Columbia to Pay $9 Million Plus To Settle DOJ/HHS False Claims Charges For Submitting Inaccurate Cost Reports and Mischarging Federal Grants

The US ex rel. v. Columbia U. and ICAP complaint-in-intervention  civil False Claims Act lawsuit (lawsuit) and its resolution through the simultaneously filed US ex rel. v. Columbia U. and ICAP stipulation and order (“Settlement”) entered against the Trustees Of Columbia University In The City Of New York (“Columbia University”), and ICAP (formerly known as the International Center For Aids Care And Treatment Programs) (collectively, “Columbia”) that U.S. Department of Justice (DOJ) announced October 28, 2014 reminds health care, education and other organizations receiving federal grant monies that their False Claims Act and other compliance programs must provide for appropriate management and recordkeeping of any federal grant programs participated in by their organizations.  The lawsuit and settlement highlight the importance for health care, education and other organizations receiving or managing federal grants to establish appropriate controls to ensure that they can demonstrate the requisite compliance with grant requirements and other terms and conditions.

The settlement resolves a civil lawsuit jointly brought and simultaneously settled by DOJ and the Department of Health & Human Service against Colombia that charged Columbia with submitting false claims in connection with federal grants that Columbia University obtained to fund ICAP’s AIDS- and HIV-related work. The United States’ Complaint-in-Intervention (the “Complaint”) alleged that Columbia University, as the grant administrator on behalf of ICAP, received millions of dollars in federal grants and, pursuant to the rules applicable to such grants, was required for nearly 200 of ICAP’s employees located in New York City to use a suitable means of verifying that the employees had actually performed the work charged to a particular grant. The Complaint alleges that Columbia was well aware that this was not being done, yet continued wrongly to charge many federal grants for work that was not devoted to the projects they funded. The lawsuit seeks damages and penalties under the False Claims Act.

According to DOJ, the Colombia lawsuit and Settlement arose from Columbia’s participation in the President’s Emergency Plan for AIDS Relief (“PEPFAR program”), a global HIV/AIDS program, targeting billions of dollars in new funding for prevention, treatment, and care services in the most affected countries of the world. Columbia received $125 million in PEPFAR funding through the Multi-Country Columbia Antiretroviral Program (“MCAP”) grant, and over the years obtained over 75 grants and many millions more from the federal government for HIV- and AIDs-related work performed by ICAP.

The grant rules among other things, required that grantees track the work performed by the recipient’s employees and, with limited exceptions, charge grants only for work actually performed as a part of that grant. Columbia claimed to accomplish this by producing effort reports for ICAP’s New York City-based employees purportedly detailing the employees’ distribution of work across federal, state, and private grants, as well as Columbia-sponsored projects. These reports were used to determine how much a given grant was charged for work performed by individual employees.

For nearly 200 individuals, however, DOJ and the Justice Department charged Colombia failed to ensure that these reports were created or verified by the individuals to whom they applied. Instead, Columbia’s Finance Department provided information for these reports even though the employees of that department had limited or no knowledge of which grants the individuals actually worked on. In addition, the lawsuit charged that the effort reports were certified as correct by the principal investigators on the grants without using suitable means to verify the accuracy of the reports. Instead of taking the appropriate steps to determine whether the reports were accurate, the principal investigators would certify large batches of the reports, without making any inquiry into whether the allocation of work among the grants was accurate. Moreover, ICAP’s management was well aware of the inaccuracies of the effort reporting system.

According to the complaint, these omissions resulted in Columbia charging grants for work that was not performed on the project being funded by that grant. For instance, an ICAP Finance Analyst stated that he spent approximately 15-20% of his time on MCAP in fiscal year 2010, but his effort report falsely listed his MCAP effort, and related salary charges, as 85%. Likewise, in fiscal year 2010, an ICAP Subcontracts Manager’s effort report listed her effort as 100% MCAP, but the Subcontracts Manager actually worked on three other grants, in addition to MCAP, that year. The time submitted for many other employees was similarly mischarged.

The complaint also charged that ICAP also charged federal grants for time spent on activities that are not chargeable to any federal grants, such as competitive grant proposal writing. For example, an ICAP Grants Manager spent a significant amount of her time writing competitive grant proposals, but her effort report showed that all of her time was charged to grants, with as much as 92% of her time charged to MCAP in some years.

In the Settlement, Columbia admitted failing to use a suitable means of verifying whether the salary and wage charges that ICAP applied to specific federal grants were based on an employee’s actual effort for that grant. Columbia also admitted that as a result, certain effort reports contained inaccurate information, and for a number of years ICAP mischarged certain federal grants for work that was not allocable to those agreements. Columbia also agreed to pay $9,020,073 to resolve the Government’s claims.

Health care, educational and other organizations receiving HHS or other federal grants should heed the lawsuit and settlement as a reminder to review and tighten as necessary their federal grant program compliance and documentation to ensure that it can withstand an audit or other scrutiny by federal officials.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see here.

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THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer, P.C. Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.

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