Breaking: Judge Dismisses Cases in FMS v. ED

This afternoon Judge Thomas C. Wheeler of the U.S. Court of Federal Claims granted the Department of Education's (ED) motion to dismiss the case of FMS v. USA as moot, and lifted the February 26, 2018 preliminary injunction that prevented ED from recalling in-repayment accounts.

Here is an excerpt from the Order published today:

For reasons to be explained in a more substantive Opinion in the coming days, the Court GRANTS the Government’s motion to dismiss, LIFTS the February 26, 2018 PI, DENIES Plaintiffs’ motions for leave to file supplemental pleadings, and DENIES Performant’s motion for partial dismissal as MOOT. The Clerk is directed to dismiss Plaintiffs’ complaints without prejudice. No Costs. For the sake of judicial continuity and efficiency, any new protests that may be filed challenging ED’s decision to cancel the solicitation should indicate that they are related to the FMS Investment Corp. line of cases.

For those who need the incredibly short recap…This all started in 2014 when the five-year 2009 contract ended, and new large-firm awards were delayed. Eventually, contracts were awarded in 2016 to seven large companies, down from 17 on the previous contract. This led to dozens of protests by firms that believed the process was flawed and unfair. So began Chapter Two of the matter, with a "re-do" of the solicitation, which resulted in awards to just two large companies. This led to more protests, and finally... nothing. No large company awards at all, as ED cancelled the whole solicitation on May 3, 2018, rescinded the contract awards from the two companies, and filed a motion to dismiss the litigation. And so began Chapter Three, with 13 parties opposing that motion.

For those who want to review all of the details, click here for the full coverage of the Department of Education collection contract on insideARM.

insideARM Perspective

True to form, Judge Wheeler made a prompt decision following the deadline for filing motions, which was only two days ago. He says there will be a more substantive explanation of his thinking in the coming days, so we'll look forward to that.

For now, I would expect those firms who still hold in-repayment accounts as part of the 2015 Award Term Extensions to receive letters recalling those accounts as early as next week.

I would also expect to see a new round of litigation filed; at least one firm -- Automated Collection Services, Inc. (ACSI) -- promised as much in their filing on Wednesday.