Southern California Qui Tam Law Firm Comments on Beauty School Insurer Settling Whistleblower Lawsuit

Haircut 8The insurance carrier for the for-profit Marinello Schools of Beauty has agreed to pay over eight million dollars to settle a qui tam (whistleblower) lawsuit filed against the school’s operator by six former employees. According to the suit, B & H Education, Inc. – which operates the Marinello Schools of Beauty in various locations throughout Southern California – allegedly assisted students without a high school diploma in obtaining invalid diplomas. These students would then enroll in the school and obtain federal financial aid for which the students were not eligible (federal regulations require recipients of federal student aid to have obtained a valid high school diploma). As part of the settlement, B & H Education, Inc. has admitted to no wrongdoing.

Details of the Qui Tam Lawsuit and Allegations

The lawsuit was brought by six former employees of B & H Education, Inc. against the insurer after the education company went out of business in early 2016. According to the allegations of the plaintiffs (who filed the suit on behalf of the United States), B & H would assist students in obtaining a high school diploma by allowing them to take unproctored tests, use aids like cellphones while taking tests, and enabling students to retake the same tests over and over until they were successful. Upon “successfully” completing their high school diploma in this manner, the students would then enroll at the beauty school and obtain federal student aid. The company’s schools were allegedly kept in business through the federal student loan monies that students would receive (and then pay to the school for tuition expenses and other educational costs).

Plaintiffs Recover Over $2 Million for Their Efforts

As is true in other qui tam whistleblower lawsuits, the plaintiffs in this action were able to recover over two million dollars for their attorneys’ fees and another $2.5 million for their efforts in bringing the action. In a qui tam lawsuit, private plaintiffs who are aware of violations of the California False Claims Act are able to bring a private lawsuit against the violator in order to enforce the False Claims Act. In certain cases, government agencies may be permitted to investigate and intervene in the action. The False Claims Act encourages whistleblowers to bring actions to enforce the Act’s provisions by allowing a successful plaintiff to recover his or her attorney’s fees as well as a portion of any recovery obtained.

Those Who Violate the Public Trust Should Be Held Accountable

If the allegations made by the former B & H Education, Inc. were true, the company not only committed an act of disservice toward its students (who were certainly not well-served by being permitted to cut corners in order to obtain a high school diploma) and toward the American taxpayer, whose tax dollars provide the funds for federal student loan programs. Those who commit similar acts of disservice should be held accountable for the trust they have broken and financial harm they have caused to others.

See Related Blog Posts

False Claims FAQ, Part One: Coverage and the Qui Tam Provision

Understanding Qui Tam Law and the Benefits of Being a Qui Tam Plaintiff

 

(image courtesy of Bonnie Henderson)