A Medical Researcher Pays for Doubting Industry Claim


PITTSBURGH --When Erdem Cantekin declared a war of ethics on the University of Pittsburgh Medical Center, he was an ambitious 42-year-old biomedical engineer with a future full of promise He was a tenured professor, he and his wife, who was pregnant, were preparing to buy their first house, and he was director of research at a respected institute at the university.

Professor Erdem Cantekin Fifteen years later, Dr. Cantekin is broke, his career is in shambles, and he is widely known in his field as a "troublemaking whistle-blower," as he puts it. He is deep in debt to his lawyers and unable to afford a car , let alone the house he and his wife had once chosen for themselves. When he walks around the Pittsburgh campus, people who recognize him avert their eyes.

"I don't have any life left in this town," Dr. Cantekin says. "I am in the gulag.

Erdem Cantekin

Dr. Cantekin might have been nothing more than a brief sideshow in the annals of medical research, except that he is self-righteously persistent, and more important, his cause is at the center of a $3 billion-a-year industry: antibiotics for children's ear infections. Dr. Cantekin believes that in 1986, a fellow researcher at Pittsburgh, Charles Bluestone, manipulated the results of a study on children's antibiotics to benefit drug companies whose grants and honoraria he had accepted.

"It was a fraudulent study," says Dr. Cantekin, who was Dr. Bluestone's co-investigator on the project. "This isn't a question of scientific interpretation. They made certain changes to make the drugs look better." Partly as a result of this compromised research, he argues, millions of children have been taking antibiotics unnecessarily, spawning a population of antibiotic-resistant "superbugs" that threaten everyone.

Dr. Bluestone, a widely respected pediatric ear specialist, believed antibiotics were useful for the condition called otitis media with effusion, which is an accumulation of fluid in the middle ear. Lawyers for Dr. Bluestone and officials of the University of Pittsburgh, citing continuing litigation, declined to comment for this article. But in legal documents, they have repeatedly denied any impropriety in the research. At the time, there were no university or government regulations regarding private funding for research. Dr. Bluestone's paper on his research was peer-reviewed and accepted for publication by the New England Journal of Medicine. Dr. Cantekin, university officials have maintained, was making his allegations out of "malice" because his point of view on the study had been overidden.

In the years since the two doctors split over their research, Dr. Cantekin's allegations against Dr. Bluestone have been weighed by three University of Pittsburgh committees, three panels of the National Institutes of Health, a congressional subcommittee, a federal district court and the U.S. Court of Appeals. The government, the university and Dr. Cantekin have spent thousands of hours and millions of dollars trying to sort out what happened in that Pittsburgh medical laboratory in the mid-1980s. And it isn't over yet: Dr. Cantekin has brought a whistle-blower lawsuit against his adversaries, and a trial looms.

Deadly Consequences

But as the dispute has moved slowly through these tribunals, medical science has gradually come to its own conclusions about antibiotics and ear infections --and they are in line with Dr. Cantekin's. Although more antibiotics are prescribed today for children's ear infections --and for longer periods of time --in the U.S. than anywhere in the world, several recent, independently financed studies have found that for the vast majority of ear infections, antibiotics are little more effective than no treatment at all. Worse, physicians are now seeing in their own practices the potentially deadly consequences of too many children taking too many antibiotics --drug-resistant strains of bacteria. In the past few years, some pediatricians have begun to prescribe shorter courses of antibiotics, or even to take a different tack entirely: so-called watchful waiting. If the infection doesn't clear up in a few days, then antibiotics are used.

This approach would have been anathema to the pediatricians of the 1960s and'70s, for whom antibiotics were a miracle drug. In the 1940s and '50s, it was unusual for a child to see a doctor for a simple earache --there was little that could be done for them, and they usually cleared up anyway. But the consequences of untreated ear infections were well-known and occasionally dire. Some children suffered mastoiditis, meningitis, hearing loss and even death. Doctors and researchers suspected that antibiotics could help prevent some of these catastrophes, but there was no scientific proof.

That was the issue Dr. Cantekin and his then-mentor, Dr. Bluestone, decided to tackle in the early 1980s. The two men had met in Boston several years earlier. Dr. Bluestone, a graduate of the University of Pittsburgh and its medical school, was fast making a name for himself in pediatric otolaryngology. He has written more than 300 articles on the subject, as well as serving on government advisory boards. Dr. Cantekin, who was born and raised in Turkey, where his father was a middle-class public servant, had come to the U.S. to study at the Carnegie Institute of Technology in Pittsburgh, where he received a doctorate in biomedical engineering. In 1973, he was introduced to Dr. Bluestone, who was then working at Boston City Hospital. Dr. Bluestone hired Dr. Cantekin to help design and carry out research on children's ear infections.

In 1976, Dr. Bluestone invited Dr. Cantekin to come to Pittsburgh with him to set up the new Otitis Media Research Center. A few years later, the two men designed a large, randomized, double-blinded clinical trial --the gold standard of biomedical research. Over five years, they would compare antibiotic treatment --specifically, a generic drug called amoxicillin --with no treatment at all on ear infections. Their research received a hefty $17.4 million in grants from the National Institutes of Health.

The first sign of trouble between the two investigators came in 1984, about halfway through the trial. The Otitis Media Research Center, of which Dr. Bluestone was the overall director, was then grappling with an accumulated deficit of about $300,000. Dr. Bluestone wrote letters to three pharmaceutical companies that made antibiotics for children, asking if they were interested in having their products tested alongside amoxicillin.

Eventually, several companies, including Eli Lilly & Co., Ross Laboratories (now part of Abbot! Laboratories) and Beecham Group (now part of GlaxoSmithKline PLC), contributed about $3.4 million to support trials of antibiotics for ear infections. "If we didn't have the support of non-NIH funding, such as from pharmaceutical companies, we would not be able to complete our clinical trials," Dr. Bluestone said later in a letter to the NIH. In addition, between 1983 and 1988, Dr. Bluestone received $262,000 in honoraria and travel expenses from pharmaceutical companies whose drugs he was testing.

After adding new sponsors, Dr. Bluestone made some changes to the original study design. Looking at interim data, he concluded that amoxicillin was effective, compared with a placebo, and he created new arms of the study to compare two "boutique" antibiotics, Lilly's Ceclor and Ross's Pediazole, to amoxicillin. The newer antibiotics can cost between $30 and $70 for a course of treatment, compared with about $6 for amoxicillin.

Points of Disagreement

Dr. Bluestone's changes disturbed Dr. Cantekin, who wasn't convinced that amoxicillin had been proven superior to a placebo. The two disagreed on several items, including the study's primary end point --the time at which the drug's effect is assessed. Dr. Bluestone thought it should be four weeks. Dr. Cantekin, arguing that ear infections often recur, decided on eight. The data showed that after four weeks, a small percentage of children taking antibiotics had healthier ears than those on a placebo. But at eight weeks, the two groups had equal numbers of cures. In terms of scientific protocol, both researchers' choices were justifiable. Indeed, a panel of experts that reviewed Dr. Bluestone's research for the federal Office of Scientific Integrity found "no substantial evidence indicating willful misrepresentation or a serious deviation from commonly accepted practices."

Dr. Cantekin, however, believed that amoxicillin's efficacy was still open to question, and that the new arms of the study were therefore useless. "Every new drug has been compared with amoxicillin,' he says. "If the benchmark is only as good as a placebo, the whole thing is a house of cards." Although he himself had accepted funding from drug companies in the past, Dr. Cantekin decided to stop. He told the chairman of his department that he no longer wished to work on privately funded research.

Even then, Dr. Cantekin was one of only a handful of biomedical researchers who shunned industry funds. Since the early 1980s, connections in biomedicine between academics and drug companies have become so pervasive that a recent footnote to an article on antidepressants in the New England Journal of Medicine disclosed more than 350 financial ties between the authors of the article and pharmaceutical companies that sell antidepressants.

Many members of the medical establishment say cooperation between universities and industry is crucial, given rising research costs and the desire to attack disease swiftly and systematically. "Not to have a (public-private partnership] to study and bring to market new drugs would be a terrible thing," says Steve Bennan, president of the American Academy of Pediatrics. "The industry budget far outweighs the government budget for some kinds of research. It's absolutely essential that industry be involved."

But such connections may have other, less visible consequences. The interlocking interests tend to protect the status quo by suppressing dissent and give the false impression that there is no doubt, disagreement or error ,in biomedical research. "In an environment where there seems to be a lot of uncertainty, you may not get the level of funding you want," says Edward Dangel of the Boston law firm of Dangel & Fine, one of Dr. Cantekin's lawyers. "You don't want to look disorganized."

