II. Breach of Contract
Maldonado acknowledges that he received NHSC scholarship funds and was therefore obligated to provide three years of service in an area to be determined by the Secretary. (Def. 3(g) Stmt. P 3.) However, he contends that because the Secretary failed to assign him to a specific HMSA, he was improperly placed in default. The Government contends that summary judgment is warranted because the Secretary did, in fact, assign Maldonado to a specific site and that Maldonado cannot defeat summary judgment simply by asserting that he did not receive notice of that assignment.
The NHSC statute provides that "the Secretary shall assign individuals performing obligated service in accordance with a written contract under the Scholarship Program to [HMSA]s . . . ." 42 U.S.C. § 254m(d). The Government asserts that the Secretary fulfilled her obligation by assigning Maldonado to the Briscoe County Clinic in Silverton, Texas. The Government further asserts that Maldonado was notified of this assignment in May of 1986, but failed to respond. Maldonado, on the other hand, asserts that he never received a letter notifying him that his site-specific assignment had been made, and that the Government has not offered any proof that the notice was sent or that Maldonado received it. Maldonado argues that without that proof the Government's claim must fail because it cannot demonstrate that the Secretary fulfilled her obligation under the statute to assign him to an HMSA.
To support his argument, Maldonado relies exclusively on the Ninth Circuit's opinion in United States v. St. Thomas, 966 F.2d 476 (9th Cir. 1992). The St. Thomas court found that the defendant was erroneously placed in default because the Secretary had assigned the defendant to a three-state region, but had failed to assign him to a specific service site within that region in accordance with § 254m(d). However, because the Secretary assigned Maldonado to a specific site, St. Thomas is inapposite. Although Maldonado contends that the Secretary never assigned him to a specific site, the mailgram dated May 1, 1986, which stated that Maldonado had been assigned to the Briscoe County Clinic in Silverton, Texas, belies that contention. While it remains disputed whether Maldonado ever received the mailgram, the Government has offered undisputed proof that a communication assigning Maldonado to the Briscoe County Clinic was transmitted to the Western Union Processing Center in Middletown, Virginia on May 1, 1986, thus establishing that the Secretary in fact made the assignment. Although Maldonado suggests that the May 1 mailgram from Dyer is not the official notice of his assignment,
that does not change the fact that a site-specific assignment had been made at least as early as May 1, 1986.
Maldonado argues that even assuming that an appropriate assignment had been made, summary judgment is not warranted because there remains a genuine issue of material fact as to whether he received notice of that assignment. The Government has submitted evidence that, according to standard procedure, once the mailgram was transmitted to Western Union in Middletown, Virginia it should then have been sent to the Western Union Facility in the Bronx and hand delivered to Maldonado. However, since the sender did not request confirmation of delivery, there is no evidence that conclusively demonstrates that Maldonado actually received that mailgram. (Nelson-Maxey Aff. PP 1-11.)
The Supreme Court has stated that "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Thus, the question presented is whether the Government must establish that Maldonado actually received the May 1 mailgram assigning him to the Briscoe County Clinic, or whether it is sufficient to show that the Secretary in fact made the assignment. For purposes of deciding this motion, it will be assumed that Maldonado did not receive the May 1 mailgram.
As an initial matter, it should be noted that while the Secretary indisputably has the obligation to make a site-specific assignment for each scholarship recipient, there is no provision in either the NHSC contracts or statute that specifies how a scholarship recipient shall be informed of that assignment. Thus, this case provides an opportunity to explore the obligations of both the Secretary and the scholarship recipient under the NHSC contracts and statute.
In order to understand the parties' obligations, it is helpful to review the notices that Maldonado acknowledges that he received. First, Maldonado does not dispute that he was informed that his service obligation was scheduled to commence on July 1, 1986. In addition, Maldonado has admitted that he received the December 9, 1985 letter, in which Moritsugu notified him that he had been assigned to Texas and that he should contact Mahy, the Regional Representative, in order to arrange his placement. (Maldonado Aff. P 10.) Maldonado also has admitted receiving the March 31, 1986 letter, in which Dyer informed him that if he did not reply within five working days it would be presumed that he did not intend to fulfill his service obligation and he would be placed in default. (Maldonado Dep. at 95.) Thus, before the Secretary actually made Maldonado's site-specific assignment, Maldonado was on notice that the Secretary was expecting his cooperation in the assignment process and that if he had any questions regarding his assignment he should contact either his Regional Representative or Moritsugu. Nevertheless, Maldonado made no effort to contact anyone about his assignment and seems to have simply ignored those letters.
