ScientificLaboratory Fraud


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Scientific/LaboratoryFraud

• United States Environmental Protection Agency
• Office of Inspector General

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EPA OIG
3 Directorates
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OIG INVESTIGATIONS
GS-1811 Criminal Investigators (Special
Agents) Administer and take Oaths Serve
Subpoenas Statutory Authority to - Carry
Firearms - Make Arrests - Execute Search/Arrest
Warrants Investigate and Present Cases to the
Department of Justice
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EPA CID vs. OIG
CID Investigates Crimes Against Environment
Illegal Dumping Illegal Discharge OIG
Investigates Crimes Against Agency Program
Integrity - Laboratory Fraud Computer
Crimes Contract/Grant Fraud Internal Affairs -
Employee Integrity Other - Stolen Property
Identity Theft etc
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EPA Laboratory Assets

• EPA Has 36 fixed and 8 mobile
  laboratories nationwide
• EPA Laboratories Oriented Toward Analysis of
  Industrial Chemicals Pesticides Conventional
  Pollutants as well as nerve agents and other
  toxins

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EPA Laboratory Assets

• 44 Internal EPA Labs Consist of 3 Independent
  Laboratory Systems
• Research and Development (ORD)
• Regional Laboratories (RST)
• Program Laboratories
• 100s of Labs exist in EPAs 2 External
  Laboratory Systems
• State Laboratories
• Contract Laboratories

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US Laboratory Universe 36000
Private Sector
State Local Governments
State Ag Labs
State Env Labs
HHS CDC
FDA Labs
DOD Labs
FBI Labs
EPA
Associations
Energy Labs
Dept Homeland Security
WH HSC
Public Health Labs
Vet Labs
Crime Labs
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Why We Have All These Laboratories

• Government makes environmental and health related
  decisions based upon lab data
• Companies make business decisions and protect
  product quality based upon lab data.
• Data of known quality is essential for Government
  to make policy and regulatory decisions
• EPA requires all regulatory and enforcement data
  to be of Known Quality

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DEFINITIONS

• Quality
• The totality of features and characteristics of
  a product or service that bear on its ability to
  meet the stated or implied needs and expectations
  of the user
• Quality Systems
• Structured and documented management system
  describing policies objectives principles
  organizational authorities responsibilities
  accountability and implementation plan for
  ensuring quality in its work processes products
  (regulations guidance etc.) and services

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DEFINITIONS

• What is KNOWN QUALITY (in English)
• Documented Conformance to Specifications
• Documented Fitness for Intended Use
• Data Uncertainty is Defined

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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.

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Is It Criminal or Civil
Laboratory Fraud

• Administrative - EPA Order 3120.1b
• Scientific misconduct fabrication or knowing
  falsification of data research procedures or
  data analysis is an offense which can result in
  immediate removal
• Suspension and Debarment
• Civil Sanctions / Fines
• Local AUSA Must Decide If Fraud Meets Criminal
  Prosecution Threshold
• Culpability
• Harm

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Laboratory Fraud DOJ Definition

• Title 18 United States Criminal Code
• Mail Fraud - 18 USC 1341
• Wire Fraud - 18 USC 1343
• False Statements - 18 USC 1001
• Conspiracy - 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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Sarbanes Oxley Act of 2002

• CEOs and CFOs must certify financial statements
  are true and not misleading
• The officers are responsible for internal
  controls to detect fraud
• Penalties up to 20 years imprisonment for
  destroying concealing or falsifying records with
  intent to obstruct or impede a legal
  investigation

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Two Types of Lab Fraud

• Procedural Fraud
• Intentional Short Cuts or Deviations from
  Standard Operating Procedures
• Sample Prep QA Spiking Dont bother to do it
  at all
• Measurement Fraud
• Altering or Forging Direct Physical Measurements
• Improper Manual Integrations False Visual
  Observation
• Altering Response Factors in Calibration File
• Time Travel

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Two Ways of Committing Lab Fraud

• Fraud committed in conjunction with or at behest
  of client
• Fraud committed against client often in
  performing government contracts

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Typical Environmental Lab
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Where LAB Fraud is Detected by OI

• Organics 54
• Entire Lab 17
• Inorganics- 14
• Microbiology 6
• Air 3
• Asbestos/Metals 3
• Radiation/Other 3

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Why Lab Fraud is Committed

• 1 Reason
• TO MAKE QA/QC PASS!
• Required for All EPA Methods
• Calibration Curve Fails
• Internal Standard Fails
• Surrogates Spikes Fail
• Matrix spikes Fail QC

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Common Causes of Lab Fraud

• GREED
• Management Pressures
• Lab over-capacity Making clients happy
• Unrealistic Contractual Requirements
• hold times low balling contracts
• low detection limit requirements
• Poor Contract Oversight
• Loss of Qualified Technicians
• Unethical Personnel
• NO OVERSIGHT !

