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olumbia University must pay $9.5 million to settle charges that it repeatedly overbilled the National Institutes of Health for hundreds of research grants, the Justice Department said Thursday.

The university admitted to charging NIH on-campus overhead for psychiatric and neurological research that was actually conducted off-site, primarily in rent-free offices owned and operated by New York state and New York City. For 12 years, the university’s medical school sought and received a “facilities and administrative rate” that was about double what it should have been, according to  the US attorney in Manhattan, Preet Bharara, whose office handled the case with Scott J. Lampert of the Department of Health and Human Services.

“All institutions that receive federal grant money must abide by applicable rules and regulations governing the use of funds,” Bharara said. “For years and for over 400 research grants, Columbia improperly sought and recovered inflated” bills.

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Lampert, special agent in charge of the New York region for the HHS Inspector General, was tougher on the elite university, adding: “It is disturbing that Columbia University, a prestigious institution, would improperly seek excessive cost reimbursements from NIH, as alleged in the settlement. ”

“Money gained by such behavior deprives other research programs of funds that could yield life-altering new treatments.”

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The whistleblower case against Columbia was brought by an administrative employee, Matthew Chisholm, who noticed improprieties in the school’s billing for federal grants.

“When he saw they were billing on an on-site basis for things being done in a facility that was off-site he knew something was wrong,” said Chisholm’s attorney, Tim J. McInnis. “He was very troubled by the conduct and troubled by the fact that the people whose attention he brought it to either did not want to or were not able to do anything about it.”

The Justice Department joined the case after reviewing Chisholm’s complaint.

A Columbia spokesman said Columbia is committed to compliance with all requirements for federal grants.

“In this case, Columbia believed in good faith that it was appropriate to apply an ‘on campus’ indirect cost rate to research performed by Columbia faculty in certain buildings owned by the state or city that are located on our medical center campus, ” said Scott N. Schell, vice president for public affairs. “We are pleased to put this dispute behind us and resolve the matter.  Columbia looks forward to continuing to work cooperatively with its valued research partners in government.”

NIH did not return an email seeking comment on the matter. McInnis said that Chisholm has left Columbia, and is working for another health care system.

Reuben Guttman, a Washington attorney who specializes in whistleblower cases, was not surprised about the case.

“A government contract, particularly in the health care research arena,  is like an electronics store with a  plate glass window during a power failure,” Guttman said. “The risk of abuse or theft is significant.”

An earlier version of this story misspelled the name of Matthew Chisholm.

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