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United States Attorney General Loretta Lynch and United States Department of Education Secretary Arne Duncan announced today that Pittsburgh, Pennsylvania-based Education Management Corporation (EDMC), which operates more than 100 for-profit schools in the United States and Canada, has agreed to pay $96 million to settle a False Claims Act (FCA) lawsuit.   

The global settlement resolves allegations that EDMC violated federal and state FCA provisions by falsely certifying that it was in compliance with the incentive compensation ban, a statute enacted by Congress in 1992 to prevent predatory recruiting practices and stem student loan defaults. Under the qui tam, or whistleblower, provisions of the act, private individuals are permitted to sue on behalf of the government for false claims and to share in any recoveries.  The case was originally brought by McKool Smith clients Lynntoya Washington and Michael Mahoney.  

“This case involved allegations of a decade-long scheme to bilk taxpayers out of significant sums of money,” said Stuart Rennert, a principal in McKool Smith’s Washington, D.C. office who represents the Relators.  “We are proud of our courageous clients for raising the flag on this type of corrupt corporate activity, and applaud the Department of Justice and the many state Attorneys Generals who agreed to intervene in this case and hold EDMC accountable for their actions.  This case was a model of the public/private partnership that the False Claims Act embodies.”

As noted, in an announcement issued by the United States Department of Education on November 16, 2015, the settlement brings to a close this litigation as well as  three separate FCA lawsuits filed against EDMC in which the government did not intervene. The settlement proceeds will be shared among the United States, the co-plaintiff states, and the relators and their counsel in the FCA cases.

McKool Smith was lead counsel for the Relators in the matter and worked with the Litman Law Firm, Farrell & Reisinger, and Strassburger, McKenna, Gutnick and Gefsky.

McKool Smith’s plaintiff side qui tam practice focuses on large and complex False Claims Act cases.  Attorneys working in the practice have recovered more than $1 billion for the USA and individual States in the cases that they have handled. The firm’s unique combination of qui tam and trial experience permits it to partner with co-counsel and governmental entities to drive cases to resolution, and where necessary, try the cases to successful verdict.   

With more than 185 trial lawyers across offices in Austin, Dallas, Houston, Los Angeles, Marshall, New York, Silicon Valley, and Washington, D.C., McKool Smith has established a reputation as one of America’s leading trial firms. Since 2006, the firm has secured nine nine-figure jury verdicts, as well as ten eight-figure jury verdicts. The firm has also won more VerdictSearch and The National Law Journal "Top 100 Verdicts" over the last eight years than any other law firm in the country. Courtroom successes like these have earned McKool Smith critical acclaim and helped the firm become what The Wall Street Journal describes as “one of the biggest law firm success stories of the past decade.” McKool Smith represents clients in complex commercial litigation, intellectual property, bankruptcy, and white collar defense matters.

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