Court reinstates lawsuits against PHEAA

Written by The Associated Press | Oct 22, 2015 2:56 AM

(Richmond, Va.) -- A federal appeals court has reinstated a whistleblower's claims that a Pennsylvania student loan company cheated the U.S. government. 

Former Education Department employee Jon Oberg claims the Pennsylvania Higher Education Assistance Agency violated the False Claims Act by overstating student loan subsidies it was entitled to receive.

A judge dismissed the lawsuit, saying the company created by the Pennsylvania Legislature can't be sued because it is an arm of the state. 

However, a three-judge panel of the 4th U.S. Circuit Court of Appeals in Richmond unanimously ruled the company isn't an arm of the state because it is financially independent. 

The court reached the same conclusion in a separate case, reinstating a lawsuit by a Virginia man who claims the company falsely accused him of defaulting on loans.  

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