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September 19, 1994


The opinion of the court was delivered by: ARTHUR D. SPATT

 SPATT, District Judge:

 On behalf of the United States Public Health Service ("PHS"), a division of the Department of Health and Human Services ("HHS"), the United States of America moves pursuant to Fed. R. Civ. P. 56(a) for summary judgment in its favor on the complaint. The underlying complaint seeks a judgment against the defendant in the sum of $ 267,552.30, arising out of the alleged default by the defendant of her obligations under three one-year National Health Service Scholarship awards. The defendant opposes the motion, and moves for summary judgment in her favor, contending that the PHS's actions made it impossible for her to perform her contractual obligations under the scholarship agreements.


 The defendant Valerie Elise Williams, M.D. ("defendant" or "Williams") was a licensed practical nurse who wanted to become a doctor and render health care to the indigent. She was admitted to the Dartmouth Medical School, and while there applied for and was accepted into the National Health Service Corps ("NHSC") Scholarship Program. This scholarship program was established by Congress to address the geographic maldistribution of health care professionals in the United States. In exchange for receiving scholarships covering their educational costs and living expenses, NHSC scholarship recipients commit themselves to one year of obligated service for each year they receive a scholarship, but must in any event serve at least two years. Such obligated service is to be performed in a "health manpower shortage area" to which the recipient is assigned to by the Secretary of Health and Human Services. See 42 U.S.C. § 254l and see generally 42 U.S.C. §§ 254d - 254p; 42 C.F.R. part 62 (setting forth the statutory and regulatory scheme governing NHSC scholarships and repayment).

 According to the statute, failure of the NHSC scholarship recipient to complete the obligated period of service constitutes a breach of the scholarship agreement, and entitles the United States to recover an amount equal to three times the amount of the scholarship monies given to the recipient plus interest, discounted for any amount of time actually served by the recipient. See 42 U.S.C. § 254o.

 Williams received three one-year scholarship awards for the academic years 1977-1978, 1979-1980 and 1980-1981, totaling $ 45,023. She thus committed herself to three years of service with the NHSC. Her first scholarship award, for the year 1977-1978, was granted under the Public Health and National Health Service Corps ("PH/NHSC") Scholarship Training Program, 42 U.S.C. § 234 (repealed by section 408(b)(1) of the Health Professionals Educational Assistance Act of 1976, Pub. L. No. 94-484, 1976 U.S.C.C.A.N. (90 Stat.) 2247), the precursor to the present scholarship program, entitled the National Health Service Corps Scholarship Program, 42 U.S.C. § 254l. Pursuant to the provisions of the former statute, the United States was only allowed to recover an amount equal to the amount of the scholarship awarded, in the event of a breach by the recipient. The present statute provides, inter alia, for treble recovery by the United States upon breach by the recipient.

 After completing medical school, Williams requested and was granted two year-long deferments from her NHSC service obligation, in order that she may pursue a residency in Obstetrics/Gynecology at the Downstate Medical Center in New York. The statute and regulations provide for three year-long deferments from commencing the service obligation upon completion of medical school. 42 U.S.C. § 254m(5); 42 C.F.R. § 62.9. Williams, however, failed to request a deferment for a third year. NHSC sent several notices to her requesting that she file a deferment. These notices went unanswered by Williams. In a letter dated September 30, 1983, Williams was declared by the HHS to be in default of her scholarship obligations. A schedule for the repayment of $ 143,045.95 was sent to her in January, 1994.

 Subsequently, Williams and the HHS entered into a forbearance agreement. The forbearance agreement was between Williams and the HHS Bureau of Health Care Delivery and Assistance. (For the purposes of this decision, references to any PHS or HHS subdivisions shall be to the "agency"). Under the terms of the forbearance agreement, the agency agreed to forebear with respect to collection of the financial obligation incurred by Williams due to her default, in exchange for Williams' agreement to fulfill her NHSC service obligation in a high priority health manpower shortage area to be determined by the NHSC. Interest during the time of the forbearance would continue to accrue on Williams' debt. If Williams failed to complete her NHSC service obligation as described in the forbearance agreement, the entire amount of her financial obligation would become due and owing.

