Florida Coastal School of Law

A newly unsealed whistleblower lawsuit filed by two former professors at Arizona Summit Law School alleges that the school and its owner, InfiLaw Corp., violated federal student loan rules in order to collect more than $533 million in government-backed financial aid from 2012 to 2015.

The qui tam suit, which the plaintiffs voluntarily dismissed in February and the court unsealed March 26, is the second whistleblower suit brought by faculty from an InfiLaw school to be made public. Another case focusing on InfiLaw's now defunct Charlotte School of Law makes similar claims to the Arizona suit, and is still pending. Arizona Summit and InfiLaw's Florida Coastal School of Law are for-profit institutions, as was Charlotte.

“I think we'll see more cases involving these issues and these defendants,” said attorney Jesse Hoyer of Florida firm James Hoyer, who represented plaintiffs Celia Rumann and Michael O'Connor in the terminated Arizona Summit case. “More and more insiders are starting to realize what's going on in these schools. I doubt we're the only two complaints out there.”

Arizona Summit President Donald Lively on Tuesday pointed to the fact that the U.S. government declined to intervene in Rumann and O'Connor's suit. “We simply would note that the dismissal of these actions speak for themselves,” he said.

Hoyer said that her clients stand by their allegations, despite their decision not to move forward with the suit. She declined to specify why her clients opted to voluntarily dismiss their suit, though she acknowledged that government's failure to intervene diminished the suit's prospects. (Qui tam suits are brought on behalf of the government in an attempt to recover funds lost to fraud, with the whistleblowers getting some percentage of any amount awarded in court. In this case, the alleged fraud was tied to federal student loans.)

“These cases are so complicated and complex,” Hoyer said. “It really comes down to weighing about 100 different factors when you are deciding whether or not to move forward. We strongly believe in the allegations in this case. But moving forward with a qui tam is a lot. It's stressful. It's taxing on everybody. You are opening yourself to a lot of exposure—potentially being blackballed.”

Coleman Watson, the attorney representing former Charlotte School of Law professor Barbara Bernier in her ongoing whistleblower suit against InfiLaw, said he only became aware of the Arizona suit when it was unsealed last week and that the parties had filed independently of each other. (Bernier filed her suit seven months after the Arizona plaintiffs.)

“There is no connection,” Watson said, while noting some overlap in each suit's overarching allegations. “The only connection is that they were all professors at infiLaw schools at around the same time.”

Watson said the termination of the Arizona Summit case has no bearing on its Charlotte counterpart, and that the parties in his case are currently awaiting a ruling on InfiLaw's motion to dismiss. Both suits were filed in U.S. District Court for the Middle District of Florida because InfiLaw is headquartered in Naples.

Rumann and O'Connor, a married couple who were both fired from their tenured professor positions at Arizona Summit in 2013 after they refused to sign appointment papers they said ran afoul of the school's tenure protections, filed their whistleblower suit in November 2015. (The couple also filed an unsuccessful employment lawsuit against the school and InfiLaw in 2013, eventually losing before the U.S. Court of Appeals for the Ninth Circuit in May, 2017 and being ordered to pay nearly $42,000 in attorney fees. That employment suit also claimed that the couple were ousted for raising concerns about what they saw as efforts to boost profits at the expense of students, such as policies making it difficult for students to transfer out.)

The allegations in Rumann and O'Connor's whistleblower filing will sound familiar to anyone who has read Bernier's Charlotte complaint. They claim that Arizona Summit admitted students with little chance of graduating and passing the bar, and that the school falsified the bar pass statistics it submitted to the American Bar Association by paying students who it deemed likely to fail the licensing exam to delay taking the test.

Much of their suit centers on what is known as the 90/10 rule—a requirement from the U.S. Department of Education that no more than 90 percent of a for-profit institution's revenue be derived for federally-backed student loans. Arizona Summit employed various schemes and deceptions to appear in compliance with that rule, according to Rumann and O'Connor's complaint.

They alleged that Arizona Summit colluded with bar prep providers BarBri Inc. and Kaplan Inc.—both of which were also named as defendants—to purchase their materials and create an in-house bar prep course for which students would have to pay $2,500. Arizona Summit would then count those bar prep payments toward the required 10 percent of nonloan revenue, while Kaplan and BarBri agreed to stop recruiting Arizona Summit students for their independent bar prep courses. The in-house bar prep course also allowed administrators to identify likely failers and steer them away from the test with stipends. (Former Arizona Summit law dean Shirley Mays has previously defended that practice, calling the stipends a ”creative and innovative” way to help students who simply weren't ready to take the bar.)

“To craft your own bar prep test system and to use that to manipulate the 90/10 rule was pretty egregious, in my opinion,” Hoyer said.

A Kaplan spokesman declined to comment on the allegations Tuesday, saying the company only learned of the suit last week. A spokeswoman for BarBri did not respond to requests for comment.