Apollo Group, Inc. Resolves University of Phoenix False Claims Act Case
December 14 2009 - 2:30PM
Business Wire
Apollo Group, Inc. (NASDAQ: APOL) (the “Company”) today
announced that it has entered into an agreement with the United
States of America, acting through the U.S. Attorney’s Office for
the Eastern District of California and the U.S. Department of
Justice on behalf of the U.S. Department of Education, and with two
private plaintiffs to resolve the False Claims Act lawsuit filed in
2003 against subsidiary University of Phoenix, United States of
America ex rel. Mary Hendow and Julie Albertson v. University of
Phoenix. Although a party to the agreement, the U.S. Department of
Justice at no time intervened in the lawsuit, which was pursued by
the two private plaintiffs as a qui tam action on behalf of the
government. Under the terms of the agreement, the Company will pay
$67.5 million to the United States. A separate agreement provides
for the payment by the Company of $11 million in attorneys fees to
the plaintiffs, as required by the False Claims Act.
“This agreement not only brings closure to a long-running
dispute and enables the Company to avoid the uncertainty and
further expense associated with protracted litigation, it opens the
door for a more constructive partnership with our lead regulator,
the U.S. Department of Education,” said Charles B. Edelstein,
co-chief executive officer of Apollo Group.
“Apollo Group is committed to rigorous regulatory and compliance
systems to serve and protect the academic innovations for which we
are known,” added Gregory Cappelli, co-chief executive officer of
Apollo Group and chairman of Apollo Global, Inc. “Resolution
enables us to focus on our core mission of providing access to
quality higher education opportunities for students who have been
historically underserved by the conventional system of higher
education – and at a time when such access is more critical than
ever.”
The agreement makes clear that the Company does not acknowledge,
admit or concede any liability, wrongdoing, noncompliance or
violation as a result of the settlement. Moreover, the Company is
confident it will not face any further civil or administrative
exposure relating to its compliance with the Higher Education Act
provision relating to incentive compensation for the period of
March 1997 through the present as a result of the various releases
and related agreements it has obtained from the U.S. Department of
Education, U.S. Department of Justice and the plaintiffs.
“While we believe that the compensation practices and programs
of University of Phoenix have always complied fully with applicable
federal laws and regulations, the regulations at issue in this case
were unclear and inconsistent and, even after they were clarified
by Safe Harbor provisions, involved complex judgments and
interpretations,” said P. Robert Moya, executive vice president,
general counsel and secretary of Apollo Group. “Settlement on these
terms eliminates the risks inherent in taking any case to trial
and, ultimately, is in the best interests of our students,
employees and shareholders.”
“On behalf of the plaintiffs, we are pleased that the parties
have been able to reach an agreement on terms that protect the
interests of the government and the taxpayers,” said Robert J.
Nelson, Lieff, Cabraser, Heimann & Bernstein, LLP, lead counsel
for the plaintiffs. “The case raised several challenging issues,
many of them novel, which made settlement of the case
appropriate.”
About the Litigation
Under the False Claims Act, plaintiffs – or relators – sue as
“partial assignees” of the government’s claims for alleged injuries
to the government. The False Claims Act lawsuit against University
of Phoenix was filed by two private plaintiffs in March 2003 in
United States District Court for the Eastern District of
California, Sacramento Division. The suit alleged University of
Phoenix violated a federal statute and regulation stating that
while recruiters may be compensated based in part on the number of
students they enroll, it cannot be the sole factor for determining
their compensation. After review of the lawsuit’s allegations and
consultation with the U.S. Department of Education, the U.S.
Department of Justice declined to join in the litigation. In fact,
in a brief submitted to the Ninth Circuit in connection with the
case, the Justice Department expressed “the government’s strong
support for the important work of proprietary institutions of
higher education, like University of Phoenix, that are providing
much-needed educational opportunities to people looking to advance
their careers and to earn a better living for themselves and their
families.” In September 2003, the plaintiffs filed a First Amended
Complaint, followed by a Second Amended Complaint in March 2004.
The Court twice dismissed this case, ultimately with prejudice,
before it was reinstated by the Ninth Circuit Court of Appeals in
September 2006.
About Apollo Group, Inc.
Apollo Group, Inc. is one of the world’s largest private
education providers and has been in the education business for more
than 35 years. The Company offers innovative and distinctive
educational programs and services both online and on-campus at the
high school, undergraduate, graduate and doctoral levels through
its subsidiaries: University of Phoenix; Institute for Professional
Development; College for Financial Planning; Western International
University; Meritus University; Insight Schools and Apollo Global.
The Company’s programs and services are provided in 40 states and
the District of Columbia; Puerto Rico; Canada; Latin America; and
Europe, as well as online throughout the world (data as of August
31, 2009).
For more information about Apollo Group and its subsidiaries,
call 800-990-APOL or visit the Company’s website at
www.apollogrp.edu.
Forward-Looking Statement
Statements in this press release that are not statement of
historical fact are forward-looking statements, and are subject to
the Safe Harbor provisions created by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
based on current information and expectations and involve a number
of risks and uncertainties. Actual results may differ materially
from those projected in such statements due to various factors. For
a discussion of the various factors that may cause actual results
to differ materially from those projected, please refer to the risk
factors and other disclosures contained in Apollo Group’s
previously filed Forms 10-K, Forms 10-Q and other filings with the
Securities and Exchange Commission.
Apollo Education Group, Inc. (NASDAQ:APOL)
Historical Stock Chart
From Sep 2024 to Oct 2024
Apollo Education Group, Inc. (NASDAQ:APOL)
Historical Stock Chart
From Oct 2023 to Oct 2024