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Appeals court reinstates FCA suit against University of Phoenix

The Ninth Circuit Court of Appeals has reinstated a whistle blower suit against the University of Phoenix. The suit, brought under the qui tam provisions of the federal False Claims Act, alleges that school officials violated federal rules barring incentive payments to employees who recruit students to enroll in the college.

Most of students at the University of Phoenix use federal loans and grants to pay their tuition, but many never complete their education and are unable to repay their loans. Last year the university obtained $1.7 billion in federal education funds.

A report by the Dept. of Education said the company promoted an intense sales culture that rewarded recruiters who encouraged the most students, even if they were unqualified, to enroll.

A district court had ruled that the whistle blowers’ allegations were beyond the scope of the False Claims Act, but the Ninth Circuit reversed.

Additional details can be found in the September 6, 2006 article published in the Los Angeles Times.

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