Cleveland Clinic to pay $7.6 million after False Claims Act allegation

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The Cleveland Clinic is paying $7.6 million to resolve allegations that it violated the False Claims Act by submitting federal grant applications and progress reports to the National Institutes of Health that failed to disclose information about a key employee involved in administering the grants.

The individual involved had pending and/or active financial research support from other sources, according to the U.S. Department of Justice.

The main allegation is that Cleveland Clinic made false statements to NIH, a component of the Department of Health and Human Services, in connection with three federal grant awards. Despite NIH requirements to do so, Cleveland Clinic repeatedly failed to disclose that the employee 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.

Cleveland Clinic falsely certified that the grants submissions were true and accurate, according to the DOJ.

WHAT'S THE IMPACT?

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.

The settlement also resolves allegations that Cleveland Clinic violated NIH password policies by permitting employees to share passwords. Some of the false submissions in which the organization failed to disclose the principal investigator's foreign grant support were made by employees who were inappropriately given access to NIH's online grant reporting platform, the DOJ said.

In addition to the $7.6 million settlement, NIH has imposed Specific Award Conditions on all of Cleveland Clinic'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 Cleveland Clinic employee to personally attest to the truth, completeness and accuracy of all "other grant support" information the organization provides to NIH. 

The clinic 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 Cleveland Clinic has oversight at the institutional level to confirm that the information its principal investigators disclose is true, complete and accurate.

The Specific Award Conditions will begin October 1 and remain in effect through September 30, 2025, or until NIH is satisfied that Cleveland Clinic has successfully completed the Corrective Action Plan.

THE LARGER TREND

Settlements and judgments under the False Claims Act exceeded $2.68 billion in the fiscal year ending Sept. 30, 2023, and, of that total, more than $1.8 billion related to matters that involved the healthcare industry – including managed care providers, hospitals, pharmacies, laboratories, long-term acute care facilities and physicians.

The amounts included in the $1.8 billion reflect recoveries arising only from federal losses, but in many of these cases, the department was instrumental in recovering additional amounts for state Medicaid programs, the DOJ said.

Overall, healthcare fraud was responsible for two-thirds of the recovered amount in 2023.
 

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.