Dive Brief:
- Connecticut’s attorney general on Thursday sued Stone Academy, a for-profit nursing college that shut down earlier this year, alleging it and its owner misled students about its academic programs in violation of state consumer protection law.
- Attorney General William Tong accused the academy and owner Joseph Bierbaum of lying to students that it had robust healthcare programs that would prepare them for a nursing licensure exam. Tong alleged the academy failed to offer a promised number of clinical hours, that it did not hire enough qualified faculty to support students, and that Bierbaum was enriching himself with their tuition dollars while they racked up significant loan debt.
- The lawsuit names another for-profit institution Bierbaum owns, the Paier College of Art. Tong said that Bierbaum redirected Stone’s funding and resources to Paier, leaving the nursing school in the lurch. A lawyer representing Bierbaum said in an emailed statement Tong’s arguments are baseless.
Dive Insight:
For-profit colleges have been under scrutiny by policymakers and regulators, in part because of abrupt, high-profile closures of chains like ITT Technical Institute.
Stone, too, has faced troubles before shutting down its three campuses in February.
In 2022, its former owner, Mark Scheinberg, paid more than $1 million to federal prosecutors to settle accusations that he tried to conceal certain loans from being counted in the college’s student loan default rate. It was also alleged he did not report Stone’s higher default rate to the U.S. Department of Education.
Scheinberg cut financial ties with the institution as part of the settlement.
State regulators had also raised concerns about the academy. Connecticut colleges that offer practical nursing programs annually must have at least 80% of their students pass what’s known as the National Council Licensure Examination, or NCLEX.
But none of Stone’s three campuses reached that benchmark last year.
“Stone’s multiple, blatant failures and regulatory violations described above created a situation that caused many of its graduates to be ineligible to sit for the NCLEX and obtain licensure in the State of Connecticut, thus violating one of Stone’s most important promises,” Tong said in the lawsuit.
Stone also continued to enroll students despite shortages of clinical sites and faculty members, the attorney general said. Some practical nursing instructors were hired with associate degrees, as well as less than three years of clinical experience, infringing on Connecticut law, he said.
Tong is alleging multiple violations of the Connecticut Unfair Trade Practices Act.
And he’s seeking for the state’s Superior Court “to attach multiple millions of dollars of Stone’s and Bierbaum’s assets during the pendency of this litigation,” Tong said in a statement, including what he described as a mansion that Bierbaum owns.
“While students suffered from plummeting exam pass rates, disappearing clinical opportunities, and a dearth of qualified faculty, Stone’s owners got rich,” Tong said.
Perry Rowthorn, the lawyer representing Stone Academy and Bierbaum, said in an emailed statement Thursday that it “is sadly not surprising that the State’s efforts are devoted to preparing a baseless lawsuit, instead of helping the many vulnerable students harmed by the Office of Higher Education forcing the precipitous closure of Stone Academy.”
In May, former Stone students also sued, seeking a class-action lawsuit, alleging that the academy deceived them about the quality of its academic programs.
At the federal level, the Education Department determined that, before its closure, Stone was in such deep financial straits that it restricted the college’s participation in the government student financial aid program.
This forced the academy to fund students’ financial aid itself and then seek Education Department reimbursement.
Both the Obama and Biden administrations have attempted regulatory crackdowns on for-profit colleges broadly.
The Education Department this year proposed a rule this year that career programs would need to meet a debt-to-earnings ratio test to remain federally funded, and it wants to craft a public list of colleges with poor financial returns.
The for-profit sector maintains it is being targeted and treated unfairly.