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The Professional Massage Training Center, in Springfield, Missouri, became accredited by the Accreditation Alliance of Career Schools in 2005. When PMTC applied for reaccreditation in 2010, AACS denied the application.
That's a big deal: Unaccredited schools don't get access to a whole host of benefits, including the ability to accept federal student loan money. PMTC sued, and a federal district court agreed with PMTC, awarding it $400,000 in damages and reinstating the accreditation. That decision was totally wrong, said the Fourth Circuit, which reversed the reinstatement and ordering the district court to dismiss the case.
Deference to Expertise
Even though accrediting agencies are private, "[t]hey, like all other bureaucratic entities, can run off the rails," requiring judicial review because their decisions implicate matters of public concern and because the Higher Education Act delegates the duty of quality control for federal student aid purposes to those private agencies.
Like any other government agency, accreditation bodies have "expertise and knowledge" that a court doesn't, meaning a court should generally defer to that knowledge and should reverse a decision only if it was "arbitrary or capricious."
The Administrators Are Dropping Like Flies
The district court, on the other hand, conducted what amounted to a de novo review of AACS' findings. Not only was that wrong, said the Fourth Circuit, but a review of the record showed that AACS' decision not to reaccredit PMTC was supported by substantial evidence.
The accreditation process involves layers of evaluation by the school itself and by the accrediting body. Representatives from AACS visited PMTC to conduct an on-site evaluation. They issued a factual report and summary of their findings. They detailed areas of concern and allowed PMTC to respond. They even allowed PMTC to implement an improvement plan and conducted a second on-site visit.
After a year-long process, AACS denied the reaccreditation, finding that PMTC wasn't in compliance with AACS' standards for "continuity of management and administrative capacity" and "faculty quality and verification," among other things. Eight of PMTC's 16 administrators had worked there less than a year, and the school's management team turned over constantly, resulting in a "negative impact on the operation of the school." And the school failed to verify the background or credentials of many faculty members.
All of this told the Fourth Circuit that AACS' actions were hardly "arbitrary or capricious."
While the Fourth Circuit reversed the reaccreditation determination, it upheld the denial of state-law claims of breach of contract and tortious interference with contractual relations. Because there was no contract between AACS and PTMC, there couldn't be a breach or a tortious interference claim as a matter of law.