July 18, 2013

$13 million awarded in lawsuit against Vatterott College

Jennifer Kerr finally feels vindicated.

The Lee’s Summit single mother was looking for a way to improve her family’s future in 2009 when she decided an education at Vatterott College would be her key.

Like thousands of others, Kerr, who was then living partially on state assistance, had seen Vatterott’s ads on television.

When she went to the local campus and told the admissions representative that her dream was to be a nurse, Kerr contended in a lawsuit, the representative told her that although the school did not offer a nursing degree, it did offer a medical assistant’s degree. That degree, she allegedly was told, would help her earn $15 to $17 an hour and, with the transfer of her credits, put her on the “fast track” to becoming a nurse.

Only none of that happened.

After securing more than $27,000 in loans and being in the program for nearly 60 weeks, Kerr said she was flabbergasted to learn that she wasn’t even enrolled in the medical assistant’s program. Instead, she was enrolled in the preliminary medical office assistant’s program. She said she was told that if she wanted to continue on and get the medical assistant’s degree, it would take a total of 90 weeks and cost her some $10,000 more.

“I was shocked and devastated,” said Kerr, now 42 and living in Belton. “I felt very deceived. I was totally deceived.”

A Jackson County jury on Friday found in favor of Kerr in her lawsuit against Vatterott and found that the Missouri-based Vatterott Educational Centers Inc. had violated the Missouri Merchandising Practices Act. It ordered the corporation to pay Kerr $27,676 in actual damages and $13 million in punitive damages.

The decision is certain to be appealed, her lawyer said, and the punitive amount the jury awarded far exceeds the maximum allowed under Missouri law. The most Kerr can receive, said her lawyer, Martin Meyers, is the greater of two amounts, either $500,000 or five times actual damages plus other expenses, including legal fees.

“I asked for $2 million to $4 million in punitive damages,” Meyers said. “They came back with $13 million.”

Vatterott was represented by James Monafo, a lawyer out of St. Louis with the Husch Blackwell firm. He referred calls to the school, which responded with an emailed statement:

“We cannot comment on pending litigation. We are confident at Vatterott that our systems and admission processes are handled professionally. Our mission is to transform and better the lives of our students through quality, career education. We are proud of this mission and will continue to pursue it with professionalism and integrity.”

Vatterott, which was started in 1969, has 19 locations in nine states, most in Missouri, along with a large online enrollment, according to the company’s website.

The court’s decision will give Kerr the money to repay thousands of dollars in federal loans for a certificate of completion as a medical office assistant that she said has been all but useless to her.

“It’s not even a degree,” she said.

Equally important, she said, is that Vatterott has been held accountable in court.

“I feel like, I mean, it’s wonderful,” Kerr said. “The truth finally came out. Not just for me, but for everyone like me who was fooled.”

Kerr’s case is hardly the first to cast a negative light on the for-profit college industry, which has long been criticized for enrolling students into expensive courses of study that deliver degrees or diplomas that lead to few or low-paying jobs.

In 2010, an undercover investigation of 15 for-profit colleges (not including Vatterott) conducted by the U.S. Government Accountability Office revealed, among other findings, that “four colleges encouraged fraudulent practices and that all 15 made deceptive or otherwise questionable statements to GAO’s undercover applicants.”

Four undercover applicants were encouraged to falsify financial aid forms to quality for federal aid.

Other colleges exaggerated applicants’ potential salaries after graduation and underestimated the total cost of their programs. Although some of the colleges did provide applicants with accurate and even sound advice, such as not borrowing too much money, others pressured applicants to sign contracts for enrollment before allowing them to speak to financial aid advisers.

Last year, U.S. Sen. Tom Harkin of Iowa released the results of a two-year investigation into some 30 for-profit colleges that included Vatterott. Among his findings, covering 2008 and 2009:

• Students who attended for-profit colleges accounted for 47 percent of all federal student loan defaults.

• Because 96 percent of students who enroll in for-profit colleges take federal student loans (compared to 13 percent at community colleges), nearly all students who leave have student-loan debt, even when they do not have a degree or diploma or increased earning power.

• Most for-profit colleges charge significantly more than similar programs at community college or even flagship state universities.

• In 2008 and 2009, more than 1 million students started at schools owned by the for-profit companies examined in the investigation. By mid-2010, 54 percent had left school without a degree or certificate; among associate’s degree students, 63 percent left without that degree.

Vatterott made national news itself in 2009 and early 2010, when three top Vatterott employees, including Kevin Earl Woods, the former director of the Kansas City campus, pleaded guilty to roles in a conspiracy to fraudulently obtain federal student grants and student loans for students who were ineligible for such loans between August 2005 and July 2006.

Kerr said that after she left Vatterott, she tried for six months to find full-time employment. Earning her medical office assistant diploma, she said, not only placed her deep into debt, which she could not repay, but also was not necessary to become a medical office secretary.

“For a long time, I was just devastated and depressed,” Kerr said. “The diploma I got was worthless.”

She contacted the Missouri attorney general and in time found a lawyer who would take her case. She took a part-time job, she said, working in a cafeteria lunchroom. She now works full-time making baked goods for a large corporation.

“It’s a good job,” said Kerr, who supports two children, ages 6 and 12.

“I feel like in doing this, maybe others will have the courage to do the same. Maybe they’ll see that they have a recourse.”

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