proactive, timely, and voluntary self-disclosures to the Department about misconduct will receive credit during the resolution of a False Claims Act case.”

This case was a cooperative effort among HHS-OIG, the FBI, and the U.S. Attorney’s Office for the Western District of Michigan.  Assistant U.S. Attorney Adam B. Townshend represented the United States

The claims resolved by the settlements are allegations only.  There has been no determination of liability.

Source: https://www.justice.gov/usao-wdmi/pr/2019_1219_VARI

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