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Charlotte Law School Agrees To Pay $2.65m To Settle Accreditation Lawsuit

Charlotte Law School Agrees To Pay $2.65m To Settle Accredit blawprof09/12/18
I imagine students who made the conscious decision to attend dietcoke09/12/18
"Students acknowledged that the settlement fund will not com wutwutwut09/12/18
It's a good deal, in a sense. Any students smart enough onehell09/12/18
They will wipe the debt even if the student is compensated b jeffm09/12/18
It would appear so. The criteria are that you were (1) enrol onehell09/14/18
"But in the court case I wonder if a defense lawyer could ge jeffm09/14/18
"Is it that carriers no longer have the luxury of riding the onehell09/24/18
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blawprof (Sep 12, 2018 - 4:07 pm)

Charlotte Law School Agrees To Pay $2.65m To Settle Accreditation Lawsuit

Thoughts?

On its face, this settlement does not appear to even come close to making the plaintiffs whole.

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dietcoke (Sep 12, 2018 - 4:15 pm)

I imagine students who made the conscious decision to attend Charlotte Law were likely going to lose their money in some way. The average goldfish has better foresight.

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wutwutwut (Sep 12, 2018 - 6:13 pm)

"Students acknowledged that the settlement fund will not come close to reimbursing each of the 2,500 potential class members the average of $44,000 each spent on single year of tuition.
But given that the for-profit law school closed in 2017 and the host of suits seeking tens of millions of dollars from it, the students said they had to strike a prompt deal before the school's insurance and assets dry up."

(excerpt of an excerpt at Paul Caron's `site, below. Original apparently at Law360 but I don't have an account)

http://taxprof.typepad.com/taxprof_blog/2018/09/charlotte-law-school-agrees-to-pay-265m-to-settle-accreditation-lawsuit.html

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onehell (Sep 12, 2018 - 6:51 pm)

It's a good deal, in a sense.

Any students smart enough to take the closed-school loan discharge rather than transfer to another school would have already had their debt wiped, making the amounts they "paid" with student loan monopoly money largely irrelevant. And any students who (unfortunately) continued their studies at some other terrible school technically got the benefit of their (awful) bargain if the credits for which their tuition paid were accepted by the transferee school.

Either way, any cash they get could be seen as a windfall unless they didn't transfer AND were somehow paying tuition out of pocket. Doubt that would be the situation for any significant percentage of the class.

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jeffm (Sep 12, 2018 - 7:29 pm)

They will wipe the debt even if the student is compensated by the closed school?

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onehell (Sep 14, 2018 - 1:00 pm)

It would appear so. The criteria are that you were (1) enrolled in good standing within 120 before school closure and (2) are not in the process of completing (or have completed) a comparable program of study at another school which either accepted transfer credits or has a teach-out agreement with the closed school. You have no obligation to accept a teach-out arrangement but if you do, then no discharge.

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/closed-school#criteria

There's no criteria I can find about lawsuits outside the DOE process being relevant to the DOE's administrative decision, and usually I would imagine the administrative decision would be made long before any court decision or settlement. I also don't know of anything that would give DOE a lien on settlement proceeds like you'd see with Medicaid or whatever. I would imagine DOE's remedy is not against the student but against the school, which is why the school's try to market the teach-out arrangements so hard. The more people they can get to accept, the less of a claim DOE has against the school's carcass. I'd imagine it is quite an interesting wind-down to go through for schools in this position, particularly if the school was for-profit and is trying to preserve as much as possible of whatever sellable assets the school has for shareholders who are last in line behind any creditors.

Also, a closed school could very likely be in bankruptcy, which could make it hard to create rules for reversing a discharge upon recovery or creating liens or intervention rights in some state court lawsuit. Getting a judgment doesn't mean you recovered it, it would all be very case-by-case, and DOE doesn't seem to like any process it can't contract out to a servicer and automate.

But in the court case I wonder if a defense lawyer could get discharge (or transfer) information in discovery and use it to argue that the student has no (or at least significantly lessened) damages. Don't know if the plaintiff could raise a collateral source objection to that though. I bet that would be an issue of first impression in any state. I mean, debt being forgiven by an original creditor isn't really insurance, but on the other hand, it sure feels like insurance....

Another interesting question this all raises to me is, what if you decline any teach-outs or immediate transfers and just take a year or two off? You could perhaps just get the discharge and only AFTER it is granted, try to transfer your credits to another school. The criteria says you can't have completed or be in the process of completing a comparable program at the time of discharge, but it says nothing about a post-discharge lookback, so I wonder if that'd work...

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jeffm (Sep 14, 2018 - 2:58 pm)

"But in the court case I wonder if a defense lawyer could get discharge (or transfer) information in discovery and use it to argue that the student has no (or at least significantly lessened) damages. Don't know if the plaintiff could raise a collateral source objection to that though. I bet that would be an issue of first impression in any state. I mean, debt being forgiven by an original creditor isn't really insurance, but on the other hand, it sure feels like insurance...."

In the 1990's, case law was more friendly to barring evidence of collateral sources. As part of tort reform (in my state and probably most others), statutory laws were made to avoid the collateral source rule more and more. I recall when ordinary insurance recoveries were barred from evidence due to the collateral source rule. It made sense, especially given the carrier's right to subrogation.

Now, I've been away from PI so long that I don't know how subrogation fits in anymore, given that insurance benefits are no longer barred as collateral sources. Is it that carriers no longer have the luxury of riding the plaintiff's coat-tails to obtain subrogation and that they need to bring their own actions for this purpose?

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onehell (Sep 24, 2018 - 1:05 pm)

"Is it that carriers no longer have the luxury of riding the plaintiff's coat-tails to obtain subrogation and that they need to bring their own actions for this purpose?"

I don't think so. At the very least, Medicaid/Care definitely still have and follow the lien approach. I'd imagine that if a court now allows evidence of these payments to come in due to some tort reform measure, then the plaintiff would be free to tell the jury that the insurer has such a lien because the defense opened that door.

But in this student loan example, I don't think DOE would have a lien so if collateral source rule is no longer absolute, that would be yet another reason that plaintiffs may have been wise to settle.

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