October 26, 2006

U. of Phoenix loses bid for review of decision that reinstated high-stakes lawsuit

The University of Phoenix has lost another legal round in its attempt to derail a whistle-blower lawsuit that seeks billions of dollars in damages from the for-profit institution and its parent company, the Apollo Group Inc. Last month a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit ruled against the university on a legal issue and ordered the lawsuit, filed under the federal False Claims Act, to proceed to trial. Lawyers for Phoenix had hoped to have that decision reversed by the full court, but in a decision on Wednesday, the court denied that request. The complaint, filed in 2003, alleges that the university wrongfully obtained a minimum of $3-billion in federal funds over a period of six years. Nancy G. Krop, a lawyer for two former recruiters for the university who filed the suit, has estimated that perhaps $1.5-billion of that is recoverable. If Phoenix is found liable under the law, it could be ordered to pay up to three times that amount.

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