Note 4 - Commitments and Contingencies	9 Months Ended
Sep. 30, 2015
Notes to Financial Statements
Commitments and Contingencies Disclosure [Text Block]	(4) COMMITMENTS AND CONTINGENCIES: Legal Proceedings From time to time, in the ordinary course of business, we are a party to various claims and legal proceedings. Currently, there are no such claims or proceedings which, in the opinion of management, could have a material adverse effect on our results of operations, financial condition and cash flows, except as follows: On April 7, 2014, a former student at our Schools Division’s Denver School of Massage Therapy brought a putative class action against our Schools Division, Nesbitt v. FCNH, Inc. et al. , in the U.S. District Court for the District of Colorado, alleging violations of the Fair Labor Standards Act (“FLSA”) and various state wage and hour laws. The plaintiff alleges that, in performing certain therapies on individuals from the public as part of the requirements that students perform clinical services (required for a massage therapy license), she was acting as an employee for purposes of the FLSA and applicable state law and was entitled to wages for those services. The complaint seeks unspecified damages. The plaintiff brought the action on behalf of herself and all others similarly situated at the schools operated by our Schools Division. At this time, we are unable to provide an evaluation of the likelihood of an unfavorable outcome, or provide an estimate of the amount or range of potential loss in this matter. Should we be found liable in this matter, the amount that we may be required to pay in connection with such liability could have a material adverse effect on our financial condition and results of operations. On November 17, 2014, a former sales consultant brought a putative collective action against Ideal Image Development Corporation, Marlow v. Ideal Image Development Corp., in the U.S. District Court for the Eastern District of Tennessee, alleging violations of the FLSA. The plaintiff alleged that she and others working as sales consultants were not paid the applicable minimum wage for certain training and travel work and were not paid overtime for hours worked over 40 in a workweek. The complaint sought unspecified damages. The plaintiff brought the action on behalf of herself and others similarly situated across the country. Other individuals joined the lawsuit. The matter went to mediation and the parties reached a settlement in compromise of the claims pursuant to which Ideal Image agreed to pay $780,000, the loss of which was included in Administrative expenses in the accompanying condensed consolidated statement of operations for the three and nine months ended September 30, 2015. The settlement is subject to approval of the court and, accordingly is not yet final. Should such settlement not be so approved, the litigation resume and we be found liable in this matter, the amount that we may be required to pay in connection with such liability could have a material adverse effect on our financial condition and results of operations. Regulatory Matters In October 2015, the DOE issued a letter approving the renewal application for the eligibility of one of our schools to continue participating in the Title IV Programs, but that letter also prohibited the school from providing Title IV Program funds to any new or re-admitted student in three of the school’s educational programs. The DOE stated that the school may continue to disburse Title IV funds to qualifying students who are currently enrolled in any of the three educational programs and did not prohibit the school from continuing to disburse Title IV funds to eligible students in any of the school’s other eligible educational programs. The DOE regulations require that certain educational programs must, among other things, demonstrate a reasonable relationship between the length of the program and entry level requirements for the recognized occupation for which the program prepares the student. By regulation, the DOE considers the relationship to be reasonable if the number of clock hours provided in the program does not exceed by more than 50 percent the minimum number of clock hours required for training in the recognized occupation for which the program prepares the student, as established by the state in which the program is offered, if the state has established such a requirement, or as established by any federal agency. Our school in question has three programs that the DOE cited in this regard. The DOE has the authority to approve educational programs of greater length and has approved these programs, and similar programs at other institutions, in the past, including at some of our other schools. However, the DOE has declined to consider approving these three programs at the school in question on a going forward basis. We are in the process of requesting the DOE to reconsider its conclusion and permit continued funding of these programs as they are currently designed. We also have seven other schools that offer one or more educational programs at one or more campuses that exceed the “more than 50 percent” threshold. The DOE has previously approved each of these educational programs to participate in the Title IV Programs at its current length. When these schools and their programs are reviewed by the DOE, if the DOE declines to consider continuing to approve some or all of the educational programs that exceed the “more than 50 percent” threshold, then we may be required to stop providing Title IV funds to students in these programs, and would then be required to modify the programs’ current length. The modified programs would be subject to DOE review and approval for Title IV program funds.

