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Tuesday April 8 5:42 AM EDT

NYU Medical to Pay Record Fraud Settlement

New York University Medical Center agreed to pay a record $15.5 million
to settle civil charges that it used false information to obtain inflated
federal research grant
reimbursements, prosecutors said Monday.

The settlement is the largest payment by a university for claiming too much
in indirect costs
associated with federally sponsored research, the government said.

"Health care fraud and rising costs are at crisis levels in this country,"
Mary Jo White, U.S.
Attorney for the Southern District of New York, said.

This settlement demonstrates the government's strong resolve to combat
abuses and overcharges by
educational institutions and to ensure that no institution receives more
than its fair share of limited
federal research funds.

The settlement is unusual is that it combines a monetary damage recovery
along with the finalization
of a rate negotiation.

Over the years NYU, like other universities, has negotiated indirect cost
rates with the Department
of Health and Human Services' Division of Cost Allocation.

One part of the settlement addresses allegations that NYU Medical Center
provided false
information to the government in negotiations over the center's indirect
cost rates for the fiscal years
1982 through 1993. These are the rates at which indirect costs are
reimbursed on NYU Medical
Center's federally sponsored research grants and contracts.

Another part of the settlement covers rate negotiations for indirect costs
for fiscal years 1994-1997.
NYU Medical Center said that the rates for these years had previously been
agreed to on a tentative
basis with the DHHS and the settlement provided an opportunity to reach a
finalization.

The center said a significant portion of the settlement funds this
finalization of rates. It said this
portion is not related to the false claims allegations.

Although the medical center has agreed to pay the $15.5 million, it denied
any wrongdoing. It said
in a statement that it settled the suit to avoid the expense of protracted
litigation with the
government.

"The medical center has worked closely with the government since first
being advised of the
existence of the complaint in July 1995 and we are pleased to have this
matter resolved. As the
settlement agreement makes clear, we do not believe there was any
intentional wrongdoing or
liability," it said.

The government's complaint alleged that the medical center provided false
information in a number
of different ways. Among allegations is that it submitted duplicate claims
for the same costs in its
research related indirect costs proposals and in the hospital reports
submitted for reimbursement by
Medicare, a separate federal program.

The government also alleged that duplicate claims were submitted for
certain environmental services
costs by NYU Medical Center and New York University. Other alleged
violations included
unallowable expenses relating to entertainment, capital interest and
overstatement of housekeeping
expenses.

The original suit was filed in December 1993 by Emmanuel Roco, a former NYU
Medical Center
assistant manager of financial studies, who brought the action under a
federal law that allows an
individual to file a complaint on behalf of the government and to share in
the proceeds of the action.

Prosecutors said they had reached an agreement with Roco under which he
will receive more than
$1.5 million. The figure was approved by a federal judge Monday.

*****************
Anthony M. Boccanfuso, Ph.D.
Director
Office of Sponsored Programs and Research
Bowling Green State University
Bowling Green, Ohio 43403
419-372-2481; 419-372-0304 (fax)
xxxxxx@bgnet.bgsu.edu
http://www.bgsu.edu/offices/spar/HomePage.html