In December, 2012, the Department of Justice ("DOJ") declined to intervene in two qui tam suits brought against Bridgepoint Education, Inc. ("Bridgepoint"). Bridgepoint announced that DOJ was investigating its compensation practices for admissions personnel in October 2012, and that it was cooperating with that investigation.
The complaints assert that Bridgepoint violated the False Claims Act by purportedly engaging in illegal recruiting tactics, particularly by allegedly violating the incentive compensation provision. One of the complaints also includes a claim for unlawful business practices under California law, which is premised on purportedly false and misleading statements made in the recruitment of students, as well as violations of the California Private Postsecondary Education Act of 2009.
Over the past year, DOJ has become more active in qui tam cases, intervening in cases brought against EDMC and ATI. DOJ's decision to not intervene in the Bridgepoint cases is a positive sign for the sector and suggests that although DOJ has become more interested in qui tam actions involving the sector, DOJ can be persuaded not to intervene.