Washington Post 2012 Annual Report Download - page 103

the purpose of exploring a settlement. In the fourth quarter of 2012,
the parties reached a comprehensive agreement to settle the matter.
The settlement is expected to be presented to the District Court for
approval in the first quarter of 2013.
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
False Claims Act complaint 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 False Claims Act
complaint (United States of America ex rel. David Goodstein v.
Kaplan, Inc., et al.) was dismissed with prejudice, and the DOE will
issue a final program review determination. 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 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 complaint, leaving only an
individual employment claim; and dismissed in part the Gillespie
complaint, thereby limiting the scope and time frame of its False
Claims Act allegations regarding compliance with the U.S. Federal
Rehabilitation Act. On October 31, 2012, the court entered
summary judgment in favor of the Company as to the sole remaining
employment claim in the Diaz complaint. The Gillespie complaint is
proceeding to the discovery and dispositive motion phases.
On August 23, 2011, the U.S. District Court for the Southern District of
FloridadismissedtheTorrescaseinitsentiretyandenteredafinal
judgment in favor of Kaplan. That case was appealed to the U.S.
Court of Appeals for the Eleventh Judicial Circuit, but the appeal was
subsequently dismissed for want of prosecution.
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 complaint, which limited the allegations in that
complaint to alleged violations of U.S. Federal incentive comp-
ensation regulations and so-called “70 percent rules” and an
individual employment claim and limited the time frame applicable
to these claims. Thereafter, the relators voluntarily dismissed the
“false claims” allegations and the remaining employment claim was
settled. The complaint was dismissed in the first quarter of 2012.
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. On February 13, 2013, the U.S.
Circuit Court for the Ninth Judicial Circuit affirmed the dismissal in
part, and reversed the dismissal on one allegation under the False
Claims Act relating to eligibility for Title IV funding based on claims
of false attendance. Kaplan is evaluating the decision and its options
for next steps, including seeking a re-hearing in the appellate court.
On October 21, 2010, Kaplan Higher Education Corporation
received a subpoena from the office of the Florida Attorney
General. The subpoena sought information pertaining to the online
and on-campus schools operated by KHE in and outside of Florida.
KHE has cooperated with the Florida Attorney General and
provided the information requested in the subpoena. Although KHE
may receive further requests for information from the Florida Attorney
General, there has been no such further correspondence to date.
The Company cannot predict the outcome of this inquiry.
On December 21, 2010, the U.S. Equal Employment Opportunity
Commission (EEOC) filed suit against Kaplan Higher Education
Corporation in the U.S. District Court for the Northern District of
Ohio, alleging racial bias by Kaplan in requesting credit scores of
job applicants seeking financial positions. In March 2011, the court
granted in part the Company’s motion to dismiss the complaint. On
January 28, 2013, the court entered summary judgment in favor of
Kaplan Higher Education Corporation and against the EEOC,
terminating the case in its entirety. The EEOC will have 60 days in
which to file an appeal.
On February 7, 2011, Kaplan Higher Education Corporation
received a Civil Investigative Demand from the Office of the
Attorney General of the State of Illinois. The demand primarily
sought information pertaining to Kaplan University’s online students
who are residents of Illinois. KHE has cooperated with the Illinois
Attorney General and provided the requested information. Although
KHE may receive further requests for information from the Illinois
Attorney General, there has been no such further correspondence to
date. The Company cannot predict the outcome of this inquiry.
On April 30, 2011, Kaplan Higher Education Corporation
received a Civil Investigative Demand from the Office of the
Attorney General of the State of Massachusetts. The demand
primarily sought information pertaining to KHE Campuses’ students
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