On remand, EDVA District Judge holds that education agencies meet "arm-of-the-state" test, dismisses qui tam suit

by Ben Vernia | December 14th, 2012

On December 5, in U.S. ex rel. Oberg v. Penn. Higher Educ. Auth’y, District Judge Claude M. Hilton of the Eastern District of Virginia evaluated, after remand from the Fourth Circuit, the claims of four defendant higher education agencies that they were state agencies were “persons” capable of being sued by qui tam relators under the False Claims Act. Judge Hilton had initially ruled for the agencies, but the Court of Appeals remanded for him to consider their claims under an arm-of-the-state analysis, typically used in cases under the Eleventh Amendment.

After briefly describing the four defendant agencies, he applied a four-factor test:

  • Whether any judgment against the entity will be paid by the state, or any judgment for it inure to the state’s benefit;
  • Whether the entity functions autonomously, including the appointment of directors or officers, funding, and whether the state has a veto power of its actions;
  • Whether the entity is involved with state concerns, or non-state concerns; and
  • How state law characterizes the entity.

In the case before him, Judge Hilton concluded that each of the agencies met all four factors of the test, and he once again dismissed the qui tam suit.

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