Bard Whistleblower Settlement Highlights Potential Risks for Higher Education Institutions
Bard College recently entered into an agreement with the United States to pay $4 million to settle a whistleblower suit alleging violations of the False Claims Act. Bard is a non-profit liberal arts institution founded in 1860 and based in New York’s Hudson River Valley. The alleged violations centered on its ill-fated attempt to start a Master’s of Arts in Teaching (MAT) program in Delano, California, beginning in 2009. This case demonstrates the risks that institutions of higher learning can face if they fail to meet administrative and accreditation requirements that are part of an attempted expansion.
On June 7, 2013, two relators filed a sealed complaint in the Eastern District of California against Bard. The relators were both members of the first cohort of MAT students at Bard’s Delano location. They alleged that Bard personnel had made numerous misrepresentations to current and potential MAT students regarding its accreditation status.
Specifically, the complaint alleged that Bard had begun operating its MAT program in Delano before gaining accreditation by the California Commission on Teacher Credentialing (CCTC). As a result, the students who completed Bard’s program were not eligible for teaching credentials upon graduation. The program did not receive certification until roughly one year after the relators had graduated and no longer exists in the Delano location.
The relators contended Bard had violated the False Claims Act in two primary ways. First, Bard had entered into a Program Participation Agreement (PPA) with the United States Department of Education so that its students could receive federal student aid under Title IV of the federal Higher Education Act. As part of that PPA, Bard had falsely certified to the Department of Education that it would comply with all applicable statutes and regulations related to the MAT program, but its lack of accreditation amounted to a violation of the PPA and rendered its claims for payment of Title IV funds false under the FCA.
Second, the relators alleged that Bard had applied for and received a Teacher Quality Partnership (TQP) grant from the Department of Education for its MAT program in 2009. As part of the application process, it certified, among other things, that its students would receive accreditation in California, but that did not occur as Bard claimed it would. The relators also alleged numerous other shortfalls by Bard in meeting the claims of its TQP application. Bard received roughly $6 million in funds pursuant to that grant.
Finally, the relators alleged that Bard had retaliated against one of them after she had made comments regarding Bard’s accreditation status at a public meeting of the CCTC. She had been working for Bard at that time, and she alleged that she was constructively terminated after going public with her comments.
According to the complaint, the CCTC conducted a series of hearings concerning Bard’s MAT program, in part due to its “astonishment” that Bard began operating the program without first securing accreditation. The complaint also alleged that Bard recruited and admitted a second cohort of MAT students without being accredited, and that administrators from local secondary schools referred to Bard’s program as an example of “exactly what not to do.”
The government proceeded to investigate the relators’ claims, demanding document productions from Bard and taking the depositions of multiple individuals pursuant to Civil Investigative Demands. On November 13, 2015, the United States filed a Notice of Election to Intervene. As part of that filing, the government represented that it had made “significant progress toward a consensual resolution of this matter,” and asked the court to stay the action for 90 days to allow for further negotiations. The court approved that request and ordered the relators’ complaint to be unsealed on December 2, 2015.
On March 9, 2016, the government and the relators voluntarily dismissed the action pursuant to the terms of a settlement agreement they reached with Bard. As a result, Bard never answered the relators’ complaint. Under the settlement agreement, Bard agreed to pay $4 million to the United States in a series of payments running from April 2016 through April of 2021. The relators and the government reached an agreement as to the relators’ share of that recovery. At present, though, the relators have been unable to reach an agreement with Bard as to the payment of their expenses and attorneys’ fees under the FCA. In a filing dated April 5, 2016, the relators represented that their counsel had spent over 1,100 hours on this case prior to the settlement agreement. The court has set a date certain of June 7, 2016 for Bard and the relator to agree to a payment figure, and if the parties fail to do so, relators will file a petition with the court to set an amount for payment of those fees.
Given the critical nature of California accreditation to the relators’ claims, this case serves an example of some of the pitfalls that can endanger an institution of higher education as it seeks to broaden its geographic and programmatic scope.