A for-profit business school is under investigation for federal financial aid fraud after a former employee blew the whistle. The New York Times reports on Kelli Amaya, a former administrator for Harris School of Business from 2009 to 2011. Amaya is one of seven former employees who are suing the school in a qui tam action.
In their lawsuit against Harris, the employees claim the school grossly overcharged for programs, misled students about the career prospects, and falsified records to maintain federal loans and grants. According to Amaya, the school accepted and encouraged students with criminal records into pharmacy programs, knowing that pharmacy certifications and pharmacy technician careers are not granted to people with felonies or drug convictions. Amaya claims school officials misled students about their career prospects and were only concerned with enrollment and graduation numbers. As part of their efforts to increase or maintain enrollment numbers, the school reportedly falsified records required for program enrollment and ignored facts that would prevent acceptance into a program or the resulting career.
Falsifying enrollment documents was not the end of the school’s fraudulent efforts, though. The former employees claim the school kept students “enrolled,” even though they could not or were not attending or completing the course work. Teachers would change grades and attendance records to show that the students were doing better and passing classes, as required for the school to receive federal aid. These actions allowed the school to continue receiving federal aid and charging the students tuition. The school received $112 million in federal grants and student loans from 2011 to 2012. Harris denies the allegations and claims the former employees could potentially be suing because they were angry over a dismissal or for financial reasons. Amaya admits she was terminated because she insisted on following federal rules, not Harris’.
Qui Tam — Federal Whistleblowing
Qui tam actions are lawsuits brought under the Federal False Claims Act. The lawsuit is brought by citizens on behalf of the federal government. The lawsuits are usually against governmental agencies, but can be against private employers who attempt to defraud the government. If a defendant, like Harris, is found guilty of defrauding the government, they could be liable for triple the actual damages of the fraud. This is an incentive to not get caught and to discourage whistleblowers. Fortunately, the law protects whistleblowers from employer retaliation and intimidation tactics related to their whistleblowing activities. Also, whistleblowers have an incentive to report fraud. Whistleblowers can usually receive a percentage of the penalty, sometimes as high as thirty percent of the triple damages. As Harris’ lawyer mentioned, this percentage could motivate false claims of fraud against an employer, but the whistleblower does not receive anything if no fraud can be proven, and they take considerable employment risk in bringing the lawsuit.
If you have questions or believe you need to report your employer’s actions, contact an HKM employment law attorney for help.