 The NHSC assigned Williams to Matty Hersee Hospital, in Meridian, Mississippi, and she began service there on August 1, 1985. However, on November 6, 1985, the administrator of the hospital made a request to the NHSC that Williams be immediately terminated from duty because she was disruptive and unprofessional. After investigating the allegations, the NHSC terminated Williams from service at Matty Hersee Hospital on December 6, 1985. The agency then notified Williams that she was in default of her service obligation under the forbearance agreement, and that collection of the debt she owed to the agency would begin immediately.

 In 1988, the agency and Williams entered into a Special Repayment Program Agreement. The Special Repayment Program ("SRP"), set forth in the notes accompanying 42 U.S.C. § 254o and codified in the regulations at 42 C.F.R. §§ 61.72-61.76, was established under section 204 of the Public Health Service Amendments of 1987, Pub. L. No. 100-177, 1987 U.S.C.C.A.N. (101 Stat.) 986, and provides an opportunity for persons who were in breach of their PH/NHSC or NHSC scholarship agreements as of November 1, 1987 to satisfy their payment obligations. Under the provisions of the SRP, the individual in breach of the scholarship contract or forbearance agreement agrees to perform their NHSC service obligation at a site on the agency's "Health Manpower Shortage Area Placement Opportunity List" ("HPOL"). This list of sites is developed by the NHSC. Credit is given to a scholarship recipient for any time already served in fulfillment of the NHSC service obligation. However, if a participant fails to fulfill the remainder of their service obligation under the SRP, only one half of the time served is credited towards the fulfillment of their service obligation. See 42 C.F.R. § 62.75.

 Williams was matched under the SRP to the St. Charles Health Council in St. Charles, Virginia, where she was to perform the remainder of her service obligation, a period of approximately two years and eight months. She only performed one year of the obligation, being terminated from the position on June 12, 1990. The agency next attempted to match Williams to the Somerset County for Progressive Enterprises, Inc. ("SCOPE") in Princess Anne, Maryland, but that facility allegedly withdrew its offer of employment because of problems arising during the course of negotiating an employment contract with Williams. The agency then reassigned Williams to a site in St. Louis, Missouri, and advised Williams to contact the facility by November 30, 1990.

 Williams never contacted the facility in St. Louis, and the agency referred the matter to the Department of Justice for collection. A complaint was filed with this Court on April 6, 1993 seeking a judgment against Williams in the amount of $ 298,044.48.


 The United States moves for summary judgment on the complaint, essentially contending that Williams has defaulted on her service obligation under the terms of the statute, and is therefore liable for the full amount of her debt obligation.

 As of February 15, 1994, Williams' debt obligation has been computed by the agency to be $ 267,552.30. See Declaration of Donald W. Potoon, Chief of the Debt Management Branch of the PHS. This amount accounts for 475 days of service actually performed by Williams -- 128 days at Matty Hersee Hospital under the forbearance agreement and 347 days of service at the St. Charles Health Council under the SRP.

 In calculating Williams' debt amount, the agency first credited 365 days of Williams' service towards satisfaction of her one year service obligation under the PH/NHSC Scholarship awarded to her for the year 1977-1978, as required by 42 C.F.R. § 62.75(c). The remainder of her performed service -- 110 days -- was then credited towards the remaining two years of her NHSC Scholarship service obligation. The formula in the regulatory provisions of the SRP that is used to calculate the amount of debt Williams owes, 42 C.F.R. § 62.75, incorporates the treble damages provision of the statute. However, because Williams defaulted, the formula provides that only one half of the days Williams actually served (55) can be credited towards her remaining service obligation.

 Williams opposes the government's motion, and moves for summary judgment in her favor. In answering the complaint, Williams pleaded four counterclaims against the government, three based on breach of contract and one for defamation. The allegations in these four counterclaims are also the allegations Williams sets forth in opposing the government's summary judgment motion, and in support of her own motion.

 Williams basically contends that the NHSC made it impossible for her to perform her service obligation. According to Williams, the NHSC failed to timely provide her with a list of available sites that she could visit beforehand in order to ascertain their suitability, and placed her in problematic sites where she could not properly and ethically perform her medical service.

 Williams' first counterclaim alleges that the agency intentionally took steps to make it difficult for Williams to find placement at a site suitable to her. She contends that the agency kept sending mail to her at the wrong address. Such mail included the agency's May, 1983 request for a deferment, and a "Placement Package" containing information on available sites for 1985. She further alleges that she ...

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