Sunil Vethody - IME - BPPE Statement of Facts

1.      IME is a Delaware corporation with its principal place of business in San Jose, California.
   
2.      IME operates a post-secondary vocational school, which offers students vocational medical programs in fields such as dental hygiene, nursing, medical assisting, phlebotomy, and MRI technology on campuses in San Jose and Oakland, California.
   
3.   Founded in 2003, IME has a current enrollment of XXX students and has XX employees. Of IME’s XXX students, 47 students were scheduled to graduate from the Vocational Nursing program on February 24, 2012, and 25 students were scheduled to graduate from the Dental Hygiene program on April 26, 2012.
   
4.   IME students are currently eligible to receive funding from federal student aid programs under Title IV of the Higher Education Act of 1965, 20 U.S.C. section 1070, et seq. (“Title IV Funding”), which is administered by the United States Department of Education (“US DOE”).
   
5.  Almost all of IME’s students receive Title IV funding, and approximately 80 percent of IME’s current revenue originates from this source.
   
6.  To be eligible to participate in Title IV funding programs, a postsecondary educational institution must be accredited by an accrediting agency that is recognized by the US DOE.
   
7.  In addition, in order for IME to offer medical vocational programs to its students, each program must be accrediting by a field-specific accrediting agency. Each of these field-specific accrediting agencies requires that IME be accredited by an accrediting agency that is recognized by the US DOE.
   
8.   (Statement RE: who was accrediting the program before WASC?)
   
9.  In June 2007, IME received its initial accreditation, good through 2010, from Western Association of Schools and Colleges – Accrediting Commission for Schools (“WASC ACS”). (Attach? Not really necessary)
   
10.  In May 2007, IME filed applications with the Bureau of Private Postsecondary Vocational Education (“BPPVE”) for approval of potential programs including an MRI program. BPPVE stated that, because the agency was closing down and did not know if or when it would be revived, they could not approve the program at that time.
    
11. IME instead requested approval of the program from WASC ACS, and on or about September 20, 2007, WASC ACS approved IME’s programs for Licensed Vocational Nursing, Phlebotomy, Medical Assistant, Physical Therapy Aide and MRI Technology. (Attach)
12. In October 2008, IME became eligible to receive Title IV funding.
    
13.  IME submitted its renewal application to WASC ACS, and on or about July 7, 2010, WASC ACS confirmed that IME had been granted accreditation through June 30, 2016. (Attach)
    
14. On or about September 23, 2010, WASC ACS sent IME a verification letter, listing the 23 specific programs that were accredited by WASC ACS. (Attach)
    
15. On or about November 3, 2010, IME received a form letter from WASC ACS, addressed to “Postsecondary Title IV Institution Directors”, stating that the USDOE had accepted WASC’s withdrawal from the Title IV compliance process. (Attach)
    
16.  WASC ACS’s November 3, 2010 letter stated that the effected institutions, including IME, would have 18 months to find an alternative accrediting agency.
    
17. In the intervening time, up to April 26, 2012, the USDOE has continued and will continue to recognize WASC ACS’s 2010-2016 accreditation as sufficient to maintain IME’s eligibility for Title IV funds. (Attach email correspondence with WASC attempting to appeal/extend the April 26, 2012 date? – not a super strong document, so it may be better without it. One WASC email states that the West Coast USDOE office sent out letters re: the 18 month limit... do we have this letter?)
    
18. On or about January 5, 2010, IME wrote to Bureau of Private Postsecondary Education (“BPPE”) inquiring about a possible application to add degree-granting programs to IME’s course offerings.
    
19.  BPPE is an agency within the California Department of Consumer Affairs (DCA), and over a series of correspondences with Joanne Wenzel, DCA Staff Services Manager III, Ms. Wenzel repeatedly stated that, as an educational institution accredited by WASC, IME was exempt from BPPE oversight and did not have to have its programs approved by BPPE to be eligible for field-specific accreditation of its programs. (Attach emails)
    
20. (When??) IME received an invoice from BPPE stating that IME owed Student Tuition Recovery Fund (STRF) fees for the third and fourth quarters of 2010, the first quarter of 2011, and an annual fee for 2010.
    
21. In response to the invoice, IME filed a request for verification of exempt status, based on IME’s understanding that being accredited by WASC ACS exempted IME from BPPE’s oversight. (Attach – do we have the application?)
    
22. Over a series of emails with Nicholas Robinson, Correspondence and Report Coordinator, Licensing Unit of BPPE, Mr. Robinson clarified that it had come to BPPE’s attention that WASC ACS had lost their “recognized accrediting agency” status with the USDOE and thus IME was no longer exempt from BPPE’s oversight and would need to pay the required STRF fees. (Attach? – again, not a super strong email, but maybe.)
    
23. Based on the representations of Mr. Robinson, IME was uncertain about their status as an exempt agency, and thus withdrew the application for verification and paid the required STRF fees.
    
24. Several months later, in November 2011, BPPE representatives made an unannounced inspection of IME’s offices, copying admissions files, and meeting with Sunil Vethody, the Chief Executive Officer of IME, to ask about the pending loss of Commission on Dental Accreditation (“CODA”) accreditation for the Dental Hygiene program, WASC ACS accreditation and WASC ACS’s withdrawal from the Title IV compliance process, approval for the Ultrasound and MRI programs, student complaints, and the requirement that IME pay STRF fees following WASC ACS’s withdrawal from USDOE.
    
