Med School to Pay $1.2M to Students in Refunds and Debt Cancellation in FTC Settlement

Roni Robbins

April 19, 2022

Although disputing the allegations, Saint James School of Medicine has settled a complaint with the Federal Trade Commission (FTC) that the school used deceptive marketing tactics to lure students. The complaint referenced the school's medical license exam test pass rate and residency matches along with violations of rules that protect consumers, including those dealing with credit contracts.

The school, based in the Caribbean with operations in Illinois, agreed to pay $1.2 million toward refunds and debt cancellation for students harmed by the marketing in the past 5 years.

"While we strongly disagree with the FTC's approach to this matter, we did not want a lengthy legal process to distract from our mission of providing a quality medical education at an affordable cost," Kaushik Guha, executive vice president of the parent of the school, Human Resources Development Services (HRDS), said in a YouTube statement posted on the school's website.

"Saint James lured students by lying about their chances of success," Samuel Levine, director of the FTC's Bureau of Consumer Protection, said in a press release. The settlement agreement was with HRDS, which bills itself as providing students from "non-traditional backgrounds the opportunity to pursue a medical degree and practice in the US or Canada," according to the school's statement.

The complaint alleges that since at least April 2018, the school, HRDS, and its operator Guha has lured students using "phony claims about the standardized test pass rate and students' residency or job prospects. They lured consumers with false guarantees of student success at passing a critical medical school standardized test, the United States Medical Licensing Examination Step 1 Exam."

For example, a brochure distributed at open houses claimed a first-time Step 1 pass rate of about 96.8%. The brochure further claimed: "Saint James is the first and only medical school to offer a USMLE Step 1 Pass Guarantee," according to the FTC complaint.

The FTC said the USMLE rate is lower than touted and lower than reported by other US and Canadian medical schools. "Since 2017, only 35% of Saint James students who have completed the necessary coursework to take the USMLE Step 1 exam passed the test."

The school also misrepresented the residency match rate as "the same" as American medical schools, according to the complaint. For example, the school instructed telemarketers to tell consumers that the match rate for the school's students was 85% to 90%. The school stated on its website that the residency match rate for Saint James students was 83%. "In fact, the match rate for SJSM students is lower than touted and lower than that reported by US medical schools. Since 2018, defendants' average match rate has been 63%."

The FTC also claims the school used illegal credit contracts when marketing financing for tuition and living expenses for students. "The financing contracts contained language attempting to waive consumers' rights under federal law and omit legally mandated disclosures."

Saint James' tuition ranges from about $6650 to $9859 per trimester, depending on campus and course study, the complaint states. Between 2016 and 2020, about 1300 students were enrolled each year in Saint James' schools. Students who attended the schools between 2016 and 2022 are eligible for a refund under the settlement.

It requires Saint James to notify consumers whose debts are being canceled through Delta Financial Solutions, as Saint James' financing partner. The debt will also be deleted from consumers' credit reports.

"We have chosen to settle with the FTC over its allegations that disclosures on our website and in Delta's loan agreements were insufficient," Guha stated on the school website. "However, we have added additional language and clarifications any time the USMLE pass rate and placement rates are mentioned."

He said he hopes the school will be "an industry leader for transparency and accountability" and that the school's "efforts will lead to lasting change throughout the for-profit educational industry."

Guha added that more than 600 of the school's alumni are serving as doctors, including many "working to bridge the health equity gap in underserved areas in North America."

The FTC has been cracking down on deceptive practices by for-profit institutions. In October, the FTC put 70 for-profit colleges on notice that it would investigate false promises the schools make about their graduates' job prospects, expected earnings, and other educational outcomes and would levy significant financial penalties against violators. Saint James was not on that list, which included several of the largest for-profit universities in the nation, including Capella University, DeVry University, Strayer University, and Walden University.

For more news, follow Medscape on Facebook, Twitter, Instagram, and YouTube.

Comments

3090D553-9492-4563-8681-AD288FA52ACE
Comments on Medscape are moderated and should be professional in tone and on topic. You must declare any conflicts of interest related to your comments and responses. Please see our Commenting Guide for further information. We reserve the right to remove posts at our sole discretion.

processing....