CHICAGO—Northwestern University will pay the United States $2.93 million to settle claims of cancer research grant fraud by a former researcher and physician at the university’s Robert H. Lurie Comprehensive Center for Cancer in Chicago. Northwestern agreed to the settlement in a federal False Claims Act lawsuit that was unsealed today after the government investigated the claims made by a former employee and whistleblower who will receive a portion of the settlement.

Northwestern allegedly allowed one of its researchers, Dr. Charles L. Bennett, to submit false claims under research grants from the National Institutes of Health. The settlement covers improper claims that Dr. Bennett submitted for reimbursement from the federal grants for professional and consulting services, subcontracts, food, hotels, travel, and other expenses that benefited Dr. Bennett, his friends, and family from January 1, 2003, through August 31, 2010.

The allegations were made in a civil lawsuit filed under seal in 2009 by Melissa Theis, a former employee of the Lurie Cancer Center, who will receive $498,100 in settlement proceeds. Her allegations were investigated by the U.S. Department of Health and Human Services Officeof Inspector General, the Federal Bureau of Investigation, the National Institutes of Health, and the U.S. Attorney’s Office, resulting in the settlement announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois. At the same time, the whistleblower lawsuit that initiated the case was unsealed. United States, et al., ex rel. Melissa Theis v. Northwestern University, Dr. Charles L. Bennett, et al., No. 09 C 1943 (N.D. Ill.).

Northwestern, which fully cooperated during the investigation, did not admit liability as part of the settlement.

“Allowing researchers to use federal grant money to pay for personal travel, hotels, and meals and to hire unqualified friends and relatives as ‘consultants’ violates the public trust and federal law,” Mr. Shapiro said. “This settlement, combined with the willingness of insiders to report fraud, should help deter such misconduct, but when it doesn’t, federal grant recipients who allow the system to be manipulated should know that we will aggressively pursue all available legal remedies,” he added.

“The mismanagement or improper expenditure of grant funds is unacceptable and will not be tolerated,” said Lamont Pugh, III, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General-Chicago Region. “The OIG will continue to diligently investigate allegations of this nature to ensure that taxpayer dollars are being properly utilized.”

Cory B. Nelson, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation, said, “The FBI takes allegations of fraud seriously, especially those allegations from insiders who are often in the best position to detect wrongdoing long before it would otherwise come to the attention of law enforcement.”

Northwestern agreed to pay the settlement within 14 business days. The agreement covers allegations that the university submitted false claims to NIH for costs that Dr. Bennett incurred on his grant-funded research projects involving adverse drug-events, multiple myeloma drugs, a blood disorder known as thrombotic thrombocytopenic purpura, and quality of care for cancer patients. Dr. Bennett allegedly billed those federal grants for family trips, meals and hotels for himself and friends, and “consulting fees” for unqualified friends and family members, including his brother and cousin. At Dr. Bennett’s request, Northwestern also allegedly improperly subcontracted with various universities for services that were paid for by the NIH grants.

The United States was represented by Assistant U.S. Attorney Kurt N. Lindland.

Under the federal False Claims Act, defendants may be liable for triple the amount of actual damages and civil penalties between $5,500 and $11,000 for each violation. Individual whistleblowers may be eligible to receive between 15 and 30 percent of the amount of any recovery.