ITT, Calif. Settle False Claims Lawsuit

Higher education company to pay state $725,000 for errors that led to financial aid overpayments.
October 18, 2005

ITT Educational Services Inc. announced Monday that it had agreed to pay $725,000 to settle a lawsuit in which employees charged that the higher education company had inflated students' grade point averages so they qualified for more financial aid from the State of California.

In a filing with the U.S. Securities and Exchange Commission, ITT acknowledged that "erroneous student grade point average calculations" resulted in 49 students receiving larger financial aid awards through the state Cal Grant program than they otherwise would have received. The original lawsuit, filed in 2002 under the federal False Claims Act, which allows individual citizens to file lawsuits seeking recompense on behalf of state and federal governments, charged ITT with altering GPAs to enable 93 students to receive Cal Grants that they were not entitled to.

California's attorney general investigated the charges, according to ITT, and agreed on September 30 to settle the state's portion of the lawsuit, in return for the $725,000 payment by ITT. In settling the lawsuit, the company said it did not admit to the charges asserted by it. 

ITT's statement also said that the U.S. Justice Department had decided last week not to intervene in the federal portion of the False Claims Act lawsuit.


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