25.  BPPE’s representatives, Jennifer Jones and Steve Nichols, returned to IME in December 2011 to meet with Mr. Vethody. Mr. Vethody showed BPPE’s representative the emails confirming IME’s exemption from BPPE oversight, at least prior to WASC ACS’s withdrawal from USDOE Title IV compliance process, and spoke with the BPPE representatives at length about WASC ACS’s approval of the MRI and Ultrasound programs in 2007. At that time, the parties agreed that, as the programs were previously approved while IME was exempt from BPPE (BPPVE) oversight, IME did not need to apply to BPPE for a renewed approval of the programs.
    
26.  On or about February 2, 2012, IME received notice that CODA was withdrawing accreditation of IME’s Dental Hygiene program.
    
27.  On February 3, 2012, IME discontinued the Dental Hygiene program for the junior class. (IME only discontinued for the junior class – Did CODA offer to accept the students about to graduate?)
    
28.  IME did not hear anything further from BPPE, and on or about February 10, 2012, Mr. Vethody wrote to (WHO?) to enquire about the status of the investigation and/or to request a copy of any investigation report that had been issued.
    
29. (Named Person) did not respond directly to Mr. Vethody, and instead, on February 13, 2012, BPPE sent IME an Emergency Decision (“Decision”) ordering IME to 1.) Cease enrollment of new students in all of IME’s programs; 2.) Cease instruction for all of IME’s programs; and Cease collection of tuition or fees for all of IME’s programs, with the orders to become effective on February 16, 2012.
    
30. Pursuant to California Code of Regulations, Title 5, Section 75150(d), IME requested an opportunity to be heard before the effective date of the Decision.
    
31. On February 14, 2012, IME appeared before DCA’s Chief Deputy Director, Awet Kidane, to contest the Decision.
    
32. Having heard IME’s arguments against the Decision, Mr. Kidane determined that “Because IME has lost its institutional accreditation, cannot demonstrate that it has sufficient funds to operate at this time, and is has [sic] not either closed or operated certain programs with approval, there is an immediate danger to the public health, safety, or welfare of the students if IME continues to enroll and instruct its students.”  Accordingly, Mr. Kidane upheld the Decision, with the orders becoming effective on February 16, 2012.

Arguments:

1.     IME has not lost its institutional accreditation.

While set to become ineffective as of April 26, 2012, IME’s WASC ACS accreditation continues to be recognized by the USDOE as sufficient compliance to receive Title IV funds. If, in fact, WASC ACS’s accreditation had been invalidated the day WASC ACS sent written notice to schools that the USDOE had accepted its withdrawal from the Title IV compliance process, countless schools throughout the state would have lost their accreditation and been subject to immediate closure for failure to comply with the accrediting requirements. This would have been an absurd and unjust result of WASC ACS’s voluntary action, and accordingly, that is not the actual result of WASC ACS’s notice of withdrawal from Title IV compliance. Instead, WASC ACS’s notice, as authorized by the USDOE, allowed educational institutions 18 months, through April 26, 2012, to seek alternative accreditation. Accordingly, IME continues to be accredited by an agency that is recognized by the USDOE, as required under Education Code section 94813.  

Considering the difficulty of the process, IME does not, at this time, expect to have alternative accreditation in place prior to April 26, 2012. Accordingly, IME cancelled classes and programs for many students who would not graduate in time and has worked diligently to get students through their programs prior to the loss of accreditation. Accordingly, IME has approximately 75 students scheduled to graduate in the next two months, some as soon as next weekend. And yet, BPPE’s preemptive decision to close the school, two months before IME’s accreditation runs, out has cut these students off from receiving certifications that they worked hard to earn – with 47 students less than one week from graduation.

2.     IME is financially solvent and able to meet all current outstanding financial obligations.

BPPE’s entire argument that IME is financially insolvent is based on the presumption that, because IME will lose Title IV funding on April 26, 2012, IME will become financially insolvent at that time. Again, even if true, BPPE’s Emergency Decision to close IME because it is unable to fund its operations comes two months before IME will actually suffer a loss in Title IV funding.

Furthermore, BPPE’s finding that IME is financially unstable was completely unsupported. BPPE never examined IME’s financial statements and never spoke with IME regarding their plans to move forward following the loss of Title IV funds. In fact, IME, which was fully operational for five years before ever receiving Title IV funds, has been taking measures to insure continuing financial stability when Title IV funds run out. Specifically, IME has reduced staffing, is consolidating campuses, offering cash paying students reduced tuition, and generally downsizing the programs to cut costs where possible.

Not including the unprecedented impacts of BPPE’s arbitrary and unfounded closure of the school, IME fully believes that they are financially stable enough to survive the loss of Title IV funding after April 26, 2012.

3.     Operation of IME’s MRI Program Does Not Require BPPE Approval.
IME’s MRI program was approved by WASC ACS in 2007, following the closure of BPPE’s predecessor, BPPVE. On more than one occasion, BPPE’s own representatives have agreed with IME that the earlier WASC ACS approval of the programs meant that IME would not need to submit the MRI program for a renewed approval process through BPPE.

At the time that BPPVE was shutting down, IME has an application pending for approval of its MRI program. However, in light of BPPVE’s impending closure, BPPVE was unable to issue an approval at that time, and IME sought approval of the MRI program through WASC ACS. When BPPVE was resurrected as BPPE, Education Code section 94809 provided that institutions that had an application for approval pending before BPPVE prior to June 30, 2007 would need to resubmit the application for the program to BPPE. If that was all, that would be sufficient to have required IME to resubmitted the MRI program for approval by BPPE. However, because BPPVE was defunct and IME did not know if and/or when BPPVE would be able to approve the program, IME sought alternative approval through WASC ACS. The program was approved prior to BPPE’s existence and IME’s approval by WASC ACS was specifically exempted from application of Education Code section 94809 by Education Code section 94874.1. Accordingly, IME is not and has not ever been required to resubmit the already approved MRI program for BPPE approval.