U.S. Department of Health and Human Services sued over astronomical student loan repayment penalties
FOR IMMEDIATE RELEASE
September 5, 2024
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U.S. Department of Health and Human Services sued over astronomical student loan repayment penalties
Plaintiff Haley Clements alleges that the NHSC penalties violate the Excessive Fines Clause of the 8th Amendment and her 7th Amendment right to a jury trial.
Student Defense, Upper Seven Law, and the law firm Chehardy Sherman Williams today filed a complaint 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 and, after receiving $25,000 in student loan relief, has been fined over $217,000 in penalties 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.
“The NHSC was meant to help healthcare heroes like Haley Clements provide critical medical services in high-needs areas, not bankrupt them when things beyond their control go wrong,” said Alex Elson, vice president and co-founder of the National Student Legal Defense Network. “HHS’s decision to apply massive penalties in such a rigid way has been devastating for many medical professionals and to the reputation of this very important program.”
Clements is not the only healthcare worker to be crushed by these draconian penalties. In 2022, the Wall Street Journal reported on other similar penalties, including one participant who was fined $270,000 after being awarded less than $10,000 in student relief.
“The penalties in Haley’s case are fundamentally unjust,” said Rylee Sommers-Flanagan, executive director of Upper Seven Law and one of Clements’s attorneys. “Haley has dedicated herself to providing care for the most vulnerable members of her community. Now, because she’s unable to comply with the federal government’s red tape, the agency is punishing her with a fine that is more than 10 times her grant amount.”
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.
She 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 NHSC Loan Repayment Program enjoys broad bipartisan support, and these measures would ensure HHS and HRSA are administering the program consistent with Congressional intent.
“Before I applied for the NHSC loan forgiveness program, I owed roughly $25,000 in student loans,” said Plaintiff Haley Clements. “I now owe $218,000 in penalties — almost ten times the original amount. When I chose to move back to my hometown to provide medical services to my community, it should have made my and my patients' lives better. Instead, it made things unimaginably worse. I sincerely hope that by hearing my story, HHS will amend its rules for this program so that no other healthcare worker has to go through what I have been through.”