The 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).