Courts & Corrections

No blame, no cash as state settles fraud case against Gruber

MIT economics professor Jonathan Gruber was a consultant on Vermont’s examination of a publicly financed health care system. Courtesy photo

The attorney general’s office has settled with a health care consultant after a 2½-year investigation into whether he committed fraud when billing the state for services.

The office announced the settlement Thursday with Jonathan Gruber, a professor from the Massachusetts Institute of Technology who did economic modeling on single-payer health care for then-Gov. Peter Shumlin.

Neither Gruber nor the state will pay each other any money over the allegations.

Gruber signed the settlement May 10, and two assistant attorneys general signed it June 8.

The attorney general’s office accused Gruber of billing the Agency of Administration in 2014 for more hours than his research assistant actually worked, allegedly violating the Vermont Civil False Claims Act.

The office opened the investigation in February 2015, after State Auditor Doug Hoffer submitted a memo to the Agency of Administration and then-Attorney General William Sorrell saying Gruber may have “overstated” the number of hours his research assistant worked.

“It’s clear that the Agency of Administration failed to exercise due diligence and enforce
important provisions of the contract,” Hoffer wrote in the memo.

State Auditor Doug Hoffer, right, with then-Attorney General William Sorrell. File photo by Roger Crowley/for VTDigger
By that time, the state had already paid Gruber for two invoices, although the state held back $40,000. Each invoice was for exactly $100,000 and for identical hours by Gruber and his research assistants — even though he had only one — and the second invoice incorrectly stated it was the “first invoice.”

The state then decided not to pay Gruber’s third or fourth invoices, which billed for a total of $90,000, and instead open an investigation. Under the settlement, the state has agreed not to take Gruber to court under the False Claims Act and will not have to pay the remaining $90,000.

“Dr. Gruber denies liability in general and specifically denies that he violated the Vermont False Claims Act, or any other state or federal law, regulations, or rules, including the common law,” the settlement says.

Instead, the settlement document says the state decided to settle with Gruber “to avoid the delay, expense, inconvenience, and uncertainty of litigation.”

Gruber did not respond to a phone message or email inquiry seeking comment.

Representatives of the attorney general’s office also did not return phone messages seeking comment.

The investigation found that the first two invoices were false with respect to the amount of work performed by research assistants. In order for them to be correct, the settlement says, the research assistant would have had to work “almost 12 hours a day” for 42 days and then more than 16 hours a day for 30 days.

Additionally, while Gruber’s contract with the Agency of Administration required him to submit detailed information about his work and his research assistant’s work performed during which hours, the settlement says Gruber didn’t keep that information.

The research assistant was an independent contractor who was paid on a salary basis and therefore reported working 40 hours a week to a payroll company in order to receive that pay period’s paycheck, according to the settlement.

“The research assistant retained no record of the actual hours worked on the contract,” the settlement says, and “documentation” that Gruber submitted after the state began its probe “did not reflect the actual hours worked by the research assistant.”

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Erin Mansfield

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  • Briana Kuk

    And yet nothing to recoup funds from CGI after so many failed deadlines?

  • … and how much money did the state spend to come up empty handed? Can someone provide the number of hours and cost of this investigation? I’m sure the state’s ability to reconcile hours worked on this case must be as good as Gruber’s.