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Federal Appeals Court Upholds Fraud Verdict Against Cornell University Medical School For Misuse Of NIH Aids Funding
Date:9/6/2012

the fellows were engaged primarily in activities related to medicolegal cases instead of HIV research. Indeed, Dr. van Gorp had represented in his initial grant application to the NIH that clinical work is a "springboard" for developing research activities, and considering the disproportionate number of medicolegal cases that the fellows evaluated, the focus of the fellows' research was unrelated to HIV. Dr. Feldman contended that Defendants misrepresented that the fellows would be exposed to formal HIV-courses that were never taught, key faculty on the grant who were never introduced to the fellows, and a breadth of HIV-research in which the fellows were never involved. Feldman argued that the defendants fraudulently failed to disclose the changes to NIH in each of its annual progress reports to NIH, despite the fact that Cornell was legally obligated to disclose them in those reports, and that the deliberate non-disclosures would have been material to NIH's decision to continue to fund the grant. The jury agreed that Cornell had committed fraud in failing to disclose the changes – and affirmatively representing that no changes had occurred – in each of three successive progress reports.

Based upon the jury's findings of fraud, Judge Pauley had entered an award of $855,714, representing three times the amount the government paid to Cornell subsequent to its submission of the first fraudulent progress report, plus $32,000 in statutory penalties and more than $625,000 in attorneys' fees and costs to Dr. Feldman.

THE AFFIRMANCE BY THE COURT OF APPEALS

The Court of Appeals rejected three separate arguments raised by Cornell and van Gorp. Defendants argued that the Court had miscalculated the amount of damages suffered by the Government; that the evidence was insufficient to prove that the fraudulent misrepresentations were material; and that the lower court improperly excluded evidence.

In its 48-page opinion, a panel of the Cour
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SOURCE Salmanson Goldshaw, P.C.
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