At Pittsburgh, as at most other research universities, industry money has helped to step up the pace and rewards of innovation. For the fiscal year ended June 30, 1999, Pittsburgh received more than $36.3 million in corporate grants, about 11% of overall research funding.

While Pittsburgh was encouraging private industry to fund biomedical research, the National Institutes of Health was also unfazed by researchers commingling government and industry money. In the early 1980s, neither the NIH nor most research universities had formal conflict-of-interest guidelines. Scientists were assumed to be impervious to financial temptations, and while disclosure of private funding was required on grant applications, it wasn't considered relevant to a project's merit.

"It was common knowledge that [Dr. Bluestone] was partially supported by drug company money," said Ralph Naunton, a former official of the National Institute on Deafness and Other Communication Disorders, in a deposition. "We had Dr. Bluestone's verbal assurance that there was no conflict." (Dr. Naunton has since retired and couldn't be reached for comment.)

In 1985, with their data complete, Dr. Cantekin and Dr. Bluestone found themselves in an unusual position: Using the same statistics, Dr. Bluestonejudged antibiotics useful for ear infections, while Dr. Cantekin declared the opposite. Dr. Cantekin tried to persuade other members of the research team that he was right and Dr. Bluestone wrong. Dr. Cantekin "was rigid," Dr. Bluestone told the Office of Scientific Integrity in 1989. "He only wanted it presented his way. He did not listen to anybody else. His co-authors had other opinions, and I felt their opinion was the best." So Dr. Bluestone, the study's senior investigator, wrote the official paper, and in the summer of 1986 submitted it to the New England Journal of Medicine.

Academia has conventions for scientific disagreements, but Dr. Cantekin, whose grandfathers were revolutionaries who helped overthrow the Ottoman empire, isn't a conventional man. Rather than writing a dissenting letter to the editor, he took the step that would destroy his career: He drafted a separate report of the study with his own conclusions and submitted it to the New England Journal of Medicine. Now holding two reports on the same study, the medical journal asked officials at Pittsburgh to choose one paper for publication. University officials responded by saying that only Dr. Bluestone was authorized to publish the data.

For the next five years, Dr. Cantekin's accusations were considered --and mostly rejected --by several panels. All three university committees exonerated Dr. Bluestone. One NIH inquiry found that while Dr. Bluestone should have been more forthright about his acceptance of private-sector funds when applying for NIH grants, his conduct was excusable. Another NIH report, however, recommended that Dr. Bluestone be placed on five years of administrative oversight for "having analyzed the data from NIH-funded research in a manner biased toward the effectiveness of the antibiotics he had evaluated with public monies

Meanwhile, in 1989, the NIH issued its first draft of conflict-of-interest guidelines for researchers, which would have been voluntary .The proposal resulted in a stonn of protest from universities and industry .Officials predicted that the requirement for scientists to divulge their financial holdings and divest themselves of stock in companies whose products they tested would cause "the U.S. biomedical industry to languish in a second-rate position," as one chief executive of a biotech company wrote to the NIH. It took six more years before the NIH produced a final draft.

In 1990, the congressional subcommittee on Human Resources and Intergovernmental Relations, which was holding hearings on misconduct in scientific research that posed public risks, excoriated both the university and the NIH for their handling of Dr. Cantekin's claims. Most troubling, the subcommittee reported, was that Dr. Cantekin's dissenting report had been, for all practical purposes, censored. "Evidence of the ineffectiveness of antibiotics would have been available to physicians and the public several years ago, if the medical school had not prevented Dr. Cantekin from publishing them," the panel noted.

But not even a congressional endorsement could rescue Dr. Cantekin from his exile in Pittsburgh, where he was still officially a member of the faculty, though his salary remained frozen at its 1986 level. He had no research projects, and he hasn't spoken to an official of the medical school for 15 years. Five times since 1986, Dr. Cantekin has arrived at his office to find a note on his door saying that his belongings had been moved somewhere else. Now he doesn't even bother to unpack his few boxes of books and papers. Nor will he turn on his office computer, which appeared mysteriously on his desk several months ago, in case his activities are being monitored. He brings his frustration home to his wife, a psychologist, and daughter, who has come to hate hearing her father talk about earaches. "My potential has been stolen from me," Dr. Cantekin says. "No one's going to hire me unless there's a revolution in the medical profession."

In April 1991, five years after the war had begun, two big events in the long-running dispute coincided. One was the publication by Dr. Bluestone's research team of another paper based on data collected during the clinical trials of 1981 to 1985. Again the team concluded that children with ear infections --in this case, acute otitis media, or painful and inflamed ears --"should routinely be treated with amoxicillin (or an equivalent antimicrobial drug)." A close reading of the data showed that children who hadn't received medication had a cure rate of 92.5%, compared with 96% of those who were treated.

Published in the journal of the American Academy of Pediatrics, the study became one piece of evidence for a federal panel then drawing up recommendations for the treatment of otitis media. The panel's Clinical Practice Guideline for parents stated that antibiotics "may increase chance (by about 14% ) and speed of middle ear fluid going away. " The panel cited the Bluestone group's study in six of eight footnotes to a chart illustrating the efficacy of antibiotic treatment. "If a government agency advises you that antibiotics are good for children's ear infections, you don't think, 'Drug companies are behind that.' But in this case, they were," says Danielle Brian, executive director of the Project on Government Oversight in Washington, D.C.

The second big event of April 1991 was that Dr. Cantekin filed a lawsuit against Dr. Bluestone and Pittsburgh in U.S. District Court in Pittsburgh. Until then, Dr. Cantekin had avoided the legal system or any consideration of a financial settlement with the university. "The first thing Pittsburgh did when they found out [Dr. Cantekin] had retained me was to dispatch a lawyer to my office with a checkbook," says Robert Potter, a partner in the Pittsburgh law finn of Strassburger, McKenna, Gutnick & Potter in Pittsburgh. "The lawyer closed the door and asked, 'What does he want?' But for [Dr. Cantekin], it wasn't a question of money. You couldn't settle with him because you couldn't settle the scientific issue."

As his cause began to fade from public view, and antibiotic prescriptions continued to rise, Dr . Cantekin invoked the federal False Claims Act, which allows an individual to sue on the government's behalf for damages caused by another person's false claims. Enacted in 1863, the law has been used almost exclusively against defense contractors. But recently, it has also become an appeals court for academicians alleging scientific fraud against universities and scientists. If the whistle-blower's case is proved, he or she may collect as much as three times the amount of research grants that involved fraudulent claims. In his suit, Dr. Cantekin charged that Dr. Bluestone had fraudulently not disclosed his private financing in grant applications to the NIH. If the NIH had known of this drug company money, Dr. Cantekin asserted, Dr. Bluestone wouldn't have received his federal funding.

Dr. Bluestone and the university won the first legal round in 1998, when the district court issued a summary judgment in their favor. The judge, Donald E. Ziegler, noted that in June 1987, Dr. Bluestone had sent a letter to the NIH disclosing his private funding --"a cost-sharing arrangement was implemented," Dr. Bluestone had written, adding, "but it was not explained fully," That letter nullified the claim that Dr. Bluestone hadn't told the government about his private funding, the court said. Even if Dr. Bluestone had notified the NIH on his grant applications, as he was supposed to do, there was no evidence that his NIH funding would have been jeopardized, the judge decided.
> Dr. Cantekin appealed to the United States Court of Appeals for the Third Circuit, and in September 1999, he won his first major victory in the long war. "One can easily infer," the appeals court said, that Dr. Bluestone's letter, which was sent after Dr. Cantekin had lodged his complaint to the NIH, "was not an expression of an honest oversight, but an attempt to cover up prior misconduct and limit its damage."

Material and Negative

Furthennore, two of the five members of the NIH panel that had approved Dr. Bluestone's grants said in affidavits that they hadn't known about his private funding. That infonnation would have had a "material and negative" impact on their funding decisions, both said. Finally, the appellate court found it unlikely that Dr. Bluestone may simply have misread the instructions on the application, which asked for a list of "all research support." The court noted that for a scientist, the best of both worlds is to enjoy the munificence of pri vate industry and a government imprimatur on their studies. "In investigating treatments that have a disputed efficacy and a high aggregate cost," the court said, "[Dr.] Bluestone can be reasonably expected to know of the government's heightened interest in avoiding bias." The appellate sent the suit back to the district court for trial, which hasn't been scheduled yet.

