Washington Post 2014 Annual Report Download - page 102

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. On July 16,
2013, the court likewise entered summary judgment in favor of the
Company on all remaining claims in the Gillespie complaint. Diaz
and Gillespie each appealed to the U.S. Court of Appeals for the
Eleventh Judicial Court. Arguments on both appeals were heard on
February 3, 2015.
On July 7, 2011, the U.S. District Court for the District of Nevada
dismissed the Jajdelski complaint 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. The surviving claim was remanded to the
District Court, where Kaplan has moved for summary judgment.
In January 2013, a former employee of KTP filed a sealed False
Claims Act alleging that there were instructors at the San Antonio
campuses of Kaplan College who did not meet Texas’ qualification
requirements. The case, captioned United States of America ex rel.
Leslie Coleman v. Kaplan, Inc. et al., was unsealed on
December 23, 2014, in connection with the parties entering into a
settlement agreement pursuant to which Kaplan paid approximately
$1.3 million, of which approximately $1.1 million was paid in the
form of partial refunds to 289 former students. The settlement
agreement stated that “[d]uring its investigation of the Relator’s False
Claims Act allegations, the United States did not encounter
evidence of harm to Kaplan students.”
On December 22, 2014, a former student representative filed a
purported class and collective action lawsuit in the U.S. District
Court for the Northern District of Illinois, in which she asserts claims
under the Illinois Minimum Wage Law and the Fair Labor Standards
Act (Sharon Freeman v. Kaplan, Inc.). The plaintiff alleges that she
and other law students who were student representatives, on their
respective law school campuses, of Kaplan’s bar exam preparation
business should have been classified as employees and paid
minimum wage. The Company cannot predict the outcome of this
inquiry.
On October 21, 2010, KHE received a subpoena from the office
of the Florida Attorney General (FL AG). The subpoena sought
information pertaining to the online and on-campus schools
operated by KHE in and outside of Florida. In June 2014, Kaplan
entered into an Assurance of Voluntary Compliance (AVC) with the
FL AG on behalf of Kaplan University, Kaplan Higher Education
Campuses and Kaplan, Inc. This agreement closes the FL AG
investigation. The AVC required Kaplan to pay $200,000 in
“investigation costs,” provide certain tuition credits for students who
previously dropped from a program and wish to return, and comply
with certain industry best practices. In addition, Kaplan agreed to
keep the Kaplan Commitment in place for Florida students until such
time as Kaplan can prove that the program resulted in savings to
Florida students of at least $350,000. This condition was satisfied
at the end of 2014.
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 appealed the
judgment to the U.S. Court of Appeals for the Sixth Judicial Circuit,
and briefing on that appeal was completed in November 2013.
On April 9, 2014, the Court of Appeals affirmed the lower court’s
judgment in favor of the Company.
On February 7, 2011, KHE 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, KHE 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’s nationally accredited campuses in Massachusetts known
as the Charlestown and Kenmore Square campuses. The
Charlestown campus closed in 2013 and the Kenmore Square
campus closed in 2012. Kaplan Higher Education Corporation has
cooperated with the Massachusetts Attorney General and provided
the requested information, as well as additional information
requested in 2012 and 2013. In October 2014, the Attorney
General’s office sent Kaplan a “notice of intention to file” a lawsuit
letter under section 93A of the Massachusetts consumer fraud
statute. The letter outlined 12 allegations against the Charlestown
and Kenmore Square campuses. The Company cannot predict the
outcome of this inquiry or any potential litigation.
On July 20, 2011, KHE received a subpoena from the Office of
the Attorney General of the State of Delaware. The demand
primarily sought information pertaining to Kaplan University’s online
students and Kaplan Higher Education Campuses’ students who are
residents of Delaware. Kaplan Higher Education Corporation has
cooperated with the Delaware Attorney General and provided the
information requested in the subpoena. Although KHE may receive
further requests for information from the Delaware Attorney General,
there has been no such further correspondence to date. The
Company cannot predict the outcome of this inquiry.
Student Financial Aid. The Company’s education division derives
the majority of its revenues from U.S. Federal financial aid received
by its students under Title IV programs administered by the ED
pursuant to the Higher Education Act, as amended. To maintain
eligibility to participate in Title IV programs, a school must comply
with extensive statutory and regulatory requirements relating to its
financial aid management, educational programs, financial
strength, administrative capability, compensation practices,
86 GRAHAM HOLDINGS COMPANY