California University To Pay $225,000 For Allegedly Violating Ban On Incentive Compensation

Elizabeth Shofner, Justin Brooks Articles, Reuben Guttman Articles, Traci Buschner Articles, Whistleblower News

Department of Justice, October 19, 2020

WASHINGTON – San Diego Christian College (SDCC), based in Santee, California, will pay $225,000 to resolve allegations under the False Claims Act for submitting false claims to the U.S. Department of Education in violation of the federal ban on incentive-based compensation, the Justice Department announced today.    

Title IV of the Higher Education Act (HEA) prohibits any institution of higher education that receives federal student aid from compensating student recruiters with a commission, bonus, or other incentive payment based on the recruiters’ success in securing student enrollment.  The incentive compensation ban protects students against admissions and recruitment practices that serve the financial interests of the recruiter rather than the educational needs of the student.

“Higher education enrollment decisions should put students first,” said Acting Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Civil Division.  “Offering recruiters financial incentives to enroll students undermines students’ ability to make educational decisions in their own best interests.”

“Colleges should be places for students to learn and grow, not places to be taken advantage of by recruiters watching out for the own financial interests,” said U.S. Attorney Peter M. McCoy, Jr. for the District of South Carolina.  “This office will continue its efforts to protect students against illegal recruiting practices.”

“Today’s settlement is a result of the hard work and effort of the Office of Inspector General and the Department of Justice to protect and maintain the integrity of the Federal student aid programs,” said Neil Sanchez, Special Agent in Charge of the U.S. Department of Education Office of Inspector General’s Southern Regional Office.  “We will continue to work together to ensure that Federal student aid funds are used as required by law. America’s taxpayers and students deserve nothing less.”

The settlement, which was based on SDCC’s ability to pay, resolves allegations that between 2014 and 2016, SDCC hired Joined, Inc., a California-based student recruiting company, to recruit students to SDCC.  The United States contended that SDCC compensated Joined with a share of the tuition that SDCC received from the enrollment of recruited students, in violation of the prohibition on incentive compensation. 

The allegations resolved by the settlement were brought in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act by Maurice Shoe, the co-owner of Joined.  The Act permits private parties to sue on behalf of the government for false claims and to receive a share of any recovery.  As part of today’s resolution, the whistleblower will receive $33,750.

This matter was investigated by the U.S. Attorney’s Office for the District of South Carolina and the Civil Division’s Commercial Litigation Branch.  Investigative assistance was provided by the Office of Inspector General of the Department of Education.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.  The case is captioned United States ex rel. Shoe v. San Diego Christian College, No. 6:16-cv-01570 (D.S.C.).

Source: https://www.justice.gov/opa/pr/california-university-pay-225000-allegedly-violating-ban-incentive-compensation

Hudson Valley Hematology Oncology Associates, $5.3 million

Elizabeth Shofner, Justin Brooks Articles, Reuben Guttman Articles, Successes, Traci Buschner Articles

U.S. ex rel. Abrahamsen v. Hudson Valley,
Southern District of New York.

Firm attorneys brought a qui tam suit against Hudson Valley Hematology Oncology Associates (Hudson Valley), a New York based treatment center for patients with blood disorders and cancer. The complaint alleges that Hudson Valley illegally billed Medicare and Medicaid for services that were improperly documented and/or were not rendered. Hudson Valley was also accused of violating the Anti-Kickback Statute by waiving copayments and adding the waived fees to claims for Medicare reimbursement. The relator, a former billing department employee at Hudson Valley, recieved between 10-25% of the funds recovered for the government. Hudson Valley also entered into a corporate integrity agreement as part of the settlement. 

Read more: https://www.poughkeepsiejournal.com/story/news/local/2016/10/21/medicare-hudson-valley-hematology-oncology/92510938/

Oral Roberts University, $300,000

Elizabeth Shofner, Justin Brooks Articles, Reuben Guttman Articles, Successes, Traci Buschner Articles

United States ex rel. Shoe v. Oral Roberts University,
District of South Carolina.

GBB attorney’s brought this False Claims Act case against Oklahoma based ORU alleging that the university had fraudulently billed the Department of Education after violating the federal ban on incentive-based compensation. The whistleblower contended that ORU hired Shoe Inc., a student recruiting firm, then paid them with a portion of the tuitions of recruited students. Title IV of the higher education act prohibits any university receiving federal student aid from compensating recruiters based on the number of students successfully recruited. Maurice Shoe, the whistleblower and co-owner of Shoe, was awarded $45,000. 

Boeing Company, $40 million

Dan Guttman Articles, Reuben Guttman Articles, Successes, Traci Buschner Articles

US Ex Rel. Roby v. Boeing Co.,
Southern District of Ohio.

Firm attorneys represented the relator in this False Claims Act suit alleging that the Boeing Company defrauded the US Government by manufacturing and selling the Army helicopters with defective parts. The Government contends that Boeing used faulty transmission gears that resulted in the crash of two helicopters and more than $20 million in damages and government expenses. The nature of this case is closely aligned with the original purpose of the False Claims Act; passed in 1863 it was enacted with the intention of preventing large corporate contractors from defrauding the US Army and Government. 

North Greenville University, $2.5 million

Elizabeth Shofner, Justin Brooks Articles, Reuben Guttman Articles, Successes, Traci Buschner Articles

United States ex rel. Shoe v. North Greenville University,
District of South Carolina.

Firm attorneys pursued a False Claims Act suit against North Greenville University, alleging NGU illegally submitted student aid claims to the government after providing incentive compensation to student recruiters. Title IV of the Higher Education Act makes it a crime for higher education institutions which receive federal student aid money to provide recruiters with commissions, bonuses, or other forms of incentive compensation for recruiting new students. The complaint against NGU accusing of paying a recruitment company which it partially owned, Joined Inc., based on the number of new students their recruiters enrolled.

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