Two former employees of a Kaplan-owned college in Pennsylvania who alleged in a 2006 federal whistle-blower lawsuit that the company had falsified graduation and job-placement rates and had paid illegal bonuses to student recruiters have withdrawn their suit. The two also reached a settlement with Kaplan on an employment-discrimination claim alleging that the company had fired them in retaliation for saying they would report wrongdoing.
The terms of the settlement are confidential.
Kaplan had long contended that the allegations in the whistle-blower case were meritless, along with those in two other False Claims Act suits filed by other former employees of other Kaplan institutions that raised some of the same charges.
The settlement and the voluntary dismissal, finalized in court filings this month at the U.S. District Court in Pittsburgh, mean the company no longer faces the risk of a trial—or the potentially negative taint of having agreed to a settlement—on False Claims Act charges related to recruiting or academic practices.
The company still faces a claim from a former department chair of Kaplan University, Jude Gillespie, who alleges the company violated the False Claims Act by falsely asserting that it was in compliance with laws barring discrimination against students, employees, and others with disabilities.
The federal government, which was never a formal party to the lawsuit filed by the two former employees—Victoria G. Gatsiopoulos and Dolores A. Howland-Justice—consented to the suit’s withdrawal. “There wasn’t enough to make us intervene way back then or today,” said Paul E. Skirtich, an assistant U.S. attorney based in Pittsburgh. He said a lack of admissible evidence, a lack of resources, or other factors determine whether the government intervenes in False Claims Act suits, but he declined to provide a precise reason for the decision in this case.
While a Kaplan spokesman noted that the False Claims Act allegations “were voluntarily withdrawn and no payments were made,” there is no way to know whether the withdrawal of that suit was a condition of, or a factor in the ultimate value of, the settlement of the discrimination claim.
“I think a lot of people would probably speculate that, but I can’t really confirm it,” said Christine Elzer, the former employees’ lawyer. She did, however, note that the cases had been resolved with “a global settlement that everybody’s satisfied with.”
