UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 23-1414

TODD BERMAN,

 Plaintiff – Appellant,

v.

PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY, d/b/a

FedLoan Servicing,

 Defendant – Appellee.

Appeal from the United States District Court for the Middle District of North Carolina, at 

Greensboro. Loretta C. Biggs, District Judge. (1:21-cv-00063-LCB-JLW)

Submitted: February 29, 2024 Decided: April 15, 2024

Before DIAZ, Chief Judge, and HARRIS and HEYTENS, Circuit Judges.

Affirmed by unpublished opinion. Judge Heytens wrote the opinion, which Chief Judge 

Diaz and Judge Harris joined.

ON BRIEF: Jonathan A. Vogel, VOGEL LAW FIRM PLLC, Charlotte, North Carolina, 

for Appellant. Christopher R. Healy, Philadelphia, Pennsylvania, Justin G. Weber, 

Harrisburg, Pennsylvania, Ethan J. Ostroff, TROUTMAN PEPPER HAMILTON 

SANDERS LLP, Virginia Beach, Virginia, for Appellee.

Unpublished opinions are not binding precedent in this circuit. 

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TOBY HEYTENS, Circuit Judge:

Asserting its actions cost him the chance to have his student loans forgiven, Todd 

Berman sued the Pennsylvania Higher Education Assistance Agency. The district court 

concluded the Agency was entitled to derivative sovereign immunity and dismissed 

Berman’s complaint. We affirm.

Berman obtained two student loans directly from the Department of Education. The 

Department contracted with the Agency to service certain loans. Among the Agency’s 

responsibilities was administering loans that might be eligible for cancellation under the 

Public Service Loan Forgiveness program, which requires borrowers to make ten years of 

payments while working for a qualifying public service employer. The Agency did so by 

processing employment certification forms submitted by borrowers and “notify[ing]” those 

borrowers of “the number of qualifying payments made while employed in qualifying 

public service.” JA 837. 

After spending four years in the United States Army (which all agree is a qualifying 

public service employer), Berman went to work for Blue Cross Blue Shield of North 

Carolina. This raised a question: Is Blue Cross also a qualifying public service employer?

Unfortunately, Berman received conflicting answers to that question. Berman 

asserts that, until 2018, the Agency repeatedly told him his Blue Cross job qualified for 

loan forgiveness. In doing so, the Agency relied on then-existing guidance from the 

Department about a similar employer—Blue Cross Blue Shield of Rhode Island.

By the time Berman submitted a second employment certification form, however, 

the Department had reversed course. In March 2018, the Agency sent Berman a letter 

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stating that, “after consulting with the Department of Education,” it had determined that 

“BlueCross BlueShield of North Carolina does not provide a qualifying service as part of 

its primary purpose . . . and therefore cannot be approved under public health for [loan 

forgiveness] purposes.” JA 131. After receiving that letter, Berman consolidated his federal 

loans into private loans, which eliminated any possibility for loan forgiveness. A year later, 

however, the Department “reversed it[s] decision again” (JA 900), and the Agency told 

Berman that Blue Cross was a qualifying employer after all.

Berman sued the Agency in federal district court, bringing four state law claims all 

stemming from the Agency’s assertedly “false representation” that Blue Cross was not a 

qualifying employer. JA 24. The district court dismissed Berman’s complaint for lack of 

subject matter jurisdiction, concluding the Agency was entitled to derivative sovereign 

immunity. See Cunningham v. General Dynamics Info. Tech., 888 F.3d 640, 649 (4th Cir. 

2018) (“[D]erivative sovereign immunity . . . confers jurisdictional immunity from suit.”).*

Reviewing that conclusion de novo, see Franks v. Ross, 313 F.3d 184, 192 (4th Cir. 2002), 

we see no error.

The parties agree about the relevant legal framework. Under this Court’s precedent,

“a government contractor” like the Agency “is not subject to suit if (1) the government” 

(here, the Department) “authorized the contractor’s actions and (2) the government validly 

* Berman asserts derivative sovereign immunity is better understood as an 

affirmative defense that must be proven at trial. We need not consider the merits of that 

argument because “one panel cannot overrule another.” McMellon v. United States, 

387 F.3d 329, 333 (4th Cir. 2004) (en banc).

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conferred that authorization, meaning it acted within its constitutional power.” 

