The U.S. Department of Justice weighed in Tuesday on the side of several whistle-blowers who have alleged in lawsuits that various colleges owned by Kaplan Higher Education defrauded the government of hundreds of millions of dollars by paying incentives to recruiters and lying to obtain accreditation.
The three cases, all filed under the federal False Claims Act, were consolidated before the same federal judge in Miami last year. Kaplan has been arguing to have two of the cases, one filed in Illinois and the other filed in Florida, dismissed on grounds that under a “first to file” provision of the act, only the earliest lawsuit filed should proceed. Kaplan is also arguing that the suit that was filed first, in Pennsylvania, should be dismissed on grounds that it lacks the specificity required in a federal fraud case.
(A fourth suit out of Nevada initially was considered as part of this consolidation, but it never was included).
The Justice Department, however, has urged the judge to allow the allegations against Kaplan to proceed based on the various “first-filed” claims from each of the cases, as long as the cases don’t substantially piggyback on one another.
As a condition of participating in federal student-aid programs, colleges and universities owned by Kaplan affirm that they will abide by the rules of a “program participation agreement,” or PPA, with the Department of Education. Each of the lawsuits alleges that Kaplan fraudulently obtained millions in federal student-aid funds by violating various provisions of that agreement—allegations that the company denies.
The False Claims Act allows individuals to sue on behalf of the government for alleged fraud. The Justice Department has a stake in such lawsuits because the government shares in any damages that may eventually be recovered.
A memorandum it filed on Tuesday, at the request of Judge Patricia A. Seitz of the U.S. District Court in Miami, suggests that the department is eager to keep that option open in all three cases. To best serve the purposes of the False Claims Act, the memo says, “there is no reason why an allegation of a violation of one provision of a PPA should act as a first-to-file bar against unrelated allegations of a violation of a wholly different provision.”
