Scripps Research Pays $10M To Settle Federal Grant FCA Suit

Posted September 14th, 2020.

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By Daniel Wilson

Law360 (September 14, 2020, 9:07 PM EDT) — Scripps Research will pay $10 million to settle a whistleblower suit alleging it used grants from the National Institutes of Health to pay for unrelated work by its researchers, the U.S. Department of Justice announced.

The settlement ends a False Claims Act lawsuit filed by former Scripps employee Thomas Burris, who accused the biomedical research institute of unlawfully using NIH grant money to cover time used by researchers for teaching, administrative activities and developing new grant applications, the DOJ said Friday.

The institute did not admit any liability, the DOJ said.

“The NIH has finite resources to support important research across the nation,” said Jeffrey Clark, the acting assistant attorney general for the DOJ’s Civil Division. “Today’s settlement demonstrates our commitment to protect those resources by ensuring that NIH grants funds are used for the purposes for which they were intended.”

Scripps, a nonprofit organization with campuses in La Jolla, California, and Jupiter, Florida, is a major biomedical researcher, employing thousands of scientists and holding nearly 1,100 patents, according to its website.

It receives hundreds of NIH grants each year, but it lacked a system between 2008 and 2016 to properly account for time spent on activities that weren’t supposed to be charged to those grants, the DOJ said. The terms of federal grants require that funding must be used for tasks directly related to the purpose of that grant.

According to Burris’ 2015 complaint, which was unsealed Thursday, federal grants are the “lifeblood” of Scripps’ operations.

Scripps averages about $250 million in research grants each year, more than 85% of which comes from the federal government, and nearly all of the federal funding comes from the NIH, said Burris, a former tenured professor at the institute. Between 2008 and 2014, the institute received more than $1.5 billion in NIH grant funding, according to his complaint.

The complaint alleged that the institute knowingly charged the government for costs it wasn’t allowed to claim through a “soft money policy” that required its faculty to cover 100% of their salaries through grant funding.

However, faculty members spend much of their time teaching, carrying out administrative activities or applying for new grants, which can’t lawfully be charged to existing federal grants, Burris said.

Burris, as a whistleblower, will receive a $1.75 million cut of the settlement, the DOJ said.

Counsel for Burris did not immediately respond to a request for comment Monday.

Scripps spokesman Chris Emery told Law360 on Monday that the settlement had stemmed from an inquiry into “an accounting discrepancy that averaged less than half of 1% per year of the institute’s annual federal grant funding.”

The institute had fully cooperated with the government throughout that inquiry, and there was no issue regarding the quality or conduct of Scripps’ research, he said.

“Scripps Research tremendously values the investment the federal government makes in scientific research, and we are deeply committed to using this support to its utmost to make discoveries and innovations that improve human health,” Emery said.

The government is represented by Jeffrey B. Clark, Jamie Ann Yavelberg, Patricia L. Hanower and Yolonda Y. Campbell of the U.S. Department of Justice’s Civil Division, and Robert K. Hur and Allen Loucks of the U.S Attorney’s Office for the District of Maryland.

Burris is represented by Vincent McKnight of Sanford Heisler Sharp LLP, Sherrie R. Savett, Joy P. Clairmont and Russell Paul of Berger & Montague PC, and Mark Allen Kleiman of the Law Office of Mark Allen Kleiman.

Attorney details for Scripps were not immediately available Monday.

The case is U.S. ex rel. Burris v. The Scripps Research Institute, case number 1:15-cv-01443, in the U.S. District Court for the District of Maryland.

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