Magistrate Judge Recommends Case Against EDMC Move Forward

Positive news for a whistleblower represented by the James Hoyer Law Firm in a case against Education Management Corporation (EDMC), the 2nd largest for-profit college provider in the country. Magistrate Judge Cynthia Reed Eddy, of the U.S. District Court for the Western District of Pennsylvania, recommends that the case move forward on several key counts.

Former EDMC employee Jason Sobek alleges in the lawsuit that EDMC defrauded the federal government by making misrepresentations which led students to sign up for federal student loans and grants.  Among the issues are misrepresentations on program accreditation and job placement statistics and failing to track student academic progress.

Magistrate Judge Eddy recommends that those three main counts put forth in the suit regarding job placement, accreditation, and satisfactory academic progress proceed–  denying EDMC’s Motion to Dismiss those counts. EDMC schools named in the suit include South University, Agrosy and The Art Institutes.

An article in Law360 reports:

U.S. Magistrate Judge Cynthia Reed Eddy said that  several allegations made by Jason Sobek, a former
EDMC associate admissions officer, are strong enough to go forward, including claims that the Pittsburgh, Pa.-based education company lied to students about its programs’ accreditations and their job prospects.

Magistrate Eddy also says Sobek met the burden of evidence for a claim on “incentive compensation”  to continue, but because the plaintiff was not “first filed” on that issue, she recommends dismissing that count. The “incentive compensation” claim will move forward in a separate whistleblower suit which was first to file on that issue.

The Magistrate recommended that there was not sufficient evidence put forth to continue two other counts in the suit, which had to do with misrepresentations of  cost and a “violation of reverse false claims.”

District Judge Terrance McVerry will now take the Magistrate’s recommendation under advisement and is expected to rule in the near future.