(4)

COMMITMENTS AND CONTINGENCIES:

Legal Proceedings

From time to time, in the ordinary course of business, we are a party to various claims and legal proceedings. Currently, there are no such claims or proceedings which, in the opinion of management, could have a material adverse effect on our results of operations, financial condition and cash flows, except as follows:

On April 7, 2014, a former student at our Schools Division’s Denver School of Massage Therapy brought a putative class action against our Schools Division,

Nesbitt v. FCNH, Inc. et al.

, in the U.S. District Court for the District of Colorado, alleging violations of the Fair Labor Standards Act (“FLSA”) and various state wage and hour laws. The plaintiff alleges that, in performing certain therapies on individuals from the public as part of the requirements that students perform clinical services (required for a massage therapy license), she was acting as an employee for purposes of the FLSA and applicable state law and was entitled to wages for those services. The complaint seeks unspecified damages. The plaintiff brought the action on behalf of herself and all others similarly situated at the schools operated by our Schools Division. At this time, we are unable to provide an evaluation of the likelihood of an unfavorable outcome, or provide an estimate of the amount or range of potential loss in this matter. Should we be found liable in this matter, the amount that we may be required to pay in connection with such liability could have a material adverse effect on our financial condition and results of operations.

On November 17, 2014, a former sales consultant brought a putative collective action against Ideal Image Development Corporation, Marlow v. Ideal Image Development Corp., in the U.S. District Court for the Eastern District of Tennessee, alleging violations of the FLSA. The plaintiff alleged that she and others working as sales consultants were not paid the applicable minimum wage for certain training and travel work and were not paid overtime for hours worked over 40 in a workweek. The complaint sought unspecified damages. The plaintiff brought the action on behalf of herself and others similarly situated across the country. Other individuals joined the lawsuit. The matter went to mediation and the parties reached a settlement in compromise of the claims pursuant to which Ideal Image agreed to pay $780,000, the loss of which was included in Administrative expenses in the accompanying condensed consolidated statement of operations for the three and nine months ended September 30, 2015. The settlement is subject to approval of the court and, accordingly is not yet final. Should such settlement not be so approved, the litigation resume and we be found liable in this matter, the amount that we may be required to pay in connection with such liability could have a material adverse effect on our financial condition and results of operations.

Regulatory Matters

In October 2015, the DOE issued a letter approving the renewal application for the eligibility of one of our schools to continue participating in the Title IV Programs, but that letter also prohibited the school from providing Title IV Program funds to any new or re-admitted student in three of the school’s educational programs. The DOE stated that the school may continue to disburse Title IV funds to qualifying students who are currently enrolled in any of the three educational programs and did not prohibit the school from continuing to disburse Title IV funds to eligible students in any of the school’s other eligible educational programs.

The DOE regulations require that certain educational programs must, among other things, demonstrate a reasonable relationship between the length of the program and entry level requirements for the recognized occupation for which the program prepares the student. By regulation, the DOE considers the relationship to be reasonable if the number of clock hours provided in the program does not exceed by more than 50 percent the minimum number of clock hours required for training in the recognized occupation for which the program prepares the student, as established by the state in which the program is offered, if the state has established such a requirement, or as established by any federal agency. Our school in question has three programs that the DOE cited in this regard. The DOE has the authority to approve educational programs of greater length and has approved these programs, and similar programs at other institutions, in the past, including at some of our other schools. However, the DOE has declined to consider approving these three programs at the school in question on a going forward basis. We are in the process of requesting the DOE to reconsider its conclusion and permit continued funding of these programs as they are currently designed.

We also have seven other schools that offer one or more educational programs at one or more campuses that exceed the “more than 50 percent” threshold. The DOE has previously approved each of these educational programs to participate in the Title IV Programs at its current length. When these schools and their programs are reviewed by the DOE, if the DOE declines to consider continuing to approve some or all of the educational programs that exceed the “more than 50 percent” threshold, then we may be required to stop providing Title IV funds to students in these programs, and would then be required to modify the programs’ current length. The modified programs would be subject to DOE review and approval for Title IV program funds.