JHU, Bayview Settle Federal
Lawsuit for $2.6 Million

Whistle-Blower Told U.S. Grant Work Was Overbilled
by Jonathan Bor
Baltimore Sun Staff

February 27, 2004

The Johns Hopkins University and one of its teaching hospitals have agreed to pay more than $2.6 million to settle a federal lawsuit alleging that they overbilled the National Institutes of Health for addiction research and other projects.

The settlement, announced yesterday by the U.S. attorney's office, came six years after an employee told federal authorities that researchers at Hopkins Bayview Medical Center had inflated the amount of time required to carry out studies on therapies for drug dependence.

"The United States must maintain the integrity of the grant application and funding process for research," U.S. Attorney Thomas M. DiBiagio said in a prepared statement.

The university and Bayview agreed to pay $2.1 million in addition to $587,000 already refunded, but they did not admit any wrongdoing.

Faye Grau, 64, a Bayview secretary who filed the initial complaint, receives $439,000 of the settlement under the federal False Claims Act, which encourages people with inside information about irregularities in federal contracts to step forward.

Stephen J. Immelt, a private attorney representing Hopkins and the other defendants, said the mistakes were not deliberate and resulted from poor accounting practices by a physicians' payroll service that was disbanded a few years ago.

"None of this resulted from faculty members getting extra compensation," Immelt said. Rather, extra payments were funneled into a general fund that supported clinical work and other activities. "There's no question that there was a problem, and you've got to repay."

The case started when Grau, who has worked at Bayview since 1974, told federal prosecutors that researchers had submitted false information to the NIH in a $2.8 million grant application for addictions research. She also alleged that researchers overstated their work in progress reports they filed.

Her allegations touched off a wider probe into federally funded research throughout Bayview. The resulting lawsuit, filed on behalf of Grau, involved grants awarded from January 1994 through December 2000. Many but not all related to the addictions program, according to the prosecutor's office.

Grau still works at the addictions program, although she tried unsuccessfully to find a new job after filing her complaint, said Robin West, a Baltimore attorney representing her. Grau declined to comment yesterday, referring questions to West.

"I really admire and have a tremendous amount of respect for her," said West, adding that her client will soon retire. "She was the type of person this law was contemplating when it was written."

The settlement was not particularly large in comparison to others reached since 1986, when the False Claims Act extended new protections to potential whistle-blowers. The 100 largest settlements and judgments listed by the False Claims Act Legal Center in Washington range from $731 million to $13 million.

"It's not just totally up to the government to be watchdog over this," West said. "The government has allies in the form of every citizen."

Much of the lawsuit focuses on statements Bayview researchers made to the NIH concerning the percentage of their workweek spent on research covered by the grants. Grant amounts are based partly on that percentage, which together with other duties performed by researchers must add up to -- but not exceed -- 100 percent.

The government charged that Robert Brooner, director of the addictions research program, charged more than 100 percent of his employees' time -- as well as his own -- to federally funded research.

According to the suit, Brooner "charged more time to grants than was actually spent."

"He stated to Ms. Grau that the 'extra' money helped him get better salary increases." Grau, according to the suit, "indicated her disapproval of this technique to Dr. Brooner and sought a new job."

Later, according to the suit, Grau told the Bayview director of employee relations that Brooner was "obtaining 'extra' grant funds by billing nonexistent effort and by making effort commitments exceeding 100 percent."

If researchers are committed to several grants as well as clinical duties, they must report the percentage of time that each duty occupies, said Assistant U.S. Attorney Roann Nichols, who handled the case. If scientists take on extra commitments, they must report this to the NIH. Grant money is scaled back accordingly.

"Academic institutions understand what those rules are," Nichols said. "It's not that they are secret -- they're published."

The lawsuit also alleged that the addictions program failed to tell the NIH that it was receiving grant money from other federal sources that, in part, paid for the same work. This resulted in duplicate payments, the suit alleged.

Brooner and Dr. Chester W. Schmidt, a professor of psychiatry at Bayview, were named as defendants in the suit along with the medical school, Bayview and Johns Hopkins Bayview Physicians, a now-defunct corporation that employed doctors.

Hopkins referred all questions yesterday to Immelt, who represented all the defendants.

Immelt blamed much of the problem on errors by the Johns Hopkins Bayview Physicians, a private corporation that employed and paid doctors and researchers at the facility. The corporation, he said, did not always detect billing discrepancies that arose when people took on new responsibilities and worked more than they had before.

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