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Media Alerts - Oberg v. Pennsylvania Higher Education Assistance Agency -- Fourth Circuit
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December 3, 2015
  Oberg v. Pennsylvania Higher Education Assistance Agency -- Fourth Circuit
Whistleblower Suit Gets Go-Ahead from Fourth Circuit

Areas of Law: Constitutional Law, 11th Amendment

Issue Presented: Whether Pennsylvania Higher Education Assistance Agency is an arm of the Pennsylvania state government and thus immune from civil suit.

Brief Summary: In the third installment in a series of cases stemming from the same litigation, the Fourth Circuit held that the Pennsylvania Higher Education Assistance Agency (PHEAA) was not an arm of the Pennsylvania state government and reversed the grant of summary judgment for PHEAA.

Extended Summary:
This case is the third case that has come before the Fourth Circuit stemming from a whistleblower suit brought by Jon Oberg against several student loan servicers and providers. Oberg brought suit under the False Claims Act, alleging that the defendants inappropriately claimed federal student loan interest subsidy payments.

In Oberg II, the court reversed the District Court's ruling that PHEAA was an arm of the Pennsylvania state government and thus immune from suit, and remanded for further discovery on PHEAA's status as a state agency. After discovery, the District Court ruled that PHEAA was an arm of Pennsylvania government and granted summary judgment for PHEAA which resulted in this opinion.

The Fourth Circuit considered four factors when evaluating whether PHEAA was an arm of the state for the purposes of immunity from suit. These factors are whether any judgment would be paid by the State; how much autonomy is exercised by the organization; whether the organization involves itself with State concerns; and how the organization is treated under State law.

The court held that the first factor, whether a judgment would be paid by the State, weighed against PHEAA being held to be an arm of the State. PHEAA controls substantial revenue and assets. In the past, when PHEAA has settled other legal disputes, PHEAA paid the agreed upon settlements from its own funds rather than from State assets. Turning to the second factor, the court held that PHEAA was autonomous from the State government, citing its control over its substantial revenues and testimony from officers regarding the lack of legislative oversight. The Fourth Circuit next held that the third factor, whether the organization was involved with State concerns, weighed in favor of PHEAA being a state entity. The court found that PHEAA was primarily concerned with accessibility of higher education and that this was a state concern. Finally, as to the fourth factor, the court held that the PHEAA was treated as a State entity under State law. Balancing all four factors, the court ultimately held that PHEAA was not an arm of the state and that summary judgment was improperly granted.

The instant ruling - that PHEAA was not protected by Eleventh Amendment immunity - was applied by the Fourth Circuit in Pele v. Penn. Higher Educ. Assistance Agency, No. 14-2202, 2015 WL 6162942 (4th Cir. Oct. 21, 2015). In Pele, the court vacated and remanded the district court's grant of summary judgment in favor of PHEAA. Plaintiff Pele is now able to proceed with his suit against PHEAA under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., for refusing to remove information he claims was erroneous from his credit reports.

To read the full opinion in Oberg click here. To read the full opinion in Pele click here.

Panel: Chief Judge Traxler and Judges Gregory and Keenan

Argument Date: 05/12/2015

Date of Issued Opinion: 10/21/2015

Docket Number: 15-1093

Decided: Reversed and remanded.

Case Alert Authors: Kathleen DeNobile and J'Naia Boyd, Univ. of Maryland Carey School of Law

Counsel: Bert Walter Rein, WILEY REIN LLP, Washington, D.C., for Appellant. Paul D. Clement, BANCROFT PLLC, Washington, D.C., for Appellee. ON BRIEF: Michael L. Sturm, Brendan J. Morrissey, Stephen J. Obermeier, WILEY REIN LLP, Washington, D.C., for Appellant. John S. West, Megan C. Rahman, Richmond, Virginia, Christopher G. Browning, Jr., TROUTMAN SANDERS LLP, Raleigh, North Carolina, for Appellee Vermont Student Assistance Corporation; George W. Hicks, Jr., Raymond P. Tolentino,
BANCROFT PLLC, Washington, D.C., Joseph P. Esposito, Jill M. deGraffenreid, HUNTON & WILLIAMS LLP, Washington, D.C., Daniel B. Huyett, Neil C. Scur, STEVENS & LEE P.C., Reading, Pennsylvania, for Appellee Pennsylvania Higher Education Assistance Agency.

Author of Opinion:
Chief Judge Traxler

Case Alert Supervisor:
Professor Renée Hutchins

    Posted By: Renee Hutchins @ 12/03/2015 12:07 PM     4th Circuit  

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