US v. Maldonado

• Decision Date: 07 November 1994
• Docket Number: No. 93 Civ. 4210 (MGC).,93 Civ. 4210 (MGC).
• Citation: 867 F. Supp. 1184
• Parties: UNITED STATES of America, Plaintiff, v. Jose Rafael MALDONADO, M.D., Defendant. Jose Rafael MALDONADO, M.D., Third-Party Plaintiff, v. ALBERT EINSTEIN COLLEGE OF MEDICINE OF YESHIVA UNIVERSITY, Third-Party Defendant.
• Court: U.S. District Court — Southern District of New York

867 F. Supp. 1184

UNITED STATES of America, Plaintiff, v. Jose Rafael MALDONADO, M.D., Defendant.

Jose Rafael MALDONADO, M.D., Third-Party Plaintiff, v. ALBERT EINSTEIN COLLEGE OF MEDICINE OF YESHIVA UNIVERSITY, Third-Party Defendant.

No. 93 Civ. 4210 (MGC).

United States District Court, S.D. New York.

November 7, 1994.

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Mary Jo White, U.S. Atty., S.D.N.Y. by Kathleen A. Zebrowski, Asst. U.S. Atty., New York City, for plaintiff.

Reaves & Yates by James A. Reaves, New York City, for defendant and third-party plaintiff.

Martin H. Bockstein by Toby Stone, Gen. Counsel for Yeshiva University, New York City, for third-party defendant.

OPINION

CEDARBAUM, District Judge.

This is an action for breach of three contracts between the Secretary of the Department of Health and Human Services ("Secretary") and Dr. Jose R. Maldonado under the National Health Service Corps ("NHSC") Scholarship Program, 42 U.S.C. § 254l, et seq. The Government claims that Maldonado accepted $46,878 in scholarship funds to finance three years of his medical education, but upon completion of his medical education failed to commence his three-year service obligation in an area designated by the Secretary as a health manpower shortage area ("HMSA").¹ The Government seeks to recover $412,051.41, plus interest from June 11, 1993, pursuant to the liquidated damages provisions of the contracts. The Government also seeks a surcharge of 10% of the amount of the debt pursuant to 28 U.S.C. § 3011. Jurisdiction is based on 28 U.S.C. § 1345.

Maldonado asserts fourteen affirmative defenses and a third-party claim against Albert Einstein College of Medicine of Yeshiva University ("AECOM"). Maldonado moves for summary judgment on the Government's claim, contending that the Government's action is time barred and that the Secretary failed to assign him to a specific site at which to fulfill his service obligation before he was declared in default. The Government cross-moves for summary judgment. AECOM is not involved in either of the motions for summary judgment. For the reasons discussed below, Maldonado's motion for summary judgment is denied, and the Government's motion for summary judgment will be granted unless within thirty days Maldonado submits a specific request for discovery that might raise a genuine issue of material fact.

Facts

The following facts, except where noted, are undisputed. On May 16, 1980, Maldonado signed a contract with the Secretary, accepting a scholarship award for the 1980-81 academic year at AECOM pursuant to the NHSC Scholarship Program. (Lee Dec., Ex. C.) On March 12, 1981, Maldonado signed an extension contract pursuant to which he accepted scholarship funds for the 1981-82 academic year. (Id., Ex. D.) On May 4, 1983, Maldonado entered into his third and final contract with the Secretary, accepting a scholarship award for the 1983-84 academic year. (Id., Ex. E.) These scholarship awards totalled $46,878.

The terms of these contracts are established by statute. 42 U.S.C. § 254l (f). The contract outlines the following "obligations of the Secretary": providing the applicant with a scholarship award; utilizing the applicant to provide health services; and granting a deferral so that the applicant may complete an internship or residency before commencing service. (Lee Dec., Ex. C, § A(1)-(3).) In return, Maldonado agreed to accept the scholarship award; maintain full-time enrollment and an acceptable level of academic standing; and provide one year of service for each year a scholarship is awarded in an area designated by the Secretary as an HMSA. (Id., § B(1)-(6).) In addition, the contract provided that "if the applicant ... fails to begin or complete the period of obligated service incurred under this contract for any reason ..., the United States shall be entitled to recover an amount equal to three times the scholarship funds awarded, plus interest...." (Id. § C(3).)

Following his graduation in June of 1985, Maldonado was granted a one-year deferment of his service obligation so that he could complete a residency in general surgery at Montefiore Medical Center. (Lee Dec., Ex. H.) This residency was to be completed by June 30, 1986 and Maldonado was therefore scheduled to commence his service on July 1, 1986. On August 1, 1985, Dr. Kenneth Moritsugu, then Director of the NHSC, mailed to Maldonado an Information Bulletin regarding the 1986 placement process, a timetable for site selection, and the 1986 HMSA Placement Opportunity List. (Lee Dec., Ex. K.) At that time, Maldonado was advised that he had until August 15, 1985 to complete a site selection questionnaire if he wanted his placement preference considered, and that he had until October 31, 1985 to choose a site under the Early Decision Alternative. (Id.) Maldonado did not submit a questionnaire, nor did he choose a site.

