For-profit colleges may defraud federal education programs
It has been quite a summer, here at Bracker & Marcus LLC. We kicked things off with a nice False Claims Act settlement against a Compound Pharmacy, alleged to have defrauded Medicare and Medicaid by using bulk ingredients but billing for name-brand. We then attended the national conference for the National Employment Lawyers Association in N’awlins, where this Tulane grad got his fair share of etouffee, po’boys, and beignets. And now if you can believe it, it’s already time to go back to school. At least it is here in Marietta, GA, where the county operates on a quarter system. Which brings us to another area rife with fraud: for-profit education.
Many attendees of for-profit colleges obtain money from the federal government to help pay for their schooling, such as Pell or VA grants or loans. In order for schools to qualify to accept these grants, they must abide by certain rules. For example, colleges are not permitted to pay recruiters based on how many students they enroll; this is called the “incentive compensation ban.” The 90/10 rule requires for-profit schools to obtain at least 10% of their revenue from private payors or financial aid sources besides the federal government. And the schools may only admit students who actually qualify, meaning having high school diplomas or speaking the language the classes are taught in, but some schools have been caught helping unqualified students falsify Pell grant applications. Any of these violations could form the basis of a False Claims Act case.
In addition to the for-profit colleges, there are other privately-run, but publicly-funded, schools that may fall under the umbrella of the False Claims Act as well. One example is schools that are educating boys and girls in juvenile correction facilities or behavioral health institutions.
And there are also private universities that receive federal grant funds for research projects. If the university does not follow the requirements of the grant or the results are frauded up, it may be liable under the FCA. Just a few months ago, Duke University paid $112.5 million to settle claims that they falsified scientific data in order to obtain additional grants.
So as the summer comes to an end, remember to wear sunscreen, study hard, and look out for potential fraud!