United States ex rel. Feldman v. Van Gorp

• Decision Date: 05 September 2012
• Docket Number: Docket Nos. 10–3297(Lead) 11–975(Con).
• Citation: 697 F.3d 78
• Parties: UNITED STATES of America ex rel. Daniel FELDMAN, Plaintiff–Appellee, v. Wilfred VAN GORP and Cornell University Medical College, Defendants–Appellants.
• Court: U.S. Court of Appeals — Second Circuit

697 F.3d 78

UNITED STATES of America ex rel. Daniel FELDMAN, Plaintiff–Appellee,

v.Wilfred VAN GORP and Cornell University Medical College, Defendants–Appellants. ^*

Docket Nos. 10–3297(Lead) 11–975(Con).

United States Court of Appeals, Second Circuit.

Argued: Jan. 30, 2012.

Decided: Sept. 5, 2012.

Tracey A. Tiska (R. Brian Black, Eva L. Dietz, on the brief) Hogan Lovells US LLP, New York, New York, for Defendant–Appellant Cornell University.

Nina M. Beattie, Brune & Richard LLP, New York, NY, for Defendant–Appellant Wilfred van Gorp.

Michael J. Salmanson (Scott B. Goldshaw, on the brief) Salmanson Goldshaw, P.C., Philadelphia, PA, for Plaintiff–Appellee.

Jean–David Barnea, Rebecca C. Martin, Sarah S. Normand, Assistant United States Attorneys, of counsel, for Preet Bharara, United States Attorney for the Southern District of New York, for Amicus Curiae, The United States of America.

Before: SACK, RAGGI, and CHIN, Circuit Judges.

SACK, Circuit Judge:

The defendants appeal from a judgment of the United States District Court for the Southern District of New York (William H. Pauley III, Judge) denying their motion for judgment as a matter of law and their motion for a new trial following a jury verdict partially in favor of the plaintiff on his claims regarding the misuse of a research training grant brought on behalf of the government pursuant to the False Claims Act, 31 U.S.C. § 3729 et seq., and awarding principally $855,714 in treble actual damages. We conclude that: 1) where the government has provided funds for a specified good or service only to have defendant substitute a non-conforming good or service, a court may, upon a proper finding of False Claims Act liability, calculate damages to be the full amount of the grant payments made by the government after the material false statements were made; 2) there was sufficient evidence from which a reasonable jury could determine that the false statements at issue were material to the government's funding decision; and 3) the district court did not abuse its discretion in excluding evidence of inaction on the part of the National Institutes of Health in response to the plaintiff's complaint regarding the fellowship program in which he had been enrolled.

BACKGROUND

In 1997, appellants Cornell University Medical College 3 (“Cornell”) and Dr. Wilfred van Gorp, a professor of psychiatry at Cornell, applied for funding from the Ruth L. Kirschstein National Research Service Award Institutional Research Training Grant program, also known as the “T32” grant program, of the National Institutes of Health (“NIH”). The T32 program funds pre- and post-doctoral training programs in biomedical, behavioral, and clinical research. T32 grants are meant to “help ensure that a diverse and highly trained workforce is available to assume leadership roles related to the Nation's biomedical and behavioral research agenda.” NIH Guide, “NIH National Research Service Award Institutional Research Training Grants,” at 1 (May 16, 1997), United States ex rel. Feldman v. Van Gorp, No. 10–3297, Joint Appendix (“J.A.”) 2437 (2d Cir. Jan. 26, 2012) (“NIH Guide”). Positions funded through T32 grants may not be used for study leading to clinically-oriented degrees, “except when those studies are a part of a formal combined research degree program, such as the M.D./Ph.D.” Id. at 2, J.A. 2438. Instead, funded programs must train their fellows “with the primary objective of developing or extending their research skills and knowledge in preparation for a research career.” Id.

Institutions applying for T32 grants undergo a two-tiered review process. It begins with a review of the proposal by a twenty-member “Initial Research Group” (“IRG”), also called a “peer review committee.” IRG members are independent experts in scientific fields related to that of the grant application under review; they are not NIH employees. Each member scores applications based on his or her view of its scientific or technical merit guided by specified criteria, including, among other factors: the program director's and faculty's training records, as determined by the success of former trainees; the objective, design, and direction of the program; the caliber of the faculty; the institutional training environment, including the commitment of the institution to training and the resources available to trainees; and the institution's proposed plans for recruiting and selecting high-quality trainees. The scores are then averaged to arrive at an IRG “priority score.” Testimony of Dr. Robert Bornstein at 1190–91, July 21, 2010 (“Bornstein Testimony”), J.A.1955. This score is included with the IRG members' written comments in a summary statement, which is transmitted to the NIH.

