pediatrics or emergency room. Redovan was specifically advised that, "No more than one year of general surgery training will be approved."
9. In July or August, 1982, Redovan was provided by the NHSC with a Site Selection questionnaire so that he could indicate his placement preference for serving his obligation to the Public Health Service upon expiration of his one year deferral.
10. Redovan failed to complete the site selection questionnaire and submit it to the NHSC until late February 1983. Seven months elapsed between the time Redovan received the site selection questionnaire and the time he submitted the completed questionnaire to NHSC. By the time NHSC received Redovan's site selection questionnaire NHSC had, for some months, been involved in assigning other scholarship participants to NHSC sites. Thus, when Redovan finally submitted his questionnaire, most, if not all, of the popular regions within the NHSC had been filled. As a consequence, Redovan was assigned to the Indian Health Service ("IHS"), in the North Dakota, South Dakota and Montana region. The public health service believed that this assignment allowed the best use of Redovan's qualifications to fill the greatest need.
11. Redovan was assigned to the IHS and that particular geographic area according to the normal procedures of the Public Health Service for those individuals not otherwise assigned at that late date.
12. On March 9, 1983, Redovan was notified of his assignment to the Indian Health Service in the IHS Aberdeen, South Dakota or Billings, Montana areas. Redovan was advised to contact recruiters in the two areas to complete the placement process, and was advised of his options to serve either in the Commissioned Corps of the Public Health Service or under the Civil Service.
13. On June 13, 1983, Redovan informed the NHSC, through John T. Gimon, Acting Chief, Physician Recruitment, Retention and support Branch of the NHSC Program, of his intention to default on his service obligation.
14. On July 20, 1983, upon Redovan's failure to commence his service obligation on July 1, 1983, Redovan was placed in default of his service contract.
15. On July 20, 1983, Redovan was advised that, due to his default, he was required to pay three times the amount of all NHSC Scholarship funds paid to him or on his behalf plus interest, subject to credits for service actually performed. Redovan was also advised that, pursuant to the Scholarship Contracts he had entered into, that interest accrued from the date of each scholarship payment made to him or on his behalf, said interest accruing at the maximum prevailing rate as determined by the Treasurer of the United States. As of the date of default, July 1, 1983, Redovan owed $172,041.92 representing $125,538.00 in tuition, stipends and other costs, plus interest of $46,503.92. Redovan was requested to repay this amount by June 30, 1984, i.e. within one year of the default, in accordance with the Contracts he had signed.
16. Redovan did nothing to attempt to cure his default or work out some arrangement to do so agreeable to the NHSC for nine months. Finally, by letter dated April 27, 1984, Redovan acknowledged his breach of contract and expressed his wish to complete his service obligation after the completion of his five year surgical residency, in blatant disregard of the known policy to allow only one year of deferral for surgical residencies.
17. Redovan was advised on June 14, 1984, that the NHSC might permit him to serve in lieu of repayment if he agreed to accept an assignment within 6 months, at a site selected by the NHSC, and if he completed a Forebearance Agreement and returned same to the NHSC within two weeks. Redovan did not return the Forebearance Agreement as specified.
18. On November 30, 1984, Redovan was again reminded that he was in default, that his financial obligation, by then $202,853.28 was due by December 30, 1984. Another Forebearance Agreement was sent him, if he wishes to serve his obligation with the NHSC instead of financial repayment.
19. By letter dated January 18, 1985, Redovan again requested that he be permitted to serve his obligation in lieu of repayment. By letter dated February 12, 1985 from the NHSC, Redovan was again advised that he would have to submit a notarized Forebearance Agreement within 2 weeks, Redovan was also advised that, "Your signed and notarized FA means that you agree to fulfill your obligation as a primary care health professional in a high priority health manpower shortage area to be determined by NHSC," and that, pending receipt of the Forebearance Agreement and acceptance of the agreement by the Division of Health Services Scholarships (DHSS) he would remain in a default status. Although Redovan did not submit the Forebearance Agreement within 2 weeks, a signed and notarized Forebearance Agreement was approved by DHSS on March 21, 1985.
20. Pursuant to the notarized Forebearance Agreement, Redovan agreed as follows:
Edward G. Redovan, M.D. agrees to fulfill his National Health Service Corps (NHSC) service obligation as a primary care health professional in a high priority health manpower shortage area to be determined by the NHSC, notwithstanding the regular matching process and other placement policies and practices. Such service must begin on or before six months from the effective date of this agreement. . . .
21. When Redovan signed the Forebearance Agreement in March 1985, he had decided that he would leave his surgery residency in June of 1985 and ostensibly was planning to fulfill his service obligation starting then. He knew that a position would be available at the Punxsutawney Area Hospital in Punxsutawney, Pennsylvania, a designated health manpower shortage area in rural Western Pennsylvania, and that the Hospital Administrator was interested in having Redovan fill the position.
22. In accordance with the Forebearance Agreement entered into by the parties, Redovan was assigned to the IHS and on July 3, 1985, Redovan was notified by mailgram of his assignment. Redovan was given 5 work days from receipt of the mailgram to accept the assignment. Redovan's assignment was not inconsistent with the terms of his Forebearance Agreement. He was assigned to the IHS for the same reasons as the first time, and in addition so that he would not benefit and receive preferential placement at the expense of another participant in the NHSC program who was not in default of his or her obligation.
