Public Entities Potentially Liable Under Chapter 93A

In a case concerning allegedly unfair student loan collection practices, Judge Salinger concluded that a Pennsylvania public corporation, the Pennsylvania Higher Education Assistance Agency (PHEAA), is a “person” potentially subject to Chapter 93A liability.

Judge Salinger stated:

The Legislature has defined the term “person” to “include, where applicable, natural persons, corporations, trusts, partnerships, incorporated or unincorporated associations, and any other legal entity.” On its face, this statutory definition of “person” would seem to encompass PHEAA, which is a legal entity.

PHEEA argued that it cannot be sued under Chapter 93A because PHEAA is a public instrumentality rather than a private corporation. Judge Salinger rejected that argument, relying on a previous decision against PHEAA in the Fourth Circuit that held PHEAA was “not a State, an arm of the state, or a political subdivision of a State.”

Judge Salinger also found that PHEAA did not have sovereign immunity for Chapter 93A claims under principles of comity because PHEAA, while a public authority, is “financially independent” from the Commonwealth of Pennsylvania, supported by its own nontax revenues, and without Pennsylvania’s credit pledged on its behalf. PHEAA is therefore subject to Chapter 93A liability, Judge Salinger concluded, in the same way that a similarly organized Massachusetts public entity would be subject to Chapter 93A liability under Karlin v. Massachusetts Tpk. Auth., 399 Mass. 765 (1987).

Massachusetts v. Pennsylvania Higher Education Assistance Agency

February 28, 2018

Full decision here

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