The Obama administration has made a great show of building a wall between the government and lobbyists. Not only were lobbyists not to be invited to meetings with the executive branch, but the infamous “revolving door,” which led from government service to lucrative lobbying positions, was to be locked tightly shut.
Apparently, these rules were never meant to apply to places like the Justice Department. Consider the example of the $11 billion whistleblower lawsuit the Justice Department has brought against for-profit colleges.
The lawsuit comes on the heels of an aggressive campaign led by the U.S. Department of Education to cripple for-profit colleges - schools that provide desperately needed education and training to a segment of the population most at risk for being undereducated.
The Obama administration isn’t satisfied with issuing more rules and regulations. Now it has co-opted the Justice Department to put these schools out of business by joining a private multibillion-dollar lawsuit and urging private-sector trial attorneys to file more such suits. This is more egregious than the usual political favors trial lawyers are given by their trusted allies of the Democratic establishment.
Certainly, the Justice Department can (and should) bring suits under the False Claims Act against companies it thinks have defrauded the government. Private citizens, of course, can sue companies they think have defrauded the government. When the two combine, the payoff can be substantial.
If a private citizen files a whistleblower, or qui tam, action and wins, he can collect as much as 30 percent of the award. Trial lawyers collect a contingent fee - usually one-third of the award. In this particular case against for-profit colleges, an $11 billion qui tam action was filed against Educational Management Corp., which operates dozens of colleges and universities around the country, including the Art Institute of Washington.
If the Justice Department wins this case, the private plaintiff (whistleblower) would be awarded 30 percent of $11 billion, or $3.3 billion. More important, the trial attorney representing the private party would get one-third of that, or $1.1 billion.
The U.S. attorney for the Western District of Pennsylvania, where the case was brought, is David J. Hickton. In February, Mr. Hicktongave a presentation to the Allegheny County Bar Association on the importance of pursuing qui tam lawsuits. He stressed that “the administrationhas made this a priority” and encouraged other lawyers in western Pennsylvania to pursue government fraud and abuse. He was joined on the panel by trial attorney and longtime colleague Harry Litman, who helped instruct his fellow attorneys on the best way to sue corporations.
Here’s where it gets interesting: Mr. Litman represents the plaintiff in the $11 billion suit against Educational Management Corp., now joined by Mr. Hickton, the U.S. attorney. Should the Justice Department succeed in this action, Mr. Litman’s firm stands to make more than $1 billion. Moreover, in a shocking example of the judicial revolving door, Mr. Litman is a former U.S. attorney for the Western District of Pennsylvania, i.e., one of Mr. Hickton’s predecessors.
The current U.S. attorney has joined in a lawsuit filed four years ago by a previous U.S. attorney. Together, they teach other attorneys how to get in on the action.
It has been estimated that when government entities intervene, plaintiffs win or successfully settle 95 percent of the cases. If the government doesn’t intervene, about 90 percent of the cases are dismissed.
The Justice Department brings with it endless resources to pursue such a case, but in the end, it provides an unbelievably huge payoff for the private attorney.
More than 30 cases against for-profit and not-for-profit schools have been passed up over the past nine years, but now Justice is getting involved. Mr. Hickton’s revolving-door relationship with Mr. Litman can be the difference between his stale case being dismissed and his making more than $1 billion.
In an era when the Obama administration is “focusing like a laser on jobs,” it is inconceivable that his Justice Department is mining for new and improved ways to shut down a legitimate corporation employing thousands of people - especially when its business is to educate Americans who need education the most.
Melissa A. Hart was a Republican member of the U.S. House of Representatives from Pennsylvania during from 2001 through 2007.
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