High Court Gives For-Profit College a Break

WASHINGTON (CN) — Though an appellate panel revived whistleblower claims that Heritage College defrauded the U.S. government, the for-profit institution won a stay Friday from the Supreme Court.

Per its custom, the Supreme Court did not issue any comment along with its brief order granting the stay. It noted only that the stay remains in effect pending resolution of Heritage's petition for certiorari.

The stay blocks a 2015 ruling by the Eighth Circuit that revived a False Claims Act case in Kansas City, Mo., against Heritage, which is incorporated as Weston Educational.

Chickoiyah Miller and Cathy Sillman, both former Heritage employees, related the suit, accusing Heritage of not keeping accurate student records despite its promise to do so for federal funding.

In addition to the FCA retaliation claim, Miller and Sillman had also alleged wrongful discharge.

Though a federal judge granted the college summary judgment on all counts, a three-judge panel of the Eighth Circuit revived the FCA claim last year.

The ruling notes that the U.S. Department of Education disbursed more than $32 million to Heritage from 2009 to 2012, with 97 percent of Heritage students receiving Title IV financial aid, accounting for 90 percent of gross tuition.

Student eligibility hinges satisfactory progress, however, which is measured by minimum 70 percent grade-point averages by end of program.

A Program Participation Agreement, or PPA, that Heritage signed requires the school to document student eligibility and refund materials "to ensure proper and efficient administration of funds."

Miller and Sillman claim that Heritage altered grade and attendance records from 2006 to 2012 to ensure students made "satisfactory progress" and to avoid refunds, thereby maximizing Title IV funds.

Miller claims to have seen one administrator erasing the grades in a paper gradebook and replacing them with higher numbers.

She says administrators also discussed at meetings how they kept students at Heritage long enough to get all Title IV funds possible.

"Two other program managers testified that administrators ordered them to go through instructor grade books and change failing grades to passing," the ruling says.

Heritage fired Sillman two days after Christmas in 2010. Miller quit early the next month.

Though Miller and Sillman accused Heritage ignoring the PPA requirement to keep accurate student records, Heritage argued that the PPA does not require the maintenance of these specific grading and attendance records.

The Eighth Circuit found it reasonable for a jury to find "that Heritage knew it had to keep accurate grade and attendance records and intended not to do so."

It emphasized that the question at summary judgment is not one of the merits or credibility — merely whether there is genuine issue of material fact.

"Because there is a dispute of material fact about how Heritage understood its obligations and whether it intended to comply with the PPA, the district court erred in granting summary judgment," it said.

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