Conflicts of interest remain a contentious issue in biomedical research, particularly after the 1999 death of a young man undergoing gene therapy at an academic center whose director had a financial stake in the outcome of the procedure. But no one suggests that private industry , academia and the government should, or even could, disentangle themselves. As the saying goes, the only people without conflicts of interest are those who know nothing at all about the subject. Erdem Cantekin wouldn't agree. But 15 years after having blown the whistle on what he believed was biased medical Iesearch, he has the whistle-blower's greatest regret. "If I had known the consequences would be so abrupt and severe," he says, "I wouldn't have done it."

Write to Cynthia Crossen at cynthia.crossen@wsj.coml
URL for this Article: http://interactive. wsj.com/archive/retrieve.cgi?id=SB978479119332376537 .djm
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Pneumococcal Vaccine and Otitis Media

by Dr. Erdem Cantekin

Transcibed by and made available by Families for Natural Living, 
www.FamiliesforNaturalLiving.org or FNLemail@aol.com.  From the National 
Vaccine Information Center's Second International Public Conferene, "Science 
for Hope and Healing: Challenging the Status Quo" on September 8 - 10, 2000 
in Arlington, Va.  For more information on the NVIC see www.909shot.com
Erdem Cantekin, Ph.D., is Professor of Otolaryngology, University of 
Pittsburgh.  An internationally recognized authority on otitis media and has 
studied causes and treatments for ear infection and sinusitis in his 25 year 
career.  An early, outspoken critic of the overuse of antibiotics to treat 
ear infections, Dr. Cantekin has published more than 150 articles and 
abstracts in the medical literature on eustachian tube function, ear tube 
surgery, antibiotic resistance and conflicts of interest in biomedical 
research and manufacturer sponsored medicine.

Cantekin discussed the new Prevnar vaccine for pneumococcal, as endorsed by the American Academy of Pediatrics. "The alleged benefits for this new vaccine are greatly exaggerated and the risks are significant," said Cantekin. "The bacteria pneumococcus, with more than 90 serotypes, is a common pathogen. Though pneumococcus causes various diseases the carriage rate and serotype distribution rates in different groups are not know. Also, it is not known how pneumococcus transmutes itself into a pathogen. The role of pneumococcus in the microbiological balance is not known. It does contribute to 3,000 cases a year of meningitis, 50,000 a year of bacteremia, 500,000 cases of pneumonia, and seven million cases of otitis media or ear infectionsā?¦

"With all of these unknowns, the vaccination of newborns with seven pneumococcal serotypes and possible eradication of those serotypes, is an uninformed experiment at best," said Cantekin.

"Unfortunately, our public health officials have no good estimates of these carriage rates in common populations. The rates of healthy newborns contracting these diseases are not well documented and yet to be determined. Yet in February 2000 Prevnar, a seven-valent, conjugate vaccine was approved for infants and toddlers. The FDA did not approve pneumococcal for pneumonia or otitis media. This approval was limited and paradoxical because three years earlier the New England Journal of Medicine the scientists had concluded that 'bacterial meningitis in the US is now a disease predominately of adults rather than infants and young children.'"

Cantekin pointed out that the study on Prevnar violated rules of internationally accepted methods of reporting clinical trials by publishing the results when they were incomplete. For example, regarding pneumonia there was no information at all. All the results were presented in a "confusing nonstandard format." Also, the control group for the study did not receive a placebo, but another meningitis vaccine.

Other questions remained unanswered: "If this HMO trial was going to be the only foundation to vaccinate every newborn in the United States, why were those findings, involving 38,000 captive HMO children, not published in a leading medical journal? The results were instead published in a journal well known to be the mouthpiece of drug manufacturers. It is also troubling that, prior to the publication of primary results, the medical economic analysis was rushed to publication in the Journal of the American Medical Association. Then a string of publications appeared in print - this was a well-organized effort to capture the newborn population as quickly as possibleā?¦Prevnar is not effective for otitis media or pneumonia and the prevention of meningitis data are inconclusive. Why does the American Academy of Pediatrics want our children to be immunized using Prevnar? Why are all those experts excited about this new vaccine? I'm afraid the answer does not lie in the scientific realm. Endorsements by experts become more puzzling if we examine the adverse or peculiar effects of the vaccine in the HMO trial. As shown here, Prevnar had four times more seizures, four times more gastritis than the control group, significantly more developed asthma, one death in the Prevnar group. Strangely, there were twice as many SIDS in the control group, but remember the control group was receiving another experimental vaccine.

"The big push for Prevnar came from its supposed prevention of otitis media, even though it had not been approved for this use. The promise of saving children from this common, self-limiting disease now turned into persistent childhood pest, is an excellent strategy, for marketing. Every parent knows and abhors otitis media.

"Simple facts about otitis media is that 60 percent of the cases are viral, less than 40 percent are bacterial, and perhaps 25 percent of all otitis media is due to pneumococcus. In two days, 90 percent of the otitis cases resolve by itself without treatment. Regardless of these facts our experts for two decades have been recommending aggressive interventions, such as long duration antibiotic therapy and designer drugs, antibiotic prophylaxis and then followed by aggressive surgery. This clinical practice, not supported by existing scientific based evidence, fuels our $5 billion a year otitis media medical economics. So if Prevnar could stop the cycle of drug and slash, it would have been a great public benefit. But that is not the case. The FDA data both from Finland and the HMO trial show that the prevention benefit is less than four percent. Despite this, the economic spin goes on."

When the JAMA rushed to publish the economic analysis deployment of Prevnar in the US prior to the publication of the HMO trial results, Cantekin wrote a letter to the editor. In this letter he pointed out that all of the money the vaccine was supposed to save health care consumers would be saved without the vaccine if health care providers would stick to the clinical guidelines for the treatment of otitis media. His letter to the editor was rejected. "Prevnar will have the same effect that antibiotic abuse currently has because, by changing serotype, it will exert selective pressure on the microbial ecology. This vaccine is the perfect example of a profit driven health care with no checks and balances. In our $1 trillion health care system the public health for people's interest are supposedly in the hands of three government agencies: the FDA, the CDC, and the NIH. These three pillars of our public health system are more and more in the hand of expert panels and advisory committees with ad hoc appointed outsiders. Such experts dictate policies, control the complex biomedical information system, and directly influence the taxpayers' health and wealth. Those experts are frequently in the state of conflict of interest because they also serve those special interest groups who profit from their expert decisions. Most experts are in financial relationships with these special interest groups and are usually registered with the speaker offices of various manufacturers. In other words, they are paid lobbyist. The perils of such interlocking conflicts are dangerous to public health. With increasing frequency we witness the media exposures of these white coat crimes. I think it is time that a reform act was in order and the people demand better controls from the government to protect their health and their pocket books." (Too see some of the 150 papers Dr. Cantekin has written, go to the National Library of Medicine, PubMed, at http://www.ncbi.nlm.nih.gov/entrez/query.fcgi)

E:\Cygnus Stuff\Research Summit\201Rauzi2.doc

ERDEM I. CANTEKIN, an individual v.
Pennsylvania corporation;
a non-profit Pennsylvania
corporation; CHARLES D. BLUESTONE,
an individual; United States of
America, ex rel. Erdem I. Cantekin,
Appellant (Amended pursuant to
Clerk's order dated 1/7/99)
No. 98-3552
June 17, 1999, Argued
September 29, 1999, Filed
and COWEN, Circuit Judges.
STAPLETON, Circuit Judge,
COWEN, Circuit Judge.

This case concerns a medical
researcher's failure to disclose
his industry funding on a number of
grant applications that he
submitted to the National
Institutes of Health
(NIH). The undisclosed funding
included several million dollars
from pharmaceutical companies
making the drugs that the NIH paid
the researcher to evaluate.
On this appeal we must determine
when a private party can properly
bring a suit under the False Claims
Act's qui tam provision, 31 U.S.C.
§ 3730(b), which allows an
individual to sue on the
government's behalf for damages
caused by another party's false
claims. Congress has changed
several times the rules limiting
when a private party can bring a
qui tam suit under the False Claims
Act. We must resolve which of two
versions of the Act apply to the
various grant applications that the
researcher submitted to the NIH and
what effect each version has on the
claims it controls.

