Former Mountain State University students who sued the now-defunct Beckley, West Virginia school would be entitled to compensation under a tentative settlement announced this week.
The proposed settlement announced by University of Charleston officials would resolve hundreds of lawsuits and set up a compensation fund that would include $8.5 million from Mountain State’s insurance carrier, money from the U.S. Department of Education and from expected income from the liquidation of Mountain State’s remaining assets.
According to Kanawha Circuit Court documents on the mediation, the insurer is United Educators Insurance, which issued a $10 million educators’ legal liability policy for the school through the Songer Insurance Agency in Beckley.
The students sued after Mountain State closed because it lost its accreditation. The lawsuits alleged school officials were deceptive about the problems the school was facing. Individual settlement amounts weren’t specified.
University of Charleston took over Mountain State’s campuses in Beckley and Martinsburg so students could complete their degrees but will move out of facilities owned by Mountain State and restructure its academic offerings.
Programs in Martinsburg will be moved to a National Guard facility, while UC will look to identify another location in Beckley after the 2014-15 academic year.
The proposed settlement still requires court approval.
“UC understands the need for the settlement and supports it,” said University of Charleston President Ed Welch.
Attorney Anthony Majestro, who represents the former students, said he was pleased.
The Higher Learning Commission revoked Mountain State’s primary accreditation in June 2012 after years of failing to correct major problems in leadership, program evaluations and campus wide governance.
When a university loses its primary accreditation, any subsequent degrees conferred by the university are effectively worthless.
According to the state Higher Education Policy Commission, Mountain State is the first higher education institution ever in West Virginia to have its school-wide accreditation revoked.
Mountain State was founded in 1933 as Beckley College and had enrolled more than 8,200 students annually at its peak. The median age was 34.