Education Management Corporation Responds to U.S. Department of Justice Plans to Intervene in Qui Tam Action

PITTSBURGH, May 5, 2011 /PRNewswire/ -- In reference to news that the U.S. Department of Justice plans to intervene in a qui tam action involving the Company, EDMC spokeswoman, Jacquelyn P. Muller, today released the following statements on behalf of John R. McKernan, Chairman of the Board of Directors:

While it is not our policy to comment on pending litigation, Education Management Corporation (the Company) believes the intervention by the U.S. Department of Justice (DOJ) and several states in a qui tam lawsuit previously filed against the Company is unwarranted and without merit.  

The Company denies any allegation of misconduct and plans to present a vigorous defense against this action.  The admissions compensation plan referenced in the claim was adopted in 2003, and was based on the advice of and good faith reliance on the opinion of outside counsel that EDMC's compensation system was lawful.  It also was assured that the plan complied with the safe harbor requirements of the U.S. Department of Education for compensation paid to admissions representatives.

Without these assurances of compliance with the requirements of the regulations and the law regarding compensation of admissions representatives, the Company would not have adopted the compensation plan.  

The Company has provided the Department of Justice with several statistical analyses performed by a nationally recognized firm demonstrating that admissions representatives were compensated using strict guidelines that considered other factors in addition to the enrollment of students, which is consistent with the requirements of the safe harbor regulation. Because of the presentation of this statistical data and the opinion of counsel, the Company is disappointed that the DOJ has decided to intervene, as it has previously declined to intervene in some 25 qui tam actions involving similar allegations to those complaints made in this action.  

EDMC has long maintained an uncompromising commitment to sound business principles with an emphasis on compliance with laws and regulations. This compliance focus reflects the essential tenets and core values of the organization.  The Company will remain committed to its more than 40-year mission of delivering a quality higher education to help students achieve their educational goals.  

Earlier this week, the Company filed a disclosure document with the Securities and Exchange Commission stating its belief that it has complied with all federal regulations governing the payment of compensation to admissions representatives and acted in good faith.

About Education Management

Education Management Corporation (www.edmc.com) is among the largest providers of private post-secondary education in North America, based on student enrollment and revenue, with a total of 104 locations in 31 U.S. states and Canada. We offer academic programs to our students through campus-based and online instruction, or through a combination of both. We are committed to offering quality academic programs and continuously strive to improve the learning experience for our students. Our educational institutions offer students the opportunity to earn undergraduate and graduate degrees and certain specialized non-degree diplomas in a broad range of disciplines, including design, media arts, health sciences, psychology and behavioral sciences, culinary, fashion, business, education, legal and information technology.

SOURCE Education Management Corporation

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