Agnew, Bruce. "False Claims: Wins, But Stakes Soar in Minnesota Case," The Journal of NIH
Research , March, 1997, pp.30-31.
"There are a lot of disgruntled researchers around the country who think they've been done in in
some way," says attorney Alexander Bok, who represented former graduate student Pamela
Berge in her just-reversed plagiarism lawsuit against the University of Alabama "I've probably
heard from two dozen people who think they have a case in the last two years."
That's precisely what U.S. research universities are afraid of, and it explains why five research
universities and six higher education organizations last year joined the University of Alabama's
(UAB's) appeal of the nearly $2 minion jury verdict that Berge won in her False Claims Act suit
... . They warned that the Berge case "threatens ad American colleges and universities" with
whistle-blower lawsuits under the False Claims Act's qui tam provision, which permits
individuals to sue on behalf of the government and offers them a share of treble-damages awards
if they win.
On Jan. 22, Alabama and the other universities won a partial victory. A three-judge panel of the
U.S. Court of Appeals in Richmond, Va, threw the verdict out, declaring that Berge's case was so
weak that it should not have gone to the jury. But the appeals court did not give the universities
the new protections they had sought against such lawsuits. And False Claims Act suits are
looming against other research institutions including a massive and probably unique suit filed by
the U.S. Justice Department against the University of Minnesota that carries damage claims of
more than $100 minion.
The Richmond appeals court dealt with the Berge case in short order, just seven weeks after oral
argument, and with surprisingly harsh language. Berge, who had used UAB's NIH-funded
database on cytomegalovirus (CMV) in mothers and newborns while researching her Ph.D. thesis
in 1987, charged that three UAB scientist~Charles Alford, Sergio Stagno, and Robert Pass
plagiarized her research in progress reports for an NIH grant and that UAB doctoral candidate
Karen Fowler plagiarized Berge for her own Ph.D. thesis. Berge won at trial: A U.S. District
Court jury in Baltimore awarded the government $1.65 minion, $498,000 of which would have
gone to Berge, and awarded her $265,000 under an Alabama law prohibiting the "conversion" -
that is, wrongful use - of property.
But the appeals court said there were no false statements, no plagiarism, and no evidence that
Berge's data swayed NIH's decision to renew the grant. "No reasonable jury could possibly
conclude that a multimillion dollar grant, continually renewed over a period of more than a
decade, undertaken by three internationally respected scientists engaged, in part, in the collection
of the world's leading database on CMV, would be reduced or eliminated due to UAB's lack of
expertise in areas that could only be bolstered by the work of an unknown graduate student in
nutritional sciences work that, when reviewed by independent scientists at peer-reviewed
journals, was determined to be ‘scarcely comprehensible,'..." the court said. "The hubris of any
graduate student to think that such grants depend on the results of her work is beyond belief."
The court did not, however, rule on the universities' contention that the False Claims Act should
not apply to scientific misconduct because Congress has established a different route for
investigating misconduct (the Office of Research Integrity). Nor did it accept state universities'
claim that they should be immune from the False Claims Act because, under the U.S.
Constitution, the federal government cannot sue states for punitive damages. The court didn't
rule formally on this issue, but it shrugged off the argument as "a red herring."
Even so, attorney Barbara Mishkin of Hogan & Hartson in Washington, D.C., who represented
UAB, says she hopes the appeals court's decision will at least deter "really frivolous" false
claims suits. "I'm hoping that it will somewhat stem the tide, and that the plaintiffs' bar the law
firms that take these cases on contingent fee basis will be more cautious in deciding what cases to
bring," ~Mishkin says.
