Stopping Crippling Financial Penalties on Medical Professionals

The National Health Service Corps (NHSC) was established by Congress to address healthcare staffing shortages in certain urban, rural and tribal communities. The NHSC Loan Repayment Program offers student loan relief and grants to incentivize medical professionals to work at NHSC-approved facilities in these areas. Eligible participants can receive up to $50,000 in loan repayment in exchange for two to three years of service at an approved site. Congress also gave HHS the authority to impose penalties on participants who abuse the program. These penalties were designed to guard against fraud and ensure that benefits are provided only to those who comply with the terms of the program.

However, reporting by The Wall Street Journal reveals 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.

Student Defense calls 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.

Additional Information

• On August 8, 2022, Student Defense, along with three medical professionals —Brandi Barrick, Kelsey Bowser and Rhonda Williams —  submitted a Section 553(e) rulemaking petition calling on the U.S. Department of Health and Human Services (HHS) to address the crippling financial penalties it is assessing against medical professionals who participate in the National Health Service Corps (NHSC) Loan Repayment Program.
• Brandi Barrick, a nurse practitioner in Pennsylvania, was accepted into the program in August 2019 and received $25,000 in loan aid. By April 2020, her clinic had experienced a drop in elective procedures due to the pandemic and she was laid off. Shortly thereafter, the Service Corps sent her a notice saying she needed to find another NHSC-qualifying job within 90 days or she would owe the federal government more than $85,000. Ms. Barrick applied for a waiver of her service obligation, citing the extreme hardship imposed by her husband’s health conditions (including stage IV kidney cancer and multiple myeloma), her family’s difficult financial circumstances, and her inability to find a job at an NHSC-approved site in her area. But the agency denied her request, providing her instead with only a temporary suspension.
• Kelsey Bowser, a nurse in Tennessee, was accepted into the program in July 2021 and received $8,300 in loan aid. Shortly after her contract started, her employer offered her a raise and promotion at a nearby location. When Ms. Bowser called to ask whether the relocation would comply with her contract, she was told that it would, so she accepted the promotion and relocated. However, when she submitted the formal transfer request, it was denied. By this time, her old job was filled and the grace period to terminate her contract had expired. Remarkably, the Service Corps is threatening Ms. Bowser with a $270,000 penalty if she does not find a new qualifying position and blamed the misinformation on a “Customer Service Representative.

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

A full copy of the rulemaking petition can be found on the Student Defense website. Student Defense is represented on the petition by the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP.

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