Dive Brief:
- A whistleblower lawsuit accusing Colorado Technical University of artificially inflating how much educational content it provides students will move forward after a federal judge denied a motion to dismiss the complaint earlier this month.
- The suit, brought by an anonymous former employee, alleges that the for-profit college defrauded the federal government out of hundreds of millions of dollars by deliberately failing to provide students with the number of learning hours needed to meet federal financial aid requirements.
- However, Senior U.S. District Court Judge R. Brooke Jackson dismissed the lawsuit’s claims against CTU’s sister institution, American InterContinental University, as well as its publicly traded parent company, Perdoceo Education Corp. The whistleblow’s attorneys plan to push further for Perdoceo’s inclusion.
Dive Insight:
The whistleblower alleges that CTU made online courses as easy to complete as possible to ensure it retained students and continued collecting federal financial aid.
The company created a proprietary software, called Intellipath, to assess students and skip over course material that they already know. But the whistleblower alleges that these assessments were overly simplistic and that courses provided no replacement content to make up for the lost hours.
In 2011, the U.S. Department of Education implemented regulations defining credit hour requirements. For each credit hour per semester, colleges must provide work that approximates one hour of classroom instruction and two hours of out-of-class work each week.
However, the lawsuit alleges that Colorado Technical said in some cases more than 100 learning hours were completed over Intellipath, when in actuality the software provided less than 10. That left students significantly short of the 135 hours required for a 4.5 credit hour course, the complaint contends.
Roughly 27,000 students are currently enrolled in CTU online courses, according to the complaint. During the 2021 fiscal year, the university brought in more than $350 million in revenue from Title IV funding, federal data shows.
“This lawsuit aims to hold CTU accountable for what we allege is the deliberate failure to provide sufficient educational content to tens of thousands of students while extracting hundreds of millions in federal financial aid that it’s not entitled to,” said Marlene Koury, the whistleblower’s attorney. “They want to keep students enrolled so they keep getting that money, and the way that they attempt to accomplish that is to make coursework virtually effortless.”
The whistleblower alleges that they brought forward the inflated numbers to CTU leadership, who indicated knowledge of the situation and removed them from duties involving Intellipath in 2019.
Federal law allows whistleblowers to file suits on behalf of the government, which may then choose to become involved. In this case, after two years of investigation, the government did not intervene.
The law also says whistleblowers largely cannot bring claims on behalf of the government if the same allegations have already been publicly made. In their motion to dismiss, the defendants argued that the complaint "recycles allegations of a supposed fraudulent scheme that the Government has been investigating on an industrywide basis for years."
However, Jackson’s order to in part deny the motion argues that media and government publications have not significantly discussed misrepresentations using Intellipath.
Parent company Perdoceo has faced other allegations of defrauding students, having poor student outcomes and enrolling students who are not equipped for college. In 2019, faced with investigations from 49 attorneys over accusations that the company’s institutions were misleading students, Perdoceo agreed to forgive nearly $500 million in student debt. That same year the company settled with the Federal Trade Commission for $30 million over allegations that the company was improperly generating leads.
Neither the university nor Perdoceo responded to a request for comment.
