'Whistle-blower' lawsuit dismissed
Publication Date: Wednesday Sep 4, 1996

STANFORD: 'Whistle-blower' lawsuit dismissed

Judge rules Biddle's allegations about Stanford's indirect costs were unfounded

by Elizabeth Darling

A federal judge in San Jose has dismissed a lawsuit by one-time Naval researcher Paul Biddle against Stanford University, a move that may mark the end of a six-year debate over research overhead costs. "This is welcome news after a drawn-out, costly controversy," said Stanford University President Gerhard Casper last week.

The lawsuit was filed in 1991 by Paul Biddle, a former Office of Naval Research contracting officer, who oversaw federal research at Stanford. He filed his suit on behalf of taxpayers under a federal law that allows government whistle-blowers to sue for fraud and receive a portion of any award.

At one point, Biddle claimed that Stanford could owe as much as $200 million in overcharges for research costs between 1981 and 1992. His allegations triggered a government audit and a congressional hearing on the matter.

But U.S. District Court Judge Ronald Whyte dismissed the lawsuit Monday Aug. 26, saying in his written ruling that Biddle's suit didn't qualify under that particular federal law.

In response to motions for dismissal filed by Stanford, Whyte said a plaintiff can only bring such a suit, called a "qui tam" suit, if he has "direct and independent" knowledge of the information his allegations are based on. In Biddle's case, the information was made public through congressional hearings and by the media, so, the judge said, Biddle's allegations "repeat what the public already knows."

The judge also found that Biddle's allegations of false statements made by Stanford to conceal information from the government were unfounded.

Biddle, who could not be reached for comment, may still appeal the ruling.

The decision is the most recent in a series of legal victories for Stanford, which drew national attention six years ago over allegations that it had overbilled the government.

In 1994, Stanford settled with the Office of Naval Research, agreeing to pay $1.2 million for overbilling of expenses between 1981 and 1992. As part of the settlement, the Office of Naval Research concluded it did "not have a claim that Stanford engaged in fraud, misrepresentation or other wrongdoing."

"The dispute has imposed extraordinary expenses on Stanford and the United States government," Casper said in a prepared statement. "It has lasted for more than six years. In its course, the reputation and integrity of individuals and institutions have been sullied."

In May 1990, Biddle contacted Congressman John Dingell, who conducted congressional hearings on the matter, beginning in March 1991. By July, former Stanford President Donald Kennedy, who testified before the congressional committee, resigned over the situation, saying "it is very difficult for a person identified with a problem to be the spokesman for its solution."

By March 1992, Biddle resigned to run for Congress, a few months after Stanford asked the government to transfer him because of his pending lawsuit. In December 1993, the Justice Department decided his suit had no merit and refused to join it.

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