By: Christopher A. Parrella, Esq., CPC, CHC, CPCOc
Parrella Health Law, Boston, Ma.
A Health Law Defense and Compliance Firm

The False Claims Act (FCA) serves as a critical tool in the U.S. government’s arsenal to combat fraud against federal programs. Traditionally associated with healthcare and defense contracting, the FCA’s application extends far beyond, touching various sectors including education. A recent legal action exemplifies its broad reach and the government’s commitment to safeguarding the integrity of federal student aid programs, even when it involves international territories.

Background on the Case
The Justice Department has filed an FCA complaint against Study Across the Pond LLC (SATP) and its principal, highlighting the global applicability of the Act. SATP, a Massachusetts-based firm, specializes in recruiting American students to attend universities in the U.K. and other countries. This case centers around allegations that SATP demanded and received payments from UK schools in violation of the U.S. Department of Education’s incentive compensation ban, thereby inducing the schools to submit false claims for federal student aid.

Understanding the Incentive Compensation Ban
Title IV of the Higher Education Act explicitly prohibits institutions receiving federal student aid from offering incentive-based compensation to recruiters. This ban is designed to prevent the prioritization of profit over educational needs, ensuring that student recruitment practices are aligned with genuine educational guidance rather than financial motives.

Allegations and Legal Implications
The complaint alleges that from at least 2015, SATP, under John Borhaug’s leadership, required UK universities to pay commissions which were contingent upon the enrollment and subsequent tuition payment by recruited students using federal aid. Such arrangements, according to the DOJ, directly contravene the incentive compensation ban, leading to the submission of false claims under the FCA.

The Role of False Claims Act
The FCA enables whistleblowers to file suits on behalf of the government and potentially share in the recovery. This not only incentivizes the reporting of misconduct but significantly extends the government’s reach in overseeing federal funds’ proper use. In this case, the government’s intervention illustrates a strong stance against the misuse of U.S. federal student aid, regardless of the geographical boundaries.

Implications for Educational and Recruiting Entities
This case serves as a stark reminder of the legal responsibilities and risks associated with the administration of U.S. federal student aid, particularly for foreign educational institutions and their recruiting partners. Entities involved in recruiting or enrolling students with U.S. federal aid must ensure compliance with all relevant regulations to avoid severe penalties under the FCA.

Conclusion
At Parrella Health Law, we specialize in guiding healthcare providers and organizations through the complexities of the False Claims Act (FCA). Whether you’re facing allegations of fraud, need assistance with compliance audits, or require counsel on implementing internal policies to prevent FCA violations, our experienced team is here to help. We understand the nuances of the FCA and how it impacts your business operations and reputation. By providing comprehensive legal advice and proactive strategies, we aim to safeguard your practice from legal risks and ensure your activities align with federal regulations. If you have concerns about how the False Claims Act might affect your healthcare practice, don’t hesitate to reach out for tailored legal support.

For more information or to discuss your specific needs, contact Parrella Health Law at 857.328.0382 or email me at cparrella@parrellahealthlaw.com.

Christopher Parrella, ESQ, CPC, CHC, CPCO, is the founding partner of Parrella Health Law in Boston, Mass. The firm focuses exclusively on healthcare defense and compliance matters. Chris also travels the country on behalf of a wide range of healthcare organizations, lecturing on a variety of health care enforcement and compliance topics. Chris is one of a handful of health care attorney’s that are also Certified Professional Coders (CPC) and is a member of the AAPC’s National Legal Advisory Board and Ethics Committee.  He is also a Certified Professional Compliance Officer (CPCO) and Certified in Health Care Compliance (CHC.)