Yale pays $7.6 million to settle federal investigation

Say what you will about Wall Street firms. But when it's universities that receive billions of dollars from the government, mistakes don't come cheap. In late December, the U.S. Attorney's Office in New Haven announced that Yale had agreed to pay $7.6 million to settle allegations that it had made false claims on federal research grants. The settlement ended a two-year investigation that covered more than 6,000 federal grants worth $3 billion from around 30 federal agencies, according to Acting U.S. Attorney Nora Dannehy.

Dannehy says that Yale's alleged sins were twofold. First, some costs were charged to the wrong grants. Researchers, she says, "were motivated to carry out these wrongful charges because the grant was nearing its expiration date, and federal regulations require that unspent grant funds be returned to the government." Second, researchers overestimated the time and effort they spent on a particular grant. "The government's evidence was that some researchers submitted 100 percent of their time to a federal grant, when in fact they were spending some of their time on unrelated work."

Yale, for its part, denied liability for any false claims. But the university acknowledged in a statement that "some errors did occur, particularly with respect to transfers of costs to some federal awards from other federal awards or Yale accounts."

In September 2006, three months after receiving the government subpoenas that started the investigation, Yale established the Office of Research Administration to train faculty and staff in compliance with federal grant regulations. Andrew Rudczynski, who holds the recently created position of associate vice president of research administration, says that Yale has installed a web-based system to track effort reporting. The university is also working on systems to provide better feedback to faculty about their grants so that they are kept apprised of how much time has elapsed on a grant and how much money they've spent.

Yale's transgressions aren't unique. In the past six years, several institutions, including Northwestern, Johns Hopkins, and Harvard, have paid settlements in the low millions over claims that researchers had overestimated their effort reporting on grants from the National Institutes of Health. The Northwestern and Johns Hopkins investigations were prompted by whistle-blowers, but Harvard voluntarily disclosed its problem to the NIH. No individuals were named in Yale's settlement, and Dannehy would not reveal what prompted the investigation into Yale. But the subpoenas followed a much smaller audit in which the Department of Health and Human Services had accused Yale of slipshod accounting on a $1.7 million grant for research on gene expression in stem cells.

Yale cooperated fully with the investigators - too fully, in the minds of some faculty members. For starters, Yale lawyers asked for copies of the hard drives of some faculty, though the lawyers backed down in a couple of instances when professors raised questions about the propriety of handing over drives that contained confidential information such as student evaluations. And since July 2007, faculty who work on sponsored research have been required to complete a 45-minute web-based training program on grant administration and pass a ten-question exam. Rudczynski says that nearly 90 percent of faculty who are principal investigators on grants have completed the training.

"I looked over the exam and the questions were ridiculous," says Joel Rosenbaum, a professor of molecular, cellular, and developmental biology (whose grants were not targeted in the investigation). "To keep track of all the myriad rules and regulations, I have to take an exam to prove that I'm capable of running a grant? I've run a research lab for 40 years. Why would I want to study all those rules when all I have to do is lift a telephone and someone should be able to tell me what I can and can't do? I refused."

The university is in a tight spot. It receives $400 million in federal research grants annually. When President Richard Levin announced the settlement, he said: "As stewards of public funds, it is our duty to adhere strictly to the regulations." Rudczynski says Yale recognizes the many demands on professors' time, but wants the faculty to shoulder more of the burden of compliance. After all, "if you gave your checkbook to me, you'd like to make sure I spent the money in an appropriate way." That means faculty members now have to add a new skill to their resume: accounting.