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Cleveland Clinic Foundation Pays $7.6M To Settle FCA Charges Relating To NIH Grants

May 20, 2024

The Cleveland Clinic Foundation (“CCF”) has agreed to pay $7,600,000 to resolve allegations that it violated the False Claims Act (“FCA”) by submitting to the National Institutes of Health (“NIH”) federal grant applications and progress reports in which CCF failed to disclose that a key employee involved in administering the grants had pending and/or active financial research support from other sources.

The settlement resolves allegations that CCF made false statements to NIH, a component of the Department of Health and Human Services (“HHS”), in connection with three federal grant awards. Despite NIH requirements to do so, federal officials charged CCF repeatedly failed to disclose that the employee who it designated as the Principal Investigator on each grant had pending and/or active grants from foreign institutions that provided financial assistance to support the employee’s research and already obligated that employee’s research time. CCF falsely certified that the grants submissions were true and accurate. The settlement also resolves allegations that CCF violated NIH password policies by permitting CCF employees to share passwords. Some of the false submissions wherein CCF failed to disclose the Principal Investigator’s foreign grant support were made by CCF employees who were inappropriately given access to NIH’s online grant reporting platform.

NIH requires full transparency in applications and throughout the life of the grants it awards. This includes a requirement that grant applicants disclose all sources of research support, from any source, on grant applications and on follow-up documents relating to grant awards. NIH uses this information to determine if the applicant has the time necessary to allocate to the proposed research project, and if the research proposal has other sources of funding that are duplicative. It also assists NIH in determining if an applicant’s financial interests may affect its objectivity in conducting research.

Under the Cleveland Clinic Settlement Agreement, CCF will pay $7.6 million settlement and be subject to additional NIH imposed Specific Award Conditions on all CCF’s grants for a one-year period.

Federal regulations allow NIH to impose Specific Award Conditions on grant recipients, including on recipients that do not comply with the terms of a federal award. In this case, NIH is requiring a high-level CCF employee to personally attest to the truth, completeness, and accuracy of all “other grant support” information CCF provides to NIH. CCF must also develop a corrective action plan that includes an assessment of internal controls related to other grant support and foreign-component reporting; create a mandatory training program addressing requirements for disclosing other grant support, research security, and cyber security; and develop an improvement plan for its internal controls, ensuring that CCF has oversight at the institutional level to confirm that the information its Principal Investigators disclose is true, complete, and accurate, among other requirements. The Specific Award Conditions will begin Oct. 1, 2024, and remain in effect through Sept. 30, 2025, or until NIH is satisfied that CCF has successfully completed the Corrective Action Plan.

The Department of Justice FCA enforcement and settlement illustrate the importance for researchers receiving NIH grants to ensure the accuracy of information reported in applications and other documentation related to federal grants. U.S. Attorney Rebecca C. Lutzko for the Northern District of Ohio said, “Today’s settlement illustrates the importance of being truthful at every stage of the grants process.”

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About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 35 plus years of compliance, risk management, regulatory affairs, operations, strategy and other work with health, employee benefits, insurance, hospitality, retail, construction and other clients, public policy leadership and advocacy, coaching, teachings, and publications.

A Fellow in the American College of Employee Benefit Counsel, Co-Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee and Vice-Chair and Chair Elect of its International Employment Law Committee, Chair of the ABA TIPS Section Medicine & Law Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, and Chair of t and Che ABA Intellectual Property Section Law Practice Management Committee, Ms. Stamer has decades of experience advising employers, investigating and helping employers to defend wage and hour, worker classification, discrimination and other labor and employment, employee benefits and other compliance.

Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, life sciences, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. Her experience includes extensive involvement advising clients about preventing, investigating and defendingWHD, CAS, Davis-Bacon and other federal and state wage and hour and other compensation; EEOC, OFCCP, DOD, HUD, HHS and other Civil Rights Act, Section 1557 and other federal and state discrimination; EBSA, IRS, and PBGC employee benefit and compensation; DEA and other Justice Department; CDC, OSHA and other safety and other compliance, investigations, audits, lawsuits and other enforcement actions as well as advocacy before Congress and regulators regarding federal and state equal opportunity, equity and other laws.

For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

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