EDMC Whistleblower Case Moves Forward

The whistleblower case filed against Education Management Corporation by James Hoyer Law Firm client Jason Sobek has cleared a major hurdle. U.S. District Court Judge Terrence McVerry in Pittsburgh ruled to deny EDMC’s Motion to Dismiss Sobek’s suit.  The case will proceed on three major counts involving misrepresentations of job placement statistics and accreditation and allegations that EDMC failed to adequately record the Satisfactory Academic Progress of students, whereby allowing its schools to collect federal financial aid to which they were not entitled.

Sobek filed the suit in 2010 against EDMC, the country’s second largest for-profit college provider, after witnessing questionable practices while working as an Admissions Representative at the company.

Oral arguments were presented before Judge McVerry in Pittsburgh on May 13, 2013 by James Hoyer Senior Partner Christopher Casper. In response to today’s ruling, Casper said, “We are encouraged by the Court’s ruling.  It sends a message that companies cannot rake in hundreds of millions of dollars in taxpayer money while blatantly violating federal law.”

In his ruling denying EDMC’s Motion to Dismiss,  the judge wrote “EDMC presents several overarching lines of reasoning in support of dismissal.”  One of EDMC’s arguments claimed that even if the company committed the alleged violations, it would not be grounds for the government to refuse paying its schools federal financial aid.  The judge indicated “such a defense is fact-intensive and would not justify dismissal at the pleading stage.”  As a result, Judge McVerry determined “a final determination is premature at this time” and the case should proceed.

The case will now move on to the discovery phase.  “We look forward to taking depositions and the opportunity to put EDMC under oath,”said Casper.

Three additional counts in the suit were voluntarily dismissed.  One of those regarding “incentive compensation” continues on in a separate whistleblower case filed against EDMC.