In a VA claim similar to that made against Yavapai Community College Academy agreed to pay $512,000; violated 85/15 rule

The Florida Academy in Fort Myers, Florida has agreed to pay $512,500 to the United States to resolve allegations that it made misrepresentations to the United States Department of Veterans Affairs (VA) in order to maintain its eligibility to receive VA funding under the Post-9/11 GI Bill. Among the claims made in Hamilton v. Yavapai College, et. al., is one almost identical to that made by the Government against the Florida Academy.

Beginning in 2012, the VA provided financial assistance for veterans taking classes at Florida Academy as part of the Post-9/11 GI Bill.

The Post-9/11 GI Bill is a VA educational benefit program for veterans who served on active duty after September 10, 2001. As part of that program, the VA provides tuition and fee payments directly to qualifying schools on behalf of eligible veterans. In order for a school to qualify for the program, it is required to certify to the VA that no more than 85% of the students for any particular course are receiving VA benefits. This requirement, commonly referred to as the “85-15% Rule,” is intended to prevent abuse of Post-9/11 GI Bill funding by ensuring that the VA is paying fair market value tuition rates since at least 15% of the enrolled students would be paying the same rate with private funds. Schools that receive GI Bill funding are required to certify their compliance with this rule and notify the VA in the event they are no longer in compliance.

According to the Settlement Agreement, the United States alleged that, from January 1, 2017, until January 1, 2018, Florida Academy received Post-9/11 GI Bill funding during a time when they knew, or reasonably should have known, that it did not qualify because almost all of the students who were enrolled in the Heating, Ventilation, and Air Conditioning (“HVAC”) Advanced Fundamentals class were veterans, whose tuition was paid for by the VA. The settlement resolves allegations that Florida Academy made misrepresentations to the VA regarding its compliance with the 85-15% Rule.

The claims resolved by the settlement are allegations only, and there has been no determination of liability. 

Source:  Department of Justice Press Release, Monday, January 27, 2020.  Please click here to read the entire press release.

Plaintiff’s lawyer shares letter sent to College attorneys regarding million dollar settlement offer

The Yavapai Community College Governing Board met in secret on Monday, February 3, 2020 to discuss the status of the seven-year lawsuit by the former Community College Director of Aviation, Dan Hamilton,  against Yavapai Community College, NorthAire, and Guidance Academy is that a trial has been set by the federal district court in Phoenix for late March or early April of 2020. Hamilton is a professional aviator, a veteran and a decorated former F-16 fighter pilot who served as a captain in the U.S. Air Force from 1997 to 2007. He reportedly started his job with Yavapai College in Sept. 6, 2011, and was terminated on or about May 31, 2012. (His claims are outlined in earlier Blog posts; see “lawsuits” index.)

In response to an interview with Mr. Hamilton’s lawyer, the Blog received the following  letter he sent to the College’s lawyers  regarding the lawsuit.

Liz and Georgia (Community College lawyers):

I am writing in connection with the meeting you have scheduled with the Board of Trustees of Yavapai Community College today.  I trust you will candidly apprise the Board that the landscape of the upcoming trial in US ex rel. Hamilton v. Yavapai Community College et al. has become much more settled.  Please be sure to communicate the following to your client. 

The Court has ruled against Defendants Yavapai and its contracted flight schools (Guidance and NorthAire) on key pre-trial motions.  The Court ruled that the Defendants cannot introduce testimony or argument that any violations were the result of a subjective good faith belief that they were acting lawfully.  See, Doc. 739 pp. 4:5-4 and 5:23 (“No Defendant shall be permitted to argue its/their subjective good faith belief.”).  Defendants waived that argument in favor of concealing anything they told their lawyers or their lawyers have told them about VA requirements and any violations by the College’s flight programs.  The Court also declined to rule on Defendants’ motion to preclude evidence of damages. See, Doc. 739 p. 3:5-7.  Together these rulings mean Hamilton will introduce evidence of over $110 million in False Claims Act damages and penalties and the College will not be able to argue that it believed it was acting lawfully.

With a new Board President seeking accountability, there are several questions the Board deserves to have answered.  Will you please share this letter with your clients and include this letter with the following questions in the record of your meeting today? 

1. What is the maximum financial exposure to the College if Hamilton wins? Is the College not at risk, as Hamilton claims, for up to $110 million in fraud damages based solely on Hamilton’s claims that the JTED students were improperly counted as non-supported under the 85/15 Rule? If he wins against all Defendants, will the College be responsible for the full amount of the judgment?  What amount, if any, will be covered by insurance?  What amount of Hamilton’s attorneys fees and costs would the College owe if he wins? 
2. What evidence supports Hamilton’s claim that the College violated the 85/15 Rule by certifying to the VA that JTED high school students were “non-supported” even though the College reduced and then waived tuition for those students without ever disclosing that fact to the VA? Are there not internal documents and testimony from Defendants showing that the Defendants came up with the JTED scheme specifically to enrol more veterans under the 85/15 Rule? What are the College’s defenses to this claim? What are the specific defenses against Hamilton’s JTED claims? Other than a letter to the VA disclosing that JTED would pay the tuition for JTED students, is there any evidence of the College having disclosed to the VA the other aspects of the JTED program that might violate the VA’s funding regulations?  For example, that JTED students were part-time? That they had tuition reduced? That they had tuition waived? That they took different courses than veterans?  That while they were included in the Operations Management program, they took different courses than those disclosed to the VA for that program?  Did not the College, Guidance and NA come
3. What evidence supports Hamilton’s claim that the College violated the 85/15 Rule during summer terms? Are there not internal documents (e.g. email from V.P. Greg Gillespie, meeting minutes, email from Dan Hamilton) and also testimony from Yavapai College witnesses (e.g. Sandra Aldirch and John Morgan) saying that the College had to comply during summer terms? What are the College’s defenses to this claim?  How will Hamilton respond to those defenses?  How does the College overcome the regulatory requirement to report to the VA if it ever falls out of compliance?  Are summer violation damages for 2012, 2013 and 2014 over $26 million as Hamilton claims in the pretrial order?  Is there a reason why summer damages would not include another
4. Does the fact that the United States never dismissed this case impact the College’s argument that the VA did not care about any claimed violations?
5. How many failed attempts have Defendants made to throw this case out? Is there some reason to now believe Defendants will easily win? If we win or lose are there issues that Hamilton might appeal? 
6. What efforts have been made to settle the case? Did Hamilton respond to the Defendants’ initial offer of $1,000,000.00? 

The Board’s consideration of candid and complete answers to these questions will be of great value in considering Yavapai’s exposure at trial and the alternative merits of settlement. 

Thanks,

Rich