Maldonado also admits that he received the May 12, 1986 letter which stated, in part, that "since you have not responded to our recent mailgram, we assume that you do not intend to fulfill your NHSC scholarship obligation at the site to which you were assigned. " (Lee Dec., Ex. P) (emphasis added). That letter also informed Maldonado that he would be placed in default on July 1, 1986. Maldonado offers no explanation for his failure to contact anyone to learn where he had been assigned, or to make clear that he did intend to commence his service on July 1, 1986.
Maldonado, in fact, offers no meaningful explanation for his failure to commence service as scheduled on July 1, 1986. Instead, Maldonado has submitted carefully worded affidavits and deposition testimony which avoid that issue and focus only on the Secretary's failure to make a proper assignment. For example, Maldonado states:
NHSC never made or communicated to me a site specific assignment to a location at which I was obligated to fulfill my service obligation. Therefore, NHSC failed to comply with its own placement procedures and statutory mandate and erroneously declared me to be in default. In short, I never refused to fulfill a valid site-specific placement assignment and consequently I did not breach my NHSC Scholarship Contracts service obligation.
(Maldonado Aff. P 6.) And, in response to the question, "In May of 1986, were you under the assumption that you had to complete your service obligation starting July 1st, 1986?," Maldonado stated, "It was my understanding that if I was placed by the National Health Services Corps for July 1, 1986, that I would have to comply with that service obligation at that time." (Maldonado Dep. at 96.)
An NHSC scholarship recipient cannot simply ignore correspondence from NHSC officials, particularly when that correspondence specifically directs the recipient to contact a particular person within a specific period of time. Furthermore, Maldonado had notice that his approved deferment for his general surgery residency expired on June 30, 1986, and that he was obligated to commence service on July 1, 1986. Assuming that he did not receive the May 1 mailgram, Maldonado should have contacted Moritsugu, Mahy, or Dyer to inquire if an assignment had been made so that he could commence his service according to schedule. Moreover, upon receipt of either the letter dated May 12 or the notice of default dated July 1, 1986, Maldonado had an obligation to contact someone at the NHSC to make clear that he did intend to fulfill his service obligation and that he had not yet received an assignment.
Instead, Maldonado chose to allow more than twelve months to go by after he received notice of default before making any response.
When Maldonado agreed to accept $ 46,878 in NHSC funding to finance his medical education, he made a commitment to provide three years of service in an HMSA. Although Maldonado had notice that his service was to commence on July 1, 1986, it appears that he simply decided to do nothing and to hope for some technical defect to avoid that service. However, Maldonado may not avoid his service obligation, nor may he avoid summary judgment, simply by disputing whether he actually received one piece of correspondence from the NHSC, after having ignored several others. It is clear from the record that the Secretary did not fail to make a site-specific assignment and that the Secretary sent Maldonado enough information to put him on notice that an assignment would be made sometime after April 15, 1986, and that such an assignment had in fact been made. In contrast, Maldonado made no good faith effort to live up to his obligation in the contract, and so was properly placed in default.
III. Affirmative Defenses
Maldonado asserts a laundry list of affirmative defenses, none of which has merit. Three of these defenses are based on Maldonado's contention that he should have been allowed to defer his service to complete his urology residency and that his current practice as a urologist satisfies his obligation under the contract. First, because Maldonado did not request a deferment until a full year after he was placed in default, the Secretary's decision to deny that request was discretionary and is not reviewable under the Administrative Procedure Act. 5 U.S.C. § 701(a)(2); see United States v. Gary, 963 F.2d at 183-84. In any event, the Secretary's decision was not arbitrary and capricious because Maldonado had been informed that only residencies in primary care specialties would be approved for deferment.
Second, according to both the contracts and the statute, the Secretary has the discretion to assign scholarship recipients to a specific site for service. See United States v. Lopez, 1993 U.S. Dist. LEXIS 20897, No. 91-730, slip op. at 21-22 (S.D.N.Y. March 29, 1993). Maldonado cites no authority for the proposition that the Secretary abused her discretion in failing to assign Maldonado to a site that he had chosen, or in deciding not to retroactively approve Maldonado's current practice as satisfying his obligations under the contracts. Indeed, the NHSC program is not intended "as a mechanism solely to subsidize health professional education" but "as a means to overcome a geographic maldistribution of health professionals." S.Rep.No. 887, 94th Cong., 1st Sess. 201 (1975). Thus, the Secretary must have the ability to place scholarship recipients in areas that she decides are most in need of medical services.
Next, Maldonado asserts that his financial obligations should be waived pursuant to 42 U.S.C. § 254o(d)(2). That section provides that:
The Secretary shall by regulation provide for the partial or total waiver or suspension of any obligation of service or payment by an individual under the Scholarship Program (or a contract thereunder) . . . whenever compliance by the individual is impossible or would involve extreme hardship to the individual and if enforcement of such obligation with respect to any individual would be unconscionable.