It was about 21 years ago that Stanford University settled a fraud case involving research expenses. The Government settled for a small fraction of of the Navy's original claim. Initially, the Office of Naval Research wanted the University to pay back more than $200 million. The parties finally settled for $1.5 million (or perhaps a bit more as the settlement included some small claims that Stanford had against the Government). It was an embarrassing time for the University and its President though. The President was dressed down before Congress trying to explain why silk sheets for his private home were charged to Government contracts among other indiscretions. And, he was forced to resign. Although the Government did not recover much money in the end, the episode brought about significant changes in the way the Government conducted oversight of university conducted research.
A couple of decades go by and once again, a prestigious university is on the hot seat for overcharging the Government for improper research expenses. In this case, the University of Florida has agreed to pay the United States about $20 million to settle allegations that it improperly charged the Department of Health and Human Services (DHHS) for salaries and administrative costs on hundreds of federal grants.
The overcharging occurred in several ways. First, the University charged the Government for salary costs of employees where it did not have documentation that the employees actually worked those hours. Secondly, the University charged costs directly to the grants that were improper under federal regulations. And finally, the University inflated costs for services performed by an affiliated entity.
As is typical in settlements by the Justice Department, the claims resolved by this settlement are only allegations and the University did not agree to any liability in the matter.
You can read the DoJ press release by clicking here.
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