Cleveland Clinic to pay $7.6M to settle fraud case

[In the player above, watch previous FOX 8 News coverage on Cleveland Clinic being named among the nation’s best hospitals.]

CLEVELAND (WJW) — The Cleveland Clinic Foundation has agreed to pay $7.6 million to settle allegations that it lied on federal grant applications.

Federal prosecutors brought violations of the False Claims Act against the hospital system, alleging it claimed in research grant applications submitted to the National Institutes of Health that its researcher hadn’t received any other financial support — when in fact he had.

In 2020, federal authorities accused that researcher of wire fraud for the $3.6 million grant, as well as sharing his U.S.-funded research with the Chinese government.

NIH applicants are required to disclose any other outside research funding. That helps the institutes determine whether the applicant has time to complete the research, whether they can remain objective in their research and if they have multiple sources of funding for the same project, according to a Friday news release from Rebecca Lutzko, U.S. attorney for Ohio’s Northern District federal court.

In addition, foundation employees were accused of improperly sharing passwords for the institutes’ online grant reporting platform, according to the release. Some of the false submissions came from employees who were “inappropriately given access” to that platform, prosecutors said.

“Each year, NIH awards federal grants to support research to improve public health, but those funds are limited and the grant process is competitive. Every entity or person who seeks such grant money must strictly play by the rules,” Lutzko is quoted in the release. “As stewards of taxpayer dollars, our office takes seriously its responsibility of ensuring that grant recipients fully and accurately report all required information to NIH so that it may properly award its limited funds to deserving institutions.

“Today’s settlement illustrates the importance of being truthful at every stage of the grants process.”

In addition to the settlement, NIH is imposing a special condition for the hospital’s future NIH submissions. Starting Oct. 1, a “high-level” foundation employee must personally attest to the “truth, completeness and accuracy” of anything submitted to the NIH for one year, according to the release.

In response, the foundation said Friday though it did not agree with the allegations, it settled the case without any admission of guilt “to avoid costly and time-consuming litigation.”

The allegations center around a former Clinic researcher fired in 2020 for committing “multiple violations of the hospital’s policies over many years,” reads the statement. The foundation claims the man concealed research funding he had obtained through academic positions he held in China — positions which also were not disclosed to the foundation.

The statement claims the foundation at the time did not know the researcher’s NIH submissions contained false information. The local NIH investigation mirrored others happening at “hundreds of research institutions across the United States” at that time, according to the statement.

Throughout the federal investigation, the U.S. Attorney’s office assured that the Cleveland Clinic was not its target, according to the foundation’s statement.

“We were surprised that the U.S. Attorney’s office chose to pursue this matter knowing that Cleveland Clinic worked with NIH and the U.S. Attorney’s office on this issue,” reads the foundation’s Friday statement. “We continue to work cooperatively with NIH to strengthen our research processes and remain a good steward of the federal research funds entrusted to our organization. Every day our researchers are advancing lifesaving and enhancing treatments with the help of those funds.”

Federal prosecutors ultimately dismissed the case against that researcher in 2021 “for undisclosed reasons,” reads the foundation’s statement.

The institutes are part of the U.S. Department of Health and Human Services, whose inspectors investigated the case alongside the FBI and the Northern Ohio U.S. attorney’s office, according to the release.

“The accuracy of information reported in applications and other documentation related to federal grants is critical to ensuring that these limited funds are utilized in the most efficient and effective manner and that the integrity of the application process is upheld,” Special Agent in Charge Mario Pinto, of HHS’ Office of the Inspector General, is quoted in the release.

Potential fraud, waste, abuse or mismanagement of HHS programs can be reported to the Inspector General’s Office online or by calling its hotline at 1-800-447-8477.

For the latest news, weather, sports, and streaming video, head to Fox 8 Cleveland WJW.