Instituto De Educ. Univer. v. U.S. Dept. of Educ., No. CIV. 98-2225RLA.
| Decision Date | 26 October 2004 |
| Docket Number | No. CIV. 98-2225RLA. |
| Citation | 341 F.Supp.2d 74 |
| Parties | INSTITUTO DE EDUCACION UNIVERSAL, INC., Plaintiff, v. UNITED STATES DEPARTMENT OF EDUCATION and The Honorable Secretary of Education Richard Riley, Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Gregory T. Usera-Macfarlane, Esq.; Maria L. Santiago-Ramos, Esq.; Migdali Ramos Rivera, Esq., Schuster Usera & Aguilo LLP, San Juan, PR, for Plaintiff.
A.U.S.A. Isabel Munoz Acosta, Esq., United States Attorney's Office, Torre Chardon, San Juan, PR, for Defendants.
ORDER GRANTING SUMMARY JUDGMENT FOR THE DEPARTMENT OF EDUCATION
These proceedings are based on Plaintiff INSTITUTO DE EDUCACION UNIVERSAL's (IEU) challenge to certain actions taken by Defendants, the U.S. Department of Education (USDE or EDUCATION), and the Secretary of Education (SECRETARY), to obtain reimbursement for federal funds allegedly received erroneously by Plaintiff in conflict with the requirements of the Higher Education Act of 1965, as amended, 20 U.S.C. § 1070 et seq., (Title IV, HEA programs). The parties filed cross-motions for summary judgment, acknowledging that there are no disputed facts sufficient to give rise to a contested proceeding. Following a review of the administrative record created pursuant to the agency's process, and the arguments set forth by the parties, the Court hereby GRANTS summary judgment to USDE.
Plaintiff, a private post-secondary higher education institution that was eligible to participate in the Higher Education Act Title III and IV programs administered by the USDE, filed its Complaint to effectuate a remand from the First Circuit Court of Appeals to obtain judicial review of a final agency action pursuant to the Administrative Procedure Act, 5 U.S.C. § 551 et seq. (APA). As a result, judicial review in this case consists of a review of the administrative record. Florida Power & Light Co. v. Lorion, 470 U.S. 729, 744, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985). Although Plaintiff suggests that a de novo review may be appropriate here, it wholly fails to demonstrate the exceptional circumstances that could justify deviation from the well-established standard requiring a record review of administrative decisions. Town of Norfolk v. U.S. Army Corps of Engineers, 968 F.2d 1438, 1458-59 (1st Cir.1992). ("Courts require a strong showing of bad faith or improper behavior before ordering the supplementation of the administrative record.")
In addition, pursuant to the APA, a reviewing court evaluates the propriety of an administrative action to determine if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law...". 5 U.S.C. § 706(2). It is well settled that such an inquiry is ultimately narrow and limited to "whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). Indeed, "(t)he Court is not empowered to substitute its judgment for that of the agency." Id.; and, in fact, "judicial review of administrative actions should be highly deferential to the agency." Organized Fishermen of Florida v. Hodel, 775 F.2d 1544, 1550 (11th Cir.1985). Moreover, when conflicting views are expressed, "an agency must have discretion to rely on the reasonable opinions of its own qualified experts, even if, as an original matter, a court might find contrary views more persuasive." Marsh v. Oregon Natural Resources Council, 490 U.S. 360, 378, 109 S.Ct. 1851, 104 L.Ed.2d 377 (1989).
As set forth by Rule 56(c), Fed.R.Civ.P., summary judgment is appropriate where the record shows no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. The First Circuit Court of Appeals has stated that the function of summary judgment is "to pierce the boilerplate of the pleadings and examine the parties' proof to determine whether a trial is actually necessary." Vega-Rodriguez v. Puerto Rico Telephone Co., 110 F.3d 174, 178 (1st Cir.1997). "To defeat a motion for summary judgment, the nonmoving party must demonstrate the existence of a trialworthy issue as to some material fact." Cortes-Irizarry v. Corporacion Insular, 111 F.3d 184, 187 (1st Cir.1997). Furthermore, "[a] genuine issue of fact exists only if a reasonable jury could resolve it in favor of either party." Basic Controlex Corp. v. Klockner Moeller Corp., 202 F.3d 450, 453 (1st Cir.2000). At this stage of the proceedings, both parties have acknowledged that summary judgment is the appropriate disposition of the matter given their pending cross-motions.