A recent Supreme Court decision,
Hughes Aircraft Co. v. United
States ex rel. Schumer, 520 U.S.
939, 117 S. Ct. 1871, 138 L. Ed. 2d
135 (1997), discussed the
retroactivity of the 1986 Grassley
Amendments, Congress's latest
change to the Act's qui tam rules.
Applying Hughes, the District Court
concluded that Erdem Cantekin, the
appellant, could not pursue qui tam
claims based on grant applications
that Charles Bluestone, the
researcher and appellee, submitted
before October 27, 1986. Although
our reasoning differs from the
District Court's, we will affirm
its ruling on these applications
submitted in 1986 or earlier.
For Cantekin's remaining qui tam
claim, which was based on an
application submitted after the
effective date of the 1986
amendments, the District Court
granted summary judgment in favor
of Bluestone and the other
defendants because the Court
concluded that Bluestone did not
knowingly omit his industry funding
from the application. Contrary to
the District Court, we conclude
that genuine factual disputes
preclude summary judgment on
whether Bluestone knowingly
submitted a false claim.

Both the appellant, Erdem Cantekin,
and the appellee, Charles
Bluestone, are professors of
otolaryngology at the University of
1 The University of Pittsburgh
and Children's Hospital of
Pittsburgh joined Bluestone in
applying for various grants and
were also named as defendants. For
convenience, we have referred
throughout our opinion to the
claims against Bluestone, but our
analysis applies equally to the
other named defendants.

Pittsburgh's medical school and
have worked together on research
since the early 1970s. As part of
their collaboration, they created
the Otitis Media Research Center to
investigate acute otitis media and
otitis media with effusion, two ear
diseases common in children.
Much of the research they conducted
together focused on testing the
effectiveness of various
antibiotics, such as amoxicillin,
in treating the different types of
otitis media. This research was
particularly significant because
while the drugs are widely used,
controversy continues about the
desirability and effectiveness of
using antibiotics for these
conditions. Not only are there
medical reasons for worrying about
unwarranted use of antibiotics, but
also according to Cantekin's brief,
the public spends over half a
billion dollars annually buying
antibiotics to treat the various
forms of otitis media.

To pursue the research on
antibiotics, Bluestone submitted
numerous grant applications to the
NIH throughout the 1970s and 1980s
and ultimately was awarded
approximately $ 17.4 million. At
the same time, Bluestone began
receiving funding from various
pharmaceutical companies to test
the effectiveness of their
antibiotics in treating otitis
media. Collectively, this industry
funding totaled approximately $ 3.4

Cantekin claims that as early as
1976, he raised with Bluestone his
failure to list his industry
funding on his NIH grant
applications, but Bluestone
allegedly brushed him off, saying
that he was not going to tell the
"federal feather merchants" because
it was "none of their business" and
would "muddy up the waters." App.
at 523. Cantekin also disputed
Bluestone's interpretation of
research results, in particular the
results of several industry-funded

In May of 1987, Cantekin wrote to
the NIH complaining about
Bluestone's conduct, but the NIH
chose to take no action, instead
deferring to an investigation
conducted by the University of
Pittsburgh. When the university
announced on June 22, 1987 that it
had cleared Bluestone of any
wrongdoing, the NIH dropped the
matter. Dissatisfied with the
university's investigation and with
the NIH's reliance on it, Cantekin
later testified before the United
States House of Representatives at
hearings investigating scientific
fraud in federally funded research.
While the congressional report from
the hearings was pending, the NIH
decided to conduct its own inquiry
into Bluestone's conduct. The
resulting report by Howard Hyatt,
then director of the NIH's Division
of Management Survey and Review,
concluded that Bluestone and the
Otitis Media Research Center had
"not generally disclosed to NIH the
extent of its industry-sponsored
research." App. at 508. But Hyatt
continued that since the grant
instructions were ambiguous,
Bluestone's conduct was excusable.
Hyatt also rejected Cantekin's
claim that Bluestone's research
results were biased.

On September 10, 1990, the House
released its report, which
discussed ten cases where grant
recipients had engaged in
misconduct. See H.R. Rep. No. 101-
688, Are Scientific Misconduct and
Conflict of Interest Hazardous to
Our Health?, 19th Report, Committee
on Government Operations, 101st
Cong., 2d Sess. (Sept. 10, 1990).
Bluestone's case was included among
the ten. The House report
excoriated both the University of
Pittsburgh's investigation as well
as Hyatt's report and challenged
many of their findings. Several
months later, in December of 1990,
the NIH issued a new report by the
agency's recently created Office of
Scientific Integrity (OSI), which
had reopened the agency's inquiry
into Bluestone's conduct. Dr.
Suzanne Hadley, then Acting Deputy
Director of OSI, was in charge of
this second NIH investigation. Her
affidavit explained that the OSI
recommended that the Director
of NIH require that Dr.
Bluestone be place on a
period of five years of
administrative oversight for
having failed to disclose his
private pharmaceutical
company research to NIH and
having analyzed the data from
NIH-funded research in a
manner biased towards the
effectiveness of the
antibiotics he had evaluated
with public monies.

App. at 481.
To illuminate how Bluestone's
failure to disclose his industry
funding could have affected the
NIH's approval of his grants,
Cantekin provided the following
overview of the application
process. Applications are first
assigned to one of several
institutes within the NIH. In
Bluestone's case, his applications
were sent to the National Institute
for Neurological, Communication
Disorders, and Stroke, which then
forwarded them to the Communication
Disorders Review Committee (CDRC),
one of the review committees within
the institute. A review committee
is the body primarily responsible
for evaluating the merits of
applications like Bluestone's. Each
review committee is composed of
experts who are not NIH employees
and are paid per diem for
evaluating the applications.
Frequently, the review committee
members have themselves received
NIH grants in conducting their own

The review committee takes two
votes on an application. The first
vote is to "approve" or
"disapprove" the requested grant;
receiving approval at this stage,
however, does not assure that the
application will be funded. The
application may still be rejected
based on the second vote, which
establishes a "priority score." To
determine the priority score, each
member of the review committee
gives the proposal a score between
1, for the highest priority, and 5
for the lowest. Each member's score
is then added together, the total
is divided by the number of
members, and the resulting average
is multiplied by 100, yielding the
final priority score. Thus, the
highest priority score possible is
100 and the lowest 500.

In 1984, Bluestone and Children's
Hospital of Pittsburgh submitted an
application to extend an earlier
grant by five years. Their first
request for an extension received a
priority score of 154 and was not
funded, but later Bluestone and the
Otitis Media Research Center
submitted a revised application
that received a priority score of
131, which was good enough to
receive funding.

If we combine the NIH's method of
calculating the priority score and
the rough guideline that an
application with a score of 154 or
higher would not receive funding,
at least around the time that
Bluestone's application was
considered, we can see that one or
two members can easily raise an
applicant's priority score above
the cut-off for funding. For
example, votes of 1, 1, 1, 1, and 5
yield a priority score of 180; and
votes of 1, 2, 1, 1, and 3 yield a
score of 160. Even votes of 1, 1,
1, 1, and 3 could place an
applicant on the edge of rejection
with a priority score of 140.
After the priority vote, an
executive secretary, who functions
as a staff member for the
committee, writes a report
describing the review committee's
deliberations and submits the
report to the Council of the
Institute. The council receives
applications from the various
review committees within the
institute and makes the final
determination of which applications
will be funded. Council members,
like the review committee members,
are not NIH employees and are
chosen for their expertise in their
field. Unlike the review committee
members, however, council members
are appointed to serve for fouryear

Once a multi-year grant has been
approved for funding, NIH assigns
the grant to a "program
administrator," who is in charge of
administering the grant. Each year
the grant's principal investigator,
Bluestone in our case, and the
grantee institution must submit a
special continuing application, or
progress report. These progress
reports are "noncompetitive" in
that funding during the allotted
time has already been approved. The
purpose of the progress reports is
to informed the NIH of how the
research is advancing, identify the
amount of the budget for the next
year, and provide information about
key personnel engaged in the

Two of the five members of an NIH
review committee that voted to
approve one of Bluestone's grants
stated in affidavits that if they
had known about his industry
funding, it would have affected
their decision. Dr. Perkell, one of
the review committee members, said
that Bluestone's undisclosed
industry funds were not "common
knowledge." He continued:
It is my opinion that had Dr.
Bluestone disclosed his
relationships with the
private pharmaceutical
industry, the competing
renewal application of NS
16337 which came before the
Review Committee of which I
was a member would have been
evaluated more critically
with regards to: demands on
investigator time, possible
conflicts of interest, the
effects of bias on the value
of the proposed studies,
safeguards in the study
design to ensure unbiased
interpretation and evaluation
of the results of the
proposed studies. The more
critical evaluation would
have had an impact on the
recommendation for approval
and on the priority score.
The impact on the priority
score I gave would have been
material and negative. In my
opinion, based on my
knowledge of past behavior of
my fellow members of the
Review Committee in
evaluating and assigning
priority scores to several
hundred other applications
the impact on the overall
priority funding score would
have been material and

