§254o. Breach of scholarship contract or loan repayment contract
(a) Failure to maintain academic standing; dismissal from institution; voluntary termination; liability; failure to accept payment
(1) An individual who has entered into a written contract with the Secretary under section 254l of this title and who-
(A) fails to maintain an acceptable level of academic standing in the educational institution in which he is enrolled (such level determined by the educational institution under regulations of the Secretary),
(B) is dismissed from such educational institution for disciplinary reasons,
(C) voluntarily terminates the training in such an educational institution for which he is provided a scholarship under such contract, before the completion of such training, or
(D) fails to accept payment, or instructs the educational institution in which he is enrolled not to accept payment, in whole or in part, of a scholarship under such contract,
in lieu of any service obligation arising under such contract, shall be liable to the United States for the amount which has been paid to him, or on his behalf, under the contract.
(2) An individual who has entered into a written contract with the Secretary under section 254l–1 of this title and who-
(A) in the case of an individual who is enrolled in the final year of a course of study, fails to maintain an acceptable level of academic standing in the educational institution in which such individual is enrolled (such level determined by the educational institution under regulations of the Secretary) or voluntarily terminates such enrollment or is dismissed from such educational institution before completion of such course of study; or
(B) in the case of an individual who is enrolled in a graduate training program, fails to complete such training program and does not receive a waiver from the Secretary under section 254l–1(b)(1)(B)(ii) of this title,
in lieu of any service obligation arising under such contract shall be liable to the United States for the amount that has been paid on behalf of the individual under the contract.
(b) Failure to commence or complete service obligations; formula to determine liability; payment to United States; recovery of delinquent damages; disclosure to credit reporting agencies
(1)(A) Except as provided in paragraph (2), if an individual breaches his written contract by failing (for any reason not specified in subsection (a) of this section or section 254p(d) 1 of this title) either to begin such individual's service obligation under section 254l of this title in accordance with section 254m or 254n of this title or to complete such service obligation, the United States shall be entitled to recover from the individual an amount determined in accordance with the formula
t−s
A=3φ(------------------)
t
in which "A" is the amount the United States is entitled to recover, "φ" is the sum of the amounts paid under this subpart to or on behalf of the individual and the interest on such amounts which would be payable if at the time the amounts were paid they were loans bearing interest at the maximum legal prevailing rate, as determined by the Treasurer of the United States; "t" is the total number of months in the individual's period of obligated service; and "s" is the number of months of such period served by him in accordance with section 254m of this title or a written agreement under section 254n of this title.
(B)(i) Any amount of damages that the United States is entitled to recover under this subsection or under subsection (c) of this section shall, within the 1-year period beginning on the date of the breach of the written contract (or such longer period beginning on such date as specified by the Secretary), be paid to the United States. Amounts not paid within such period shall be subject to collection through deductions in Medicare payments pursuant to section 1395ccc of this title.
(ii) If damages described in clause (i) are delinquent for 3 months, the Secretary shall, for the purpose of recovering such damages-
(I) utilize collection agencies contracted with by the Administrator of the General Services Administration; or
(II) enter into contracts for the recovery of such damages with collection agencies selected by the Secretary.
(iii) Each contract for recovering damages pursuant to this subsection shall provide that the contractor will, not less than once each 6 months, submit to the Secretary a status report on the success of the contractor in collecting such damages. Section 3718 of title 31 shall apply to any such contract to the extent not inconsistent with this subsection.
(iv) To the extent not otherwise prohibited by law, the Secretary shall disclose to all appropriate credit reporting agencies information relating to damages of more than $100 that are entitled to be recovered by the United States under this subsection and that are delinquent by more than 60 days or such longer period as is determined by the Secretary.
(2) If an individual is released under section 254n 1 of this title from a service obligation under section 234 1 of this title (as in effect on September 30, 1977) and if the individual does not meet the service obligation incurred under section 254n 1 of this title, subsection (f) of such section 234 1 of this title shall apply to such individual in lieu of paragraph (1) of this subsection.
