Did the University of Kentucky's New President Help Oversee "Rampant" Research Fraud?

Eli Capilouto

The new president of the University of Kentucky was the chief academic officer during a time of "rampant" research fraud at his previous stop, according to federal whistleblower lawsuits filed in the Northern District of Alabama.

Eli Capilouto, the former provost at the University of Alabama at Birmingham (UAB), was named Kentucky's president on May 3 and  assumed the position this week. Did anyone in UK's power structure, before making this hire, bother to examine Capilouto's ties to research fraud that one whistleblower estimated at $600 million? The answer apparently is no. Such an examination would have yielded some disturbing information, and the UK hierarchy must have taken a see-no-evil approach to its presidential search.

UK has set a goal to become a top 20 public research institution, and a university press release about Capilouto's appointment touts his connections to UAB's booming research enterprise, which attracts about $460 million a year in external support and helps the university rank No. 20 in funding from the National Institutes of Health. UK officials might have been wise to take a closer look at how UAB rakes in all of those dollars--and at what role Capilouto might have played in misconduct that is a matter of public record.

Were the UAB whistleblowers "disgruntled insiders" or did they have legitimate concerns? Well, the university paid $3.4 million in 2005 to settle the complaints with the federal government, and that indicates something, indeed, was amiss.

According to public documents, Capilouto served as provost during at least two years of the wide-ranging research-fraud scheme. And those same documents state that the provost's office had played a central role in UAB's handling of funny money.

To be sure, the fraud problem on Birmingham's Southside did not start with Capilouto. One of the whistleblowers, forensic accountant and former UAB research-compliance officer Thomas Gober, filed his complaint in 2001 and said the fraud had been going on for at least 10 years. That means the fraud dated to the early 1990s, maybe earlier, and Capilouto did not become interim provost until September 2002.

But a second UAB whistleblower, rehabilitation-medicine physician Jay Meythaler, filed his complaint in June 2004. And it addresses wrongdoing from 2003, which was after Capilouto had taken office as provost. (See the full Meythaler complaint at the end of this post.)

Jay Meythaler

How bad was the problem at UAB? Meythaler said it involved both UAB and the University of Alabama Health Services Foundation (HSF), which oversees physician services and patient care. In his role as a "relator" in the qui tam case, Meythaler states:

This double billing problem, and/or problem of improperly billing Medicare for research testing, was rampant within the UAB system. HSF performed the billing for UAB and frequently double billed or billed a provider when the test was supposed to be paid for by a grant. Relator participated in faculty senate meetings and voiced his concerns at those meetings about this problem. Other physicians and researchers joined in his concern.

Was Capilouto present in such meetings? Was he aware of the research fraud taking place all around him? It's hard to believe that he wasn't. From Meythaler's complaint:

The misappropriation of indirect grant funds occurs across the board at UAB.

Meythaler cites four of his own grants where he was forced to use clinical income to cover his indirect research costs. Why is that a problem? The federal government and the taxpayers who fund it are not getting their money's worth for research projects. From the complaint:

The government is damaged in two ways. First, the money the government has allotted for indirect costs is misappropriated and the claims for payment under the grant are false claims for payment because the defendants are not using the indirect cost money for the purposes of the grant. Second, because the PIs (principal investigators) are forced to work more clinical hours in order to generate revenue to cover their indirect costs, the PIs have less time to actually work on their grants and the government is not getting the work from the PI that it is paying for.

This scheme, Meythaler states, revolved around the provost's office:

With regard to on-campus UAB grants, all of the indirect cost money goes through the Provost's office. UAB's stated policy is to seek indirect cost reimbursement at the maximum federally approved rates. Those rates can vary from year to year. . . . The Provost's office takes charge of all of the grant money off of each grant for "indirect costs." The Provost's office then negotiates with each Dean a percentage of the total indirect cost funding that the Provost's office will allow to go to the Dean's office. The Dean then negotiates a percentage with each Departmental Chair.

This system is ripe for abuse, and Meythaler points to William Deal, former School of Medicine dean, and Amie Jackson, chair of rehabilitation medicine, as two administrators who handled research funds in irregular ways:

Neither William Deal nor Amie Jackson allowed the indirect cost funding to be used to pay for indirect costs of the research, such as the salaries of the researcher's secretary and other support staff who worked on multiple projects and were not part of the direct costs of a particular project. Rather, William Deal and Amie Jackson kept the money intended to pay for indirect grant funding for unknown purposes.  

What were these "unknown purposes"? That is not clear. But it appears that huge sums of federal research dollars were spent for "unknown purposes" at UAB.

Did Eli Capilouto ride in and clean up this mess? From the content of Meythaler's complaint, it sure doesn't look like it. Meythaler states that misappropriation of indirect costs occurred on at least four of his grants in 2003, after Capilouto had become provost.

Meythaler now serves on the faculty at Wayne State University in Detroit. Did University of Kentucky officials contact him in vetting their presidential candidates? Apparently not. If they had--and if they had examined public documents in Birmingham--it's unlikely that Eli Capilouto would have stepped into the UK president's office this week.

(The complaint below is stamped with notations showing that it was filed under seal, which is the usual procedure for qui tam cases. The seal later was lifted, and the complaint became a public document.)


Meythaler Complaint