App. at 473-74.
Dr. Schwartz, the chair of the
review committee, also stated in an
affidavit that she was unaware of
Bluestone's industry funding and
that had she known, it would have
had a "material and negative"
effect on her evaluation of the
application. She explained that a
researcher who receives substantial
funding from a pharmaceutical
company can be subtly biased in
favor of finding that the company's
drugs are effective. Disclosure of
this potential source of bias is
important to reviewers even if the
grant might be ultimately approved
since the review committee might
not approve the application until
certain additional safeguards are
implemented. "When bias, or
potential bias, are revealed by
disclosure of a funding source with
a vested interest in the outcome of
the research, reviewers are alerted
to look for defects in the
experimental design which could
compromise the work proposed." App.
at 1125. Elsewhere, she explained:
A bias experimenter can still
perform valid work, but the
experiments must be carefully
designed so that enrolled
patients are randomly
assigned to different test
groups, objective criteria
for measuring function are
used, and both subject and
observer are blinded as to
which experimental condition
(i.e. new drug, current
standard drug, or other
control substance) applied to
a particular subject.
Appropriate statistical tests
must be applied to the data
to assure that
interpretations of efficacy
of the test drugs are valid.

The three other members of the
review committee, Drs. Miller,
Meyerhoff, and Goode, all submitted
affidavits saying that they were
aware of Bluestone's industry
funding. Dr. Miller, for example,
stated that "I was fully aware that
Dr. Bluestone was receiving very
substantial support from private
pharmaceutical companies to do drug
efficacy studies. . . . I was not
at all troubled by the fact that
Dr. Bluestone was receiving such
funding." App. 1104-05.
None of the three, however,
informed Drs. Perkell or Schwartz
of this outside funding. Dr.
Schwartz's affidavit notes that the
other committee members did not
mention Bluestone's undisclosed
funding at the review committee
meetings, nor did they "raise the
issue of possible conflicts of
interest or of the adequacy of
safeguards to control against bias
in the interpretation of study
results..." App. at 1125.
We have jurisdiction pursuant to 28
U.S.C. § 1291, and we exercise
plenary review of a district
court's grant of summary judgment.
Barnes v. American Tobacco Co., 161
F.3d 127, 138 (3d Cir. 1998). On a
motion for summary judgment, a
court must determine whether the
evidence shows that "there is no
genuine issue as to any material
fact and that the moving party is
entitled to judgment as a matter of
law." Fed.R.Civ.P. 56(c). Factual
disputes invoked to resist summary
judgment must be both material in
the sense of bearing on an
essential element of the
plaintiff's claim and genuine in
the sense that a reasonable jury
could find in favor of the
nonmoving party. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242,
248-251, 106 S. Ct. 2505, 2510-12,
91 L. Ed. 2d 202 (1986). A court
should not prevent a case from
being presented to the jury simply
because the court favors one of
several reasonable views of the
evidence, for "the judge's function
is not himself to weigh the
evidence and determine the truth of
the matter but to determine whether
there is a genuine issue for
trial." Anderson, 477 U.S. at 249,
106 S. Ct. at 2511.

We begin with the threshold issue
of which grant applications can be
subject to a qui tam suit. Prior to
the 1986 amendments to the False
Claims Act, a private party was
barred from bringing a qui tam suit
if the action was "based on
evidence or information the
Government had when the action was
brought." 31 U.S.C. § 3730(b)(4)
(1982 ed.). The government itself,
of course, could still bring suit
for such a violation; only private
parties were barred from seeking
recovery. The implicit logic of the
pre-1986 law was that if the
government had the relevant
information before the plaintiff
initiated suit, then the government
must be aware of the false claims
and didn't need the assistance of
private parties to ferret them out.
And if the government knew about
the information yet did nothing,
then the government probably
thought the suit meritless, and any
private action was apt to be
spurious, driven only by the lure
of the Act's sizable damages.
Despite the pre-1986 law's
legitimate aim of preventing
spurious suits, its bar for qui tam
suits imperfectly achieved its
purposes for a variety of reasons:
1) the government lacks the
resources to investigate and
prosecute all false claims even
when the government has information
revealing fraud; 2) a government
official who is deemed to "have"
the information may not recognize
the connection between the
information and a particular false
claim; 3) the official may have an
interest in not bringing the fraud
to light for a number of reasons,
such as an interest in protecting
the official's or the agency's
reputation; and 4) other
mechanisms, more directly focused
on the merits of a suit, are
available for filtering out
spurious claims. Congress was also
concerned that under the old law,
whistleblowers who came forward and
exposed fraud to government
officials before filing suit were
later being barred from bringing a
qui tam suit. Indeed, as our
discussion below makes clear,
Cantekin's case itself illustrates
this consequence of the pre-1986

With the enactment of the Grassley
Amendments, Congress generally gave
greater scope to qui tam suits.
Among other changes, such as
increasing the damages from double
to treble the harm caused, and
increasing the percentage that a
qui tam plaintiff received of those
damages, compare 31 U.S.C.
§§ 3730(a) and (c) (1982 ed.) with
31 U.S.C. §§ 3730(d)(1) and (2),
the amendments also eliminated the
old law's bar to qui tam suits.
Instead of prohibiting all qui tam
suits that are based on information
the government "has" when the suit
is brought, the Grassley Amendments
introduced a new standard: a qui
tam suit will be barred only if it
is based on information that was
"publicly disclosed" at various
hearings, in certain types of
reports, or by the media. 31 U.S.C.
§ 3730(e)(4)(A). Information that
the government "has," but that was
never publicly disclosed, does not
bar a qui tam suit. Even if there
is "public disclosure" within the
meaning of the Grassley Amendments,
a qui tam suit can still go forward
if the plaintiff is an original
source of that publicly disclosed
information. 31 U.S.C.
§ 3730(e)(4)(B). An original source
is defined as someone who has
"direct and independent knowledge"
of the information and who has
"voluntarily provided" the
government with the information
before the suit was initiated. Id.
Groundless suits are addressed in
part by provisions requiring that
all qui tam plaintiffs submit
sealed information to the
government before the suit
proceeds. After reviewing this
information, the government can
decide whether to join the suit,
allow the private party to continue
alone, or, most significantly,
dismiss the suit. See 31 U.S.C.
§§ 3730(b)(2) and (c)(2)(A).
In Hughes Aircraft Co. v. United
States ex rel. Schumer, 520 U.S.
939, 117 S. Ct. 1871, 138 L. Ed. 2d
135 (1997), the Supreme Court held
that the 1986 amendments did not
apply retroactively to conduct
occurring prior to the amendment's
effective date. The Court stated in
a footnote, however, that since in
Hughes both the "false claim
submission" and the "disclosure to
the government" of the fraud
occurred before the effective date
of the 1986 amendments, the Court
did not have to address which of
the two events should be used for
determining retroactivity. 520 U.S.
at 946, n. 4, 117 S. Ct. at 1876,

In applying Hughes, the District
Court concluded that for all of
Bluestone's grant applications
submitted prior to the 1986
effective date, the date of
"disclosure to the government" also
occurred before October 27, 1986.
Thus, the District Court decided
that, as in Hughes, it did not have
to resolve whether the disclosure
date or the date of submission

Although the parties sharply
dispute whether there was
"disclosure to the government"
prior to the 1986 effective date,
we need not resolve the issue. We
conclude that even though the
Supreme Court did not expressly
reach in Hughes whether
retroactivity is determined based
on the submission date or the
disclosure date, the Court's
analysis strongly supports using
the former, i.e., the date the
allegedly false claim was
submitted. And once we use the
submission date and apply the pre-
1986 law to all grant applications
submitted prior to the October 27,
1986 effective date, there can be
no doubt that before Cantekin began
his qui tam suit, the government
"had" the information upon which it
was based.

By the time Cantekin filed his
complaint in the District Court on
April 29, 1991, the House had
conducted its hearings and issued
its report, and the NIH had issued
both Hyatt's memo and the later
report by the Office of Scientific
Integrity. These events
unquestionably establish that the
government had the information on
which Cantekin's suit was based.2
Thus, the only live issue is why we
should use the submission date for
determining retroactivity.
When the Supreme Court concluded in
Hughes that the Grassley Amendments
should not be applied
retroactively, the Court recognized
that knowingly submitting a false
claim is illegal under both
versions of the statute. The Court
also noted that under both the
amended statute and the previous
statute, the total amount of a
defendant's liability does not
depend on who sued; the defendant
must pay the same amount regardless
of whether the government or a qui
tam relator brought the action.
Nonetheless, the Supreme Court
reasoned that the amendment's
change in when qui tam suits can be
brought does impose new penalties
on defendants.

