Ashford Univ., LLC v. Sec'y of Veterans Affairs, 2018-1213

CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit
Writing for the CourtDyk, Circuit Judge.
Citation951 F.3d 1332
Parties ASHFORD UNIVERSITY, LLC, Petitioner v. SECRETARY OF VETERANS AFFAIRS, Respondent
Docket Number2018-1213
Decision Date03 March 2020

951 F.3d 1332

ASHFORD UNIVERSITY, LLC, Petitioner
v.
SECRETARY OF VETERANS AFFAIRS, Respondent

2018-1213

United States Court of Appeals, Federal Circuit.

Decided: March 3, 2020


Kwaku Akowuah, Sidley Austin LLP, Washington, DC, argued for petitioner. Also represented by Carter Glasgow Phillips, Daniel Hay, Tobias Samuel Loss-Eaton ; Gerard D. Kelly, Chicago, IL.

William James Grimaldi, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for respondent. Also represented by Joseph H. Hunt, Martin F. Hockey, Jr., Robert Edward Kirschman, Jr. ; Y. Ken Lee, Bryan Thompson, Office of General Counsel, United States Department of Veterans Affairs, Washington, DC.

Before Newman, Dyk, and Chen, Circuit Judges.

Dyk, Circuit Judge.

The Department of Veterans Affairs ("VA") provides educational assistance in the form of monetary benefits to veterans enrolled in "approved" "course[s] of education." See 38 U.S.C. § 3483. Typically, approval must be provided by "the State approving agency [ ("SAA") ] for the State where [an] educational institution is located." 38 U.S.C. § 3672(a)(1). For online courses, the educational institution must obtain approval from the SAA where the institution’s "main campus" is located. 38 C.F.R. § 21.4250(a)(3). The VA is authorized to suspend and discontinue educational assistance, after following certain procedures, if this requirement is not met. See 38 U.S.C. § 3690(b).

Petitioner Ashford University, LLC ("Ashford") is a for-profit educational institution that provides online courses to veterans and other students. In November 2017, the VA sent a letter ("Cure Letter") to Ashford stating that Ashford’s online courses were not approved by the correct SAA. See 38 C.F.R. § 21.4250(a)(3). The VA expressed its "inten[t] to suspend payment of educational assistance and suspend approval of new enrollments and reenrollments [for Ashford’s online programs] in 60 days unless corrective action is taken." J.A. 1. The Cure Letter provided that, absent corrective action, the VA would invoke procedures for discontinuing Ashford’s educational assistance, including "refer[ring] the matter to the Committee on Educational Allowances ... to assist ... in making a determination as to whether educational assistance should be discontinued" and providing Ashford with "the opportunity for a hearing before the Committee." J.A. 3 (citing 38 C.F.R. §§ 21.4210 –14).

Ashford petitions this court for review, contending that the Cure Letter "announces" new "rules" and that 38 U.S.C. § 502 provides this court with jurisdiction to review those alleged rules. Appellant’s Br. 19, 48. On the merits, Ashford argues that these alleged rules are invalid, and

951 F.3d 1335

requests that this court "hold unlawful and set aside" the rules. Id. at 52.

We conclude that the Cure Letter is not rulemaking or any other action reviewable under section 502. The Cure Letter is also not subject to judicial review because it is not a final agency action under the Administrative Procedure Act ("APA"). We accordingly dismiss the petition.

BACKGROUND

I

A

As part of the modern GI Bill, the VA provides educational assistance in the form monetary benefits to veterans enrolled in "approved" "course[s] of education." See 38 U.S.C. § 3483. Pursuant to this statute, the VA makes tuition payments directly to educational institutions on behalf of enrolled veterans. See 38 U.S.C. § 3313 ; 38 C.F.R. §§ 21.9505, 21.9620.

For veterans to be eligible to receive payment assistance for a course of study, the course must be approved by "the State approving agency for the State where such educational institution is located." 38 U.S.C. § 3672(a)(1).1 Section 3672(a)(1) is implemented for various kinds of courses in 38 C.F.R. § 21.4250. That section provides in relevant part that "[i]f an educational institution offers a course by independent study or by correspondence, only the [SAA] for the State where the educational institution’s main campus is located may approve the course for VA training."2 38 C.F.R § 21.4250(a)(3) (emphasis added). Section 21.4250 does not expressly define the term "main campus." However, "main campus" is defined in 38 C.F.R. § 21.4266, which pertains to the approval of courses at a "branch campus" or "extension." That section provides:

(a) Definitions. The following definitions apply to the terms used in this section.

...

(3) Main campus means the location where the primary teaching facilities of an educational institution are located. If an educational institution has only one teaching location, that location is its main campus. If it is unclear which of the educational institution’s teaching facilities is primary, the main campus is the location of the primary office of its Chief Executive Officer.

38 C.F.R. § 21.4266(a).

B

If an educational institution has not secured the required approval, the VA has statutory authority to "suspend educational assistance to" veterans after following specified procedures. 38 U.S.C. § 3690. The statute provides in relevant part that:

The [VA] may suspend educational assistance to eligible veterans ... in any course as to which the [VA] has evidence showing a substantial pattern of eligible veterans ... who are receiving such assistance by virtue of their enrollment in such course but who are not entitled to such assistance because (i) the course approval requirements of this chapter are not being met ....

