United States Ex Rel. Feldman v. Van Gorp
697 F.3d 78
| 2d Cir. | 2012Background
- Cornell University Medical College and Dr. Wilfred van Gorp sought NIH funding for a T32 research training fellowship program on Neuropsychology of HIV/AIDS.
- Grant applications and renewals claimed a curriculum, faculty, and structure designed to train HIV-focused researchers; NIH approved initial and renewed funding through multiple years.
- Feldman, the plaintiff, joined the program in 1998 and left in 1999; he later alleged the program deviated from its description and that Cornell/van Gorp failed to inform NIH.
- Trial evidence showed several listed 'Key Personnel' contributed little, and many core courses were not implemented or monitored as described.
- Plaintiff asserted fellows conducted mostly non-HIV work; NIH complaints were filed by Feldman in 2001 and 2002; Cornell’s investigation found no wrongdoing.
- District court held damages could be the full grant amount due to lack of tangible benefit, and excluded NIH inaction evidence at trial; verdict awarded treble damages for years 3–5 of the grant.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Damages measure under FCA | Full government payment is proper damages when no tangible benefit was received. | Benefit-of-the-bargain should apply; damages differ from full payment when substitute program delivered. | Damages may be the full grant amount where no tangible benefit was received. |
| Materiality standard | False statements were material; they could influence NIH funding decisions. | Statements may be immaterial; district court erred in denying JMOL/new trial. | There was sufficient evidence the statements were material to NIH's renewal decisions. |
| Exclusion of NIH inaction evidence | NIH inaction is irrelevant to materiality and damages and should not have been excluded. | NIH inaction could illuminate whether claims were false or material. | District court did not abuse its discretion in excluding NIH inaction evidence. |
| Fraudulent inducement vs post-initiation false statements | Liability applies to false statements made after initial truthful grant; damages follow accordingly. | Distinction between fraudulent inducement and post-initiation falsehoods matters for liability. | Liability attaches to false statements even if made after initial truthful grant; damages awarded for years with false statements. |
Key Cases Cited
- United States v. Science Applications Int'l Corp., 626 F.3d 1257 (D.C. Cir. 2010) (damages measured when market value is not ascertainable)
- United States v. Rogan, 517 F.3d 449 (7th Cir. 2008) (materiality objective; omission can influence decision)
- United States v. Mackby, 339 F.3d 1013 (9th Cir. 2003) (damages and liability linked to false statements after initial grant)
- United States v. Longhi, 575 F.3d 458 (5th Cir. 2009) (no tangible government benefit; damages equal to government payment)
- United States v. Canova, 412 F.3d 331 (5th Cir. 2005) (loss calculation focus on loss to government, not contract by contract)
- TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438 (Supreme Court 1976) (materiality defined in securities context; objective standard)