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JGL Assists U.S. Government and Its Client in Helping Secure $95 Million Whistleblower Settlement Over School’s Alleged Misuse of Federal Financial Aid Funds

Joseph, Greenwald & Laake, P.A. is pleased to announce that its client, Dr. Mara Rainwater, has helped the U.S. Government secure a $95 million settlement in a False Claims Act case involving a for-profit educational institution’s alleged misuse of U.S. Department of Education (DOE) financial aid funds.

The defendants in the case are Education Management Corporation, Education Management, LLC (EDMC) and its affiliates and subsidiaries that allegedly submitted fraudulent claims for millions of dollars from the DOE. The defendants are among the largest recipients of Higher Education Act, Title IV (HEA) federal student financial aid funds from the DOE.

Dr. Rainwater was a professor and also supervised other faculty members at EDMC, a Pennsylvania corporation, which operates schools on more than 100 ground campuses, and also offers online education programs. Other defendants in the case are South University, LLC; South University Online; Argosy Education Group, Inc.; and Argosy University Online.

“We were very honored to be able to successfully represent Dr. Rainwater to help return these federal funds to the student loan program,” said Brian J. Markovitz, a partner with Joseph, Greenwald & Lake, PA and the attorney for Dr. Rainwater. “The student loan program is the only avenue for many individuals, who otherwise would have no access to a college education, and Dr. Rainwater bravely spoke up to protect those critical funds.”

According to the complaint, the defendants falsely certified every year that they were in compliance with the HEA’s requirement that any unused funds from students who enrolled but never attended, or did not complete a certain percentage of the defendants’ classes, were returned to the DOE. This is a core prerequisite to eligibility for the receipt of Title IV funds, and a condition of payment to receive DOE funding. The complaint claims that the defendants further falsely certified every year that they were in compliance with HEA requirements that they made no substantial misrepresentations regarding their institutions, were adequately tracking HEA standards for academic progress, and were fiscally responsible.

“At the center of Dr. Rainwater’s complaint are allegations that EDMC continued students’ participation, who actually dropped out of school, instead of failing them so it could collect the full of amount of financial aid funds available from the federal government, monies that should have gone to other students who were actively participating at their educational institutions,” Markovitz explained.  

The qui tam lawsuit, United States of America ex rel. Dr. Mara Rainwater v. Education Management Corporation et al., was filed in the U.S. District Court for the Middle District of Tennessee.

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