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USEPA Office of Inspector General. Laboratory Fraud – We are still here… Bruce A. Woods, Ph.D. Overview. The Lab – The Movie OIG Overview What is Fraud We still have lab problems Laboratory Fraud Preventing Laboratory Fraud True Cases Lab Fraud Investigations within the OIG.

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Presentation Transcript
overview
Overview
  • The Lab – The Movie
  • OIG Overview
  • What is Fraud
  • We still have lab problems
  • Laboratory Fraud
  • Preventing Laboratory Fraud
  • True Cases
  • Lab Fraud Investigations within the OIG
the lab the movie
The Lab – The Movie

Produced By

Department of Health & Human Services

Office of Research Integrity

February 2011

the lab the movie1
The Lab – The Movie
  • You assume the role of :

Kim – 3rd year grad student – questions use

of her data by another researcher

Hardik – postdoc researcher – dealing with

competitiveness in lab versus family life

Aaron – Principal Investigator – overwhelmed

as professor, researcher, and grant writer

Beth - Research Integrity Officer – how does

she handle allegations of research misconduct

the lab the movie2
The Lab – The Movie
  • Interactive movie with different outcomes based upon choices you make
  • Deals with research misconduct but the issues are similar to issues in GOV or Commercial labs
  • Has 26-page Study Guide
  • Available on-line at
    • ori.hhs.gov/TheLab/TheLab.shtml
the lab the movie3
The Lab – The Movie

Introduction – click above to start

key message
Key Message
  • Lab fraud cuts across all programs
  • Lab fraud impacts other organizations
  • Lab fraud does not occur just in the environmental field
  • Lab fraud may impact you personally, not just on the job
    • Medications, drinking water, medical testing
slide8

Office of Inspector General Overview

Authority: Inspector General Act of 1978, as amended, allows for the IG to conduct audits and

investigations into fraud, waste, and abuse within the EPA.

Overall Goal: To provide audit, evaluation, investigative, as well as advisory services resulting in improved environmental quality and human health.

slide9

INVESTIGATIONS

GS-1811 Criminal Investigators (Special Agents)

Administer and take Oaths

Serve Subpoenas

Special Agents with Authority to

- Carry Firearms

- Make Arrests

- Execute Warrants

Investigate and Present Cases to the Department of Justice

slide10

UMBRELLA OF FRAUD

Theft of

Public $

False Claims

Bribery

Wire Fraud

Mail Fraud

Obstruction of

Federal Audit

False Statements

slide11

ELEMENTS OF FRAUD

  • A Representation
  • About a Material Point
  • Which is Intentionally False
  • Which is Believed and Acted Upon
  • To the Victim’s Damage
slide12

SCHEMES TO DEFRAUD

Generally some ruse or artifice to perpetrate the fraud and minimize detection while giving it the appearance of legitimacy

  • Cost Mis-charging
  • Bid rigging
  • Front Companies and Leasing Scams
  • Product Substitution – LAB FRAUD
we still have lab problems
We still have lab problems
  • All organizations are slightly different, but we all…
  • Prequalify labs – preferred providers
    • Conduct On-Site Audits before lab is qualified
    • To varying degrees rely on Performance Evaluation sample results as part of qualification
    • Look at Quality Systems
we still have lab problems cont
We still have lab problems-cont.
  • To varying degrees conduct reviews on lab data
  • These checks are based on normal statistical variations in data
  • The human factor – deliberate activities fall outside of statistical testing/ variations
  • Finding fraud departs from normal statistical testing
laboratory fraud
Laboratory Fraud

EPA-OIG Definition

“The deliberate falsification of analytical and quality assurance results, where failed method and contractual requirements are made to appear acceptable.”

Intentional Misrepresentation of Lab data to Hide Known or Potential Problems.

Make Data Look Better Than it Really is, With the Intent to Deceive. Usually for monetary gain.

