On December 19, 2019, the Department of Justice (DOJ) announced that Van Andel Research Institute (VARI) has agreed to pay $5.5 million to resolve allegations that it violated the False Claims Act by submitting grant applications to the National Institute of Health (NIH) without disclosing Chinese government grants for involved researchers.

VARI is an independent research institute in Grand Rapids, Michigan. Between January 2012 and December 2018, at least one researcher at VARI received funding from China’s Thousand Talents Program. This initiative intends to draw researchers to China for China’s benefit. DOJ explains that not only did VARI omit reference to this funding, but it also “removed references to those grants from the proposed funding attributions in its press release.” Even after receiving correspondence from NIH directly concerning the need to disclose foreign funding, VARI did not disclose the financial source. Instead, VARI sent correspondence in December 2018 to NIH stating that it was not required to disclose the information because “there was no undisclosed overlap of any budgetary resources, commitment, or scientific endeavor” between the Chinese and NIH grants. However, NIH requires disclosure of all financial sources, and DOJ further alleges that VARI does not know whether such an absence of overlap is true.

DOJ explained that enforcement of grant disclosure requirements is particularly important due to the competitive nature of the application process. “Nondisclosures and false statements to granting agencies are especially harmful because they distort competition, disadvantage applicants who play by the rules, and undermine agencies’ decision-making on the use of their limited resources.” As part of this application process, NIH requires that applicants disclose all funding sources. Moreover, intellectual property security has become a top priority for NIH in recent years due to allegations that researchers are stealing applications and sending the concepts abroad.

For those institutions concerned about past application submissions, DOJ highlights that “proactive, timely, and voluntary self-disclosures to the Department about misconduct will receive credit during the resolution of a False Claims Act case.”  This settlement, and the government’s use of the False Claims Act in this context, is a signal that the administration intends to use all tools at its disposal to enforce NIH interpretations of grant requirements. If you have any concerns with your compliance with federal fraud and abuse law or the contents of this alert, please contact any member of our health care department, including the authors of this alert.