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Yale Under Investigation
Y: In June, the government subpoenaed Yale’s records on many federal research grants, some of them going back ten years. What’s the nature of these subpoenas?
L: This is a broad investigation of Yale’s stewardship of federal funds. Without anticipating the outcome, we are treating it as an opportunity to overhaul our policies and procedures and educate faculty and staff to ensure compliance with all rules and regulations governing federal grants. The subpoenas were issued by three different federal agencies: the Department of Defense, the Department of Health and Human Services—representing the National Institute of Health—and the National Science Foundation. They focus on 47 grants and contracts totaling $45 million in federal awards. Although this represents a small fraction of Yale’s total grant activity, it’s still a very substantial sum of money. The grants funded research in 14 departments—12 in the Faculty of Arts and Sciences and 2 in the medical school.
These subpoenas also ask for information about sub-grants—where Yale was a subcontractor to a different federal grantee, usually another university where members of our faculty have collaborators. This request is more open-ended. The government didn’t identify any particular sub-grants, so more funds are potentially subject to challenge. And they’ve also asked for information on our general policies concerning grant administration. These are very broad subpoenas, covering, I’m told, many tens of thousands of documents. We have a team of lawyers making sure that we locate the documents that are responsive to the subpoenas and produce them to the government as quickly as possible.
Y: But Yale hasn’t been charged.
L: That’s correct. Yale has not been charged with any wrongdoing. The subpoenas are simply requests from the inspectors general of three agencies for documents and information. Criminal investigators were involved in interviews of a few Yale employees just days before the subpoenas were issued, but there has been no indication that Yale or anyone at Yale is the target of a criminal investigation. Many other universities have been served with similar subpoenas in recent years.
Y: Has Yale had any official or unofficial indication of what the government is looking for?
L: No, we haven’t. We’ve not been advised why these particular grants were chosen. We do know that there was an earlier audit of a sub-grant to Yale, conducted about a year ago by the Department of Health and Human Services. The auditors did not allege that any charges to the sub-grant were unrelated to research, but they found some expenditures that should not have been charged to it. Other charges were disallowed for inadequate documentation. Many regulations govern the conduct of universities administering federal funds, and charges to grants do require documentation.
This investigation gives us an opportunity to reinforce with our faculty and business managers the importance of compliance, and we are doing so aggressively. The university officers and I have been meeting with business managers, department chairs, deans, and directors all summer, and in September I will begin a series of meetings with faculty active in federally funded research, to underscore our intention not only to be compliant, but to become best-in-class in our stewardship of federal funds.
Y: You mentioned last year’s audit of a sub-grant. DHHS audited seven grants at universities and hospitals in the past 18 months, and disputed charges in five of them. Yale had the second-largest total of disputed charges, $194,000 out of a five-year grant for $1.7 million.
L: The government did not find any funds expended for non-research purposes, but there were substantial problems with the allocation of charges to the sub-grant and the documentation of some of those charges. The biggest documentation problem was associated with the transfer of costs from one federal grant to another. Researchers sometimes transfer costs because they ordered supplies for one grant that they end up using on research involved in a second grant. Or they assign a research assistant to one grant who ends up spending time on the second grant as well. If you don’t anticipate these things, you have to go in and make transfers from one grant to another and document the reasons. Such transfers are permissible as long as they are properly documented and explained. We, and the government, want to be sure that costs are not transferred to a grant on which they don’t belong.
Y: DHHS also said the principal scientist on the grant did not spend the required amount of time on it. In its response, Yale strongly disagreed. It listed several studies by Bernard Forget of the medical school to show that the grant’s purpose was fulfilled. But Yale conceded that it did not have documentation of his time.
I was struck by DHHS’s statement that Yale “does not have procedures for monitoring” how much time key people spend on their grants. Usually the audits say procedures are “inadequate” or the like. The current subpoenas include faculty time records—even personal calendars. Do you think this finding that Yale “does not have procedures” might be a factor in the subpoenas?
L: I don’t know. We do have procedures, but there is substantial room for improvement in our reporting of effort devoted to federal grants. Since the sub-grant audit began more than a year ago, we’ve been working to improve procedures, and we’ve accelerated that work dramatically. The importance of compliance with the federal rules on effort reporting has been and will continue to be a major focus of my conversations with administrators and faculty.
Y: The audit said Yale found an e-mail that had been altered and reported it. The original e-mail had asked for costs to be transferred from other grants to the sub-grant, which was about to expire with funds still remaining. A reference to “spending down” the sub-grant was deleted in the altered e-mail.
L: That e-mail was a matter of great concern to us. When we discovered the altered email, we immediately reported it to the federal auditors. It is intolerable, no matter what the intention, for a Yale employee to alter a document in the course of a government audit. And it’s wrong to charge a research grant that is about to expire for expenses unrelated to the grant. There is simply no doubt about it.
Y: DHHS said Yale investigated and took disciplinary action. What was the outcome?
L: Disciplinary action was taken. I can’t comment about the nature of it; it’s against our policy to talk about disciplinary actions taken against an individual.
Y: In October, when DHHS finished its fieldwork on the audit, Dr. Forget stepped down as chief of hematology. Was that move related to the audit?
L: I can’t comment on that.
Y: Yale also moved to upgrade its accounting systems.
L: Yes. Our own internal auditors had raised concerns about documentation of cost transfers and the timeliness of filing government reports. So we brought in the Huron Consulting Group, who are leading experts in grant administration. They have advised many other research universities. I have been very impressed with the quality of their insight and experience. They made a number of recommendations last fall.
Paramount among them was to reorganize our whole system of grants administration by bringing in a single individual who would be the focal point for all our research compliance efforts. Previously we had separate offices for preparing grant proposals and for monitoring and reporting expenses on those grants. And we had a whole host of other compliance operations—such as the protection of human subjects, safety, and animal care—that reported to different parts of the administration. So we created a new position of associate vice president for research administration, and we have brought on Andrew Rudczynski from the University of Pennsylvania. He is regarded as one of the strongest research administrators in the country. We looked far and wide, and he has an outstanding reputation.
Also, we are moving very rapidly to clean up our backlog of financial reports and grant closings, and we are working to improve the timeliness of our financial reports and closings going forward. We are also improving our processes so that faculty can more easily allocate costs properly when they first spend research funds, so transfers among grants can be avoided later. And we are revamping our process for reporting and documenting effort on federal grants and contracts. We want our systems to make it as easy as possible for our faculty to be compliant with all the regulations.
Y: Given these investigations, are you troubled? Do you think Yale needed to get its house in order?
L: I see this as an opportunity for Yale to improve a whole host of its business processes. We have a new vice president for finance and administration, Shauna King, who is an expert in managing major changes in business systems, and now an experienced research administrator is joining us, at a time when we are making compliance a high priority. Our goal is not only to be sure that we are compliant; we want to be second to none in the quality of stewardship for federal funds.
Y: Has Yale ever had subpoenas of this scope before?
L: In the mid-1990s many major academic medical centers were audited for compliance with Medicare regulations. Like many other institutions we had a massive audit. Many of our peer institutions ended up having to reimburse the government, some for as much as $40 million. But we came out without any adverse findings. The auditors were here for many months and went over innumerable documents, and they found that our record was excellent. That’s the way we want it to be—always.
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