In 2017 Universities and colleges to face heavy federal scrutiny for fraudulent use of federal funds

Universities and colleges nation-wide which receive billions of dollars in federal funds through research grants and student financial aid. Because of this the government is examining the receipt and use federal funding which, if fraudulent can involve civil False Claims Act (FCA), a federal statute used to fight  fraud against the government. Violations of the FCA by submitting false claims to the government face treble damages and penalties ranging from $10,781 to $21,563 per violation. There has been a significant increase in the number and types of cases brought under the FCA.  and indications are that the Department of Justice and Department of Education will be watching Colleges and Universities closely for fraud in obtaining or using federal funds in 2017. In 2016, the U.S. Department of Justice (DOJ) recovered more than $4.7 billion in settlements and judgments from civil cases involving fraud against the government under the FCA, a $1.2 billion increase over the $3.5 billion recouped last year in 2015. Some if the cases brought against Universities and Colleges included:

  • The University of Missouri-Columbia paid $2.2 million to settle allegations that it submitted false claims to Medicare for payment of radiology services in violation of the FCA. The university was alleged to have falsely certified that interpretive reports prepared by resident physicians were reviewed by attending physicians, which review was required in order to be eligible for Medicare payment.
  • The University of Florida paid the government nearly $20 million just to settle FCA allegations that it improperly charged the U.S. Department of Health and Human Services (HHS) for salary and administrative costs in connection with hundreds of federal grants. The settlement resolved claims against the university for its alleged misuse of funds from 2005 through 2010 that, according to the university, resulted from a problem in its internal bookkeeping system used to track grant reimbursements.
  • The Education Management Corp. (EDMC), which operates the Art Institutes, South University, Argosy University, and Brown-Mackie College, paid $95.5 million to settle FCA allegations that it falsely certified compliance with Title IV and parallel state statutes in order to be eligible to receive federal grant and loan dollars. EDMC was alleged to have unlawfully recruited students by paying admissions personnel solely based on the number of enrolled students in violation of HEA’s Incentive Compensation Ban, which prohibits schools from paying recruiters based on their success in securing enrollments.
  • Duke University Health System, Inc., paid the government $1 million to settle an FCA suit alleging that Duke fraudulently billed Medicare, Medicaid, and TRICARE for certain services performed by physician assistants that were disallowed under the programs, and that it increased billing by improperly unbundling claims.
  • Cornell University Medical College was found to have violated the FCA, resulting in a multimillion-dollar judgment. In that case, Cornell applied for and obtained funding from the National Institutes of Health (NIH) federal grant program for a research fellowship program to train doctoral fellows. Positions funded through the grant were not to be used for study leading to clinically oriented degrees, and an annual renewal application and progress report were required to be submitted to renew the grant and to provide notification of any developments of significant impact on the research program. A jury determined that Cornell violated the FCA by making false statements in connection with its renewal applications based on evidence that Cornell’s program focused on clinical work rather than research. As a result, Cornell was liable for damages in the full amount of grant money it was awarded based on its false statements.Jeffrey Newman represents whistleblowers nation wide.