While we acknowledge that the
monetary liability faced by
2 Cantekin objects that when
the District Court granted summary
judgment against his pre-1986
claims, the Court erred by
converting a 12(b)(6) motion into a
motion for summary judgment without
first giving adequate notice and an
opportunity to respond. See, e.g.,
Rose v. Bartle, 871 F.2d 331, 342
(3d Cir. 1989). Cantekin raised
this point in a motion for
reconsideration, but the District
Court rejected the argument, noting
that under Rose a failure to give
notice can be excused if
"harmless." Id. Since we evaluate
retroactivity based on the
submission date, and since it is
undisputed that Cantekin's suit was
filed after the NIH and
Congressional investigations, we
conclude that any error stemming
from the conversion of the motion
was indeed harmless.

an FCA defendant is the same
whether the action is brought
by the Government or by a qui
tam relator, the 1986
amendment eliminates a
defense to a qui tam suit --
prior disclosure to the
Government -- and therefore
changes the substance of the
existing cause of action for
qui tam defendants by
"attaching a new disability,
in respect to transactions or
considerations already past."
520 U.S. at 948, 117 S. Ct. at 1877
(citations omitted). After noting
that the 1986 amendments eliminate
a defense, the Court commented that
the amendments also in effect
create a new cause of action
because the courts are open to an
expanded class of plaintiffs.
We think this reasoning would be in
deep tension, if not outright
conflict, with using the date of
disclosure instead of the date of
submission for determining
retroactivity. Our primary
rationale is very simple. If we
invoked the disclosure date to
apply the amendments to a false
claim submitted before the
amendment's effective date, then
the new penalties listed by the
Court, i.e., the loss of a defense
and the creation of a new cause of
action, would be imposed after the
defendant acted. The reason that
using the disclosure date would
have this effect is that the
defendant's conduct ends with
submitting the false claims; the
defendant is not the one, or at
least not usually, who makes the
disclosure to the government. Since
the Court rejected in Hughes an
application of the Grassley
Amendments that would allow the law
to "attach new disabilities" to
conduct committed prior to the
amendment's passage, we think the
Court implicitly foreclosed using
the disclosure date.
Another problem with using the date
of "disclosure to the government"
to determine retroactivity is that
it is not clear what test should be
applied to determine that date. The
Supreme Court's phrase "disclosure
to the government," straddles the
1986 amendment's "public
disclosure" language and the pre-
1986 standard of "information the
government had." By speaking of
disclosure "to" the government,
rather than disclosure "by" the
government, the Supreme Court's
language may suggest that the Court
was referring to the pre-1986
"government knowledge" test. The
"government knowledge" test is
primarily focused on what other
people release to the government
while the amendment's "public
disclosure" test has a substantial
emphasis on information released by
government . On the other hand, the
Supreme Court's phrase, "disclosure
to the government," does not
accurately capture the pre-1986 law
since the government could "have"
the information within the meaning
of the pre-1986 test based on what
the government learned from its own
investigative efforts. And by
speaking of "disclosure," and not
information the government "has,"
the Supreme Court's language is
suggestive of the "public
disclosure" test.

Regardless of how one parses the
language, however, the real problem
is that choosing between the pre-
and post-1986 standards injects a
kind of circularity into the
retroactivity analysis. To
determine the date of "disclosure
to the government," we must apply
either the pre-or post-1986 test in
order to decide whether we will
apply the pre- or post-1986 test to
the alleged false claim. This
awkward need to stipulate at the
outset what our analysis is
supposed to decide reinforces our
conclusion that the date the claim
was submitted should determine the
retroactivity of the Grassley
The District Court noted in passing
that a Ninth Circuit opinion,
decided before the Supreme Court's
opinion in Hughes, relied on the
disclosure date for determining the
3 It is true that a court could
apply pre-1986 law to assign a date
to the "disclosure to the
government" and yet still find that
post-1986 law should ultimately
control the claim. For example,
suppose that after the defendant
submitted a false claim in 1985,
the plaintiff informed the
government of the fraud in 1987,
filed a qui tam suit in 1988, and
qualified as an original source.
Even if we applied the pre-1986 law
to date "disclosure to the
government," we would not bar the
plaintiff's suit. This follows
because the date that the
government learned of the fraud,
i.e., sometime in 1987, was after
the effective date of the 1986
amendments. And once we applied the
amended law, we would see that the
plaintiff could go forward with the
suit since the plaintiff is an
original source, and no public
disclosure occurred aside from the
plaintiff's suit.

The circularity of our presupposing
pre-1986 law isn't really
eliminated, however, just because
in a certain class of cases using
the pre-1986 law to assign a date
to disclosure leads us to apply
post-1986 law. We still need a
justification for applying the pre-
1986 law at the outset when it may
foreclose many claims that the
post-1986 disclosure test would
not. We could, of course, appeal to
the considerations cited in Hughes
for using the pre-1986 law. But
once we adopt those arguments, we
have reason to abandon the "date of
disclosure" altogether as a way of
determining retroactivity.
retroactivity of the Grassley
Amendments. See United States ex
rel. Anderson v. Northern Telecom.,
Inc., 52 F.3d 810, 814 (9th Cir.
1995). The main problem with
Anderson is that its reasoning
rested heavily on the point that
"the 1986 amendment did not change
the legal consequences of
[defendant] Northern Telecom's
conduct." 52 F.3d at 814. Since
Hughes rejected that position and
emphasized that the Grassley
Amendments do "attach new
disabilities" to a defendant's past
conduct, we think that Anderson's
authority has been undermined. In
short, we conclude that we should
use the date the claim was
submitted for determining the
retroactivity of the Grassley
Amendment's "public disclosure" bar
to qui tam suits.

Did Bluestone knowingly submit
false claims?
Not all of Cantekin's claims were
based on grant applications
submitted prior to October 27,
1986. On January 28, 1987,
Bluestone submitted a new grant
application without listing his
industry funding, and he again
failed to disclose when he revised
the application on May 1, 1987. The
District Court dismissed Cantekin's
qui tam claim based on this revised
application because the Court
concluded on summary judgment that
the evidence "does not permit a
finding that Dr.
Bluestone'knowingly' submitted
false or fraudulent claims to the
government." App. at 1627.
The False Claims Act defines
"knowing" and "knowingly" as
including a defendant's "actual
knowledge," "deliberate ignorance,"
or "reckless disregard" of the
truth or falsity of information in
the defendant's claim to the
government. 31 U.S.C. § 3729(b).
The statute adds that "no proof of
specific intent to defraud is
required." Id. In applying these
1standards to the record before us,
we must heed the basic rule that a
defendant's state of mind typically
should not be decided on summary
judgment. See, e.g., Hunt v.
Cromartie, 526 U.S. 541, 119 S. Ct.
1545, 1552, 143 L. Ed. 2d 731

The District Court's primary
rationale for granting summary
judgment was that the grant
application and instructions were
unclear. Before we address whether
the instructions are ambiguous, or
more properly whether there is no
genuine dispute that they are, we
note that Cantekin stated in his
affidavit that he specifically
informed Bluestone that he should
disclose his private funding.
In 1976, when Dr. Bluestone
and I were applying for
various NIH grants, I raised
with Dr. Bluestone the
question whether he, as
principal investigator,
should not be disclosing to
NIH his other research
support, especially from
pharmaceutical companies. Dr.
Bluestone replied that it was
"none of their business," and
that he was not going to tell
the "federal feather
merchants" because it would
"muddy up the waters." Dr.
Bluestone added that "idiots
like Buckminster Ranney would
not understand." Dr.
Buckminster Ranney was an
NIH-employee working with the
National Institute of
Neurological, Communicative
Disorders, and Stroke
("NINCDS") with whom Dr.
Bluestone had dealt.