Having reviewed the parties' proposed findings of fact, as well as the administrative record, and based on the applicable law, the Court finds that summary judgment in favor of USDE is warranted.
1) To monitor a school's compliance with Title IV requirements, the USDE conducts program reviews through its Office of Student Financial Assistance Programs (SFAP) and audits through its Office of Inspector General (OIG).
2) Following the conduct of program reviews and audits, a program review report or a draft audit report is issued.
3) Liabilities are assessed by the USDE in documents called final program review determinations (FPRD) and final audit determinations (FAD).
4) In addition to assessing liabilities, the USDE may impose fines for any Title IV programmatic violation and may seek to terminate an institution's Title IV eligibility.
5) An institution receives an administrative hearing before an USDE hearing official to contest any determinations and sanctions.
6) The hearing official's decision is appealable to the Secretary.
7) In May of 1994, USDE's OIG initiated an audit to examine Plaintiff's administration of the Title IV programs during 1991-92, 1992-93, and 1993-94.
8) A final audit report was issued on September 25, 1995.
9) The audit report found that Plaintiff violated Title IV requirements by: (1) overstating its clock hours of instruction and thereby improperly overawarding Pell Grant funds to its students (clock hour finding); and (2) requesting more Title IV funds than needed for disbursement to its students within three days of its receipt of the funds (excess cash finding).
10) For purposes of calculating its Pell Grant awards, the audit found that Plaintiff overstated the hours in its day class program by 220 hours (1440 instead of 1200) and in its night class program by 200 hours (1200 instead of 1000).
11) Plaintiff received $3,854,700 in additional Pell Grant funds as a result of the manner in which it computed its clock hours of instruction during the three-year audited period.
12) The audit found that by violating the requirement to disburse funds within the required three days of its receipt of these funds, Plaintiff retained surplus funds of $542,947 at the conclusion of the audited period, and owed Education $213,917 in imputed interest for its ongoing excess cash balances.
13) On June 28, 1996, SFAP issued a Final Audit Determination (FAD) based on the OIG final audit report covering the 1991-92, 1992-93, and 1993-94 award years.
14) The FAD assessed a liability against Plaintiff of $756,864 for the excess cash finding, and $1,284,900 against Plaintiff for the clock hour finding for 1993-94.
15) Plaintiff appealed the FAD on August 12, 1996.
16) From April 18-22, 1995, USDE conducted a program review to examine Plaintiff's administration of its Title IV funds for its 1992-93, 1993-94, and 1994-95 award years.
17) A program review report was issued on October 26, 1995 that found that Plaintiff failed to make timely Pell Grant refunds during all three award years, and failed to make Pell Grant refunds during 1994-95 (refund finding).
18) On June 3, 1996, SFAP issued a Final Program Review Determination (FPRD) that assessed liabilities for the refund finding in the amount of $720,386, to include $655,554 for Plaintiff's failure to make 512 refunds during 1994-95.
19) On July 17, 1996, Plaintiff appealed the FPRD.
20) On March 12, 1996, USDE notified Plaintiff of its intent to terminate the school's eligibility to participate in the Title IV programs, and to fine it $275,000 for the programmatic violations identified in the program review report and audit.
21) Plaintiff appealed the termination and fine actions on April 1, 1996.
22) The USDE's hearing official consolidated all three administrative actions involving Plaintiff.
23) An administrative hearing was held in San Juan, Puerto Rico in October 1996.
24) The hearing official issued his decision on January 24, 1997.
25) The hearing official affirmed the excess cash finding and the refund finding and assessed the associated liabilities. He reversed the clock hour finding in part, and reduced the amount of the fine to $150,000. The hearing official terminated Plaintiff's Title IV eligibility.
26) Both parties appealed the hearing official's decision to the Secretary.
27) In the final agency action, issued on October 28, 1997, the Secretary affirmed the hearing official's excess cash and refund findings, but reversed the hearing official's clock-hour finding, reinstating the full liabilities. The Secretary sustained the amount of the fine, but reversed Plaintiff's Title IV eligibility termination.
28) The Office of Student Financial Assistance (SFAP) filed a motion for reconsideration that was denied on January 9, 1998.
29) As a result of the administrative process, Plaintiff was assessed a total of $2,875,879 in liabilities and fines that it challenged in this case. ($1,284,900 (clock hour finding) + $756,864 (excess cash finding) + $684,115 (refund finding) + $150,000 (fine) = $2,875,879.)
The USDE's Pell Grant program assists low and middle income students with the cost of their...
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