WASHINGTON — The for-profit college company chaired by former Maine Gov. John McKernan asked a federal court Wednesday to dismiss a Department of Justice lawsuit alleging the company illegally compensated employees who recruit students.

Education Management’s dismissal motion filed in U.S. District Court in Pittsburgh, where the company is based, says “the government’s … claims are legally flawed and factually insufficient,” said Bonnie Campbell, a spokeswoman for Education Management’s legal counsel.

Campbell said the case is about a “narrow legal issue,” over whether Education Management’s sole basis for compensating admissions officers was enrollment numbers.

Federal regulations adopted in 2002 “expressly permitted companies to consider enrollment numbers when determining admission officer salaries, as long as compensation was not based solely on enrollment numbers,” she said.

The company says it also used five other factors, including professionalism and ethics, in determining compensation for its recruiters.

The government is basing its case on a lawsuit brought by “two isolated, low-level (now former Education Management) employees with virtually no relevant knowledge,” the motion to dismiss says.

The company also says the government’s intervention in the case is motivated by a desire to win financial damages from a deep-pocketed company.

The motion to dismiss is the latest development in the whistleblower lawsuit first brought in 2007 on behalf of two former Education Management employees. The case gained prominence when the Department of Justice intervened in August.

It’s potentially a politically charged case in Maine because McKernan, a Republican who was Maine’s governor from 1987 to 1995, is married to three-term GOP Sen. Olympia Snowe of Maine, who is up for re-election next year.

Education Management is the nation’s second-largest for-profit college company, with more than 100,000 students enrolled each year and 22,000 employees nationwide. It has more than 100 schools in 32 states, none of them in Maine.

When the Department of Justice intervened in the case, federal officials said the lawsuit was seeking to recover an unspecified portion of $11 billion in federal and state financial aid – the vast majority of Education Management’s revenue.

There has been congressional and legal scrutiny in recent years of for-profit college companies, with critics asserting that they recruit students who they know are ill-equipped to finish school, get jobs and pay back their financial aid.

The ban on for-profit college companies paying compensation based on the number of students admissions officers recruit is aimed at preventing high default rates on student loans.

Jonathan Riskind — 791-6280

[email protected]

Twitter: MaineTodayDC


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