By Greg Care

Sea Mar Community Health Centers started a family medicine residency program in 2015 and, less than a decade later, the Accreditation Council for Graduate Medical Education (ACGME) withdrew its accreditation. Appeals within the ACGME and litigation have since ensued. A federal court has just ruled that while some of Sea Mar’s claims must be dismissed, others will move forward so that Sea Mar can seek more information to support them.

In Sea Mar Community Health Centers v. ACGME, No. 2:24-cv-00896-JNW (W.D. Wa. Sept. 26, 2025), the plaintiff residency program brought a variety of legal claims stemming from the withdrawal of its accreditation.

Two of those claims—that the ACGME violated Sea Mar’s federal and state due process rights—did not survive the ACGME’s motion to dismiss. In general, constitutional due process applies only to actions taken by the government. Because the ACGME is not a governmental entity, Sea Mar argued creatively that quasi-public accrediting bodies nonetheless have a common law duty to use fair procedures in dealing with their members. The court rejected that argument, finding that Sea Mar’s arguments hinged largely on a federal statute that did not apply in this factual scenario.

However, the court allowed the residency program to move forward with two other claims—one under the Washington Consumer Protection Act (CPA) and another for breach of an implied duty of good faith and fair dealing. Sea Mar alleged multiple unfair practices under the CPA: conducting only a six-hour site visit while denying Sea Mar’s administration any opportunity to address the Field Representatives’ concerns, crediting hearsay over verifiable data and issuing citations inconsistent with both facts and ACGME’s own policies, disregarding the primary reviewer’s recommendation for probation, scheduling the appeal only after withdrawing accreditation, refusing to provide materials Sea Mar was entitled to for its appeal, and refusing to consider countervailing evidence confirming the Program’s compliance. The other claim touched on similar themes.

While the court said that the first of these claims presented a close call, it noted the relatively low threshold for moving past a motion to dismiss as a reason to allow Sea Mar to enter the “discovery” phase of litigation. It will be interesting to see what comes out in support of Sea Mar’s consumer protection claim, which appears to be premised on the idea that the ACGME functions as a monopoly.

The court wrote that, “to prevail in a private CPA action . . . , a plaintiff must establish five distinct elements: (1) unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) public interest impact; (4) injury to plaintiff in his or her business or property; (5) causation.” It went on to say that Sea Mar could prove the third element by showing that the ACGME’s conduct has injured or could (in more than a hypothetical way) injure others. It concluded that

Sea Mar meets this standard through its monopoly theory. ACGME maintains exclusive control over residency accreditation, with 198 other Washington programs subject to the identical policies and procedures challenged here. Although ACGME emphasizes the rarity of withdrawing accreditation without prior citations, rarity does not negate capacity for future harm when the alleged unfairness stems from ACGME’s written policies and standard procedures which ACGME claims it followed in this case.

Regarding the claim for breach of an implied duty of good faith and fair dealing, which is a species of contract (or quasi-contract) claim, the court seemed underwhelmed by the ACGME’s defenses. There was some threshold argument about whether the relationship between Sea Mar and the ACGME was contractual in nature. Based on Sea Mar’s allegations, which are assumed to be true for purposes of a motion to dismiss, the court distinguished this case from others where the relationship between voluntary associations and its members weren’t contractual. Next, the ACGME claimed that, even if there was a contract between it and Sea Mar, it merely applied its policies. However, the court ruled that the dispute wasn’t about violation of policies but, instead, if the ACGME “weaponized its discretion to ensure Sea Mar could never meaningfully contest the adverse decision.”

In support, Sea Mar argued that the ACGME exercised its discretion to Sea Mar’s detriment in at least three ways: (1) the ACGME chose immediate withdrawal over probation despite no recent citations or egregious violations—a decision the Appeals Panel later found inappropriate; (2) the ACGME set the withdrawal date before the appeal hearing, denied Sea Mar’s requests for extensions and discovery materials, and refused to consider exculpatory evidence, effectively mooting any meaningful review; and (3) the ACGME’s Board upheld withdrawal even after its own Appeals Panel recommended probation instead, suggesting predetermined outcome.

Because “Sea Mar has alleged facts showing that ACGME exercised discretion ‘inconsistent with the reasonable expectations of the parties or in some other objectionable manner,'” and a factual dispute exists on this, the court allowed the claim to proceed.

Finally, the court ruled that the residency program could pursue damages for now. The ACGME argued that many or all of Sea Mar’s claimed damages (e.g., loss of government funding) were attributable to the separate decisions of government entities, not the ACGME. But the court was persuaded by Sea Mar’s allegations that the ACGME knew that government funding was conditioned on maintaining accreditation, the ACGME’s actions triggered the loss of funding, and that this was reasonably foreseeable to the ACGME. The court noted that this issue could be revisited after more facts were developed during discovery.

If you have questions regarding residency, fellowship, or the ACGME, please contact us today to see if we can assist with your particular circumstances.

* Content on this website, including blog articles, are proprietary and copyright protected. If you wish to use all or part of a blog article, we request that you properly attribute the work and include a link to the Brown, Goldstein & Levy webpage on which it appears.