The “second tier” of review is performed by the advisory council of the appropriate constituent organization of the NIH, in this case the National Institute of Mental Health (“NIMH”). The advisory council ranks the applications by priority score, and establishes a “pay line” at the point in the list of applications where there is no more funding available; only the applications above the “pay line” are recommended to the director of the funding institute as potential grant recipients. “The role of the advisory council is not to second-guess the scientific review of the IRG. Rather, [the council] reviews the applications to ensure that they further the goals and interests of the awarding institute. Thus, the IRG review and the resulting high-priority score are keys to NIH funding.” Id. at 1190, J.A.1955–56.

Once an application has placed above the “pay line,” the advisory council makes recommendations based on the scientific merit of the proposal, as judged by the IRG, and the relevance of the proposal to the awarding institute's programs and priorities. Funding is typically approved by the NIH for one year, and recipient institutions are eligible for up to four years of additional funding.

In order to renew a T32 grant, the recipient institution (in this case Cornell) must submit an annual renewal application and a progress report detailing the status of its project. In contrast with initial grant applications, renewal applications are reviewed solely by the NIH on a noncompetitive basis. The NIH considers the progress made under the grant and the grant's budget. By regulation, the annual progress report must contain a “comparison of actual accomplishments with the goals and objectives established for the period,” and must specify “[r]easons why established goals were not met,” if indeed they were not. 45 C.F.R. § 74.51(d)(1)-(2).

Recipient institutions must also “immediately notify” NIH of “developments that have a significant impact” on the research program, including “problems, delays, or adverse conditions which materially impair the ability to meet the objectives of the award.” Id. § 74.51(f). This notification must also include a “statement of the action taken or contemplated, and any assistance needed to resolve the situation.” Id.; see also Draft OIG Compliance Program Guidance for Recipients of PHS Research Awards, 70 Fed.Reg. 71312–01, 71320 (Nov. 28, 2005) (“Prompt voluntary reporting will demonstrate the institution's good faith and willingness to work with governmental authorities to correct and remedy the problem. In addition, reporting such conduct may be considered a mitigating factor by the responsible law enforcement or regulatory office....”).

Cornell's initial grant application at issue here sought funding for a fellowship program entitled “Neuropsychology of HIV/AIDS Fellowship.” Van Gorp Grant Application at 1, J.A. 2254 (April 24, 1997) (“Grant Application”). The application explained that the two-year fellowship would train as many as six post-doctoral fellows at a time in “child and adult clinical and research neuropsychology with a strong emphasis upon research training with HIV/AIDS.” Id. at 2, J.A. 2255. The training program would, according to the application, build on the Cornell faculty's extensive research into the neuropsychology of HIV/AIDS, which included projects examining distress levels in HIV–AIDS patients during the course of their illness, the relationship between the neuropsychology of HIV/AIDS and patients' abilities to function at work or in school, and the possibility of using neuropsychological testing to predict whether AIDS patients will suffer from dementia. The application further explained that van Gorp would serve as the program director, and that he had a “long history of successful research, training and mentoring of students in HIV[ ]related work.” Id. at 40, J.A. 2295.

The 123–page grant application outlined the fellowship's curriculum in detail. Fellows would be required to take “several formal, core didactic courses,” and a numberof elective courses. Id. at 45, J.A. 2300. In the first year of the fellowship, fellows would enroll in five core courses, some of which “have been designed specifically for the HIV Neuropsychology Fellowship.” Id., J.A. 2300. These core courses would be supplemented by a “large number of courses, lectures, neuroscience educational programs, as well as other seminars in a variety of sub-speciality areas.” Id. The curriculum for the second year, which included four core courses, would allow fellows to “develop more independent research skills and devote more time to their HIV research.” Id. The fellows' progress under the grant would be monitored monthly by a formal training committee comprised of several faculty members, as “[o]ngoing evaluation of the curriculum, trainees and faculty is an integral part of the training program.” Id. at 48, J.A. 2303.

The Cornell grant application identified a list of fourteen faculty members who would serve as “Key Personnel,” which the NIH defined as “individuals who contribute to the scientific development or execution of the project in a substantive way.” NIH Grant Application Instructions at 26, J.A. 2612 (June 8, 1999)....