Id. § 3690(b)(3)(A) (emphasis added). Such a suspension may only be taken, however, after:

(i) the [VA] provides to the [SAA] concerned and the educational institution concerned written notice of any such
951 F.3d 1336
failure to meet such approval requirements ...; [and]

(ii) such institution refuses to take corrective action or does not within 60 days after such notice (or within such longer period as the Secretary determines is reasonable and appropriate) take corrective action ....

Id. § 3690(b)(3)(B) (emphasis added). The statute also provides that the Secretary of the VA may discontinue benefits "if the Secretary finds that the ... course in which the veteran ... is enrolled fails to meet any of the [statutory] requirements." Id. § 3690(b)(1). These provisions are implemented in regulations, described below, that specify required procedures for suspending and discontinuing educational assistance payments.

II

Ashford is a for-profit educational institution that offers only online courses. Ashford was formerly known as The Franciscan University ("Franciscan"). Franciscan taught classes at its headquarters in Clinton, Iowa. In 2005, Franciscan was acquired by its current owner, Bridgepoint Education, Inc., and renamed Ashford University.

In 2013, Ashford moved its headquarters from Iowa to San Diego, California. Ashford lists its San Diego address as its "Corporate" address, and Ashford’s CEO’s office appears to be at that address. In 2015, Ashford announced that it would be closing its Clinton, Iowa campus and instead offering all of its classes online.

Ashford maintains an Administrative Online Student Services Center in Phoenix, Arizona, where a Financial Services Director, several financial services managers, and other financial employees work. There is nothing in the record to suggest that the Arizona location employs Ashford professors or other teaching staff, or includes facilities for making online courses available.

From 2005 to 2016, Ashford’s online courses had been approved by the Iowa SAA. However, in 2016, the Iowa SAA indicated that it would no longer grant Ashford approval because Ashford had closed its Iowa campus and moved to solely online courses. Ashford challenged the Iowa SAA’s determination, and the lawsuit appears to be pending.3 At the urging of the VA, in June 2016, Ashford sought approval from the SAA in California, where Ashford’s headquarters are located. However, after the California SAA requested additional information from Ashford, Ashford withdrew its application from the California SAA and then applied to the Arizona SAA for approval, which Arizona granted effective July 10, 2017.

On November 9, 2017, the Director of the VA’s Muskogee Regional Office, C. Jason McClellan, sent a letter ("Cure Letter") to Ashford regarding the requirement that Ashford have SAA approval. The Cure Letter asserted that Ashford was not in compliance with 38 U.S.C. § 3672(a)(1) because it had not secured approval of the SAA where Ashford "is located." J.A. 1. The Cure Letter noted the requirement in 38 C.F.R. § 21.4250(a)(3) that an institution must obtain approval from the SAA where the institution’s "main campus" is located. The Cure Letter discussed evidence "suggesting that [Ashford’s] main campus would be in San Diego, CA," and apparently contemplated that Ashford must secure approval from the California SAA. J.A. 2. The Cure Letter noted the Arizona SAA’s approval of Ashford but—relying on the definition of "main campus" from 38 C.F.R. § 21.4266 —reasoned

951 F.3d 1337

that because Ashford "does not appear to [have] any teaching location in Phoenix, AZ" and there is "no evidence that [Ashford’s] CEO’s primary office" is...

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2 practice notes
  • Nat'l Org. of Veterans' Advocates, Inc. v. Sec'y of Veterans Affairs, 2020-1321
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • December 8, 2020
    ...University, LLC v. Secretary of Veterans Affairs , " section 502, by incorporating 5 U.S.C. § 704, includes a finality requirement." 951 F.3d 1332, 1344 (Fed. Cir. 2020). To qualify as final agency action, the Knee Joint Stability Rule must (1) "mark the consummation of the agency's decisio......
  • Ricci v. Merit Sys. Prot. Bd., 2019-1626
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • March 19, 2020
    ...regulations when adjudicating the case presented to it. See 953 F.3d 760 Ashford Univ., LLC v. Sec’y of Veterans Affairs , No. 2018-1213, 951 F.3d 1332, 1338–40, 2020 WL 1017621, at *5 (Fed. Cir. Mar. 3, 2020) (concluding that "an agency’s Cure Letter [was] part of an adjudication" for purp......
2 cases
  • Nat'l Org. of Veterans' Advocates, Inc. v. Sec'y of Veterans Affairs, 2020-1321
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • December 8, 2020
    ...University, LLC v. Secretary of Veterans Affairs , " section 502, by incorporating 5 U.S.C. § 704, includes a finality requirement." 951 F.3d 1332, 1344 (Fed. Cir. 2020). To qualify as final agency action, the Knee Joint Stability Rule must (1) "mark the consummation of the agency's decisio......
  • Ricci v. Merit Sys. Prot. Bd., 2019-1626
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • March 19, 2020
    ...regulations when adjudicating the case presented to it. See 953 F.3d 760 Ashford Univ., LLC v. Sec’y of Veterans Affairs , No. 2018-1213, 951 F.3d 1332, 1338–40, 2020 WL 1017621, at *5 (Fed. Cir. Mar. 3, 2020) (concluding that "an agency’s Cure Letter [was] part of an adjudication" for purp......

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