Originally created 09/06/98

Insurance claim, trial linked



There will be more at stake than the fate of former Medical College of Georgia researcher Richard Borison when his trial commences Sept. 28. The school's $11 million insurance claim also could turn on whether he is convicted.

Dr. Borison was indicted in February 1997 and is accused of keeping $10 million worth of research money for himself and companies he controlled. A former partner, Dr. Bruce Diamond, pleaded guilty in December and agreed to reimburse the school $1 million.

In July 1997, the school made a claim for $11 million on a commercial crime policy it held with United States Fire Insurance to recover what it alleges Dr. Borison denied the school. That kind of policy typically covers a company from losses due to employee theft, as Dr. Borison is accused of defrauding MCG of the money he kept for himself.

But in May, U.S. Fire sued in Fulton County Superior Court to deny the claim. The Georgia Attorney General's Office, which is also prosecuting Dr. Borison, counter-sued U.S. Fire to collect.

The higher dollar amount in the insurance claim covers all of the research studies Dr. Borison and Dr. Diamond are accused of hiding from the school, said Michael Hobbs, counsel to the attorney general.

Among the reasons U.S. Fire claims it does not have to pay is that the policy does not cover "indirect loss," and would not cover money the school expected to collect but didn't actually lose. The insurance company's position nearly mirrors the defense that Borison attorney Michael Garrett has been using -- it was never the school's money in the first place.

And the fate of both are now tied together.

"As a matter of law, their defense is our defense," said Atlanta attorney Tim Burson, who represents U.S. Fire. "Obviously, if they didn't steal it, we're not liable."

MCG looks at it another way.

"When we get a conviction, it's going to make it very hard for them to argue there wasn't a theft," said MCG senior legal adviser Clayton Steadman.

The case may be breaking new ground in the area of research misconduct, said attorney Barbara Mishkin of Washington, past chairman of the American Bar Association's Committee on Regulating Research and a 20-year veteran of research misconduct cases.

"I really haven't run across it before," Ms. Mishkin said. Usually, a school and an insurance carrier will quietly settle claims outside the public eye, she said. Wausau Insurance, which also had a policy with the state covering employee theft, has settled the claim for $1 million, Mr. Hobbs said.

The roughly $2 million has been turned over to the Board of Regents of the University System of Georgia but so far none has made its way to MCG. Even if the state wins its claim with the insurance company, "how much of that will come back to (MCG), I don't know," Mr. Steadman said.

When there is money at stake in a research misconduct case, it is usually a False Claims Act case where the federal government is trying to recoup its money from a school and a whistle-blower stands to gain a percentage, Ms. Mishkin said.

None of the cases she knows of come close to what is at stake in the Borison case, she said.

"This really is a fascinating case," she said.