Cunningham, 888 F.3d at 643 (quotation marks and citation removed). Berman makes no 

argument about the second requirement. Instead, he trains his fire on the first element, 

insisting the Department did not, in fact, authorize the Agency’s allegedly wrongful 

actions. Like the district court, we are unpersuaded.

Berman’s argument runs into two problems. First, the Department authorized the 

Agency’s actions by contract. See Cunningham, 888 F.3d at 648 (stating that the first step 

of the derivative sovereign immunity analysis is satisfied if a contractor “adhered to the 

terms of its contract with” the government). Under its contract with the Department, the 

Agency had to follow certain procedures for certifying private employers as eligible for 

public service loan forgiveness. Among the step-by-step instructions for “[v]erifying 

qualifying employment” was a requirement to “escalate” questions about whether a given 

private employer qualifies “to the Department for approval” and then “[s]end the Borrower 

a notification of the outcome of the review.” JA 851–53. That is precisely the approach the 

Agency followed here in issuing the March 2018 letter.

In contrast, Berman urges an unnatural reading of the contract. The contract, 

Berman says, spoke only to how the Agency was to make an initial decision about whether 

a given employer qualified for loan forgiveness and was silent about how the Agency 

should go about “chang[ing] its prior determination.” Berman Br. 18. The parties spar over

whether Berman preserved this argument in the district court, but we need not resolve that 

question because we conclude the argument fails on the merits. The distinction Berman 

seeks to draw has no basis in the contract’s text. It also cannot be squared with the contract’s 

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requirement that, after a loan was transferred to the Agency from a different servicer—

something that happened to Berman’s loans—the Agency was required to “track the 

number of . . . qualifying payments made after” the transfer (JA 140 (emphasis added)), 

including by reviewing an employer’s qualified status every time the Agency received an 

employment certification form.

The second problem with Berman’s argument is that, even apart from the language 

of the contract, the Department expressly authorized the Agency’s challenged actions here.

Cf. Campbell-Ewald Co. v. Gomez, 577 U.S. 153, 166 (2016) (stating that derivative 

sovereign immunity does not apply “[w]hen a contractor violates both federal law and the 

Government’s explicit instructions”). Indeed, the Department told the Agency in February 

2018 that it was “approved to retract Blue Cross Blue Shield of North Carolina” from 

eligibility for public service loan forgiveness and even asked the Agency to “send . . . a 

copy” of the March 2018 retraction letter for it “to review before mailing.” JA 892. The 

Department similarly took responsibility for the decision the next year when it told the 

Agency that “the department has reversed its decision again” and asked if the Agency 

needed “help . . . with the draft response” notifying Berman about the flip-flop. JA 900. 

In short, the record makes clear that Department officials made the challenged decisions

and told the Agency to communicate those decisions to Berman.

We are unpersuaded by Berman’s argument that “emails” such as these cannot 

“provide the requisite government authorization” when a contract exists. Berman Reply 

Br. 10. To the contrary, this Court’s decisions suggest that even relying on a government 

official’s verbal authorization can be enough to confer derivative sovereign immunity to a 

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government contractor. See Butters v. Vance Int’l, Inc., 225 F.3d 462, 466–67 (4th Cir. 

2000). We see no reason why the Agency could not rely on the Department’s written

instructions here.

* * *

If there is a villain in this story, it is the Department—not the Agency. Berman might 

have sought to challenge the Department’s conclusion that Blue Cross Blue Shield of North 

Carolina was not a qualifying public service employer via an action under the APA. 

See, e.g., American Bar Ass’n v. United States Dep’t of Educ., 370 F. Supp. 3d 1, 26 

(D.D.C. 2019) (entertaining a similar action). But sovereign immunity always would have 

prevented Berman from suing the Department for money damages, and Berman may not 

evade that result by suing the Department’s agent instead. Indeed, the point of derivative 

sovereign immunity “is to prevent a government contractor from facing liability for” even 

wrongful conduct where that conduct was validly authorized by government officials. 

Cunningham, 888 F.3d at 648. The district court’s judgment is

AFFIRMED.

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