Money is the main issue as federal suit drags on

Jim Martyka

Despite rumors that the complex federal ALG lawsuit might come to a settlement soon, University officials say a resolution could be a long way off.
The $100 million lawsuit, which was filed by the U.S. Department of Justice against the University last December, claims the University profited from the sale of the unlicensed drug, ALG. The transplant drug was developed by Dr. John Najarian while he was head of the University’s surgery department.
“We are not going to settle this case in the next day or two,” said University General Counsel Mark Rotenberg. “I’m hopeful that we can settle in the next six to 12 months.”
Rumors have been circulating that the two sides were close to a settlement. However, Rotenberg said the rumors were only partially true.
The one area that Rotenberg said the sides are making progress on is the “exceptional organization” status that in August 1995 was placed on the University.
The designation, which delays the initiation of research projects and the allocation of grant funding, was placed on the University by the National Institutes of Health following the reports about the illegal sale of ALG.
Negotiations were going smoothly on this matter in December until the justice department filed the lawsuit, delaying discussion.
But recent negotiations have the two sides close to a settlement in this area.
“We have made a lot of progress in regard to what the University is prepared to do and what NIH is demanding we do in a way of grants administration,” said Rotenberg. “We’re substantially completed with the (exceptional status).”
He also said, however, that a settlement was still a long way off in terms of the other part of the suit, the $100 million the justice department is demanding.
“As far as financial settlement is concerned and the actual language of the agreement, we still have some disagreements,” he said.
The two sides have taken firm positions regarding the financial settlement.
“The justice department has interfered with our negotiations with the NIH and made demands of the University which are simply unacceptable, in the opinion of the (Board of) Regents and (University) President (Nils Hasselmo),” said Rotenberg.
Joe Krovisky, the public relations representative for the justice department, would not comment on the negotiation progress or the department’s stand on the issue other than to say no settlements have been made.
The regents have scheduled two meetings to discuss the recent negotiations in the lawsuit with the general counsel later this week.