The Office of Research Integrity of the Department of Health and Human Services announced last month that an investigation determined that Paez had "committed research misconduct" by falsifying or fabricating studies of retinal tissue from 3-week-old normal dogs and dogs bred to have a type of progressive retinal atrophy.
The integrity office said that Paez had falsely labeled data files in a Penn "core computer and submitted falsely identified files to his research mentors."
"He killed and mutilated puppies and he betrayed the trust of the public and the NIH and private benefactors," said Justin Goodman, PETA's associate director of laboratory investigations.
In research papers delivered to the Association for Research in Vision and Ophthalmology, Paez said that the dogs had received intravenous sodium pentobarbital as an anesthesia before their eyes were removed and an overdose of the same drug afterward to euthanize them.
Paez said some types of retinal diseases in dogs are comparable to those in humans.
Paez, who moved to the University of Michigan as an assistant professor in 2008, didn't return phone calls for comment.
Penn officials didn't comment. The director of the research integrity office said that he would need permission to comment. No one could be reached from the National Eye Institute.
Goodman said that the federal money is funneled to the researchers through the university, so the school would be responsible, if asked, to pay it back to the NIE.