Everglades College and Keiser University False Claims Settlement: Two False Certifications, Then a Federal Settlement

Everglades College, doing business as Keiser University, agreed to a $335,000 false claims settlement over certifications that it complied with the federal ban on enrollment-based recruiter pay. Two former admissions employees brought the case, and a trial court found two knowing false certifications but awarded no damages. For someone who knows how a college actually pays its recruiters, the story follows a familiar divide: what the compensation records show and what the institution tells the agency funding its students.

The Eleventh Circuit’s May 3, 2017 opinion follows the case from that trial to the government’s later settlement. This page covers those findings and the settlement that ended the case. Our page on Title IV incentive compensation fraud explains the recruiting-pay mechanism across schools.

The School’s Promise About Recruiter Pay

Keiser’s access to federal student aid depended on a participation agreement with the Education Department. Among its promises was compliance with the incentive-compensation ban, which prohibited paying recruiters and admissions personnel based on the number of students they enrolled. The admissions employees alleged that Keiser knew its pay practices violated that promise while continuing to certify compliance.

The defendant was Everglades College, Inc., doing business as Keiser University, and the opinion described Keiser as a nonprofit college offering undergraduate and graduate programs. The recruiting-pay promise followed participation in Title IV, the federal student-aid programs, including at a nonprofit school.

An insider may know the recruiting operation by a campus name, while the aid paperwork identifies the institution that signed for federal participation. The Program Participation Agreement connects that institution to its federal obligations. The compensation decision and the aid certification can sit in different offices, so the person who knows how recruiters were paid may hold a part of the story the final certification conceals.

What the Trial Found About Keiser’s Certifications

The trial court found that Keiser violated the incentive-compensation ban, but held it liable under the False Claims Act for only two knowing false certifications. According to the appellate opinion’s account, the school’s top policymakers became aware of the improper compensation scheme on November 20, 2009. The certifications that counted came afterward:

1. February 9, 2010: Keiser sent an electronic certification falsely stating that it complied with Title IV funding conditions.
2. March 5, 2010: Keiser submitted a compliance audit certifying the same compliance.

Those dates connect the school’s knowledge to what it later submitted. For an admissions or compliance employee, the relevant sequence includes how the compensation practice reached decision-makers and what the institution certified after they knew. The court’s account puts the false statements in specific institutional submissions.

The whistleblowers alleged more than 230,000 claims for $1.2 billion in federal financial aid while Keiser falsely certified compliance. The trial court rejected counting every student-submitted aid application as a false claim by Keiser, reasoning that the school did not control the content, number or submission of those requests.

For the two certifications Keiser itself submitted, the trial court assessed $11,000 in civil penalties, the minimum of $5,500 each. The court awarded $60,000 in whistleblower attorneys’ fees for the trial work, more than the penalties for the false certifications.

The court also rejected treating all educational assistance paid during the certification period as damages. It reasoned that the Education Department would not have demanded repayment of the already-paid aid even if Keiser had disclosed its compensation violations. We see the disconnect in that result: the court found that the school knowingly certified compliance it did not have, yet awarded nothing for financial loss. The false promises carried penalties. The aid stayed out of the damages award.

The Government Negotiated a Different Outcome

The United States initially declined to take over the whistleblower case, then negotiated a settlement after the trial. As the opinion explains, it wanted to avoid an appellate ruling that could narrow its ability to pursue other False Claims Act cases in the circuit. The court approved the agreement.

The settlement also protected Keiser’s access to federal student aid. In exchange for the payment, the United States agreed to drop further civil and administrative claims over the challenged conduct and not cut the school off from future Title IV funds because of it. The school kept its route to public money.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Our whistleblower experts work with insiders to connect what management knew, what the school certified and where the federal aid went.

Recruiter Evaluations Could Hide the Actual Pay Formula

The Education Department’s October 2010 explanation for changing the recruiting-pay rules described a problem an admissions employee could recognize immediately. Schools used evaluation forms listing enrollment results alongside qualitative factors. Employees told the department that those other factors were not actually considered when compensation was set. They appeared on the forms to create the appearance of compliance.

That was the department’s account across schools, separate from the Keiser findings. It explains why a polished evaluation form can be less revealing than the decision behind a raise or bonus. An employee who knows which results actually moved pay can explain what the form leaves out. In the department’s account, the qualitative factors had a job. Affecting pay was not it.

The department removed the old regulatory exceptions, known as safe harbors, effective July 1, 2011. Keiser’s two certifications came before that change.

Connecting the Pay Decision to Federal Aid

The Keiser case shows why financial-aid fraud evidence needs to connect internal decisions with the institution’s federal submissions. Payroll can show how compensation changed, admissions records can show the enrollment results behind it, and compliance files can show what reached the people responsible for the school’s certifications. An insider who understands how those records fit together can explain a sequence that each office sees only in part.

The Education Department’s administrative requirements handbook describes the coordination behind federal aid: relevant information can arrive in admissions, academic departments or other offices and must reach the official coordinating aid. The school’s records therefore extend beyond the financial-aid office. Participation agreements, audits, regulator notices and internal corrective decisions supply the institutional side of the story.

The business office holds another part. A student-aid disbursement generally occurs when funds credit a student’s ledger or reach the student or parent directly. The ledger, cash records and federal disbursement records connect the school’s representations to money that moved.

Where the Keiser Case Fits

Among education fraud cases and settlements, Keiser supplies a particularly clear separation between a court’s findings and the government’s negotiated resolution. The trial identified knowing false certifications, limited the claims that counted and awarded penalties without damages. The later settlement reflected the government’s broader enforcement interests as well as the dispute with the school.

For someone trying to understand the connection between a school record and a false claim, the case puts concrete questions around the paperwork. What did the institution certify, what did its decision-makers know, and how did the representation connect to federal aid? Those are the connections our whistleblower experts develop with an insider who knows the underlying operation.

You Know How the Recruiting Pay Worked

If you saw enrollment results drive pay while the school certified compliance, talk with our whistleblower experts about what happened inside the institution. We connect your knowledge of compensation, management decisions and student aid to build your strongest education fraud whistleblower case, bringing in education fraud whistleblower lawyers who understand those records. We stay beside you as your partners through the case.