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United States v. Levin

July 27, 2007

UNITED STATES OF AMERICA, PLAINTIFF
v.
MARY B. LEVIN, DEFENDANT



The opinion of the court was delivered by: John Garrett Penn United States District Judge

MEMORANDUM

The United States filed suit June 8, 2005 to recover tuition paid on behalf of Mary Levin under the National Health Service Corps ("NHSC") Scholarship Program, authorized by 42 U.S.C. § 254o. The Complaint alleges that Levin breached her scholarship contract. (Compl. ¶ 1.) The Defendant, Ms. Levin, seeks summary judgment, arguing that the suit was not timely filed under the six-year statute of limitations that she claims is applicable. The Defendant's Motion for Summary Judgment is hereby denied.

I. Standard of Review

The standard of review for a motion of summary judgment is whether a genuine issue exists as to any material fact and whether the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56. A fact is not material unless it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 248, 106 S.Ct. 2510 (1986). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id. at 247, 106 S.Ct. 2510 (emphasis omitted). There are no facts in dispute material to the date the government's right of action against Levin accrued. It accrued after June 8, 1999, such that the government's claim was not barred by the statute of limitations and Levin is not entitled to summary judgment.

II. Background

In 1994, Levin signed an agreement to participate in the NHSC Scholarship Program, which provides scholarship monies to pay for medical school in return for participants' agreement to provide two or more years of service following graduation and certification as a medical professional. Among the conditions of the agreement, participants must "maintain an acceptable level of academic standing." (Ex. B.) See also 42 C.F.R. § 62.10(b). Levin struggled academically her first several semesters in medical school due to alleged medical problems. (Mem. P. & A. Supp. Def.'s Mot. Summ. J. 2-3.) In January 1996, Levin's educational institution warned her that any additional failing grades would result in her dismissal from the institution. (Mem. Opp'n to Pl.'s Mot. Summ. J. 3.) She subsequently received failing grades in April and May 1996, and, by a letter dated June 13, 1999 or June 14, 1999,*fn1 she was dismissed from the medical program for academic reasons. (See Mem. P. & A. Supp. Def.'s Mot. Summ. J. 8.) (But see Mem. Opp'n Mot. Summ. J. 3.) By a letter dated December 16, 1999, the Department of Health and Human Services ("the agency") informed Levin that she had breached her NHSC agreement as of June 14, 1996 and that she was obligated to repay the government within three years of that date, or June 14, 1999.*fn2 (Decl. Of Christine Herald 3.) Repayment was never made. Both parties agree that during Levin's medical school career, she failed to "maintain an acceptable level of academic standing," thereby breaching the terms of her NHSC scholarship contract. (Ex. B.)

To recover Levin's obligation, the government instituted suit June 8, 2005 to enforce the damages provision of Levin's NHSC agreement. Under 28 U.S.C. § 2415, the default statute of limitations for actions founded upon contract claims, the government has a six-year statutory period to commence litigation. NHSC scholarship agreements are properly considered contracts and were subject to this six-year statutory period prior to 2002. See United States v. Westerband-Garcia, 35 F.3d 418, 421 (9th Cir. 1994); United States v. Avila, 687 F. Supp. 778, 783 (W.D.N.Y. 1988). In 2002, however, the Health Care Safety Net Amendments of 2002, Pub. L. No. 107-251 (2002), altogether eliminated a statute of limitations for actions enforcing NHSC agreements. The Court need not explore whether or not to apply Pub. L. No. 107-251 retroactively,*fn3 however, because the government's claim is timely even under the previously applicable six-year statutory period. Thus, the following analysis assumes the applicability of a six-year statute of limitations.

III. Right of Action Accrues Three Years from Breach of Contract

The government's right of action accrues the date damages to be paid the government are due -- not the date of the breach of an NHSC agreement. See Avila, 687 F. Supp. at 783. See also United States v. Santos, 785 F. Supp. 843 (N.D. Cal. 1992) (holding that the statutory period begins to run when the government acquires the right to pursue a claim); United States v. Richards, No. 87-1103, 1988 WL 4575, at *1 (4th Cir. Jan. 19, 1988) (per curiam) (holding debt becomes due and statute of limitations begins running three years after date of the breach). Under the terms of the scholarship contract to which Levin agreed, repayment of scholarship funds must be made within three years of the date the participant becomes liable to make the payment. (Ex. B). See also 42 C.F.R. § 62.10(b). Thus, the date of a participant's breach is relevant insofar as the government's right of action accrues three years from the date that the substantive term of the NHSC agreement is breached.*fn4 The government argues that the breach occurred June 14, 1996, when Levin was formally dismissed from school. Levin, however, claims that the breach occurred in either April or May 1996, when she received failing grades in her final classes. (Mem. P. &. A. Supp. Def.'s Mot. Summ. J. ¶¶ 5-6.)

IV. Language of Regulation Controls

Levin breached her scholarship contract when she "fail[ed] to maintain an acceptable level of academic standing in the course of study for which the scholarship award [was] provided." (See Ex. B.). In constructing when an "acceptable level of academic standing" is no longer being maintained, the authorizing statute and agency regulations pursuant to which the contract terms were drafted are controlling. Westerband-Garcia, 35 F.3d at 421. ("[S]tatutory intent rather than common law contract defenses control the interpretation of the terms of the NHSC scholarship agreement.") Under the authorizing statute, the agreement is breached when a participant, "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)." 42 U.S.C. § 254o(a)(1)(a). Because agency involvement is expressly invited by statute, the subsequent regulation, 42 C.F.R. § 62.10(b), governs with respect to how educational institutions are supposed to determine that an acceptable level of academic standing has been transgressed by participating students. Chevron, U.S.A. v. Natural Resources Defense Council, 468 U.S. 1227, 105 S.Ct. 28 (1984). Thus, the following agency regulation is incorporated into Levin's NHSC agreement:

"When a participant fails to maintain an acceptable level of academic standing, is dismissed from the school for disciplinary reasons, or voluntarily terminates the course of study or program for which the scholarship was awarded before completing the course of study or program, the participant must, instead of performing any service obligation, pay to the United States an amount equal to all scholarship funds awarded.

42 C.F.R. § 62.10(b).*fn5

In ascertaining the date Levin "fail[ed] to maintain an acceptable level of academic standing," the language of the regulation itself, rather than any subsequent agency interpretation, governs if the language of the regulation is clear and unambiguous. Christensen v. Harris County, 529 U.S. 576, 588, 120 S.Ct. 1655, 1663 (2000) ("To defer to the agency's position [when constructing an unambiguous regulation] would be to permit the agency, under the guise of interpreting a regulation, to create de facto a new regulation."). While the government has introduced evidence of a "long-standing agency interpretation" under which Levin breached her agreement when she was dismissed from school, this interpretation is not entitled to any deference unless the language of the regulation is ambiguous. See Christensen, 529 U.S. at 586, 120 S.Ct. at 1662. The inquiry into whether a regulation is ambiguous depends on whether "the issue [at hand] is settled by the plain language of the regulation." United States. v. Deaton, 332 F.3d 698, 710 (4th Cir. 2003). The regulation is ambiguous if it can reasonably be interpreted multiple ways giving rise to multiple conclusions. See Drummond Coal Co. v. Hodel, 610 F. Supp. 1489, 1498 (1985). See e.g., Auer v. Robbins, 519 U.S. 452, ...


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