The University of Alabama at Birmingham (UAB) has agreed to pay $3.39 million to the federal government to settle a dispute regarding overbilling related to National Institutes of Health (NIH) and other research grants. The settlement, announced April 14, 2005, represents a consolidation of two qui tam actions brought by whistleblowers Gober v. University of Alabama, No. 01-CV-00977; Meythaler v. University of Alabama, No. 04-CV-0011. The whisteblowers, a former compliance officer and a former physician for UAB, filed separate claims in the U.S. District Court for the Northern District of Alabama alleging FCA violations. The FCA permits private citizens to file suits on behalf of the government in certain contract fraud cases and entitles them to share up to 30 percent of any resulting settlement or judgment.

The complaints alleged that UAB's related entities, the University of Alabama Hospital and the School of Medicine and the UAB Health System, Inc., billed NIH for more time than was actually spent on research. In this regard, the complaint alleged that UAB failed to maintain an adequate compliance mechanism. It was also alleged that Medicare was improperly billed for clinical trials that were being paid for by research sponsors (both federal and nonfederal). Subsequent to the filing of the complaints, the government intervened and took over the prosecution of the cases.

While UAB did not admit to any liability or wrongful conduct, the University did agree to pay $3.39 million to settle the cases. Prosecutors have said the whistleblowers will share approximately $493,000. Rather than imposing a corporate integrity agreement (CIA), the settlement agreement contained a stipulation that UAB will adhere to several compliance requirements for a period of three years from the effective date of the agreement. UAB agreed to operate its existing compliance programs and to devote at least the current level of resources to these efforts. The existing compliance programs, including budgets, are outlined in attachments to the settlement agreement. These requirements include reporting of overpayments to federal health care programs within 30 days and taking remedial steps on these overpayments within 60 days. UAB is required to report certain events to the OIG. UAB is also required to submit an annual report regarding its compliance program to the OIG. The OIG is entitled to request copies of UAB's books, records, or other documents and supporting materials related to UAB's compliance program. Additionally, the OIG is entitled to conduct on-site reviews and interview employees, contractors, or agents. Should UAB fail to comply with these requirements, the settlement agreement includes monetary penalties.

The UAB case shows that the government is continuing to carefully scrutinize research activities. It also shows the government's willingness to pursue both traditional FCA actions involving overbilling NIH through grants as well as FCA actions involving billing Medicare for services already paid for through research grants. In addition, the description of UAB's various compliance efforts related to research is instructive.

Copies of the Settlement Agreement are available. Please contact the author for your copy.

Mr. Mathias thanks Marla Y. Johnson, a law student interning for the summer at Ober|Kaler, for her invaluable contributions to the writing of this article.