University Pays $1.17 Million to Settle False Claims Act Allegations of Mismanagement of Federally-Funded Grants

University Pays $1.17 Million to Settle False Claims Act Allegations of Mismanagement of Federally-Funded Grants

February 6, 2017

The Department of Justice recently announced that Jackson State University (“JSU”) will pay $1.17 million to settle allegations that it violated the False Claims Act (“FCA”) by mismanaging National Science Foundation (“NSF”) grants. According to the DOJ, the university submitted claims and expended funds under its NSF grants between June 2006 and September 2011, impliedly certifying that each claim was allowable and properly recorded. But when auditors with the Office of the Inspector General arrived on campus in 2012, they determined that the university had made expenditures that were unallowable or lacked sufficient supporting documentation. The DOJ says that further investigation revealed that some university employees fabricated time and effort reports in anticipation of the audit.

After absorbing the sticker shock of this settlement figure, there are lessons to be learned. While grant compliance may seem simple, it is imperative that institutions of higher education remain vigilant. They must ensure that employees and faculty involved in federally-funded research are well-acquainted with the regulations applicable to each of the federal grants they receive. It is important not only to monitor the use of federal grants, but to thoroughly train staff and faculty on allowable and allocable expenditures and proper documentation. Indeed, as part of JSU’s settlement, the university agreed to institute a five-year compliance program, which includes comprehensive training on time and effort reporting and other aspects of grant management. While a robust compliance program is certainly critical, institutions should take a “belt-and-suspenders” approach to risk management and routinely audit and monitor their own internal compliance systems. Universities should also consider investing in electronic time- and effort-tracking systems.

For more information on the settlement, see the DOJ’s press release.

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