The First Circuit Court of Appeals (opinion by Kermit V. Lipez) has affirmed a Massachusetts District Court decision voiding efforts by the National Institutes of Health to cap administrative fees on “indirect costs” on NIH grants at 15%. (See Nonprofit Issues®, Vol. XXXV, No. 2). The cases were brought by 22 states, five medical associations, and 16 higher education associations and universities.
The Court of Appeals found that the District Court had jurisdiction to hear the case and affirmed the trial court’s findings on the merits. It found that the Supplemental Guidance on which NIH based its actions violated Health and Human Service’s regulations and undercut Congressional efforts to ensure that NIH could not displace negotiated indirect cost reimbursement rates with a uniform rate. It also affirmed the District Court holding that the issuance of the Supplemental Guidance did not comply with the applicable procedural requirements. The three judge panel was unanimous in its decision. (Massachusetts v. National Institutes of Health, First Cir., No. 25-1343, 1/5/26.)
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