(c) Failure to commence or complete service obligations for other reasons; determination of liability; payment to United States; waiver of recovery for extreme hardship or good cause shown
(1) If (for any reason not specified in subsection (a) of this section or section 254p(d) 1 of this title) an individual breaches the written contract of the individual under section 254l–1 of this title by failing either to begin such individual's service obligation in accordance with section 254m or 254n of this title or to complete such service obligation, the United States shall be entitled to recover from the individual an amount equal to the sum of-
(A) in the case of a contract for a 2-year period of obligated service-
(i) the total of the amounts paid by the United States under section 254l–1(g)(2) of this title on behalf of the individual for any period of obligated service; and
(ii) an amount equal to the unserved obligation penalty;
(B) in the case of a contract for a period of obligated service of greater than 2 years, and the breach occurs before the end of the first 2 years of such period-
(i) the total of the amounts paid by the United States under section 254l–1(g)(2) of this title on behalf of the individual for any period of obligated service; and
(ii) an amount equal to the unserved obligation penalty; and
(C) in the case of a contract for a period of obligated service of greater than 2 years, and the breach occurs after the first 2 years of such period-
(i) the total of the amounts paid by the United States under section 254l–1(g)(2) of this title on behalf of the individual for any period of obligated service not served; and
(ii) if the individual breaching the contract failed to give the Secretary notice, that the individual intends to take action which constitutes a breach of the contract, at least 1 year (or such shorter period of time as the Secretary determines is adequate for finding a replacement) prior to the breach, $10,000.
(2) For purposes of paragraph (1), the term "unserved obligation penalty" means the amount equal to the product of the number of months of obligated service that were not completed by an individual, multiplied by $1,000, except that in any case in which the individual fails to serve 1 year, the unserved obligation penalty shall be equal to the full period of obligated service multiplied by $1,000.
(3) The Secretary may waive, in whole or in part, the rights of the United States to recover amounts under this section in any case of extreme hardship or other good cause shown, as determined by the Secretary.
(4) Damages that the United States is entitled to recover shall be paid in accordance with subsection (b)(1)(B) of this section.
(d) Cancellation of obligation upon death of individual; waiver or suspension of obligation for impossibility, hardship, or unconscionability; release of debt by discharge in bankruptcy, time limitations
(1) Any obligation of an individual under the Scholarship Program (or a contract thereunder) or the Loan Repayment Program (or a contract thereunder) for service or payment of damages shall be canceled upon the death of the individual.
(2) 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) or the Loan Repayment 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.
(3)(A) Any obligation of an individual under the Scholarship Program (or a contract thereunder) or the Loan Repayment Program (or a contract thereunder) for payment of damages may be released by a discharge in bankruptcy under title 11 only if such discharge is granted after the expiration of the five-year period beginning on the first date that payment of such damages is required, and only if the bankruptcy court finds that nondischarge of the obligation would be unconscionable.
(B)(i) Subparagraph (A) shall apply to any financial obligation of an individual under the provision of law specified in clause (ii) to the same extent and in the same manner as such subparagraph applies to any obligation of an individual under the Scholarship or Loan Repayment Program (or contract thereunder) for payment of damages.
(ii) The provision of law referred to in clause (i) is subsection (f) of section 234 2 of this title, as in effect prior to the repeal of such section by section 408(b)(1) of
(July 1, 1944, ch. 373, title III, §338E, formerly title VII, §754, as added Oct. 12, 1976,
References in Text
Section 254p of this title, referred to in subsecs. (b)(1)(A) and (c)(1), was in the original a reference to section 338F of act July 1, 1944, which was renumbered section 338G by
Section 234 of this title, referred to in subsecs. (b)(2) and (d)(3)(B)(ii), was repealed by
Section 254n of this title, referred to in subsec. (b)(2), in the original referred to section 753, meaning section 753 of the Public Health Service Act, which was classified to section 294v of this title. Section 753 was redesignated section 338C of the Public Health Service Act by
Codification
Section was formerly classified to section 294w of this title prior to its renumbering by
Prior Provisions
A prior section 338E of act July 1, 1944, was renumbered section 338F by
Amendments
1990-Subsec. (d)(3).
1988-Subsec. (b)(1)(B)(i).
1987-
Subsec. (a).
Subsec. (b)(1).
Subsec. (b)(1)(B)(i).
Subsec. (c).
Subsec. (d).
1983-Subsec. (b)(1).
1981-Subsec. (a).
Subsec. (b).
Subsecs. (c), (d).
1977-Subsec. (c).
