Settlement of Lawsuits on Mountain State U. Collapse

September 8, 2014
Attorneys for several hundred students who sued after accreditation issues led to the collapse of a private college in West Virginia have reached a multi-million settlement, worth at most roughly $35 million. The proposed settlement, submitted Friday evening to a state court, could conclude a messy, multi-party struggle over the ashes of Mountain State University, which closed in 2012. 
The settlement would resolve about 400 lawsuits by students against Mountain State and its former officials. Far more — over 18,000 students — could be eligible for a portion of the settlement funds. One estimate suggests claims against what’s left of Mountain State could be worth $72 million, but all of its remaining assets together are worth perhaps only half that, according to court filings.
The litigation involved not just students and Mountain State but also the University of Charleston, a private college in the state capital that had taken over Mountain State’s buildings and students, and United Educators, which was Mountain State's insurance company. The settlement funds will come from an $8.5 million settlement with United Educators; Department of Education funds "potentially forthcoming" to Mountain State; money leftover in certain Mountain State accounts; and from the sale of Mountain State properties.
Those sales will have implications for the University of Charleston, which had sought to expand in the shadow left by Mountain State. But now, instead of long-term leases for its buildings, the university will have to give up both former Mountain State sites in summer 2015 so they can be sold. In Martinsburg, the University of Charleston plans to move its classes to a National Guard facility, its president said during a press conference last month announcing a settlement had been reached but before last week's court filings made all the details of the settlement public. In Beckley, the University of Charleston plans to continue offering classes but has not yet named a site.
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