By: Sara Kropf
We’ve written before (see here, here and here) about the dangers of committing research misconduct, particularly for research that uses federal funds.
Now there’s a new danger. The federal government has recently started cracking down on institutions’ use of foreign funds for scientific research, when those funds are not disclosed to the federal government. The Justice Department’s crackdown creates a significant risk for universities and individual researchers alike.
If you work as a researcher or investigator for a university and the university is under federal investigation for improper use (or failure to disclose the receipt) of foreign funds, then you may need your own lawyer to advise you about exposure to criminal liability or to represent you in your institution’s internal investigation.
If you are a lawyer representing someone in this situation, then you should understand the background of DOJ’s crackdown and the rules that are in play.
This post will go over the background for why DOJ chose to focus on this area, as well as the National Institutes of Health (NIH) rules that are in play. Since federal funding for scientific research goes through NIH, its rules are a key component for any investigation by DOJ.
In Part 2, we’ll talk about how a failure to make these disclosures could lead to criminal charges or civil False Claims Act liability.
Background of DOJ’s Efforts
The crackdown is a result of national security concerns. National security officials believe that other countries, particularly China, are targeting universities to obtain scientific knowledge and information about technology advances. According to the federal government, the Chinese government pays thousands of scientists around the world to work at Chinese institutions. The stated concern is that this work is not disclosed to U.S. institutions that may employ these individuals.
According to a 2018 intelligence report, China recruited over 2,600 scientists through a program called the “Thousand Talents Plan.” Congress held hearings about this program to explore its effects. The publication Inside Higher Ed reported comments by Jodi Black, who directs NIH’s office of extramural research. Black said that NIH had identified at least 120 scientists at 70 different institutions who failed to fully disclose contributions from foreign sources.
Although some have accused DOJ and NIH of racial profiling by focusing so heavily on Chinese researchers, these accusations have not slowed DOJ’s efforts. Rather, it is actively soliciting tips from universities about researchers who did not disclose foreign ties.
Adding to the problem, the US Department of Health and Human Services Office of Inspector General issued a report in September 2019 finding that most institutions were not following the rules about disclosures. It found that of 1,875 institutions “that received NIH funding in fiscal year 2018 and were required to have FCOI policies, 1,013 did not have FCOI policies posted on their website.”
As explained below, these policies must be implemented by institutions that receive federal funding. Of course, not having the right policies on your website is not a crime, but it does give DOJ an excuse to investigate further. Plus, any time DOJ can find a national security reason to conduct an investigation, it will have a wide berth.
Keep in mind that this is not a small problem. The New York Times reports that since 2012, colleges and universities have received over $10 billion in foreign assistance, and noted that these numbers may underreport the total amount received.
NIH Guidance
Federal regulations, namely 42 CFR 50, Subpart F, govern financial conflicts of interest (FCOI) for investigators. The purpose of the regulations is to ensure that any research completed with federal funds “will be free from bias resulting from Investigator financial conflicts of interest.” It requires institutions to implement and make available FCOI policies. It requires an institution to investigate any potential FCOIs and take steps to ameliorate them.
Perhaps most important, it requires institutions to affirmatively report FCOIs to the federal government.
Interestingly, the regulation does not say that accepting foreign funds creates an automatic FCOI or a reportable event for an institution. But later guidance makes that clear.
In March 2018, NIH issued “Financial Conflict of Interest: Investigator Disclosures of Foreign Financial Interests” (Notice Number: NOT-OD-18-160). I won’t go into the slightly tortured reading of the regulations, but suffice to say, NIH concludes that foreign grants must be disclosed by institutions:
Therefore, Investigators, including subrecipient Investigators, must disclose all financial interests received from a foreign Institution of higher education or the government of another country (which includes local, provincial, or equivalent governments of another country).
The March 2018 Notice was followed up by another Notice in July 2019 that included more detailed guidance. NIH issued “Reminders of NIH Policies on Other Support and on Policies related to Financial Conflicts of Interest and Foreign Components” (Notice Number: NOT-OD-19-114). In summary, it says:
The intent of this notice is to remind the extramural community about the need to report foreign activities through documentation of other support, foreign components, and financial conflict of interest to prevent scientific, budgetary, or commitment overlap. NIH has long required full transparency for all research activities both domestic and foreign and does not consider these clarifications to be changes in policy. The requirements referenced in this Notice, along with the other obligations in the NIH Grants Policy Statement (NIHGPS) and other terms and conditions of award, are instrumental to achieving the mutual goal of NIH and the extramural community, to protect the integrity of biomedical research.
The Notice includes a reminder that disclosure of support has a very broad interpretation:
NIH reminds applicants and recipients that other support includes all resources made available to a researcher in support of and/or related to all of their research endeavors, regardless of whether or not they have monetary value and regardless of whether they are based at the institution the researcher identifies for the current grant. This includes resource and/or financial support from all foreign and domestic entities, including but not limited to, financial support for laboratory personnel, and provision of high-value materials that are not freely available (e.g., biologics, chemical, model systems, technology, etc.).
The Notice goes on to describe certain disclosures that applicants for NIH funds must make. When a university applies for NIH funds, it must make these disclosures on behalf of the individual investigators. The institution must disclose, for example:
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List all positions and scientific appointments both domestic and foreign held by senior/key personnel that are relevant to an application including affiliations with foreign entities or governments…
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Report all resources and other support for all individuals designated in an application as senior/key personnel – including for the program director/principal investigator (PD/PI) and for other individuals who contribute to the scientific development or execution of a project in a substantive, measurable way, whether or not they request salaries or compensation. Information must be provided about all current support for ongoing projects, irrespective of whether such support is provided through the applicant organization, through another domestic or foreign organization, or is provided directly to an individual that supports the senior/key personnel’s research efforts.
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Report all current projects and activities that involve senior/key personnel, even if the support received is only in-kind (e.g. office/laboratory space, equipment, supplies, employees). All research resources including, but not limited to, foreign financial support, research or laboratory personnel, lab space, scientific materials, selection to a foreign “talents” or similar-type program, or other foreign or domestic support must be reported.
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Provide the total award amount for the entire award period covered (including facilities and administrative costs), as well as the number of person-months (or partial person-months) per year to be devoted to the project by the senior/key personnel involved.
The Notice then devotes a section to “Foreign Components,” mandating that funding recipients must determine whether the activities it supports has a “foreign component.” This is a very broad phrase: any “significant scientific element or segment of a project” outside of the United States is a “foreign component.”
The Notice gives a few examples to show how broad the phrase is interpreted:
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performance of work by a researcher or recipient in a foreign location, whether or not NIH grant funds are expended and/or
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performance of work by a researcher in a foreign location employed or paid for by a foreign organization, whether or not NIH grant funds are expended.
Note: There is also a FAQ section for these rules that is worth perusing.
As you can tell, these regulations are broad. But, in light of DOJ’s stated national security interest in cracking down on disclosure violations, institutions and investigators cannot risk treating them lightly.
Our next post will discuss the very real risks of disclosure violations.