For-profit universities have recently been the subject of a number of False Claims Act lawsuits. Continuing this trend, Grand Canyon Education settled its False Claims Act suit for $5.2 million in August. The whistleblower, a former employee of the company, filed the qui tam action in August 2007. The case was unsealed in September 2008 and alleged unlawful recruitment and compensation practices.
Since 1992, it has been illegal for any university receiving financial aid to compensate recruiters based upon enrollment. However, many for-profit universities have attempted to disguise compensation based upon enrollment figures. Under the terms of the settlement, Grand Canyon will be protected from all future False Claims Acts suits and Department of Education administrative actions for past transgressions.