By Taylor Ey

Today the Fourth Circuit issued its published opinion of the civil case, Professional Massage Training Center, Inc. v. Accreditation Alliance of Career Schools and Colleges, affirming the district court’s decision in part, and reversing in part.

The plaintiff Professional Massage Training Center (“PMTC”) brought a due process action against the defendant Accreditation Alliance of Career Schools and Colleges (“ACCSC”) when the ACCSC denied PMTC’s application for accreditation in 2010.  The Fourth Circuit held that the district court inappropriately applied a de novo standard of review when it considered the ACCSC’s accreditation decision and reversed the judgment.

“Quasi-Public” Professional Organizations Have a Common Law Duty

The Fourth Circuit recognized that professional organizations, like accreditation agencies, have a duty to employ fair procedures when making decisions affecting their members.  The Fourth Circuit cautioned that while the duty exists it does not allow courts to take de novo review of accreditation agencies.

The Proper Standard of Review Is Substantial Evidence or Arbitrary or Capricious

When reviewing decisions of accreditation agencies, the court should give significant, but not total, deference to the agencies.  The Court reasoned that like federal agencies, accreditation agencies have knowledge and experience in assessing a school’s compliance with the appropriate standards, and, therefore, the accreditation agencies merit a degree of deference from the federal courts.

The District Court Failed to Give Adequate Deference to the Agency

The Fourth Circuit listed a number of reasons to explain why the district court did not give adequate deference to the accreditation agency.  First of all, the district court conducted a four-day bench trial, receiving depositions and live testimony, all which expanded the administrative record.  According to the Fourth Circuit, the district court should not have acted as the “primary investigator and finder of fact” in this manner.  Furthermore, the ACCSC gave PMTC significant opportunities to argue its case after its accreditation was revoked, including granting additional time for PMTC to make improvements.

ACCSC’s Accreditation Revocation Was Not Arbitrary or Capricious

PMTC was given adequate due process before its accreditation was revoked, including adequate notice that it was not in compliance and ample opportunities to remedy.

ACCSC Was Not Biased Against PMTC

PMTC alleged that ACCSC was biased against it.  However, the Fourth Circuit stated that a decision maker at an administrative agency is entitled to a presumption of honesty and integrity.  Because ACCSC did not have a pecuniary interest in the outcome of the revocation decision and was not the target of criticism from PMTC, the Fourth Circuit did not find this argument to have any merit.

The Fourth Circuit Upheld the District Court’s Decision to Dismiss State Law Claims

The district court held that PMTC was not entitled to relief as a matter of law for its state law claims of breach of contract, negligence, and tortious interference with a contract.  The Fourth Circuit affirmed the district court’s decision.

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