Effective Date of 1990 Amendment
Section 203(b) of
Effective Date of 1988 Amendment
Except as specifically provided in section 411 of
Effective Date
Section effective Oct. 1, 1977, see section 408(b)(1) of
Effective Date; Savings Provision; Credit for Period of Internship or Residency Before September 30, 1977, Towards Service Obligation
See section 408(b)(2) of
Special Repayment Provisions
Section 204 of
"(a)
"(1)
"(A)(i) breached a written contract entered into under section 338A of the Public Health Service Act (42 U.S.C. 254l) by failing either to begin such individual's service obligation in accordance with section 338C of such Act [section 254m of this title] (as redesignated by section 201(2) of this Act) or to complete such service obligation; or
"(ii) otherwise breached such a contract; and
"(B) as of November 1, 1987, is liable to the United States under section 338E(b) of such Act (as redesignated by section 201(2) of this Act) [subsec. (b) of this section],
shall be relieved of liability to the United States under such section if the individual provides notice to the Secretary in accordance with paragraph (2) and provides service in accordance with a written contract with the Secretary that obligates the individual to provide service in accordance with subsection (b) or (c). The Secretary may exclude an individual from relief from liability under this section for reasons related to the individual's professional competence or conduct.
"(2)
"(3)
"(4)
"(5)
"(6)
"(b)
"(1)
"(A)(i) is on the Health Manpower Shortage Area Placement Opportunity List created by the Secretary of Health and Human Services for obligated service under section 338C of the Public Health Service Act (as so redesignated) to begin in fiscal year 1988 and to which no individual who is not described in subsection (a)(1) has been assigned by a date determined by the Secretary; or
"(ii) is on the Health Manpower Shortage Area Placement Opportunity List created by the Secretary of Health and Human Services for obligated service under section 338C of the Public Health Service Act (as so redesignated) to begin in fiscal year 1989; and
"(B) has agreed to permit the individual to serve at such site.
"(2)
"(c)
"(1) to-
"(A) serve in accordance with subpart II of part D of title III of the Public Health Service Act (42 U.S.C. 254d et seq.) for the period of such individual's service obligation remaining under section 338C of the Public Health Service Act [section 254m of this title] (as redesignated by section 201(2) of this Act) at a site that is on a supplemental Health Manpower Shortage Area Placement Opportunity List created by the Secretary of Health and Human Services for obligated service under section 338C of the Public Health Service Act (as so redesignated) and that has agreed to permit the individual to serve at such site; and
"(B) pay, in accordance with guidelines established by the Secretary of Health and Human Services, to the United States the sum of the amounts paid under subpart II of part D of title III of such Act to or on behalf of the individual reduced by any amount paid, before entering into the contract, by such individual to the Secretary with respect to the individual's indebtedness under such part D [section 254a–1 et seq. of this title]; or
"(2) to serve in accordance with such subpart II [section 254d et seq. of this title] at a site described in paragraph (1) for 150 percent of such individual's remaining service obligation under section 338C of such Act [section 254m of this title] (as so redesignated).
"(d)
"(1) shall include any site to which a National Health Service Corps member was previously assigned but which in fiscal year 1988 or 1989 will not have such member or a member of the National Health Service Corps to replace such member unless the Secretary of Health and Human Services determines that such site may reasonably be expected to recruit a health care professional from other than the Corps;
"(2) shall include any migrant health center receiving funds under section 329 of the Public Health Service Act (42 U.S.C. 247d) [section 254b of this title] or community health center receiving funds under section 330 of such Act (42 U.S.C. 254c) unless the Secretary of Health and Human Services determines that such center has been able to recruit health care professionals from other than the Corps to serve at the center and may reasonably be expected to recruit such health care professionals in the future;
"(3) may include any other site selected by the Secretary; and
"(4) shall designate the type of health care professional or medical specialist who is eligible to serve at the sites included on the list.
A site may be included on the supplemental list only if, at the time the list is created, the Secretary determines that the site meets the criteria prescribed by section 332 of such Act (42 U.S.C. 254e).
"(e)
"(1)
"(A) service by the individual in accordance with subsection (c) would be in the best interests of the National Health Service Corps; and
"(B) allowing such service would alleviate a substantial hardship for such individual.
"(2)
Existing Proceedings
Section 308(b) of
Section Referred to in Other Sections
This section is referred to in sections 254l, 254l–1, 254o–1, 254p, 288–2, 288–4, 288–5, 293b, 1395ccc of this title.