Judge Miriam Goldman Cedarbaum

Student loan borrower Danziger neither appeared nor answered HICA Education Loan Corp.’s (HICA) suit to recover money owed under a promissory note executed under the Health Education Assistance Loan (HEAL) Program. Such federally created loans are insured by the U.S. Department of Health and Human Services. Neither the government nor any agency of the United States was a party to HICA’s suit. District court denied HICA—for lack of federal subject matter jurisdiction—default judgment. Discussing Inter-Am. Univ. of Puerto Rico Inc. v. Concepcion, it observed that although the note executed under the HEAL program is governed by federal regulations, HICA’s cause of action to recover on the note was created by state law. The fact that HEAL loans are federally regulated does not bear on the issue of Danziger’s default. The court also rejected HICA’s claim that jurisdiction existed because commencement of an action for default was part of the federal insurance claims process. Citing Grable & Sons Metal Prods. v. Darue Eng’g & Mfg., the court noted that the federal government’s interest in HICA’s collection of a defaulted student loan does not transform HICA’s state law claim into one raising a disputed federal issue.