A high-stakes whistle-blower case accusing the University of Phoenix of misusing billions of dollars in federal money has taken a bizarre twist. The U.S. Department of Education, which is ostensibly opposing Phoenix in the case, has given away the entire legal strategy of the whistle-blowers, including the identities of confidential witnesses.
Lawyers for the University of Phoenix and its parent company, the Apollo Group, obtained most of the information in 2005 after filing a Freedom of Information Act request the previous year. The information, in a set of documents called a disclosure statement, outlines legal strategies and includes notes from interviews with witnesses, and department lawyers say they should not have been given out.
Now, the department has written to Apollo’s lawyers, asking that they give back all their copies of the documents. A lawyer for the department has also filed a motion asking that a copy of the legal strategy, entered in court as an exhibit by Apollo’s lawyers, be sealed.
“It’s as if we had a burglar come into our office and rummage through our files,” said Daniel R. Bartley, a lawyer for the two whistle-blowers in the case. They allege that the University of Phoenix paid recruiters on the basis of how many students they could get to enroll, a violation of federal law.
Mr. Bartley’s clients are former recruiters for the University of Phoenix who say the institution falsely certified its compliance with all federal guidelines when it applied for Pell Grant money and other federal funds. Apollo received as much as $3-billion in federal money from 1997 to 2003, the years covered in the lawsuit.
The suit was filed under the federal False Claims Act, which allows people with evidence of misuse of federal money to sue on behalf of themselves and the government. Any money recovered is shared by the government and the plaintiffs.
A federal judge dismissed the lawsuit in 2004, but it was reinstated last month by the U.S. Court of Appeals for the Ninth Circuit.
The False Claims Act requires that plaintiffs’ legal strategies and working papers be shared with the federal agencies involved in the lawsuits. But it is unclear how the documents were released.
In a written statement, an Education Department spokesman said the agency “is aware that certain department records were released in error. ... The department is taking appropriate action to safeguard its records.”
The spokesman, Jim Bradshaw, said he could not comment further on matters in litigation and could not say if the department was investigating who approved the release of the records.
In this case, lawyers at the Department of Education were consulted as part of the review process for Apollo’s Freedom of Information Act request. One of them, Christine M. Rose, who works in the general counsel’s office, filed a declaration in federal court this month, saying the department had determined that the disclosure statement and witness-interview notes were “privileged documents.”
Apollo’s lawyers have responded that they do not plan to give the documents back, arguing that they are now public records.
“This FOIA request was the subject of intense and protracted scrutiny at multiple levels within the department,” Joseph P. Busch III, a lawyer for the Apollo Group, wrote in a letter this month to the U.S. attorney’s office in California. In the letter, he noted that Apollo had been charged more than $8,000 in fees for the costs of producing the documents.
“Given the amount of effort devoted by the department in responding to the FOIA request,” he wrote, “it is hard to believe that there was any inadvertent production of documents.”
Apollo paid a $9.8-million fine in 2004 after a department investigation of its recruiting practices, but it did not admit any wrongdoing.
http://chronicle.com Section: Money & Management Volume 53, Issue 10, Page A29