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Why We Care About 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

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Preventing Lab Fraud

• Company Itself May Be a Victim
• 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
• Prohibited Practices Clearly Identified
• Proper and Periodic Training - ETHICS
• Periodic INTERNAL Audits
• Analysis of Proficiency Testing Samples
• Inspection/Auditing of Electronic Files
• LOOK FOR RED FLAGS
• Failure to follow procedures
• Dates and times on raw data dont match
• Odd unwarranted or repeated manipulations
• Perfect control charts

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Inspection Flow Chart
Detecting Laboratory Fraud
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Assess the Quality System
Detecting Laboratory Fraud

• An effective Quality System is critical to timely
  detection correction and deterrence of Fraud.
• An ineffective Quality System can allow shortcuts
  and improper practices to occur and to go
  unnoticed
• Documents and Records
• Quality Manual
• Resumes
• Training records
• Assessment and corrective action reports
• Interviews
• General Manager Technical Director(s) QA
  Manager QA staff laboratory staff
• Management Commitmentto Data Integrity

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RED FLAGS
Detecting Laboratory Fraud

• Lack of a data integrity policy or statement
• Lack of a no-fault mechanism
• Emphasis on production over quality
• Inadequate backup (personnel and equipment)
• Poor coordination for accepting work
• Excessive overtime
• Bottleneck departments
• Lack of technical depth
• High staff turnover
• Gaps in training records

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RED FLAGS
Detecting Laboratory Fraud

• QA staff lacks direct access to senior management
• Unclear roles and responsibilities
• QA staff performing competing responsibilities
• Inadequate internal assessments
• Lack of data assessments
• Incomplete assessment files
• Repeat assessment findings
• Inadequate procedures for handling complaints
• Corrective action fails to address root cause
• Lack of documented follow-up to corrective action
• Lack of record verification in archiving
  procedures
• Inadequate archiving procedures to ensure data
  retrieval

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RED FLAGS
Detecting Laboratory Fraud

• Records not readily accessible
• Discrepancies between method and SOP
• Referenced methods out of date
• Presence of pencils or whiteout
• Extremely clean neat logbooks
• Logbook entries all aligned
• Discrepancies between SOP and practice
• Expired standards
• Disabled audit trails
• Shared log-on and password access
• Unlabeled containers or illegible labels
• Sample volume discrepancies
• Materials inventory doesnt match throughput
• Sample throughput exceeds time required to
  process samples

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RED FLAGS
Detecting Laboratory Fraud

• Managers Interfering with Analysts Responses
• Emphasis on Production
• Inadequate Sample Handling Procedures for
  Evening/Weekend Deliveries
• No Mechanism for Reporting Problems
• Analysts unable to describe data review and/or
  oversight
• Incomplete case narratives
• Unexpected sample results
• Too-perfect QC results
• Reports Missing Review Signatures or Dates
• Discrepancies between Chain of Custody and Final
  Reports

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RED FLAGS
Detecting Laboratory Fraud

• Unexplained gaps/changes in records
• Discrepancies in QC performance between analysts
• Calibration records missing review
  signatures/dates
• Reappearing QC results
• Non-standard report formats
• Routine dead time on auto-injection run logs
• Samples or blanks diluted without apparent
  justification
• Too few QC records to support data output
• Chronological chromatograms that do not display
  prevalent background

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RED FLAGS
Detecting Laboratory Fraud

• Sample Receipt Records
• Transcription errors date/time discrepancies
  inappropriate containers improper preservation
  or storage
• Wet Chemistry Records
• Discrepancies between original data and reports
  inappropriate sample sequencing reappearing QC
  results
• Sample Preparation/Extraction Records
• Failure to meet holding times inappropriate
  sample volumes or dilutions improper sample
  processing cycles
• Calibration Records
• Improper calibration procedures (e.g. dropping
  points re-use of historical calibration data)
• Logbooks sequences data sheets run logs
• Improper changes or corrections data
  fabrication
• Chromatograms
• Improper electronic peak integration improper
  manual integration improper background
  subtraction

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Consequences

• Saybolt Inc. Environmental Laboratory
  Washington Reporter Vol 9 issue 17 Sept. 17
  1998
• 4.9 million fine falsifying test results
• Water Works Laboratories Inc. Mass
  Environmental Laboratory Wash. Reporter Vol 10
  issue 17 Sept. 16 1999
• decertified for fraud falsifying test results
  for PE samples (from another lab)
• Dalton Utilities GA Environmental Laboratory
  Wash. Reporter Vol 10 issue 18 Sept. 30 1999
• 0.5 million fine falsifying analytical data
• Caleb Brett USA Inc. NJ Environmental
  Laboratory WR Vol 10 issue 18 Sept. 30 1999
• 250000 fine 5 years prison supervisors
  falsifying RFG test results

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Consequences

• Intertek to pay 9 million for data fraud
  Environmental Laboratory Wash. Reporter Vol
  13 issue 5 March 14 2002
• 5 pled guilty 8 acquitted (ITS)
• Treatment plant operator jailed for falsifying
  lab report Environmental Laboratory Wash.
  Reporter Vol 14 issue 22 Dec. 18 2003
• Dyke 46 months in prison
• Altered and falsified lab report
• Pace to close Tulsa lab after finding improper
  analytical practices Environmental Laboratory
  Wash. Reporter Vol 15 issue 8 April 22 2004
• Management allegedly knew culture too wide
  spread
• Trust broken reputation damaged
• Deviations from established lab practices

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Consequences

• Mold testing company owner charged with testing
  cleanup fraud Environmental Laboratory Wash.
  Reporter Vol 15 issue 15 August 12 2004
• Offered services to remediate allegedly fake
  problems
• Generated allegedly false laboratory results
  showing no more mold
• In our public schools (Connecticut)!!
• Up to 250000 and 5 years imprisonment per count
• Former lab president sentenced for test fraud
  Environmental Laboratory Wash. Reporter Vol
  16 issue 7 April 7 2005
• Kellogg sentenced to 16 months in federal prison
• Falsified environmental test results
• Former lab owner sentenced for test fraud
  scheme Environmental Laboratory Wash.
  Reporter Vol 16 issue 6 March 24 2005
• Kilgarlin sentenced to 46 months in federal
  prison
• 13359 fine for mail fraud and obstruction of
  justice
• Dry-labbing results and false statements