Washington Post 2011 Annual Report Download - page 52

fees, costs and equitable/injunctive relief. The Company moved to dismiss the complaint, and on December 23, 2011,
the court granted the Company’s motion and dismissed the case with prejudice. On January 25, 2012, the Plaintiff filed
a motion seeking leave to amend or alter that final judgment; the Company has opposed the motion.
On February 6, 2008, a purported class action lawsuit was filed in the U.S. District Court for the Central District of
California by purchasers of BAR/BRI bar review courses from July 2006 onward alleging antitrust claims against Kaplan
and West Publishing Corporation, BAR/BRI’s former owner. On April 10, 2008, the court granted defendants’ motion
to dismiss. On May 7, 2008, the plaintiffs filed an appeal to the U.S. Court of Appeals for the Ninth Circuit. On
October 18, 2010, the parties entered into a stipulation and settlement agreement. The District Court granted preliminary
approval of this proposed settlement on March 21, 2011, but denied final approval thereof on July 1, 2011. On
November 7, 2011, the Ninth Circuit reversed the District Court’s order of dismissal, but stayed the mandate and
referred the matter to the Ninth Circuit mediator for renewed settlement discussions.
On or about January 17, 2008, an Assistant U.S. Attorney in the Civil Division of the U.S. Attorney’s Office for the Eastern
District of Pennsylvania contacted KHE’s CHI-Broomall campus and made inquiries about the Surgical Technology program,
including the program’s eligibility for Title IV U.S. Federal financial aid, the program’s student loan defaults, licensing and
accreditation. Kaplan responded to the information requests and fully cooperated with the inquiry. The DOE also conducted
a Program Review at the CHI-Broomall campus, and Kaplan likewise cooperated with the Program Review. On July 22,
2011, the U.S. Attorney’s Office for the Eastern District of Pennsylvania announced that it had entered into a comprehensive
settlement agreement with Kaplan that resolved the U.S. Attorney’s inquiry, provided for the conclusion of the DOE’s program
review and also settled a previously sealed U.S. Federal False Claims Act (False Claims Act) complaint (31 U.S.C. § 3729,
et seq.) that had been filed by a former employee of the CHI-Broomall campus. The total amount of all required payments by
CHI-Broomall under the agreements was $1.6 million. Pursuant to the comprehensive settlement agreement, the U.S.
Attorney inquiry has been closed, the DOE will issue a final program review determination and the False Claims Act
complaint (United States of America ex rel. David Goodstein v. Kaplan, Inc., et al. (unsealed July 22, 2011)) was unsealed
and will be dismissed with prejudice. At this time, Kaplan cannot predict the contents of the pending final program review
determination or the ultimate impact the proceedings may have on the CHI-Broomall campus or the KHE business generally.
Several Kaplan subsidiaries were or are subject to four other unsealed cases filed by former employees that include,
among other allegations, claims under the U.S. Federal False Claims Act relating to eligibility for Title IV funding. The U.S.
Government declined to intervene in all cases, and, as previously reported, court decisions in 2011 either dismissed the
cases in their entirety or narrowed the scope of their allegations. The four cases are captioned: United States of America
ex rel. Carlos Urquilla-Diaz et al. v. Kaplan University et al. (unsealed March 25, 2008); United States of America ex rel.
Jorge Torres v. Kaplan Higher Education Corp. (unsealed April 7, 2008); United States of America ex rel. Victoria
Gatsiopoulos et al. v. ICM School of Business & Medical Careers et al.(unsealed September 2, 2008); and United
States of America ex rel. Charles Jajdelski v. Kaplan Higher Education Corp. et al. (unsealed January 6, 2009).
On August 17, 2011, the U.S. District Court for the Southern District of Florida issued a series of rulings in the Diaz case,
which included three separate complaints: Diaz, Wilcox and Gillespie. The court dismissed the Wilcox complaint in its
entirety; dismissed all False Claims Act allegations in the Diaz case, leaving only an individual employment claim; and
dismissed in part the Gillespie case, thereby limiting the scope and time frame of its False Claims Act allegations
regarding compliance with the U.S. Federal Rehabilitation Act. The case (now consisting of the individual employment
claim in Diaz and the remaining False Claims Act allegations in Gillespie) is expected to proceed to the discovery and
dispositive motion phases.
On August 23, 2011, the U.S. District Court for the Southern District of Florida dismissed the Torres case in its entirety
and entered a final judgment in favor of Kaplan. That case has been appealed in the U.S. Court of Appeals for the 11th
Judicial Circuit.
On August 9, 2011, the U.S. District Court for the Southern District of Florida granted in part Kaplan’s motion to dismiss
the Gatsiopoulos case, which limited the allegations in that case to alleged violations of U.S. Federal incentive
compensation regulations and so-called “70 percent rules” and an individual employment claim, and limited the time
frame applicable to these claims. Thereafter, the court recommended that the case be transferred back to its original
jurisdiction, the U.S. District Court for the Western District of Pennsylvania, and the case was assigned to a judge in that
venue in December 2011. The case is expected to proceed to the discovery and dispositive motion phases in that venue.
On July 7, 2011, the U.S. District Court for the District of Nevada dismissed the Jajdelski case in its entirety and entered
a final judgment in favor of Kaplan. That case is currently on appeal in the U.S. Circuit Court of Appeals for the Ninth
Judicial Circuit.
40 THE WASHINGTON POST COMPANY