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DOJ Takes a Bite Out of the Gators’ Hospital System

The University of Florida in Gainesville (the “University”) has settled with the U.S. Department of Justice (DOJ) for claims that the University improperly charged the U.S. Department of Health and Human Services (HHS) for unapproved salaries and administrative costs on hundreds of federal grants the University run hospital system received from HHS.

HHS considers its grants valuable commodities that must be used strictly for the medical research and clinical programs in which HHS has approved funding.  Here, according to allegations, the University was knowingly diverting the grant monies to fund salaries and administrative costs that were not approved in the grants awarded to the University’s hospital system.

DOJ alleged that between 2005 and 2010, the University did not have sufficient internal controls that would promote transparency and accountability as to how the grant monies would be used.  DOJ’s allegations included charges that the University overcharged hundreds of grants for the salaries of its employees, where it did not have documentation to support the level of effort claimed on the grants for those employees.  DOJ further contended that the University charged some of these grants for administrative costs for equipment and supplies when those items should not have been directly charged to the grants under federal regulations.

In response to the news about the settlement, University officials have stated that the University has received nearly 1,900 grants from HHS with funding totaling nearly a billion dollars.  The University officials minimized that the $19.875 million represented only 2% of the HHS grants to the University.  Yet, according to federal databases, the University has received $335.7 million from HHS during the 2005-2010 period, making the settlement represent about 6 percent of funds received.

University officials now acknowledge that the University first discovered the “weaknesses in the system” during an internal audit in 2006 and a “shortcoming” was an “area of focus” during a routine federal audit of the [U]niversity’s fiscal 2008 federal grants.

In response to the publicity about the settlement, the University has emphasized that none of the settlement funds will come from tuition or state or tax-payer-provided funds.