date as specified by the Secretary), be paid to the United States." Courts considering this issue have held that the United States's right of action for recovery of the debt does not accrue until this one-year grace period has expired. See Maldonado, 867 F. Supp. at 1191. In this case, Kokayi defaulted on his service obligation as of July 1, 1985. Thus, the United States's cause of action accrued on July 1, 1986, when Kokayi's payment became due. As this action was not commenced until June 18, 1993, this action is clearly time-barred, absent some tolling of the statute of limitations.
The United States argues that the statute of limitations was tolled for a period of approximately fourteen months, from March 29, 1988 until May 15, 1989, and that its action is therefore timely. The relevant statutory provisions are contained at Pub. L. No. 100-177, 101 Stat. 1000, §§ 204(a)(3) and 204(a)(4) (1987), which were enacted as part of the SRP. Section 204(a)(3) provides that an individual who is notified by the Secretary of HHS that he or she may participate in the SRP "may notify the Secretary that the individual intends to enter into a written contract with the Secretary to provide service" to the NHSC. More significantly for purposes of this action, § 204(a)(4) provides that "if an individual provides notice under paragraph (3), the statute of limitations established by section 2415 of title 28, United States Code, shall be tolled from the time the Secretary receives such notice until such time as it is determined by the Secretary that such individual will not be relieved of liability to the United States under the Public Health Service Act as provided under this section " (emphasis added).
In this case, Kokayi sent a letter to the Director of Health Services Scholarships ("Director") in which he stated that "I wish to participate in the Special Repayment Program for the Public Health/National Health Service Corps Scholarship Support I have received." Although undated, this letter was stamped received on March 29, 1988. It is the United States's position that this letter constituted notification pursuant to § 204(a)(3) and that the six-year statute of limitations was tolled as of that date. The Court agrees. Although Kokayi argues that this letter was ambiguous in that it requested clarification of certain questions and indicated his belief that two provisions of the proposed contract required amendment, there is absolutely no indication in the letter that resolution of these issues was a pre-requisite to his participation in the SRP. Indeed, on May 26, 1988, Kokayi signed a contract enrolling in the SRP. Therefore, the Court concludes as a matter of law that the statute of limitations was tolled as of March 29, 1988.
Kokayi argues that even if the March 29 letter may be construed as tolling the statute of limitations, the toll lasted only until April 19, 1988, when Kokayi received a letter from the United States indicating that the amount of his debt was $ 183,026.67. This argument is similarly without merit. The statute clearly provides that the tolling period begins when the Secretary receives notice that the individual intends to sign a contract to participate in the SRP -- not when the individual finally signs the contract -- and ends when the Secretary determines that the individual will not be relieved of liability. Between the time that Kokayi indicated his intention to participate in the SRP in March and the formal acceptance of the contract in June, he was still technically in default of his service obligations. By providing that the tolling period begins on the date the Secretary receives notice that the individual intends to enter a contract, the statute clearly contemplates that the tolling period will include the time it takes for a formal agreement to be signed and approved. In light of this statutory language, the Court concludes that the mere fact that Kokayi received a letter reminding him of his default during this interim period cannot, without more, be construed as terminating the statutory toll.
The Court also agrees with the United States that the tolling period formally ended on May 15, 1989, the final deadline for Kokayi to match with an approved site under the SRP. On July 13, 1989, the Director sent Kokayi a letter in which he stated that Kokayi was no longer eligible to participate in the SRP because of his failure to match with an approved site by that deadline. As May 15 marked the end of Kokayi's participation in the SRP, he was again in default of his service obligations as of that time and the toll was consequently lifted. Kokayi's conclusory argument that such a reading of the statute reveals that it violates the principle of the separation of powers is without merit. Accordingly, the Court concludes that the statute of limitations was tolled between March 29, 1988 and May 15, 1989 and that this action was therefore timely commenced.
In the alternative, Kokayi argues that the United States should be estopped from pursuing this action because its failure to permit him to serve out his NHSC obligation in Brooklyn was arbitrary and capricious. Kokayi argues that the Secretary's failure to waive repayment of the scholarship funds was also arbitrary and capricious. Taking first Kokayi's contention that the United States is estopped from going forward with this action, this argument is completely without merit. Despite the fact that it is well-established that the six-year contract statute of limitations applies to actions of this type, courts that have considered these cases have held that contractual defenses, including estoppel, cannot be raised in these actions because the business arrangement between the individual physicians and the NHSC, although memorialized in a contract, is a creature of statute, not of arm's-length negotiation. See United States v. Van Horn, 20 F.3d 104, 110 (4th Cir. 1994); United States v. Becker, 995 F.2d 779, 783 (7th Cir. 1993); Rendleman I, 860 F.2d at 1541-1542. Additionally, even if this Court were to address the merits of Kokayi's estoppel claim, it is baseless. First, estoppel is rarely valid against the government. Bloom, 112 F.3d at 205. Second, in order to prove estoppel, Kokayi must demonstrate, among other things, the existence of intentional misconduct on the part of the NHSC. Id. at 206. In this task, he has utterly failed, as it is clear from an examination of the record that the NHSC has given Kokayi a host of opportunities to cure his default under the terms of his contract with the NHSC. For similar reasons, the Court also concludes that Kokayi's affirmative defense of laches is without merit.
Additionally, Kokayi has failed to show the existence of a question of fact with regard to the NHSC's failure to permit him to serve in his Brooklyn neighborhood. As noted above, the Secretary has essentially unrestricted discretion in administering the NHSC program. The Court agrees with the statement of the Court of Appeals for the Fourth Circuit in United States v. Van Horn:
While [defendant] may indeed have served an underserved population, in light of the needs and dictates of the NHSC program, we cannot give [him] relief from [his] debt to the United States. The NHSC program was established so that [HHS] could channel promising young medical students to areas of the country greatly in need of their services. The Secretary must be able to retain control over where the scholarship recipients serve or the program is meaningless. The recipients cannot unilaterally, without proper approval, decide where they wish to serve if the program is to be effective.
20 F.3d 104 at 114; see also Rendleman II, 21 F.3d at 963 ("The Secretary enjoys essentially uncircumscribed authority in assigning scholars to HMSAs [Health Manpower Shortage Areas] . . . . It is neither arbitrary, capricious, nor manifestly contrary to the statute for the Secretary to decline to relinquish . . . the task of prioritizing the needs of the many HMSAs" (internal quotation marks omitted)); Becker, 995 F.2d at 784 ("Congress . . . gave HHS the power to decide what sites would appear on the HPOL and assign [defendant] to a site of its own choosing"); United States v. Gary, 963 F.2d 180, 184-185 (8th Cir. 1992) ("There is nothing in the statute which provides a NHSC scholarship recipient the right to dictate to the Secretary where he will serve."). Based on the foregoing, the Court concludes that the NHSC did not act arbitrarily or capriciously in failing to permit Kokayi to serve out his obligation in Brooklyn.
Similarly, the Court concludes that the Secretary did not act arbitrarily and capriciously in rejecting Kokayi's request for a waiver. In deciding whether to grant a request for a waiver, the HHS must consider:
(1) The participant's present financial resources and obligations;