23. On July 22, 1985, Redovan contacted John T. Gimon of the NHSC and stated his intention to default on the assignment to the IHS. Redovan refused the assignment because it was inconvenient, it was distasteful to his wife, and because he felt it would place a strain upon his marriage.
24. As a result of Redovan's refusal to take the assignment to the Indian Health Service, he was again placed in default on July 26, 1985, and again notified of his obligation to repay the debt by letter from DHSS dated August 13, 1985.
25. On January 3, 1986, Redovan again completed a Forebearance Agreement and requested that he be permitted to serve his obligation in lieu of repayment of the debt.
26. However, as of the date of trial, Redovan has failed to accept any assignment for completion of his service obligation in lieu of repayment and has made no payments towards the debt. Redovan remains in default of the NHSC Scholarship contract. As of the date of trial, the amount due from Edward Redovan, to the United States is $244,649.37.
27. From the time he began medical school, through the default on his service obligation then and the prosecution of this action, up til the present day, Redovan has remained in Philadelphia, Pennsylvania and has performed no service under his service obligation. While he agreed to perform as a condition of receiving his scholarship for a medical education, he has not performed any service, and he has not at any time been coerced to perform any service.
CONCLUSIONS OF LAW
1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1345 and venue is proper in that the defendant, Edward G. Redovan, M.D. is a citizen and resident of this District.
2. The Statutory Program
The NHSC Scholarship Program, first enacted in 1970 by Pub. L. 91-623 and replaced by Pub. L. 94-484, effective October 1, 1977, was enacted by Congress for the express purpose of assuring an adequate supply of trained health professionals for service in the NHSC in geographic area of health manpower shortages. The NHSC Scholarship Program's statutory authority may be found at Section 751 et seq. of the Public Health Service (PHS) Act, 42 U.S.C. § 294t et seq.; redesignated, as amended, § 338A et seq. of the PHS Act, 42 U.S.C. § 2541 et seq. by Section 2709(a) of Pub. L. 97-35, effective August 13, 1981. (Further citation will be to the U.S. Code provisions.) The implementing regulations are contained at 42 C.F.R. Part 62.
Congress charged the Secretary of Health and Human Services with the responsibility of identifying geographic areas experiencing a shortage of health manpower and designating such areas as "health manpower shortage area." 42 U.S.C. § 254e. The Scholarship program is an attempt by Congress to supply health services to such shortage area. The program was not designed to subsidize the medical education of physicians, but rather:
The Committee wishes to emphasize in the strongest possible terms that it does not view the National Health Service Corps scholarship program as a mechanism solely intended to subsidize health professional education. Rather, in return for substantial subsidization of the costs of education, the Committee views the National Health Service Corps Scholarship program as a means to overcome a geographic maldistribution of health professionals.
Senate Report 94-887, 94th Cong. 1st Sess. p. 201 (1975).
The conditions for eligibility for the scholarship program require applicants to submit an application and to sign and submit a written contract to accept the scholarship and to serve for the applicable period of obligated service in a health manpower shortage area. 42 U.S.C. § 2541(b).
The contracts signed by the applicant provide for the government to pay tuition, fees and reasonable costs for each year of medical education in return for an applicant's agreeing to serve in a health manpower shortage area for one year for each scholarship year. 42 U.S.C. § 254(f). The ultimate decision of where to place the applicant when it comes time for him to serve his obligation is left to the discretion of the Secretary. However, the Secretary is obligated by statute to "seek to assign to an area a Corps member who has (and whose spouse, if any, has) those characteristics which are characteristics which increase the probability of the member's remaining to serve the area upon completion of his assignment period." 42 U.S.C. § 254f(f). This obligation of the Secretary does not, however, provide an applicant with a right to any particular placement. Rather, it constitutes a mandatory consideration in the overall administration of the assignment process.
As Redovan received scholarship awards for three years from the NHSC, he was obligated to serve 3 years as a commissioned officer in the Public Health Service or as a civilian member of the Service. Redovan's period of service was to have commenced upon his graduation from medical school, namely in July of 1982. 42 U.S.C. § 254m(b)(5)(A). A deferment was sought by Redovan and granted by NHSC for one year to allow Redovan to complete advanced clinical training. 42 U.S.C. § 254m(b)(5)(A); 42 C.F.R. § 62.9. Requests for deferments for training in general surgery for periods in excess of one year are subject to the discretion of the NHSC and will be granted only if they are consistent with the needs of the NHSC. 42 U.S.C. § 254m(b)(5)(A). The NHSC has determined that general surgery is not a needed specialty which would support a deferral in excess of the one year granted to Redovan. That determination was within the discretion of the NHSC and will not be set aside by this Court.
Upon the expiration of the approved deferment in July of 1983, Redovan was required to commence service of his three year obligation. 42 U.S.C. § 254m; 42 C.F.R. § 62.9(e). Redovan has not done so to date.
If a recipient breaches his written contract by failing to begin or complete his scholarship service obligation, he is placed in default. Once the recipient is in default status, the service option terminates and the recipient must repay the debt financially. 42 U.S.C. § 254 o (b)(1); 42 C.F.R. § 62.10(c). The relevant provisions of the statute provide that the defaulter must repay within one year damages equal to three times the amount of the scholarship award plus interest after taking into account any service performed. Redovan is not entitled to any adjustment in the debt as he has not performed any service in the Public Health Service, the NHSC or the IHS.
42 U.S.C. § 254 o (b)(1) specifically provides that:
. . . The United States shall be entitled to recover from the individual an amount determined in accordance with the formula
A = 30(t-s)/t