Berge's attorney doesn't seem deterred. Bok, of Dangel, Donlan & Fine in Boston, says he will
seek a rehearing and, if necessary, Supreme Court review of whether the appeals court judges
"supplanted the role of the jury inappropriately when they threw out the verdict. That's why we
have a Seventh Amendment right to a jury, and they may have overstepped their bounds," Bok
Similar issues will be joined later this year in a whistle blower's qui tam suit against the
University of Pittsburgh and Children's Hospital in Pittsburgh, with up to $45 million at stake. In
a case that prompted congressional hearings in 1988, Erdem Cantekin of the University of
Pittsburgh charges that clinical researcher Charles Bluestone concealed the fact that he was
receiving pharmaceutical-company support in the early 1980s, when he applied for NIH funding
for trials of amoxicillin and other antibiotics against otitis media, middle-ear infection in
children. Cantekin, who at the time was director of research of an NIH funded University of
Pittsburgh-Children's Hospital research center, also charges that Bluestone slanted his analyses
and overstated the drugs' effectiveness in published reports on the trials.
Because of "fraud and nondisclosure," Cantekin charges, Bluestone wrongly collected nearly $15
million in federal grants which could be trebled if the jury agrees. The case was scheduled for
trial in April in U.S. District Court in Pittsburgh, but it may be postponed to await a Supreme
Court decision on technical issues in a defense-industry False Claims case.
The University of Minnesota case dwarfs both the Berge and Cantekin suits and oddly, there is
no argument over the main thrust of the charges. In two self-investigations of accusations
originally made by faculty whistle blower James Zissler, the university concluded (and reported
publicly) in 1993 and 1995 that its Department of Surgery was guilty of a long skein of financial
and ethical misconduct and outright violation of Food and Drug Administration (FDA)
Over the course of 22 years, the university said, the surgery department, headed by John
Najarian, systematically diverted federal grant funds, in part to finance manufacture of an
experimental immunosuppressive drug for organ-transplant patients known as anti-lymphocyte
globulin (ALG). According to the university's investigations, the surgery department also failed
to obtain informed consent from patients, failed to report "serious adverse events" to FDA,
violated investigational protocols, and, without FDA approval, manufactured and sold ALG and
related products both nationally and internationally, pulling in nearly $80 million in revenues.
The department also misapplied funds from other grants, including $1.8 million of diversions
over nine years within its Program for Surgical Control of the Hyperlipidemias (POSCH), which
studied the relationship between cholesterol and heart disease, the university said.
University officials called in several accounting firms to help reform their grants-management
procedures, and they insist that their administrative problems have now been corrected. They
want NIH to remove strict administrative controls that it imposed on the university in 1995.
If that's the case for the defense, there's not much left to do except negotiate an out-of-court
settlement - and that's probably how this case will end. But the Justice Department and the
university have different ideas about how much federal money was misused and how much the
university should pay back.
After about a year of negotiations, the Justice Department on Dec. 19, 1996, filed a False Claims
Act suit accusing the university not only of all the misdeeds it had already confessed but also of
mischarging nearly $629,000 to at least 28 other grants, collecting $35 million in profits from
illegal ALG sales, illegally charging Medicare $1.1 million for ALG, and receiving at least $1.78
million in kickbacks for referral of Medicare patients to a managed-care operation in which
several university departments participated. The government's suit expanded on a qui tam suit
that was filed by Zissler in 1995 but that had been kept under seal while the Justice Department
investigated the charges.
Neither side would say last month how much the Justice Department is asking, or what
Minnesota is offering, in their settlement talks. But Tom Reagan, chair of the university's Board
of Regents, said on Dec. 16, 1996, that the Justice Department claims "could amount to more
than $100 million" which, he noted, the taxpayers of Minnesota would end up paying. On
Minnesota's side, "the university has offered to pay back any grant money that was misused,"
says university General Counsel Mark Rotenberg. "If we're going to be paying the amount that
was misused, then I think we could reach an agreement pretty quickly."
As for that $35 million ALG profit: Rotenberg says the profit was a lot less than $35 million, and
the money was used for bona fide university purposes. "The money was not misspent and was
not mishandled, except in some very isolated instances," he says. "It's not as though we bought
yachts with it."