“Notably, (employees) with fewer New Student Points but more Quality Points could receive a higher salary than those with more New Student Points but lower Quality Points,” the company said in its motion to dismiss the case.

The 1992 law grew out of reports of overly aggressive sales procedures in the for-profit education industry that led to the enrollment of unqualified students and high student loan default rates.

Education Management, based in Pittsburgh, offers classes at 105 locations in 32 states and Canada, as well as online. It said many of its 100,000 yearly students are non-traditional — working adults, single parents and low-income and minority students.

The company operates diploma, undergraduate and graduate programs at its Art Institutes, Argosy University, Brown Mackie College and South University, and it employs more than 22,000 people, according to the response.

The government said the company inflated its career placement opportunities, preyed on applicants’ psychological vulnerabilities and enrolled students regardless of their qualifications.

The 2007 lawsuit was filed by former employees Michael Mahoney and Lynntoya Washington but was unsealed only this year after the Department of Justice and the attorneys general of California, Florida, Indiana and Illinois intervened.

If they prove their case, Education Management could be forced to repay three times the damage, plus penalties, with the whistleblowers able to collect 15 percent to 25 percent of the recovery.


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