Qui tam cases often get the attention of the Department of Justice because they have the benefit of a whistleblower.
The Department of Justice handles the legal matters of the United States, including deciding whether to take part in qui tam cases. An emerging type of qui tam lawsuit that is getting the attention of the Department of Justice involves institutions of higher education, such as colleges and universities. In particular, for-profit schools catch the attention of the Department of Justice. That’s because of the high rate of fraud committed by those schools. But how exactly does a school commit fraud against the federal government?
Types of Colleges and Universities
In the United States, there are two main types of schools. One is the not-for-profit school, where the school’s primary mission is to educate students. Most colleges and universities are not-for-profit. Schools you’ve probably heard of, like Duke University, Virginia Tech, Michigan State and Penn State, are good examples of schools that do not focus on profits and therefore, are less likely to commit fraud.
Another type of school is the for-profit school. It is different from the not-for-profit school because its primary goal is not to educate, but to make money. As a result of this motivation, for-profit schools are usually more likely to do illegal, immoral or unethical things to boost profits.
How a School Can Commit Fraud
Despite what you might think, a school’s primary source of funding (whether for profit or not) is not the tuition students pay. Even with a tuition cost of $45,000 per year per student, that usually only represents a portion of the true cost of educating a student and running the school. The difference usually comes from two financial sources: donations (through the school’s endowment system) or the government (usually the federal government). With respect to the False Claims Act, government funding is the primary area where fraud can occur.
A school can use government funding in two ways. First, it can ask for money from the federal government to help pay for research. Many universities strongly encourage faculty members to conduct notable and important research, but this research isn’t cheap. One of the biggest sources of research funding for a university is from a government agency. However, government agencies won’t give away money with no strings attached. The money will need to go to research that the agency believes in or has an interest in.
For example, the National Science Foundation isn’t likely to give money to a language professor wanting to research the origins of a specific language. Instead, it will give its money to professors interested in research in the fields of science and engineering. This should come as no surprise given the National Science Foundation’s purpose – to support non-medical scientific research.
But getting this federal money for research is hard, with many more professors asking for money than there is money to go around. Then, schools place a lot of pressure on professors to get funding to conduct research. This means professors (and schools) will sometimes stretch the truth about the research to secure federal funding. On rare occasions, this truth stretching amounts to fraud.
Federal Education Funds
Another way a school can get funding is through federal education funds to help pay for educating students. This funding can go to pay the student’s tuition, such as federal student aid programs like the Pell Grant or the Federal Family Education Loan Program. But the federal government doesn’t send this money to schools simply because they or the students asked for it. There are a number of conditions placed on the school for students or the school to receive the money.
For example, the school must receive accreditation from a recognized accrediting institution and must only accept students who are eligible to receive these federal education funds. Many schools, especially for-profit ones, can’t always meet these requirements. However, they still really want the federal money, so they will commit fraud by lying about meeting the necessary conditions. For instance, the school might lie about its accreditation or the steps it’s taking to become accredited. The school might also fail to return federal money if a student withdraws from class.
The school may also break the law concerning the recruitment of students. For instance, the school may pay bonuses or commissions to recruiters who bring in the most students. This incentive system is illegal under federal law.
Another recruitment violation includes the school falsifying its graduation, job placement, salary or cost of attendance numbers to entice students to apply or enroll when they otherwise wouldn’t. Finally, a school may enroll students that are not academically eligible to receive federal education funds, but cover up the ineligibility or help the student cheat to remain eligible.
The Bottom Line for Qui Tam Cases
In the end, a school can catch the attention of the Department of Justice by committing fraud to get federal money it wouldn’t otherwise be able to get. This desire for federal money is particularly strong in for-profit schools, which is why the federal government usually keeps a close eye on them.
Looking for More Information about Education Fraud and Qui Tam Cases?
Click to find out more about qui tam cases by contacting Bothwell Law Group online.