Philadelphia-based Thomas Jefferson University agreed to pay $2.7 million to resolve allegations it misused and improperly retained federal funds that were intended to be used for student loans.
The allegations involve the Primary Care Loan program, which was established by Congress to address the country's shortage of primary care physicians, according to a July 25 Justice Department news release. Under the terms of the program, participating medical schools are required to loan money to medical students who meet qualifications. Schools are to add any earnings that accrue on the loan back into the fund.
Between 2009 and 2016, Jefferson is alleged to have invested nearly all of the Primary Care Loan funds with its endowment and retained the resulting earnings for its own purposes.
Jefferson returned approximately $5.6 million of excess cash in the Primary Care Loan fund to HHS' Health Resources and Services Administration in 2017, according to the release. The settlement announced July 25 resolves claims related to earnings Jefferson is alleged to have gained as a result of its investment of funds between 2009 and 2016 and the retention of those earnings.
The Justice Department said the claims resolved by the settlement are allegations only; there has been no determination of liability.
Thomas Jefferson University told Becker's in an emailed statement:
"Thomas Jefferson University expressly denies the allegations made by the government and admits no liability. We have agreed to this civil settlement to bring this 15-year-old legacy matter to a close so that we may continue to focus upon delivery of high quality academic, research, and clinical services during highly challenging times.
"To be clear, records maintained by Thomas Jefferson University reflect that PCL funds were managed in accordance with its understanding of standard accounting procedures, as well as any existing guidance. During the course of this investigation, two highly respected forensic accountants and certified public accountants opined that Thomas Jefferson University’s handling of PCL funds align with generally accepted accounting principles.
"Thomas Jefferson University remains committed to our mission to improve lives."