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United States ex rel. Oberg v. Pennsylvania Higher Education Assistance Agency

United States Court of Appeals, Fourth Circuit

January 8, 2019

UNITED STATES EX REL., JON H. OBERG, Plaintiff - Appellant,
v.
PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY, Defendant-Appellee, and NELNET, INC.; KENTUCKY HIGHER EDUCATION STUDENT LOAN CORP.; SLM CORPORATION; PANHANDLE PLAINS HIGHER EDUCATION AUTHORITY; BRAZOS GROUP; ARKANSAS STUDENT LOAN AUTHORITY; EDUCATION LOANS INC/SD; SOUTHWEST STUDENT SERVICES CORPORATION; BRAZOS HIGHER EDUCATION SERVICE CORPORATION; BRAZOS HIGHER EDUCATION AUTHORITY, INC.; NELNET EDUCATION LOAN FUNDING, INC.; PANHANDLE-PLAINS MANAGEMENT AND SERVICING CORPORATION; STUDENT LOAN FINANCE CORPORATION; EDUCATION LOANS INC.; VERMONT STUDENT ASSISTANCE CORPORATION, Defendants.

          Argued: October 31, 2018

          Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Claude M. Hilton, Senior District Judge. (1:07-cv-00960-CMH-JFA)

         ARGUED:

          Eric Kenneth Bachman, ZUCKERMAN LAW, Chevy Chase, Maryland, for Appellant.

          George W. Hicks, Jr., KIRKLAND & ELLIS LLP, Washington, D.C., for Appellee.

         ON BRIEF:

          Jason M. Zuckerman, Washington, D.C., Dallas I. Hammer, ZUCKERMAN LAW, Tysons Corner, Virginia, for Appellant.

          Matthew T. Regan, Chicago, Illinois, Michael A. Glick, Tracie L. Bryant, Michael D. Lieberman, KIRKLAND & ELLIS LLP, Washington, D.C.; Daniel B. Huyett, STEVENS & LEE, P.C., Reading, Pennsylvania, for Appellee.

          Before MOTZ, KEENAN, and HARRIS, Circuit Judges.

          DIANA GRIBBON MOTZ, CIRCUIT JUDGE.

         This case returns to us again, this time on appeal from an adverse jury verdict. Dr. Jon Oberg, as relator for the United States, brought this qui tam action against four student loan corporations, including the Pennsylvania Higher Education Assistance Agency ("PHEAA"). He alleged that the corporations had defrauded the Department of Education and so violated the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq.

         Over the course of several appeals, we affirmed the dismissal of one defendant and two of the other defendants settled. See United States ex rel. Oberg v. Pa. Higher Educ. Assistance Agency, 804 F.3d 646, 650 (4th Cir. 2015); United States ex rel. Oberg v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131, 145 (4th Cir. 2014); United States ex rel. Oberg v. Ky. Higher Educ. Student Loan Corp., 681 F.3d 575, 579-81 (4th Cir. 2012). The case proceeded to trial only against PHEAA. Oberg now appeals the jury's unanimous verdict in favor of PHEAA. For the reasons that follow, we affirm.

         I.

         Oberg's claim concerns a Department of Education subsidy program meant to encourage the issuance of low-interest federal student loans. It did so by offering Special Allowance Payments ("SAPs") to certain qualifying lenders. 20 U.S.C. § 1087-1. For one particular category of loans - those financed through tax-exempt bonds - Congress guaranteed lenders a 9.5 percent return. Id. § 1087-1(b)(2)(B). In the low-interest environment of the mid-2000s, this guaranteed rate made tax-exempt bonds a particularly attractive investment vehicle.

         To take advantage of the favorable return offered by the program, Oberg claims that between 2002 and 2006, PHEAA submitted false claims for SAP subsidies by improperly transferring student loans from non-tax-exempt bonds into tax-exempt bonds. In doing so, PHEAA converted lower-interest floating-rate loans into loans that guaranteed a 9.5 percent return. This translated into millions of dollars in additional revenue for PHEAA.

         During a five-day trial, the court admitted more than 100 exhibits and the jury heard testimony from more than a dozen witnesses. After deliberating for less than three hours, ...


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