University of Phoenix Settles Qui Tam Lawsuit For $78M; Whistleblowers Collect $19M

The University of Phoenix has settled a Qui Tam, or whistleblower, lawsuit for $78.5 million which alleged that it defrauded the federal government by providing it with false information regarding student loan applications. The two women who discovered the fraud will now share $19 million for their efforts – and they did it without the government's participation.

Multi-millionaires & heroes

Mary Hendow and Julie Albertson are now multi-millionaires – and some say even heroes – for exposing fraudulent activity against the federal government. According to California's Sacramento Bee, Hendow and Albertson worked in northern California as enrollment counselors for the University of Phoenix, the nation's largest for-profit university with more than 250 campuses in 40 states. It services 443,000 students at these locations and through its online programs.

In 2002, they discovered that the University was defrauding the U.S. Department of Education by obtaining billions of dollars of federal student loan and Pell Grant funds based on false statements of compliance with the Higher Education Act – which prohibits universities that receive these funds from making incentive payments to recruiters based "directly or indirectly" on the number of students they sign up.

The U.S. Department of Education agreed with counselors and found that the University actively promoted an intense sales culture that rewarded recruiters who encouraged large numbers of people to enroll – even if they were not qualified. The Qui Tam lawsuit was settled for $78.5 million. Hendow and Alberston will share $19 million – and they did it without the government's participation.

Qui Tam lawsuits & government participation

The government can choose to participate in a Qui Tam lawsuit or abstain from participating. Even if it does not participate, the whistleblowers can still continue with their lawsuit. The only real difference is in the percentage that the whistleblowers receive upon settlement or verdict – which can range from 15 to 30 percent. It the government participates, they generally receive less; if it doesn't, they generally receive more.

Qui Tam attorneys say that recoveries in these lawsuits tend to be in the multi-million dollar range. Here are some recent examples:

  • Pfizer, Inc., Pharmacia & Upjohn: These pharmaceutical companies paid $2.3 billion for illegal drug promotion and health care fraud. The whistleblowers who exposed the fraud will collect over $102 million.
  • Quest Diagnostics / Nichols Institute Diagnostics: These medical companies paid $262 million for engaging in Medicare fraud. The whistleblower who exposed the fraud will receive $45 million.
  • Walgreens Pharmacy: Once of America's largest retail pharmacies paid $35 million for engaging in Medicaid fraud – the U.S. health program for individuals and families with low incomes. The whistleblower who discovered the fraudulent activity will receive $5 million.

If you think that your employer may be engaging in fraudulent activity against the government, contact an experienced Qui Tam lawyer to discuss your situation. Although employers cannot retaliate against glassblowers, it's always best to speak with an attorney before confronting your employer about the alleged fraudulent activity.

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