Lying, Cheating and Stealing.

statutes used for prosecution
Statutes Used for Prosecution
  • Title 18 Criminal Code Violations
    • mail fraud, 18 USC 1341
    • wire fraud, 18 USC 1343
    • false statements, 18 USC 1001
    • conspiracy to defraud, 18 USC 371
    • concealment of a felony, 18 USC 4 (misprision)
    • false claims, 18 USC 287
    • obstruction of justice, 18 USC 1505
statutes used for prosecution1
Statutes Used for Prosecution
  • Each of these Statues carry penalties of
    • Up to 5 years in prison
    • Up to $250,000 fine
  • Misprision of Felony (Concealment)
    • Up to 3 years in prison
    • Up to $250,000 fine
basic types of lab fraud
Basic Types of Lab Fraud
  • Procedural Fraud
    • Short Cuts or Deviations from Standard Operating Procedures
      • Sample Prep
      • QA Spiking
      • Don’t do it at all (DRY LAB)
  • Measurement Fraud
    • Altering or Forging Direct Physical Measurements
      • Improper Manual Integrations
      • Altering Response Factors in Calibration File
      • Standard Pulling
where lab fraud occurs
Where LAB Fraud Occurs

Organics – 54%

Entire Lab – 17 %

Inorganics- 14 %

Microbiology – 6%

Air – 3 %

Asbestos – 3 %

Other – 3 %

epa programs impacted
EPA Programs Impacted

Water – 56%

Solid Waste & Emergency Response – 27 %

Air & Radiation - 11 %

Pesticides – 3%

Multimedia – 3 %

reasons for lab fraud
Reasons for Lab Fraud

Biggest reason: TO MAKE QC PASS!

Curve does not pass response criteria

  • minimum response or linearity

Continuing Calibration response does not match curve (% difference >)

Internal Standard areas out

Surrogates out

Matrix spikes out

To avoid diluting or re-running sample

lab fraud
Lab Fraud

Why Aren’t they Caught ? ?

  • Not Prime Contractors, 1st or 2nd Subs
    • Paper Data Review, Not Electronic
  • Performance Evaluation Samples
    • They Know What They Are
    • Designed to Weed Out Incompetent
    • Double Blinds Are Better but EXPENSIVE !
  • Lab Audits are Typically Systems Audits
    • Very Little Electronic Data Review
      • Very Very Very Expensive
      • Labor Intensive – Need Bench Chemists
lab fraud1
Lab Fraud

Results of Lab Fraud

  • Data is of Unknown Quality & Hard to Assess – OTHER DEEDS DONE !!!
  • Bad Data used for Rule Making, Policy

Impacts on Data

  • Random Number Generation
  • Un-defendable Detection Limits
  • HIGH RISK of FALSE NEGATIVES
  • Risk of False Positives
  • Highest Risk is Associated with Regulatory Action Levels and Trace Level Analysis
lab fraud2
Lab Fraud

Not Always the Bad Corporation

  • Sometimes Company is Victim Itself
    • Poor Management
    • Lack of Strong QA Program
    • QA Officer is Lab Managers Best Friend
  • Reputation is Everything to a Lab
    • Often Investigation is Enough to Cause Lab to Lose Business and Close Doors
preventing lab fraud
Preventing Lab Fraud
  • Quality System - Proactive QA Manager
  • Organizational Data Integrity Policies and Procedures
  • Proper and Periodic Training - ETHICS
  • Periodic INTERNAL Audits
  • Analysis of Proficiency Testing Samples
  • Inspection/Auditing of Electronic Files
  • LOOK FOR RED FLAGS
    • Odd unwarranted manipulations
    • Failure to follow procedures
    • Dates and times don’t match
    • Perfect control charts
case 1 i never intended to
Case 1 – I never intended to….
  • Analyst – 20 years of experience
  • Coliform analyses
  • Anonymous complaint to state agency
  • Split sampling event
    • 3-way split to 3 labs
  • Results reported versus Media ordered
    • 4,900 results versus 4,000 media
  • Involved wastewater and drinking water
case 1 i never intended to1
Case 1 – I never intended to….
  • Outcome
    • Criminal Plea
      • 1 count - 18 USC 1001 - False Statements
      • 2 years probation
      • $5,000 fine
      • $100 Special Assessment
      • $765 Restitution to complainant
    • Suspension/Debarment
      • 4 companies
      • 2 individuals – husband & wife
    • Appeal of Debarment
case 2 we will be vindicated
Case 2 – We will be vindicated…

