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By Charles Lam
After three years of sealed court actions in which top-level Chapman University administrators were deposed under oath, a potential multimillion-dollar lawsuit against the school could be headed to a jury.
Alleging that Chapman shortchanged its students and taxpayers by ignoring classroom hour requirements at its satellite campuses, the plaintiffs filed a sealed complaint in 2004 on behalf of the United States government under an 1863 law known colloquially as Lincoln's Law, and are seeking damages that could potentially amount to a quarter of a billion dollars.
Chapman is expected to file a motion this week asking Los Angeles County Superior Court Judge Philip Gutierrez to dismiss the case. If that motion, the university's third formal attempt to have the case thrown out, fails, a civil jury trial is scheduled to begin Nov. 6.
Former professors Katherine O'Connell, Chris Moyers and Carlee Durfor claim they complained for years that students were being let out early and not completing the required number of clinical training and classroom hours during courses at several of Chapman's satellite campuses—which, they say, were considered little more than revenue streams for the university.
Chapman, which unsuccessfully attempted to have the lawsuit dismissed twice in 2006, remained confident in an e-mailed statement from its lawyers, calling the case "totally lacking in any merit." The plaintiffs are "wrong on the law, and have no evidence to support their outrageous factual allegations claims," the statement reads. Chapman lawyers also denied that any of the three women ever filed a complaint.
Chapman has 6,000 students at its 26 satellite campuses, known as "University College," according to its website. The Orange-based university has scaled back in the past 15 years by closing more than 30 additional campuses, most of which were located on military bases.
O'Connell, who is also suing for wrongful termination, says the program she administered from 2002 to 2003—the Marriage and Family Therapist master's degree—met only 50 to 70 percent of the time required by a state licensing board. As a result, O'Connell says, students had below 50 percent pass rates on clinical exams required for licensing.
Durfor, 61, who taught at five University College campuses from 1988 to 2003, says "everybody talked" about students being let out early, but "if you presented any problem to the administration, you were likely to get fired."
The plaintiffs—called "relators" in this type of lawsuit—say Chapman had no protective measures to ensure students got the education they were promised, and taxpayers paid for. When they complained, they say they were either retaliated against or feared retaliation from administrators.
The lawsuit, known as a qui tam or "whistleblower" action, alleges that the misrepresentation of hours on self-evaluation forms renders Chapman ineligible for the tens of millions in state and federal aid the private university received in the past decade.
If the suit is successful, Chapman could be forced to pay back all grants and defaulted student loans received since 1998, estimated between $60 and $90 million. The federal civil court could then triple the damages, says Daniel Bartley, attorney for the professors.
The Civil War-era law the case is based on, the False Claims Act, stands also to benefit the former professors. The law allows private citizens to sue for fraud on behalf of the United States government and keep up to 30 percent of the judgment.
Charles Miller, spokesman for the U.S. Department of Justice, Civil Division, says False Claims Act lawsuits resulted in $3.1 billion in fraud damages awarded in 2006. The government rewards whistleblowers with a portion of the damages as an incentive to help uncover fraud, he says.
Washington, D.C., attorney Michael Goldstein, who chaired a committee that discussed the Chapman lawsuit for the National Association of College and University Attorneys, says universities already have quality control measures in place, and that problems should be dealt with outside of lawsuits.
"They short-circuit everything," he says. "It takes what is a fairly thorough administrative procedure and transfers it into a much more expensive, much more complex proceeding in federal court."
In another recent qui tamsuit, Oakland City University, a nonprofit, liberal-arts college in Indiana, agreed to pay a $5.3 million settlement after a former employee complained it gave illegal monetary incentives to recruiters, according to a story published July 31 in the Chronicle of Higher Education.
Goldstein says the False Claims Act—originally created to protect against defense contract fraud—is being misused in the Chapman case and could lead to a "cottage industry" of suing colleges.
"It's the kind of thing that gives lawyers a bad name," he says. "If you win there's a big pot of gold at the end of the rainbow for (the plaintiffs) and attorneys, but the social cost of that is very unnecessary."
Paul Riches, president of the Board of Behavioral Sciences, the state board that grants licenses to Marriage and Family Therapists, says he would be "very concerned" if the allegations were true, but the organization has no oversight arm and instead relies on supervision from agencies like the one that oversees Chapman, known as the Western Association of Schools and Colleges.
WASC executive director Ralph Wolff says his organization expects Chapman to hold classes the required number of hours, but that is not considered mandatory. He says the agency would be more concerned that the college wasn't living up to its promises to students, which would be a "truth in advertising" issue. The WASC did not have enough evidence of widespread misconduct to warrant a full investigation and the university is not in danger of losing its accreditation, Wolff says.
Bartley, the plaintiffs' attorney, refers to WASC and Chapman as a "good-old-boys" club, and says even though the association won't take action, he believes he can prove the allegations to a jury.
When asked if she is just suing for the money, 69-year-old former Chapman professor-turned-plaintiff Chris Moyers, who taught at a dozen University College campuses in 17 years, laughs out loud.
Moyers says the practice of cutting class hours was systemic and ongoing for her entire career with Chapman. She was confronted with it her very first day, she says, when an administrator approached her after she held a class its entire scheduled time.
"One of them says, 'If you cover what your supposed to cover, that's important, but the most important thing is keeping the students happy so they will sign up for more classes."
Moyers acknowledges the potential multimillion dollar judgment against Chapman could hurt the school financially, but, she says, Chapman has gotten away with it for several years not included in this case's 1998 statute of limitations.
"I think it is not nearly grievous enough because you're only going back a few years. My experience goes back 20 years before that," she says.
Department of Justice spokesman Miller says the vast majority of False Claims Act suits never see a jury and are either dismissed or settled out of court.
Asked in an e-mail how paying such a substantial judgment could affect the school, Chapman University lawyers responded, "We do not anticipate being subjected to such a judgment."