Whistleblower Lawsuit Against Education Management Over Student Loans Settles for $95.5 Million

Education Management Corp, a for-profit college company often abbreviated as EDMC, has settled a whistleblower lawsuit brought under the False Claims Act alleging illegal recruiting practices for $95.5 million.

Education Management is the second-largest operator of for-profit colleges in the United States. It teaches more than 100,000 students enrolled across the nation in Brown-Mackie College, Argosy University, South University or one of its Art Institutes.

The case is the largest qui tam lawsuit ever resolved involving the Department of Education, according to the New York Times. Whistleblowers initially filed the lawsuit in 2007 and the Justice Department (as well as several states) intervened in the case in 2011. Other for-profit education companies have also faced allegations of wrongdoing, with the operator of the University of Phoenix previously settling a False Claims Act lawsuit and Corinthian College fined nearly $30 million by the Department of Education.

EDMC was accused of violating a federal law prohibiting per capita incentive compensation for recruiters at schools offering student loans from government financial aid. In other words, the company was paying recruiters based on the number of students they enrolled. This form of recruiter compensation tied to production was prohibited by the HEA’s Incentive Compensation Ban.

The government had been seeking as much as $11 billion in federal and state student aid given to college students taught by the company between 2003 and 2011. The government alleged that in order to offer that money to students, EDMC falsely certified it was in compliance with Title IV of the Higher Education Act (HEA) and similar state laws.

The settlement resolved four whistleblower lawsuits filed under the False Claims Act. The False Claims Act offers whistleblowers a monetary reward of between 15 and 30 percent of the amount recovered by the federal government as a result of the individual’s information.

If you have questions about this information or you have evidence concerning fraudulent certifications by a school to obtain federal student loan money, please contact one of our False Claims Act attorneys by calling 1-800-590-4116 or filling out our contact form.

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