The Milwaukee Montessori School violated federal discrimination law when it disenrolled a student with disabilities, according to the U.S. Department of Justice.
The school disputes that it broke the law but is settling the case to save money on further litigation, headmistress Monica Van Aken said.
Besides agreeing to training and other changes, the school must pay the family $50,000 and the Justice Department $5,000.
The case centers around an 18-month-old boy with a rare neuromuscular disability. He often fell at school and "bumped" his head when he attended in 2012, according to documents filed in federal court Monday.
The staff would not allow him to nap under a policy that says a student can't nap following "any injury" to the head, the complaint said.
The disabled child's mother asked for an exception, producing a recommendation from a pediatrician saying it was safe to let the boy nap as long he wasn't showing signs of head injury, it said.
The school refused and ultimately disenrolled the boy, saying it was not a good placement for him because of his falls, according to the complaint.
"The school's discrimination caused (the child's) parents to feel stigmatized and mistreated, in addition to causing them anxiety, inconvenience, emotional pain and anguish," the complaint said.
When the mother noted that the school had to follow federal law, Van Aken wrote that because the Milwaukee Montessori School does not receive federal funding, "the law does not apply to the school."
Federal filings made public Monday said the school violated the American with Disabilities Act.
"The school may not deny admission to or disenroll a child on the basis of the child's diagnosis or simply because the child has a disability," according to a proposed decree between the school and department.
In an email Monday, Van Aken wrote she was "disappointed" by the Justice Department's news release on the case, which she said included "inaccurate or incomplete information."
"Please know that Milwaukee Montessori School maintains that we did not discriminate against the student," she wrote.
"The school did not disenroll the student because he stumbled and fell 'more frequently than his peers' as stated in the news release. Our decisions regarding the enrollment of this student were made because of concerns for the child's safety."
Despite that, she said it was the in the best interest to settle to save the school's "scarce resources."
The school has agreed to enter into a decree for three years, during which time it must implement training, change policy documents and make other changes.
The school will train teachers, administrators and board members on the law's requirements and report to the department on its compliance with the agreement, it said.
U.S. District Judge Lynn Adelman must approve the decree and would oversee its implementation.
The school, in the 300 block of N. 95th Street, serves more than 400 children from 18 months old through eighth grade.
"It is illegal under the ADA to discriminate against children with disabilities," said Acting Assistant Attorney General Molly Moran for the Civil Rights Division. "Just like public schools, private schools must make reasonable modifications of policies to permit children with disabilities to participate fully in their programs."