A federal judge has ruled that a second whistleblower case against a Yavapai College flight program will go forward. The case alleges Yavapai College’s airplane pilot program took millions of dollars from the VA by submitting false claims for veteran education benefits while knowingly violating the VA’s enrollment limitations. The Complaint was filed by the former director of aviation programs at YC, Dan Hamilton, and alleges that YC and its airplane program partner, NorthAire Aviation, violated the VA’s funding rule that limits VA beneficiary enrollment to 85% in any program. The Complaint details schemes wherein NorthAire improperly paid for students whom the program certified were not receiving any institutional aid and that the program improperly counted students who were not in the airplane program including part-time, non-flight training, high school students for whom YC waived tuition. The 85% enrollment limitation is the VA’s safeguard to guarantee that the programs have real world relevance, demand and market driven pricing.
In a ruling on December 6, 2016, the Judge Murray Snow denied a motion to dismiss filed by YC’s partner NorthAire. NorthAire argued that as a mere contractor with YC who did not, itself, submit the claims or certifications to the VA, it could not be held liable for the program’s fraud. The Court disagreed, holding that “liability extends to any person who knowingly assisted in causing the government to pay claims which were grounded in fraud, without regard to whether that person had direct contractual relations with the government.” The Court found that Hamilton’s Complaint amply alleged details of how NorthAire knew the YC airplane program was violating VA regulations and thus defrauding the VA. Indeed, the Court said Hamilton could proceed on his claim that NorthAire and YC conspired to defraud the VA. The Court dismissed the alternative theory that the airplane program improperly retained overpayments finding that the Complaint alleged more than a mere retention of an overpayment. “Rather, the Complaint alleges that the Defendants mislead the VA to receive funds that they did not have a right to.” This ruling follows the Court’s earlier decision denying summary judgment in a case against YC’s Helicopter Program. Both cases are now on proceeding toward trial. Both expose the college, its partners and their agents to $10s of millions in damages.
Under the False Claims Act, the statute that allows whistleblowers to sue on behalf of the federal government, those who defraud the government must repay three times the amount they fraudulently took, plus penalties. Whistleblowers, like Dan Hamilton, can recover up to 30% of any moneys obtained for the government under the False Claims Act.
The aviation program at the Community College Career and Technical Education Center showed low enrollment in several classes for the 2015 summer session. In checking the courses that were offered and scheduled to begin in May, there were several courses that ended up with 4 or fewer students. For example, the Private Pilot Airplane Ground course had one student sign up for it. It could accommodate 24 students. Helicopter Ground I had 4 students; Commercial pilot Ground 1 had 1 student; Flight instrument air ground had 3 students; Pilot preventative maintenance had 1 student; Commercial Pilot Air Trans had 2 students; Airplane pilot preventative maintenance had 1 student.
Recall that the College claimed that it had 40 students waiting to take education courses in May of this year when it received the letter from the VA stating it would no longer fund VA training in the aviation.
The chart below was taken from the College registration module and is believed to be reasonably accurate. The low enrollment may be the result of the Veterans Administration crack-down on the College for failing to meet the minimum percentage of non veterans in aviation courses and refusing to fund an incoming group of about 24 vets. When you see 24/24, this means that the course had 24 student seats and that no one signed up for the course.
In a series of articles published in the Los Angeles Times in March, 2014, and another on June 27, it was pointed out that Yavapai College and Southern Utah were college programs that charged the VA exorbitant fees for flight training. The VA adjusted its enforcement of a regulation that requires flight school programs to have 15 percent of its positions filled by civilians. It then refused to fund any new VA applicants for Yavapai’s flight program.
According to the Times, the helicopter flight companies were exploiting a loophole in the newest GI Bill to train veterans entirely at government expense, with no cap on what they could charge. The programs were cited for violating a requirement that nonveterans make up at least 15% of students in VA-funded programs, a rule aimed at ensuring that programs don’t exist solely on GI Bill money. The VA hadn’t been enforcing the rule.
The programs at Yavapai and Southern Utah often trained veterans in expensive helicopters rather than the basic two- and four-seat models that other students used. In comparison to the charges at Yavapai College, at the Chandler-Gilbert Community College near Phoenix, helicopter training costs about $110,000 for two years. At Yavapai the average was $96,176 for one year of training, with four students costing between $205,189 and $232,474. Training usually went for two years at Yavapai College.
Legislation introduced in Congress this year would close the loophole by capping yearly tuition and fees at $20,235, the limit placed on all private colleges and universities. Current students would be exempt from the cap for two years. The bill has been approved by the House Committee on Veterans Affairs and could reach the House floor for a vote this summer.
This Blog story was based on information from the (click here for complete story) Los Angeles Times, June 27, and the (click here for complete story) Havasu News-Herald of June 30, 2015.
Scott Orr, in a story in Friday’s Prescott Daily Courier, reported that Yavapai College has turned to Senator John McCain and Congressman Paul Gosar to bail it out of its flight program registration mess. (You can read Mr. Orr’s story by clicking here.) They have authored a joint letter asking the Veterans Administration to change its ruling as it affects about 40 students scheduled to begin training in May.
According to the Veterans Administration, the College has failed to comply with its 85/15 rule, which requires that 15 percent of students enrolled in the flight school program must be civilian, non-veterans. On March 24, the Veterans Administration sent YC a letter saying that it would not pay benefits for students enrolled in the summer session, although it would continue to fund classes for those already in the program.
In their joint letter, the two politicos argued that “recent actions may negatively affect a number of veterans who have already moved to the Prescott area based on their acceptance to this program.” The letter also noted that some Veterans may have used their own money to move and others may have used a one-time Department of Defense allowance to pay for relocation.
The VA decision affects about 40 students originally scheduled to begin classes May 11.
The Prescott Daily Courier reported today that the Veterans Administration has cracked down on Yavapai College’s fixed-wing and helicopter program. In a letter toPresident Penelope Wills, it advised her that because of enrollment problems, it had decided to stop providing support for new enrollments in the College’s fixed-wing and helicopter training programs. This has left 40 students, set to start in May, waiting to see what will happen.
According to the story written by Scott Orr, the VA notified the Community College in a letter sent last week that any class that enrolls veterans with the intent to have the government pay their tuition must include no more than 85 percent veterans.
The Veterans Administration claims that YC doesn’t meet that standard. It noted that all of the 90 students in the school’s helicopter program, and 48 of the 51 in its fixed-wing unit, are currently veterans.
President Wills disputes how the VA is calculating the number of students in the program. She has asked for a response from the VA to her objections by April 8 so that 40 students scheduled to being training in May will know one way or the other whether they can enroll.
It is interesting that a lawsuit against Yavapai College is pending and the claim in that action seems quite similar to this ruling by the VA. (See Blog Index, lawsuits.)
Click here to read the complete story in the Prescott Daily Courier.