In one of the largest settlements of its kind, the University of Phoenix agreed to pay $78.5 million to settle a whistle-blower lawsuit filed in Sacramento federal court under the False Claims Act, a federal statute that permits whistle-blowers to sue on behalf of the government for fraud committed against the government and to share in any recovery. The 2003 lawsuit claimed that the University had defrauded the U.S. Department of Education by obtaining federal student loan and Pell Grant funds from the federal government based on false statements of compliance with the Higher Education Act. That Act prohibits universities receiving federal student aid dollars from offering financial incentives to recruiters based “directly or indirectly” on the number of students they recruit or enroll.
This settlement comes in addition to $9.8 million the University previously paid to the Department of Education in 2004 to resolve administrative claims triggered by the whistle-blowers that it was improperly offering incentive payments to recruiters. In this latest settlement, $67.5 million will be paid to the United States Department of Education, with $19 million of that to be shared between the whistle-blowers. The attorneys for the whistle-blowers will receive $11 million in fees and costs.
Although this case was filed pursuant to the False Claims Act, employers should keep in mind it is unlawful to retaliate against those who blow the whistle on unlawful activities, and employers who do so can face significant legal liability.
Recent Comments