Stopping Crippling Financial Penalties on Medical Professionals

On September 5, 2024, Student Defense, Upper Seven Law, and Chehardy Sherman Williams filed a lawsuit in the U.S. District Court for the Middle District of Alabama against the U.S. Department of Health and Human Services (HHS) on behalf of plaintiff Haley Clements, a nurse practitioner who joined the National Health Service Corps (NHSC) in 2020. After receiving $25,000 in student loan relief under the program, Clements was fined over $217,000 because she was unable to find a job that meets the program’s criteria within commuting distance of her home. 

The NHSC is a federal program established by Congress to address healthcare staffing shortages in certain urban, rural, and tribal communities. Participants in the program can receive up to $100,000 in loan repayment in exchange for two to three years of service at an approved site. To guard against fraud, Congress gave HHS the authority to penalize participants who abuse the program, but the agency has misused that power to impose draconian penalties on well-intentioned program participants.  

However, reporting by The Wall Street Journal revealed that HHS and the Health Resources & Services Administration (HRSA) have administered the Loan Repayment Program rigidly, imposing massive penalties on participants who were unable to complete their service due to their facility’s pandemic-related struggles or even bad advice from the agency itself. In one case, a participant was penalized more than $270,000 in exchange for less than $10,000 in student loan relief. 

Clements is a mother of three, and the primary caregiver for her ailing parents and in-laws in Eufaula, Alabama. In 2020, she had been working at a rural healthcare clinic in Eufaula for six years when she signed up to join the NHSC, which obligated her to continue working at the same clinic for three years in exchange for a student loan repayment grant of $25,187.76. Months after signing the contract with the NHSC, Clements was unexpectedly left without a supervising physician at the clinic. Because she could not stay at the clinic without jeopardizing her medical license, she was forced to resign.  

Clements immediately informed the NHSC that she would no longer be able to fulfill her contract, and, at their request, overnighted the grant money back to the agency. Nevertheless, the NHSC refused to terminate her contract, demanding that she “return to service” and giving her 90 days to relocate her family to sites they identified for her in Maryland or North Carolina. Although Clements continues to treat an underserved population in her current job in Eufaula, her work does not qualify, and the NHSC demands that she either relocate or pay the massive penalty.

As the lawsuit explains, the penalty is “grossly disproportional” to the amount at issue in violation of the Eighth Amendment’s Excessive Fines Clause. In addition, by imposing these damages against Clements without a jury trial or any opportunity to appear before a tribunal at all, the Agency has violated the Seventh Amendment. Clements seeks to be relieved from the penalties.

Clements also asks the Agency to engage seriously with Student Defense’s petition for rulemaking submitted on August 8, 2022. In that petition, Student Defense, along with three medical professionals, called on HHS to amend its rules and release participants from these penalties when, for example, a participant’s position is terminated by the NHSC facility without cause and the participant is unable to find another position within a reasonable distance from their home. 

The press release issued after this case was filed is available here.

News Coverage:

• A Nurse Practitioner’s $25,000 in Student-Debt Relief Turned Into a $217,500 Bill From the Government | September 9, 2024 | The Wall Street Journal

Case Documents:

• Clements v. Becerra, et al. Complaint (September 5, 2024)