Indiana joins suit against Brown Mackie, Art Institute parent company

The State of Indiana has joined in a whistleblower lawsuit against Education Management Corporation (EDMC), alleging the for-profit college company and two of its subsidiaries received more than $12 million in state financial aid after making false claims and misrepresentations to the state.  The United States of America, the States of California, Florida, Illinois, Massachusetts, Minnesota, Montana, New Jersey, New Mexico, New York, the District of Columbia, and two whistleblowers are also parties to the lawsuit, pending in the Western District of Pennsylvania.

The states and federal government allege the EDMC defendants violated a federal law that bans incentive compensation for college admissions employees based on the numbers of students they enroll.  By using a system where college recruiters’ compensation was tied to enrollment numbers, EDMC and two of its subsidiaries operating in Indiana violated Title IV of the Higher Education Act of 1965, the lawsuit alleges.

This lawsuit is the first time the Indiana Attorney General’s office has used a whistleblower lawsuit to seek civil penalties due to false claims paid out of state financial aid, rather than out of Medicaid.


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