Life¼s loss of appeal may prove fatal

MARIETTA ã With lawsuits mounting against Life University and 
enrollment expected to plummet  

10/22/02


By Phillip Giltman
Marietta Daily Journal Staff Writer
 
MARIETTA ã With lawsuits mounting against Life University and 
enrollment expected to plummet even further, some observers 
wonder if the 28-year-old Marietta institution is destined for 
bankruptcy.
The university learned Sunday it lost an appeal from the Council on 
Chiropractic Education which stripped the school of its chiropractic 
accreditation. 
Last week, 14 more students filed suit against the university and its 
founder claiming both failed to implement appropriate changes to 
retain the school¼s credentials. Five other students filed suit earlier 
this month.
Compared to last year, enrollment at the institution has dropped 38 
percent ‚ representing about $21 million in yearly revenue. Many 
observers think the loss of appeal will open the floodgates for the 
1,955 students who still remain.
„One of the likely scenarios is bankruptcy,¾ said Paul Lapides, 
former professor at Life and director of the corporate governance 
center at Kennesaw State University. „I think both the prior and 
current administrations aren¼t doing the right things to restore 
credibility.¾
Life¼s interim President Dr. Michael Schmidt said Sunday that the 
school is financially capable of remaining open during the 
reaccreditation process.
„Let me assure you that the school will not close,¾ he said in a 
prepared statement. „Financially, we are capable of keeping the 
school operating throughout the re-accreditation process, which we 
are already preparing for.¾
The re-accreditation process could take two-and-a-half years. It is 
unclear where the money will come from to keep the school open 
during that time. According to the most recent IRS filings, the school 
had only $2.8 million on hand in September 2000 and an annual 
operating budget of about $48 million. 
Schmidt did not return phone calls Monday. Life¼s board of trustees 
Chairman Dr. Chuck Ribley could not be reached for comment.
The loss of 1,200 students paying $4,400 per quarter adds up to 
$21 million in lost revenue over a year. The school has already 
slashed about 50 jobs from its payroll and shuttered its athletics 
program and support for its annual Lights of Life Christmas 
celebration.
Even if Life loses all its chiropractic students, the university could 
still retain the roughly 650 students working toward business and 
life sciences degrees. 
But, the lawsuits may prove even more damaging than the loss of 
revenue from tuition.
The most recent suit, filed Oct. 16 in the State Court of Cobb 
County, represents 14 students who allege Life University and its 
founder, Dr. Sid Williams, vowed that Life¼s chiropractic accreditation 
would not be revoked by the Council on Chiropractic Education.
„Our contention is that Life University has known for quite sometime 
that their accreditation was in grave jeopardy, and they continued 
to tell our clients that everything was all right,¾ said attorney 
Pelham Anderson, of the Marietta law firm, Anderson & Anderson. 
„That is fraud.¾
Williams was unavailable for comment Monday evening. 
Anderson said approximately 20 more students will also be joining 
the lawsuit soon.
„Our phone has been ringing off the hook,¾ he said. „We have been 
getting calls from emotional students and parents who are 
devastated as to what happened because they have been 
spending so much money on tuition and other Life expenditures.¾
Late last month, five other students filed a lawsuit alleging Life 
didn¼t take the necessary steps to retain accreditation. The 
students are represented by Atlanta attorney Cary King. King said 
another lawsuit with nine plantiffs should be filed soon.
Anderson said newly elected State Court Judge David Darden will 
hear the case once it goes to trial, which could take about a year.
He said it was too early to tell how much money the students will be 
demanding for damages.
Tuition at the university costs roughly $4,400 per quarter. Fourteen 
quarters are required for graduation, meaning a student may spend 
more than $60,000 for their chiropractic education.
Lapides said if the school does go bankrupt, Life founder Dr. Sid 
Williams will be the most likely buyer to take them out of 
bankruptcy.
„Life may have to do the same thing Enron and WorldCom are being 
forced to do and that is a top to bottom review of the financial 
dealings at the business,¾ he said. „Were there related party 
transactions between the university and Williams or other Williams¼ 
family members, and were they disclosed and approved by the 
board of trustees. I expect now that they have lost their 
accreditation, state and local government agencies will look into 
self-dealings between Williams as president and Williams and his 
family as individuals.¾
pgiltman@mdjonline.com