Fraudulent Concealment In Illinois – Podiatry School Might Be On Hook for Omissions in School Catalog

A podiatry school alum may have a viable fraudulent concealment claim against the school for failing to warn him of evaporating job prospects in the foot doctor field.

That’s the key take-away from the Second District’s recent opinion in Abazari v. Rosalind Franklin University of Medicine and Science, 2015 IL App (2d) 140952, a case that considers what lengths an educational institution must go to in disclosing job placement rates and whether it can be held liable for failing to provide accurate data.

The plaintiff alleged he enrolled in the defendant’s podiatry program based on written representations contained in school brochures as well as oral statements made by high-ranking school officials.  Plaintiff claimed that the school failed to mention in its course catalog that there were too many students for available residency openings.  He also alleged that a school admissions officer misrepresented the school’s graduates’ loan default rates.  Plaintiff claimed both statements played a pivotal role in inducing plaintiff to enroll in the school.

Plaintiff’s fraud, negligent misrepresentation and fraudulent concealment claims were all dismissed with prejudice by the trial court.  Plaintiff appealed.

Partially reversing the dismissal of the fraudulent concealment claim, the Court stated the governing Illinois fraud rules that attach to student suits against higher education providers. These include:

To claim fraudulent concealment, a plaintiff must show (1) defendant concealed a material fact under circumstances that created a duty to speak, (2) defendant intended to induce a false belief, (3) the plaintiff could not have discovered the truth through reasonable inquiry or inspection, or was prevented from making a reasonable inquiry, (4) plaintiff was justified in relying on defendant’s silence as a representation that a fact did not exist; (5) the concealed information was such that the plaintiff would have acted differently had he been aware of it; and (6) the plaintiff’s reliance resulted in damages.

Like a fraud claim, fraudulent concealment must involve an existing or past state of affairs; projections of future events will not support a fraud claim.  In addition, a party cannot fraudulently conceal something it doesn’t know.

A statement that is partially or “technically” true (a half-truth) can be fraudulent where it omits qualifying information – like the fact that successful completion of the podiatry program was no guarantee of a post-graduate residency. 

While a person may not enter into a transaction “with eyes closed” to available information, a failure to investigate is excused where his inquiries are impeded by someone creating a false sense of security as to a statement’s validity.

A duty to speak arises where the parties are in a fiduciary relationship or where one party occupies a position of superiority or influence over the other.  (¶¶ 27-30, 33, 37)

The Illinois Administrative Code played an important part in the court’s decision.  Under the Code, postsecondary institutions liked the defendant must accurately describe degree programs, tuition, fees, refund policies and “such other material facts concerning the institution and the program or course of instruction as are likely to affect the decision of the student to enroll.”  23 Ill. Adm. Code S. 1030.60(a)(7).

The Court held that since the school voluntarily mentioned how crucial it was for graduates to secure podiatric residency positions.  A shortage of residencies could be material to a prospective student’s enrollment decision.  As a result, the court found that plaintiff could possibly state a fraudulent concealment claim based on the school’s failure to disclose the existing shortfall in available residencies.  The court held that the plaintiff should be able to amend his fraudulent concealment claim to supply additional facts.  (¶¶ 37-38).

Afterwords:

The plaintiff’s claim is alive but it’s on life support.  The court did not decide that the plaintiff’s fraud claim had merit.  It instead found that the plaintiff could maybe make out a fraudulent concealment case if he can show the defendant college failed to disclose key jobs or residency data.

Still, this case should give pause not just to podiatric purveyors but to higher educational institutions across the board since it shows a court’s willingness to scrutinize the content of schools’ recruitment materials.  The case’s lesson is that if post-graduate job placement is a material concern (which it doubtlessly is), and if a school is able to keep student’s in the dark about future job prospects, then a student might have grounds for a fraud suit against his alma mater where it hides bleak post-graduate jobs stats from him.

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PaulP

Litigation attorney at Fisher Kanaris, P.C. representing businesses and individuals in all types of commercial disputes.