Education Management Corp. made that argument in an 83-page response filed in federal court, the Pittsburgh Post-Gazette (http://bit.ly/KQIkhx) reported Tuesday.
The lawsuit against EDMC was filed in 2007 by two former whistle-blowing employees but had remained sealed and unknown to the public until the U.S. Justice Department and the attorneys general of California, Florida, Indiana and Illinois intervened to join the lawsuit last year.
The Pittsburgh-based company runs more than 100 higher-education programs across the country, offering diplomas and degrees in fashion, culinary arts, business and other fields, some through online courses. Many of its 100,000 yearly students are working adults, single parents, and low-income and minority students.
The government attorneys contend the company has inflated its career placement opportunities, preyed on applicants' psychological vulnerabilities and enrolled students regardless of their qualifications in order to meet enrollment goals—and also paid enrollment-based incentives that are illegal under a 1992 law. The Justice Department contends that was done to obtain more than $11 billion in federal student aid since 2003.
In the answer filed late Monday, EDMC's attorneys contend the company gave statistics and other data to the Justice Department, even before the government intervened in the lawsuit, that disprove the illegal recruitment allegations.
That data demonstrate "the absence of any company-wide scheme to calculate salaries 'solely' based upon enrollments"—which is what EDMC contends the government is accusing it of doing illegally.
"In fact, Plaintiffs have not identified any employee whose compensation was actually set solely on the basis of the number of student enrollments nor any manager who set salaries of admissions personnel in that impermissible way," the company's attorneys wrote.
U.S. District Judge Terrence McVerry ruled last month that while the case is "massive and complex," he believes there are legal grounds for the government to go to trial on at least some of its claims.
The judge, however, dismissed some other claims after determining EDMC's compensation policy was not illegal as written. The question remains whether it was implemented illegally, the judge ruled.
If the government prevails, Education Management could be forced to repay three times the damages, plus penalties.