Laboratory Fraud – We are still here… Bruce A. Woods, Ph.D.

1. USEPA Office of Inspector General Laboratory Fraud –We are still here…Bruce A. Woods, Ph.D.

2. 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

3. The Lab – The Movie Produced By Department of Health & Human Services Office of Research Integrity February 2011

4. 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

5. 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

6. The Lab – The Movie Introduction – click above to start

7. 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

8. 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.

9. 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

10. UMBRELLA OF FRAUD Theft of Public $ False Claims Bribery Wire Fraud Mail Fraud Obstruction of Federal Audit False Statements

11. ELEMENTS OF FRAUD • A Representation • About a Material Point • Which is Intentionally False • Which is Believed and Acted Upon • To the Victim’s Damage

12. 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

13. 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

14. 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

15. 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.

16. 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

17. 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

18. 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

19. Where LAB Fraud Occurs Organics – 54% Entire Lab – 17 % Inorganics- 14 % Microbiology – 6% Air – 3 % Asbestos – 3 % Other – 3 %

20. EPA Programs Impacted Water – 56% Solid Waste & Emergency Response – 27 % Air & Radiation - 11 % Pesticides – 3% Multimedia – 3 %

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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

28. Case 2 – We will be vindicated… Good Morning Step Away From The Computers

29. 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

30. Case 2 – We will be vindicated… • News coverage • Noon and 6 o’clock TV news

31. 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

32. 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)

33. Case 3 – My initials but…. • Received complaint • Initial interviews • Obtained client reports • Reviewed client reports – looked OK • Results • Quality Control data met criteria

34. 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

35. Case 3 – My initials but…. • NELAC accredited lab • Methods and NELAC accreditation require analyst qualification before conducting analyses • Outcome • Search warrant? • Subpoena?

36. 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

37. 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?

38. 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

39. 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

40. 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