Administrative — Court Denies Accreditation for Massage School

Professional Massage Training Center Inc. v. Accreditation Alliance of Career Schools & Colleges (Lawyers Weekly No. 15-01-0292, 44 pp.) (Wilkinson, J.) No. 14-1086, March 24, 2015; USDC at Alexandria, Va. (O’Grady, J.) 4^th Cir.

Holding: In reviewing a professional accreditation agency’s refusal to renew accreditation for plaintiff massage therapy school, the district court erred by conducting a de novo review when it expanded the administrative record, held a full multi-day bench trial, received depositions and live testimony to act as the primary fact finder, and awarded the school $400,000 in damages and ordered reaccreditation; the 4^th Circuit reverses the district court and remands for entry of judgment for the agency.

The Professional Massage Training Center (PMTC) brought this suit against the Accreditation Alliance of Career Schools and Colleges for violation of its due process rights after ACCSC denied the school’s application for re-accreditation in 2010. Following a bench trial, the district court awarded PMTC more than $400,000 in damages and reinstated the school’s accreditation. Judged by the correct standard of review, the accreditation decision here was well supported, not arbitrary or capricious, and we thus reverse the judgment of the district court in that regard. We affirm, however, its dismissal of PMTC’s state law claims for breach of contract, negligence, and tortious interference. We remand to the district court with directions to enter judgment in favor of ACCSC on PMTC’s due process claim and to dismiss the case.

Proper Review Standard

We first consider the underlying claim at issue: that ACCSC violated PMTC’s right to due process of law. Accreditation agencies are private entities, not state actors, and are not subject to constitutional due process requirements. Nearly every court to consider the issue in the last three decades agrees that there is no express private right of action available to enforce the Higher Education Act, which governs the administration of federal student aid programs and the accreditation of institutions of higher education.

While the Administrative Procedure Act does not specifically apply to the accrediting agency, principles of administrative law are useful in determining the standard by which we review the agency’s decision-making process.

The district court’s review here did not adhere to the appropriate standard in a number of regards. The court greatly expanded the administrative record, held a full multi-day bench trial, received depositions and live testimony in a way that sought to make itself the primary investigator and finder of fact, and went far beyond the focus on procedural fairness to refashion the accreditation decision on the merits. The district court was remedially aggressive not only in its awarding of a large amount of damages, but also in ordering that the institution in question be reaccredited, thereby overturning the judgment and expertise of an agency that in this case rested on a sound and supportable basis. All in all, and without question, the district court conducted an impermissible de novo review.

Judged by the appropriate standards, the accreditation denial was in fact a permissible one.

We hold that the agency did not act in an arbitrary and capricious manner but rather conformed its actions to fundamental principles of fairness through both the procedural and substantive standards it employed in making the accreditation decision. We believe that ACCSC acted lawfully in revoking PMTC’s accreditation. The district court’s ruling to the contrary is reversed, and we remand to that court with directions to enter judgment in ACCSC’s favor on PMTC’s due process claim and to dismiss the case.