A federal judge rejected on Wednesday Downtown-based for-profit educator Education Management Corp.'s efforts to dismiss two whistleblowers from a False Claims Act lawsuit against it.
EDMC had argued that two of its former employees - Lynntoya Washington and Michael T. Mahoney - who initiated accusations against it did so only because they read articles about concerns regarding for-profit colleges. Though EDMC's motion would not have ended the lawsuit, which has been joined by the Department of Justice and several states, it would have disqualified the two from receiving a portion of any recovery.
U.S. District Judge Terrence F. McVerry wrote that publicity regarding the for-profit college industry doesn't bar Ms. Washington and Mr. Mahoney "from providing actionable information regarding alleged fraud by EDMC." They will remain part of the case.
The two individuals and the government allege that EDMC based recruiter raises solely on the number of new students they enrolled, in violation of a federal law designed to reduce the number of misplaced students receiving aid, and implicating $11 billion in federal payments. EDMC has countered that enrollments were one of numerous factors influencing recruiter pay.