App. at 523. This affidavit not
only creates a genuine dispute that
Bluestone "knowingly" omitted his
industry funding, but it also
provides evidence that Bluestone
had the specific intent to defraud,
proof of which is not required for
a violation of the False Claims

Even apart from the evidence that
Bluestone was specifically informed
that he should disclose his
industry funding, we conclude that
there is ample evidence that the
instructions are clear. Other
members of Bluestone's Otitis Media
Research Center correctly followed
the instructions and disclosed
their outside research funding,
including private sources. App. at
38. Similarly, one of the NIH
review committee members, Schwartz,
stated in her affidavit that:
I have written or helped to
write numerous NIH grant
applications for fellowships,
research grants, program
projects and training grants.
As principal investigator I
have held an R01 grant from
NIH which has been
continuously funded since
1972 involving seven
competing renewals and
several revised resubmissions
. . . I have always found
directions for completing the
"other support" pages of NIH
grant applications to be
App. at 439-40. Another member of
the review committee, Perkell,
submitted a similar affidavit
saying that he had applied for and
received a number of NIH grants and
found the "other support" section
to be unambiguous.

A review of the instructions
themselves suggests that they
clearly indicate that industry
funding should be disclosed. On the
page that instructs applicants to
list their "other support," the
form provides:
For each of the professionals
named on page 2, list, in
three separate groups: (1)
active support;
(2) applications pending
review and/or funding;
(3) applications planned or
being prepared for
submission. Include all
Federal, non-Federal, and
institutional grant and
contract support. If none,
state "NONE." For each item
give the source of support,
identifying number, project
title, name of principal
investigator / program
director, time or percent of
effort on the project by
professional named, annual
direct costs, and entire
period of support. (If part
of a larger project, provide
the titles of both the parent
grant and the subproject and
give the annual direct costs
for each.) Briefly describe
the contents of each item
listed. If any of these
overlap, duplicate, or are
being replaced or
supplemented by the present
application, justify and
delineate the nature and
extent of the scientific and
budgetary overlaps and

App. at 1196 (emphasis in
original). The instructions
specifically request that the
applicant list "all... non-
Federal... support" and give
detailed information about each

In concluding that the instructions
were ambiguous, the District Court
relied on Hyatt's report, which
cited an earlier version of the
instructions and said that "many
institutions were found to
interpret those instructions
improperly." App. at 509. Hyatt
explained that the NIH changed the
instructions to avoid ambiguities.
The District Court's reliance on
Hyatt's memo is problematic for a
number of reasons. First,
Bluestone's post-1986 grant
applications used the improved
instructions. Second, even if
potential confusion from the
earlier applications was relevant,
perhaps because the earlier
instructions gave Bluestone
erroneous expectations, we
seriously question whether the
earlier instructions were
ambiguous. The instructions that
Hyatt claimed were ambiguous read
in part:
List all research support for
each individual including
requests now being
considered, as well as any
proposals being planned,
regardless of relevance to
this application. Include
also current awards, research
career program awards,
training grants, regardless
of the source of support.
App. at 509. Hyatt apparently
believed that these instructions
were ambiguous because, unlike the
improved instructions, they did not
specifically refer to "non-Federal"
sources. The instructions did,
however, direct applicants to list
"all" research support "regardless
of source" and "regardless of
relevance." Hyatt claimed that
"many" institutions had incorrectly
interpreted the earlier
instructions, but the drafter of
the NIH forms testified that he
could not recall any specific case,
except Bluestone's of course, where
a researcher misunderstood what was
required by the "other support"

Third, the House report sharply
criticized Hyatt's conclusions and
explained that:
NIH officials were incorrect
in describing the content of
the NIH forms; the section
regarding "Other Support" was
revised in late 1979 and
revised forms, containing the
more explicit language were
1available to applicants in
1980 or 1981, depending on
the type of application.
App. at 38.

Fourth, Dr. Hadley, the Acting
Deputy Director of the NIH's Office
of Scientific Integrity, asserted
in her affidavit that she had not
encountered any evidence that
applicants found the instructions
to be ambiguous.
In my opinion and based on my
[prior] experience as an
Executive Secretary [who
works with review committees
in evaluating grant
applications,]... there was
never any problem with
ambiguity in PHS instructions
on how to complete the "Other
Support" section of a PHS
Grant Application or
Continuation Application.
From Fall, 1979 on, the
instructions explicitly
required the disclosure of
all sources of support, both
federal and non-federal.
App. at 482.

Finally, one can infer that
Bluestone, a highly-educated
professional, would have been aware
that the NIH might be interested in
his industry ties when the agency
decided whether to award him
substantial funding to test a key
drug in a half-billion dollar
industry. As Cantekin points out,
people are likely to give much
greater weight to NIH research than
to the findings of companies making
the drugs at issue. Given this
greater public trust in the results
of government-funded research, and
the undeniable risks of bias, the
government clearly has a strong
interest in ensuring that it acts
as an impartial investigator,
especially when investigating
treatments that have a disputed
efficacy and a high aggregate cost.
Bluestone can be reasonably
expected to know of the
government's heightened interest in
avoiding bias. As a scientist, he
must be fully aware that rooting
out potential sources of bias in
our interpretations of empirical
data is central to scientific

The District Court and the
appellees' next argument is that in
the materials accompanying some of
Bluestone's applications, there
were references to his industry
funding. These references were by
no means complete disclosures of
the grants he was receiving from
pharmaceutical companies, nor did
the references include the full
information, such as the amount of
the funding, that was requested in
the "Other Support" section of the
grant application. Furthermore,
many of the references that the
appellees rely upon were included
with "progress reports," which were
submitted after a grant was
approved. But the most important
point is that scattered references
buried in voluminous accompanying
materials do not comply with the
application's disclosure

When a reviewer is faced with
complex proposals that include
large masses of accompanying
information, it makes sense to
insist that the applicants must
disclose in one place the
applicant's other grants that may
raise conflicts of interests or
impose competing demands on the
applicant's time. A reviewer who is
reading an applicant's accompanying
journal article may not notice,
while engrossed in the details of a
specialized scientific issue, a
fleeting reference to private
funding and think of its
significance for potential
conflicts of interest. Applications
distill and organize information
for a reason.

Evidence in the record bears out
this point. One of the review
committee members, Perkell, stated
in his affidavit that:
As a grant reviewer and
evaluator I have always
looked to the "Other Support"
pages to form an estimate of
the percentage of effort the
Principal Investigator and
other investigators have
available to do the proposed
work, to look for possible
overlap between proposed
projects and others already
funded or pending, and to
identify possible conflicts
of interest or possible
sources of bias in the
experiments. These factors
are important to me in
evaluating an application as
a whole and in assigning it a
priority score.

App. at 472. Schwartz, another
review committee member, likewise
stated in her affidavit that she
relies on the "Other Support"
section to gauge how much time the
applicant has to spend on the
research, whether the proposal is
duplicative, and what conflicts of
interest the applicant might have.
Despite the references Bluestone
cites in the accompanying
materials, neither Schwartz nor
Perkell was aware of Bluestone's
industry funding, and both said it
would have affected their
evaluation of his application.
The District Court's last reason
for concluding that Bluestone did
not knowingly submit a false claim
is that he sent a letter on June
23, 1987 to Elkins, his program
administrator, listing his industry
funding. We find the District
Court's reliance on this letter
unconvincing. Not only was it
written months after Bluestone
submitted his application in
January and May of 1987, but more
important, the letter was only sent
after he was under investigation.
Given that Bluestone only sent the
letter after Cantekin made his
allegations to the NIH and the
university, the timing of the
letter tends to reinforce, not
undermine, Cantekin's allegations
that Bluestone knew that he was
supposed to disclose his industry
funding. One can easily infer that
the letter was not an expression of
an honest oversight, but an attempt
to cover up prior misconduct and
limit its damage.

Cantekin alleges that program
administrators' interests are more
closely allied with grant
applicants' than any other NIH
official, so it is noteworthy that
Bluestone chose to notify Elkins,
and Elkins alone, at the NIH.
Reading the evidence in the light
most favorable to the nonmoving
party, we note that if Bluestone
calculated that disclosure to
Elkins would be the least damaging
step he could take, his judgment
apparently proved correct since the
letter he sent to Elkins was never
forwarded beyond the programadministration

Another problem with relying on
Bluestone's letter to Elkins as a
way of exonerating him for
submitting a false claim is that
the False Claims Act has a specific
provision dealing with someone who
comes forward and discloses his or
her false claims. The statute
provides that:
If the court finds that --
(A) the person committing the
violation of this subsection
furnished officials of the
United States responsible for
investigating false claims
violations with all
information known to such
person about the violation
within 30 days after the date
on which the defendant first
obtained the information;
(B) such person fully
cooperated with any
Government investigation of
such violation; and
(C) at the time such person
furnished the United States
with the information about
the violation, no criminal
prosecution, civil action, or
administrative action had
commenced under this title
with respect to such
violation, and the person did
not have actual knowledge of
the existence of an
investigation into such
the court may assess not less
than 2 times the amount of
damages which the Government
sustains because of the act
of the person. A person
violating this subsection
shall also be liable to the
United States Government for
the costs of a civil action
brought to recover any such
penalty or damages.

