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Major University Hires a President With Ties to Medicare Fraud

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Cross Posted at Legal Schnauzer

The new president of the University of Kentucky has connections to massive research fraud from his previous position as chief academic officer at the University of Alabama at Birmingham (UAB).

Eli Capilouto became provost at UAB in 2002 and remained in that position until being named UK's president yesterday. According to two whistleblower lawsuits, filed under the U.S. False Claims Act, UAB engaged in a research-fraud scheme involving hundreds of millions of dollars during much of the time Capilouto was a dean or provost at the school.

The lawsuits, filed in U.S. District Court in the Northern District of Alabama, allege that UAB engaged in about $600 million worth of research fraud over at least a 10-year period. The Bush Justice Department settled the qui tam  cases in 2005, while Capilouto was provost, for $3.4 million, which was less than one percent of the alleged fraud. Under the treble-damages provision of the False Claims Act, UAB could have been liable for approximately $1.5 billion.

As we reported yesterday, Capilouto was part of a UAB administration that took steps to essentially condone racist and sexist language in official university policies. But UAB also faced charges of major financial mismanagement during Capilouto's time at the school, including his time as provost.

Allegations in the qui tam complaints involve misappropriation of funds from Medicare, Medicaid, the National Institutes of Health (NIH), and other federal entities. The government alleged that UAB submitted claims under Title XVIII of the Social Security Act, which involves health insurance for the aged and disabled. UAB also allegedly defrauded a health-insurance program for military personnel and their dependents.

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As we reported previously, a source has told Legal Schnauzer that the U.S. attorney for the Northern District of Alabama at the time, Bush appointee Alice Martin, did not even investigate the claims. The settlement figure was based on one claim to which UAB officials admitted wrongdoing. More than 100 similar cases within UAB were ignored by Bush officials.

No wonder the Lexington Herald-Leader reported Tuesday that Capilouto had supported a number of conservative political figures, including U.S. Sens. Jeff Sessions (R-AL), Richard Shelby (R-AL), and Mitch McConnell (R-KY), plus . . . President George W. Bush.

No wonder the Obama administration had to deal with exploding health-care costs when it took office. No wonder a UAB administration headed by President Carol Garrison and Capilouto unlawfully terminated me for writing what could be called a progressive blog, outlining wrongdoing by mostly Republican judges in Alabama and officials in the Bush DOJ--especially related to the political prosecution of former Governor Don Siegelman.

Thomas Gober, a former auditor and research-compliance director at UAB, filed the first whistleblower complaint. Gober now has his own forensic-accounting firm and was featured in Newsweek article about fraud at financial giant AIG.

Dr. Jay Meythaler, a physician who practiced in rehabilitation medicine at UAB until his resignation in 2004, filed the second whistleblower complaint. He now serves on the faculty at Wayne State University in Detroit.

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Here is a timeline of Capilouto's rise to power in academia and the allegations of fraud in the qui tam  complaints:

1991--A UAB scheme to submit false claims to Medicare, Medicaid, and NIH begins at least by this date. It might have started earlier.

1994--Capilouto is named dean of the UAB School of Public Health.

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I live in Birmingham, Alabama, and work in higher education. I became interested in justice-related issues after experiencing gross judicial corruption in Alabama state courts. This corruption has a strong political component. The corrupt judges are (more...)

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