Kaplan Settles, But Admits No Fault in Surgical Technology Lawsuit

The Kaplan, Inc. system of for-profit colleges owned by The Washington Post Company has settled a whistleblower case for $1.6 million after charges were filed in 2007. The charges alleged that one of Kaplan’s schools knowingly enrolled more students in its surgical technology program than it could provide adequate education for. The former director of education at Kaplan’s CHI Institute in Broomall, Pa. took the company to federal court over its surgical technology program, which requires both classroom and clinical time for students. The lawsuit charged that the institute knowingly enrolled more students than it had clinical placements for, making it impossible for students to graduate, according to the New York Times.

Students affected by the institute’s actions were placed on leaves of absence as they waited for clinical placements that they often never received. Nearly one-third of the settlement money goes toward repaying the loans of 43 students whose absences from school became permanent. Kaplan’s settlement ended not only the lawsuit brought on by the whistleblower, but also ends an investigation by the United States Attorney’s office and a review by the U.S. Department of Education. Kaplan did not admit wrong-doing in the case, according to the NY Times.

This was not the only lawsuit filed against Kaplan nor against other for-profit colleges. According to a National Public Radio article, a class action suit was filed in December against Denver-based Westwood College for charges of fraud, or lying to get students’ money. In December 2009, the University of Phoenix paid the United States a $67.5 million settlement after two former employees of the school, acting as whistleblowers, alleged that the school’s student recruitment policies violated the False Claims Act. The government admits it did nothing to interfere with the college’s actions but aided the whistleblowers through such means as filing friend of the court briefs when the case was in appeal. The University of Phoenix did not admit fault in the settlement.

For-profit schools have used legal avenues to fight back against government regulation. On July 20, the Association of Private Sector Colleges and Universities sued the federal government, claiming its recent "Gainful Employment" regulations – requiring schools to prepare students for employment – overstep the government’s bounds of control. Such regulations, placed on all institutions according to the Department of Education, are put in place to protect students from "exploitative programs." The new regulations require colleges to meet certain criteria, such as the percentage of students repaying their loans and a graduate’s debt-to-income ratio. While for-profit students make up 12% of America’s college students, their loans represent 26% of all student loans, according to the Department of Education.

However, the APSCU argues the new regulations bring complexity, not clarity, to operating procedures and asserts that the regulations also will negatively affect women, minorities, and non-traditional students who often take advantage of the flexibility for-profit schools provide. Such regulations will force private sector colleges to deny admission to students who are at risk of not meeting the government standards but would have otherwise been accepted. Many such students saw for-profit colleges as their opportunity to advance their career and life goals, and the new regulation takes away those opportunities, the APSCU said. The APSCU has more than 1,650 member private sector colleges that cater to 3.8 million students nationwide, and this lawsuit is necessary to protect each of those students, the APSCU maintains.

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