Former TSRI employee and whistleblower Thomas Burris, who worked at the Florida campus (shown), will be paid $1.75 million, the government says. TSRI photos

In the wake of a whistleblower suit, The Scripps Research Institute has agreed to pay $10 million to settle claims it improperly charged NIH-funded research grants for time spent by researchers on nongrant-related activities, the government announced Friday.

The renowned nonprofit biomedical research institute with campuses in La Jolla and Jupiter, Florida, is accused of using the grants on banned activities including writing new grant applications.

The money also allegedly was used for teaching and other administrative activities, the Department of Justice said.

Unsealed documents in whistleblower case against TSRI. (PDF)

“The NIH has finite resources to support important research across the nation,” said Acting Assistant Attorney General Jeffrey Clark for the Department of Justice’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.”

In a statement to Times of San Diego, Scripps Research said it reached an agreement with the government resolving an inquiry into its grants management practices between 2008 and 2016.

“The inquiry stemmed from an accounting discrepancy that averaged less than half of 1% per year of the institute’s annual federal grant funding,” said the statement.

“Throughout the course of the inquiry, the Institute fully cooperated with the federal government, providing all requested documentation and assisting government investigators. No questions were raised concerning the quality or conduct of our research or the contributions of our faculty to science, innovation and the improvement of human health.”

Scripps Research added that it “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.”

The settlement resolves allegations originally brought in a lawsuit filed under whistleblower provisions of the False Claims Act by Thomas Burris, a former TSRI employee.

The act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. Burris will receive $1.75 million, the government says.

Burris worked on the Florida campus, according to a 2013 newsletter account. But he named La Jolla officials taking part in the scheme. They worked at Scripps’ Office of Sponsored Programs.

Burris, now at St. Louis College of Pharmacy, worked from September 2008 through December 2013 at Scripps Florida, serving as a tenured professor of the Department of Molecular Therapeutics and also, from 2009 through 2013, as a professor of the Department of Metabolism and Aging.

During those years, the DOJ said, Burris was caught up in a high-pressure system that led to the alleged fraud — forcing staffers to secure 100% of their salary via grants. (He names more than 40 others in the same position, mostly at the La Jolla campus.)

Burris had eight federal research grant projects totaling over $10 million, while also preparing and submitting at least 18 new grants/resubmissions that were never awarded, the government says.

“During this period, [Burris] estimates that he spent between 20%-50% of his working time on grant proposal activity,” the DOJ said. “Further, he estimates that other faculty and research staff spent a significant amount of their time assisting him in preparing the grant applications.”

Thus, the DOJ said, Scripps knowingly overcharged the eight awarded grants for Burris’ salary by 20%-50% for his time and a portion of the other researchers’ time spent on activity not related to those grants — writing and compiling the data for 18 other grant applications or resubmissions.

“His research focused in part on developing drugs targeting nuclear receptors for treatment of diseases including Type 2 Diabetes, Heart Disease, Cancer and Alzheimer’s,” the filing said. “The allegations in this Complaint are based upon information [Burris] discovered through his work at Scripps and through his own personal efforts, observations and investigations.”

The Justice Department’s case was initiated May 19, 2015, under U.S. Attorney General Loretta Lynch and Rod Rosenstein, then the U.S. attorney for Maryland.

The settlement told Friday was the result of a coordinated effort by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the District of Maryland and the Office of Inspector General of the Department of Health and Human Services.

“Federal grant recipients must use the grant funds they receive on tasks that specifically relate to the funded project,” said U.S. Attorney Robert K. Hur. “Those that improperly charge the government for costs unrelated to the project must be held accountable.”

Maureen R. Dixon is special agent in charge with the U.S. Department of Health and Human Services Office of Inspector General.

“Taxpayers funds for medical research are finite and the need for scientific advances is great,” Dixon said. “Therefore, it’s critical that these resources are used as intended.”

The $10 million penalty is relatively modest compared with the money it’s received over the years from the National Institutes of Health.

“From 2008 through 2014,” said a legal filing, “Scripps applied for and received from [NIH] over $1.5 billion in research grant funding. Each year Scripps is awarded grant money in the amount of approximately $250 [million].”

Even so, the institute was once labeled “financially-troubled.”

In February 2018, the institute’s CEO said TSRI was on the road to become financially independent within three to five years.

The settlement resolves allegations that between 2008 and 2016, TSRI failed to have a system in place for its faculty to properly account for time spent on activities that cannot be charged directly to NIH-funded projects or are unrelated to the research activities of the NIH-funded project.

Consequently, the U.S. contended that TSRI improperly charged time spent by faculty on developing, preparing, and writing new grant applications directly to existing NIH-funded projects, rather than allocating such charges as indirect costs.

(The claims resolved by the settlements are allegations only, the DOJ said. There has been no determination of liability.)

The U.S. also alleged that TSRI improperly charged NIH-funded projects for time spent by its faculty on other activities unrelated to the funded projects, such as teaching, TSRI committee work and other administrative tasks.

Updated at 5:10 p.m. Sept. 11, 2020