U.S. Protection Agency Office of Inspector General. Gregg Lundy ADD-ON...Authority: Inspector General Act of 1978, as amended, allows for the IG to conduct audits and investigations

U.S. Environmental Protection Agency

Office of Inspector GeneralU.S. Environmental Protection Agency

Office of Inspector General

Laboratory Fraud –Why Should I Worry….What Could Happen?

Bruce A. Woods, Ph.D.

September 17, 2015

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Overview Is Lab Fraud just an Environmental Problem? OIG Overview What is Fraud? We still have lab problems Laboratory Fraud Preventing Laboratory Fraud True Cases To protect your lab – more suggestions

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Is Lab Fraud Just an Environmental Problem?

Food and Drug Administration Drug testing by commercial lab

Illegal drug testing – police labs MA case – 40,000 cases impacted

Oxygen content in gasoline Fuel industry/environmental

Concrete & Steel testing Yankee Stadium/ NY Skyscrapers

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While these are not falsified testing examples Examples attempt to influence test results or need testing to

authenticate

Melamine in milk China Poison, damages kidneys

Food adulteration Olive oil, honey, saffron

Seafood Mislabel species to sell as higher cost species

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Common theme Similar instrumentation, techniques, testing.

It is hard to prevent lab fraud.

What can you do to protect yourself? Let’s look at some case studies in a moment.

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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

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Key Message

• Objective/Mission of Laboratories– To produce/report reliable and accurate data which is of known and documented quality for the decisions to be made with the data.

– Disclose any deviations from the methods requested by the client.

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Polling Question

• 1. Have you ever observed any questionable practices in a laboratory, which could be considered laboratory fraud?A. YesB. No

All responses are anonymous and will be used solely for educational purposes.

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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 and to also investigate threats against EPA personnel, assets, and facilities.

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

All major government departments have their own IG.

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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

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UMBRELLA OF FRAUD

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ELEMENTS OF FRAUD 1. A Representation

2. About a Material Point

3. Which is Intentionally False

4. Which is Believed and Acted Upon

5. To the Victim’s Damage

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SCHEMES TO DEFRAUDGenerally 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

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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

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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

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Laboratory FraudComposite 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.

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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

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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

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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

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Where Lab Fraud Occurs

Microbiology, 6%

Air, 3%Asbestos, 3% Other, 3%

Source: Historical OIG Cases

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EPA Programs Impacted Pesticides, 3% Multimedia,

3%

Source: Historical OIG Cases

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Why Analysts Commit 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

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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 for Electronic Data Review Labor Intensive – Need Bench Chemists

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Lab Fraud Results of Lab Fraud

Data is of Unknown Quality & Hard to Assess – OTHER DEEDS DONE !!! Bad Data used for Rule Making, Policy Cost for resampling and reanalysis of samples

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

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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

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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

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Polling Question

• 2. Have you ever been instructed by a manager, supervisor, or other analyst to engage in any questionable laboratory practices?A. YesB. No

Disclaimer ‐ All responses are anonymous and will be used solely for educational purposes.

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Real Cases – True Detective Stories

• WARNING!!!• This is not the graduate course on how to

commit laboratory fraud!!!

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Case 1 – I never intended to…. Analyst – 20 years of experience Coliform analyses – presence/absence Anonymous complaint to state agency Split sampling event

3‐way split to 3 labs/ 11 samples Suspect lab – all 11 samples negative Two other labs –all 11 samples positive

Results reported versus Media ordered 4,900 results versus 4,000 media

Involved wastewater and drinking water

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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 – lost appeal

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Case 2 – We will be vindicated…

Good MorningStep Away From The Computers

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Case 2 – We will be vindicated… Complaint – anonymous Hotline

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

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Case 2 – We will be vindicated… News coverage

Noon and 6 o’clock TV news

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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

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Analyst’s notes on nitrate test –how to backdate computer

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Analyst’s Notes on TKN Test Procedure‐What to do after completing tests

Dry lab ammonia results

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Nitrate‐Nitrite Analyzer ReportsLab version of report –left

My version added Detection time – rightDetection time from computer clock

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Example of Peak Juicing at 3.395Calibration Standard CCVIntegration Baseline in Red

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Example of Peak Shaving at 17.983 Calibration Standard CCVIntegration Baseline in Red

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Case 2 – We will be vindicated… Outcome

Corporation plead guilty – 1 count mail fraud (18 USC 1341) 5 years probation $150,000 fine/restitution

Suspension/Debarment 4 entities – Two labs, husband and wife ‐ owners Officers of lab suspended, and then debarred from federal

procurement 5‐year debarment Can’t receive federal funds

Direct contracts or pass‐through funds, etc

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Polling Question

• 3. Have you ever engaged in any questionable practices in a laboratory, which could be considered laboratory fraud?A. YesB. No

Disclaimer ‐ All responses are anonymous and will be used solely for educational purposes.

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Contact InfoBruce A. Woods, Ph.D.U.S. EPA Office of Inspector General1200 Sixth Ave., Suite 900, M/S OIG‐195Seattle, WA 98101206‐553‐6224

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OIG HOTLINEInternet:

www.epa.gov/oigearth/hotlinePhone:

1-888-546-8740 Mail:

USEPAOffice of Inspector General Hotline (2441T)1200 Pennsylvania Avenue, N.W.Washington, D.C. 20460

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OIG Documentation versus Data Reviewers

Documentation OIG uses for fraud investigations, which data reviewers typically don’t have: Electronic Instrument Files – discrepancies between electronic and paper Instrument Audit Trails – shows manipulations of data files Years worth of data versus single data packages – see patterns Analyst’s notebooks and other notes – notes in margins Emails – not necessarily related to a data package – may indicate improper

activities Original logbooks – instrument, extraction, maintenance – see “dud” or mis‐

fired runs, duplicate calibration/QC standards then pick the one that passes Personnel files – education (or lack of), employment history Training records – use ethics training forms in prosecution write‐ups, was

analyst trained for test Etc.

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To protect your lab Nothing can prevent lab fraud

Some things to consider Set up computers to update time clocks with a server Make sure audit trails in software are turned on See if software can record initials of analysts which show up in audit

trails – shows who did what Don’t just peer review paper, review electronic files

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Summary

Is Lab Fraud Just a Problem in the Environmental Field? OIG Overview What is Fraud We still have lab problems Laboratory Fraud Preventing Laboratory Fraud True Cases To protect your lab – more suggestions

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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

“Don’t do the crime, if you can’t dothe time.”

‐Old TV show tag line

Documents

U.S. Protection Agency Office of Inspector General. Gregg Lundy ADD-ON...Authority: Inspector General Act of 1978, as amended, allows for the IG to conduct audits and investigations