For-Profit Provider Files Motion to Dismiss U.S. Lawsuit Over Compensating Recruiters

October 6, 2011

Education Management Corp. today asked a federal judge in Pittsburgh to throw out a whistleblower lawsuit in which the U.S. Justice Department has alleged that the company violated federal law by providing financial incentives for admissions officers. The department's complaint states that EDMC, a large for-profit college company, was ineligible for $11 billion in state and federal financial aid it received from students over eight years. The company, in its filing, said that the government's claims are "legally flawed and factually insufficient," and that the government is attempting to use "overblown criticism of lawful recruiting actions" to distract from those deficiencies.

Bonnie Campbell, a lawyer and former Iowa attorney general who represents the company, said in a written statement that the "narrow legal issue" in the case is whether the sole basis for compensating admissions officers was enrollment numbers.

"Federal regulations issued in 2002 expressly permitted companies to consider enrollment numbers when determining admission officer salaries, as long as compensation was not based solely on enrollment numbers," Campbell said. "The company’s compensation plan complied with the law by requiring the consideration of five quality factors along with enrollments to determine salaries, and the company took a number of steps to ensure that the compensation plan was properly followed."

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