New Judge Takes Bold Action in Department of ED Collection Case

As I mentioned in a companion article this afternoon, today the U.S. Court of Federal Claims held a status conference in the matter of Continental Service Group, Inc., et al., Plaintiffs, and Collection Technology, Inc., et al., Plaintiff-Intervenors v. The United States, Defendant, and CBE Group, Inc., et al., Defendant-Intervenors (case nos. 17-449, 17-499, 17-493, 17-517, 17-578, 17-588, 17-633 consolidated).

Just before Thanksgiving, the case was taken over by Judge Thomas C. Wheeler. He called for this session in order to gain clarity (if that’s possible), as he works to jump onto this moving train. Today’s conference was a study in who’s on first, with all trying to keep things straight. There were approximately 50 people in attendance; mostly attorneys for the many parties involved.

However, so much has happened in the case over the last few days that it required a separate article to bring readers up to speed first, before addressing today's conferece. With that completed, now we can get to today.

Here is who was represented in the courtroom:

Plaintiffs: Continental Service Group, Inc. (ConServe), Pioneer Credit Recovery, Inc. (Pioneer), Account Control Technologies (ACT), Progressive Financial, Inc. (Progressive), Van Ru, Collection Technology, Inc. (CTI), and Alltran Education (Alltran; formerly Enterprise Recovery Systems).

Plaintiff Intervenors: Performant Recovery, Inc. (Performant), and Allied Interstate (Allied).

Defendants: Department of Justice - representing The Department of Education (ED), The CBE Group, Inc. (CBE), Premiere Credit of North America, LLC (Premiere), GC Services Limited Partnership (GC), Value Recovery Holdings, LLC (Value), Windham Professionals, Inc. (Windham), Automated Collection Services, and Financial Management Systems, Inc. (FMS).

Throughout the 90-minute proceeding, attorneys for the various firms gave Judge Wheeler their arguments as to why they should get to keep placements, or others shouldn't get to keep placements, and why one or the other would do irreparable harm to their client. The discussion wove in and out of the two separate, but very intertwined, matters in litigation: the complaint over the February 2016 Award Term Extenstion (ATE), and the complaint over the December 2016 Unrestricted Contract Award (for which we await ED's corrective action).

Judge Wheeler also noted that getting up to speed on this case has been challenging because of the lack of an administrative record from ED; there is nothing to demonstrate what actions or conclusions they have or have not made to this point. 

Judge Wheeler asked for input from the group as to whether he could issue an order to compel ED to take action within a certain period of time, such as 30 days. 

The attorney representing ED responded that such an order would be unprecedented.

The Judge asked ED's attorney what the current status of the corrective action is (i.e. is there a projected date when it would be completed). She stated that she didn't have a date, but could go back and ask. [Editor's note: Judge Wheeler didn't seem thrilled by this. As a by-stander, it certainly seemed to me that this is a question ED might have anticipated, and sent her with an answer.]

There is big money at stake. One participant, Value Recovery, which is the only recipient of a new contract award who was not previously on the 2009 contract, claimed that the company has spent over $3 million just to maintain status quo so that he can remain eligible for the contract, once ED finally takes corrective action. Others made similar claims.

The attorney for Pioneer highlighted that they have asked the Court to maintain the stay of contracts until corrective action is completed, as the GAO has said the (December 2016 Unrestricted) awards were made based on erroneous conclusions. 

Finally, the judge asked what motions are outstanding that require his immediate attention. Two were mentioned:

1) The attorney for ED noted that there are five motions to dismiss the cases of Progressive, CTI, VanRu, Alltran and ACT, on the grounds that they are more appropriately Contract Disputes Act (CDA) claims. The cases were consolidated on September 5, 2017 and have yet to be ruled on.

Progressive had the last word, urging Judge Wheeler that they need a TRO in order for motions to be heard in court, as he did not believe these are CBA claims. The judge responded that he wasn't sure he agreed with that position but he would make a ruling. He said he was inclined to agree with the Government. [Indeed, he did agree, and later in the day denied Progressive's motion for a TRO, and denied a similar one by CBE.]

2) CBE and Premiere have pending motions to dismiss the ConServe protest.

As the session ended, the attorney for ED noted she had just heard that CBE's motion filed today in the ATE matter had been denied.

Within hours of the end of the conference, Judge Wheeler issued an Order requiring ED to make its final award decisions and complete the Corrective Action by Thursday, January 11, 2018. He also lifted the stay of proceedings in the case. 

insideARM Perspective

Wow. This judge is impressive. That conference was a whirlwind of claims of what is/isn't fair to more than a dozen companies. It would have been easy to see how he would need a lot more time to make a decision. 

What's next? Two things:

1. Judge Wheeler said several times that he was planning a similar conference to address the ATE litigation matter, so we expect to see a date for that soon.
2. Mark your calendar for Thursday, January 11, 2018. It would be a minor (or a major) miracle, if that day marks a conclusion from ED in its corrective action for the December 2016 Unrestricted Contract award debacle... will that bring a new round of lawsuits? Ugh.