Legality of Universities...

I don't know about legalities, but I'm fairly certain that the university can do whatever it wants to. It will invoke whatever rules/regulations it needs to validate its actions.

If you're interested in the legal side, I would have to think that you would be mounting an expensive, losing battle. People on internet forums always throw out the "they can't legally do that" statement, but most forget that in order to prove an illegal action, someone has to file a lawsuit and pay lots of attorneys lots and lots of dollars while waiting years and years for results.

My thought is....you passed the test once, you'll likely pass it the next time, if necessary. Save your fighting spirit for the NCLEX.

How does the OP know that the school administration suspects cheating? Was an official announcement made? Or, is this just speculation? Those tests are hard to cheat on, unless the participants sit side by side at a computers, talk out loud, and share responses. I suppose with an unproctored exam, that would be possible. If administrations knows, that would imply that someone reported the cheating. And, if that is the case, it's about time that someone going into a profession that is SUPPOSED to be based on values such as honesty, reports cheating when it happens.

Alert the media. If it's a state school, go to the state.