During the next phase of the 1986 placement process, the State or Region Assignment Period, which ran from November 1, 1985 through April 15, 1986, scholarship recipients were assigned to a region and were instructed to match themselves to an approved site within that region. On December 9, 1985, Moritsugu wrote to Maldonado, informing him that he had been assigned to Texas. In that letter, Moritsugu provided to Maldonado the name, address, and telephone number of the Regional Representative, Douglas Mahy, "who is awaiting your contact." (Lee Dec., Ex. L.) The letter further stated that if Maldonado did not match himself to a specific site by April 15, 1986, he would be assigned to a site by the NHSC. (Id.) Maldonado did not respond to Moritsugu's letter, nor did he contact Mahy.

On February 10, 1986, the Texas Department of Health wrote to Maldonado, stating that at that time there were no placement sites in his specialty. (Maldonado Aff. ¶ 11, Ex. G.) On March 10, 1986, Mahy wrote to Maldonado, noting that Maldonado had not yet made any attempt to contact his office as directed in the December 9, 1985 letter. He further noted that the April 15 deadline was approaching and that if Maldonado did not reply, he would be assigned randomly to a specific site or he would be placed in default of his NHSC service obligation. (Lee Dec., Ex. M.) Maldonado did not respond to Mahy's letter. On March 31, 1986, Dr. John Dyer, the NHSC Regional Health Administrator, wrote to Maldonado stating that if he did not reply within five working days, he would presume that Maldonado did not plan to fulfill his service obligation, and he would recommend that Maldonado be placed in default. (Lee Dec., Ex. N.) Once again, Maldonado did not respond.

In a mailgram dated May 1, 1986,² Dyer notified Maldonado that he had been assigned to the Briscoe County Clinic in Silverton, Texas, and that he should respond within two days or would risk being placed in default. (Lee Dec., Ex. O.) Maldonado asserts that he never received that mailgram. (Maldonado Aff. ¶ 15; Maldonado Dep. at 91-92.) In a letter to Maldonado, dated May 12, 1986, Moritsugu wrote 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.) Moritsugu concluded the letter by informing Maldonado that he was recommending that he be placed in default effective July 1, 1986. (Id.) Although that letter is dated May 12, 1986, it bears two postmarks, one with the date May 30, 1986, the other with the date June 2, 1986. (Id.) The registered mail stamp indicates two notification dates, June 2 and 12, 1986. (Id.) Maldonado admits that he received the May 12 letter, but states that he cannot remember when he received it. (Maldonado Dep. at 92-93.) He asserts that he believed that the letter's reference to the "recent mailgram" was to the March 31, 1986 letter from Dyer, and that he did not know that a specific site assignment had been made. (Maldonado Dep. at 95.) Maldonado did not respond to Moritsugu's May 12 letter.

On July 1, 1986, John E. Bird, Chief of the Debt Management Branch of the Division of Fiscal Services, wrote to Maldonado notifying him that he had been placed in default "because you do not intend to begin your service obligation." (Lee Dec., Ex. Q.) He advised Maldonado that as a result of his default he was required, within one year, to pay three times the amount of his scholarship award, plus interest. (Id.) He further advised Maldonado that any questions or requests for review should be sent to the address provided. (Id.) Maldonado did not respond to that letter. On May 12, 1987, James C. Hargrave, Chief of the Accounts Receivable Section of the Debt Management Branch, reminded Maldonado by letter that his debt must be paid in full by July 1, 1987. (Lee Dec., Ex. R.) He also offered him an opportunity to fulfill his obligation through service at an HMSA pursuant to a Forbearance Agreement. (Id.) Maldonado did not respond to that letter.

On July 24, 1987, Hargrave sent Maldonado his "final notice," which stated that his NHSC debt had become due on July 1, 1987, and that if he did not respond within sixty days, the debt would be referred to a private collection agency or the Department of Justice. (Lee Dec., Ex. S.) Hargrave further informed him that if he wished to have an explanation of the debt, an opportunity to dispute any information about the debt, or an administrative review of the debt, he should send a written request to the address provided. (Id.) Finally, Hargrave again offered Maldonado the opportunity to enter into a Forbearance Agreement. (Id.) In a notice dated August 3, 1987, the Department of Health and Human Resources informed Maldonado that his debt was being referred to the Internal Revenue Service for collection by offsetting his tax refunds. (Lee Dec., Ex. T.) He was also informed that he had the right to present evidence to contest the debt and that if he wished to do so, he should...