31 U.S.C. § 3729(a)(7).
The first point worth noting is
that this provision merely reduces
the defendant's liability from
treble to double damages; it does
not exonerate a defendant for a
violation. Second, Bluestone's
letter of June 23 was more than 30
days after the date he made his
false statements. Third,
Bluestone's letter was sent after
he was under investigation, and
thus he arguably cannot satisfy
subsection (C). It also may be open
to dispute whether he has "fully
cooperated" or provided "all
information" that he knew about the

Taking up a different issue, the
District Court cited United States
ex rel. Hopper v. Anton, 91 F.3d
1261, 1266-67 (9th Cir. 1996) for
the proposition that a "technical
violation of rules and regulations
of an agency is not actionable
under the FCA." App. at 1627. What
the Ninth Circuit held in Hopper,
however, was that not every
regulatory violation is tantamount
to making a knowingly false
statement to the government. Since
the regulatory violation in Hopper
did not involve making a knowingly
false statement in a claim
submitted to the government, the
court held there was no violation
of the False Claims Act. Thus,
Hopper does not stand for the
proposition that before a court
allows a suit to proceed under the
False Claims Act, it must weigh how
serious it thinks a particular
knowing falsehood was in a claim
submitted to the government.
Although we reject the District
Court's reading of Hopper, the
Court's remark about "technical
violations" suggests two slightly
different objections: Bluestone's
omissions were not material, and
even if they were, they did not
cause any damages to the
government. We will consider first
the materiality objection.
Courts have held that claims under
the False Claims Act are subject to
a judicially imposed materiality
requirement. See, e.g., Harrison v.
Westinghouse Savannah River Co.,
176 F.3d 776, 784 (4th Cir. 1999).
And the Supreme Court recently held
in Neder v. United States, 527 U.S.
1, 119 S. Ct. 1827, 144 L. Ed. 2d
35 (1999) that there is a
materiality requirement under the
federal mail-fraud, wire-fraud, and
bank-fraud statutes. In a footnote,
the Supreme Court indicated,
however, that the term "false
statement," unlike "fraudulent
statement," does not imply a
materiality requirement. Neder, 119
S. Ct. at 1840 n.7. Given that the
False Claims Act prohibits merely
making a knowingly false claim and
does not require a specific intent
to defraud, perhaps Neder argues
against a materiality requirement.
In any event, we need not decide
whether there is a materiality
requirement under the False Claims
Act, because even if there is, we
think it is clear that Bluestone's
failure to disclose his industry
funding would readily qualify as
material. In Neder, the Supreme
Court quoted from the Restatement
(Second) of Torts, which provides
two alternatives for showing that a
matter is material:
(a) a reasonable man would
attach importance to its
existence or nonexistence in
determining his choice of
action in the transaction in
question: or
(b) the maker of the
representation knows or has
reason to know that its
recipient regards or is
likely to regard the matter
as important in determining
his choice of action,
although a reasonable man
would not so regard it.
Neder, 119 S. Ct. at 1840 n.5
(quoting Restatement (Second) of
Torts § 538 (1976)).
As recounted above, industry
funding is relevant for assessing
conflicts of interest, how much
time an applicant has to devote to
the requested NIH grant, and how
the research fits within a broader
research program. Because the NIH
specifically requests the
information on its form, and
because the value of this
information is readily apparent, we
think that the information is
material: a reasonable NIH grant
applicant would know that the NIH
regards the information as

We turn now to the issue of
damages. Even if the letter to
Elkins does little to undermine
Cantekin's claim that Bluestone
knowingly submit false claims, the
appellees argue that the letter
still shows that his earlier
failure to disclose caused no harm.
Bluestone sent the letter to Elkins
on June 23, 1987, but his pending
post-1986 application was not
finally approved until February 4,
1988, when he was awarded
$ 321,137. The appellees argue,
therefore, that no harm could have
been caused because Bluestone
disclosed his industry funding
before any grant money was
dispensed for his post-1986 grant

The first problem with this
argument is that, as noted above,
the letter to Elkins never left the
program-administration offices, so
the information about Bluestone's
industry funding never reached the
review committee or any other
decisionmaker involved in approving
Bluestone's grant. Thus, we do not
know whether the review committee
or the council of the institute
would have approved the grant if
they had known about the
information included in the letter.
Given that two committee members
who reviewed Bluestone's
application in 1984 and 1985 would
have assigned lower priority scores
to his application, and given that
one member's vote can effectively
deny funding, we think whether the
grant would have been approved and
what damages were incurred raise
genuine factual disputes. We also
want to point out that even if the
review committee and council would
have approved the application once
they knew about the industry
funding, they still might have
imposed additional safeguards or
requirements. Having not been
informed, they did not have an
opportunity to consider these other
intermediate steps.

It may seem unfair to hold
Bluestone accountable for the
decision made in the programadministration
offices not to pass
along Bluestone's letter. As noted
above, however, the statute
expressly provides a mechanism for
dealing with a defendant who
reveals his false claim. Since this
provision merely reduces the
defendant's liability for the
damages actually caused, and since,
in any event, Bluestone may not
satisfy the prerequisites,
Bluestone remains liable for the
harm that in fact was caused to the
government as a result of his false

It is a basic principle of tort law
that once a defendant sets in
motion a tort, the defendant is
generally liable for the damages
ultimately caused, unless there are
intervening causes. See, e.g.,
W. Keeton, D. Dobbs, R. Keeton, &
D. Owen, Prosser and Keeton on Law
of Torts § 44 (5th ed. 1984).
Analysis of intervening causes is
often used as a way of evaluating
and assigning responsibility for
harm caused. Id. Given that
Bluestone only sent his letter
after he was under the pressure of
investigation, his letter does
little to lessen his culpability,
and therefore, the fact that the
letter was not forwarded is not
plausibly treated as an intervening
cause. To the extent that analysis
of intervening causes focuses on
the foreseeability of a putative
intervening cause, we think it is
significant that Bluestone chose to
send the letter to Elkins, his
program administrator, who did not
decide whether he would receive
funding for his application.
Bluestone did not, for instance,
submit another revised application
as he did earlier in the spring. In
short, the fact that the letter was
not forwarded was a risk that
Bluestone assumed when he submitted
the claims.

The appellees have directed our
attention to several cases
discussing causation requirements
under the False Claims Act. In
United States v. First Nat'l Bank
of Cicero, 957 F.2d 1362 (7th Cir.
1992) the court held that the
government only needed to show that
it would not have made a payment
"but for" the false statement. In
reaching that holding, the Seventh
Circuit expressly disagreed with
United States v. Hibbs, 568 F.2d
347 (3d Cir. 1977), which,
according to Cicero, imposed a more
stringent causation requirement.
Specifically, Cicero said that in
addition to requiring that the
government would not have paid the
claim but for the false statement,
Hibbs effectively held that the
"subject matter of the false
statement . . . be the source of
the government's loss." 957 F.2d at
1373 (citing Hibbs, 568 F.2d at
349, 351). We need not decide
either whether Hibbs should be read
as imposing such a requirement, or
whether Hibbs is consistent with
the changes made in the False
Claims Act since that decision. We
think it suffices to point out that
both standards can be satisfied: as
we concluded in our discussion of
damages, Cantekin has presented
evidence that Bluestone's grant
might not have been approved but
for his false statements about his
industry funding (or that the grant
would have been approved with
additional restrictions or
requirements). And the content of
Bluestone's omissions about his
industry funding could have made
the difference in whether his grant
was approved or not, so even under
the Seventh Circuit's reading of
Hibbs, the "subject matter of the
false statement" could have been
the source of the government's

For the foregoing reasons, we will
affirm the order of the District
Court dated February 9, 1998 and
reverse the order dated September
4, 1998. Each party to bear its own
Because, in my view, (1) the
uncontradicted evidence establishes
that responsible government
employees knew of the private
funding and alleged conflict of
interest prior to the effective
date of the Grassley Amendments;
(2) the instructions to applicants
are clear and unambiguous on their
face; and (3) Dr. Cantekin's
affidavit alone establishes a
dispute of fact as to whether Dr.
Bluestone knowingly submitted false
claims, I join the judgment of the

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