Good Morning

Step Away From The Computers

case 2 we will be vindicated1
Case 2 – We will be vindicated…
  • Complaint – terminated employee
  • Search warrant
    • 20-30 EPA Special Agents OIG & CID
    • Interviewed most supervisors/managers
    • Imaged all computers - instruments/servers
    • Over 400 archive boxes of hard copy data for current year – can’t take it all
    • Over 100+ items in evidence
case 2 we will be vindicated2
Case 2 – We will be vindicated…
  • News coverage
    • Noon and 6 o’clock TV news
case 2 we will be vindicated3
Case 2 – We will be vindicated…
  • Review of hard copy and electronic data
    • Wet Chem lab – Flow Injection Analyzer
      • Time Traveling
      • Dry labbing
    • GC/MS lab
      • Peak shaving/juicing
  • Analysts notebook review
    • How to change time clocks on computer
    • Report negative TKN results as negative NH3 – didn’t run NH3 test but reported they did
case 2 we will be vindicated4
Case 2 – We will be vindicated…
  • Interviews of analysts with lawyers
    • Arranged by defense counsel
    • Denials by most analysts that anything was improper in lab
    • Asked about instrument printouts which showed time traveling & peak shaving
  • Outcome
    • Ongoing discussions between lab and Asst. U.S. Attorney (AUSA)
case 3 my initials but
Case 3 – My initials but….
  • Received complaint
  • Initial interviews
  • Obtained client reports
  • Reviewed client reports – looked OK
    • Results
    • Quality Control data met criteria
case 3 my initials but1
Case 3 – My initials but….
  • Follow-up interviews with analysts
  • Those are my initials and I’m certified for the test
  • I did not do those analyses
  • I quit working weeks to months before the date of analysis on the report
case 3 my initials but2
Case 3 – My initials but….
  • NELAC accredited lab
  • Methods and NELAC accreditation require analyst qualification before conducting analyses
  • Outcome
    • Search warrant?
    • Subpoena?
lab fraud investigations within the oig
Lab Fraud Investigations within the OIG
  • Is this a logical place for lab fraud?
    • Independence of OIG from Agency Management
    • Outcome of investigations could be seen by Agency Management as delaying site cleanups/ may not make Agency look good
    • OIG Subpoena power
    • Fewer restrictions with OIG Subpoena versus Grand Jury Subpoena information
      • Use of information later for Suspension/ Debarment
lab fraud investigations within the oig1
Lab Fraud Investigations within the OIG
  • Cont….
    • Law Enforcement investigation is taken more seriously than a technical/scientific audit
    • Law Enforcement focus is on building the case and prosecution
    • What happens with impacted data after prosecution?
my contact info
My Contact Info

Bruce A. Woods, Ph.D.

U.S. EPA Office of Inspector General

1200 Sixth Ave., Suite 900, M/S OIG-195

Seattle, WA 98101

206-553-6224

Fax 206-553-6225

oig hotline
OIG HOTLINE

1-888-546-8740

Or

www.epa.gov/oigearth/hotline

USEPA

Office of Inspector General Hotline (2441T)

1200 Pennsylvania Avenue, N.W.

Washington, D.C. 20460

the end
The End

“The minute you read something you don’t understand, you can be almost sure it was drawn up by a lawyer.”

-- Will Rogers