Unpublished Disposition, 849 F.2d 1476 (9th Cir. 1983)

No. 87-2406.

United States Court of Appeals, Ninth Circuit.

Before KOELSCH and LEAVY, Circuit Judges and WILLIAM J. REA, District Judge^** .

MEMORANDUM^* 

The United States sued Dr. Reatha Marlene Fowler for breach of her National Health Services Corps (NHSC) and Public Health Services (PHS) Scholarship contracts. Ruling on cross motions for summary judgment, the district court awarded judgment for the government. We affirm.

BACKGROUND

Fowler attended four years of medical school on government scholarships. In exchange she agreed to serve four years as a medical doctor in a Health Manpower Shortage Area ("HMSA") designated by the Secretary of Health and Human Services ("Secretary").¹ 

Fowler was assigned to a region of the country that she claimed was incompatible with her lifestyle, preferences and needs. After she unsuccessfully appealed the Secretary's designation, she informed the NHSC by letter and by phone that the assignment was "totally unacceptable." The Secretary in turn treated these communications as an anticipatory repudiation of Fowler's service obligation and declared her in default. In the instant suit, the government seeks recovery of the financial obligation it claims Fowler owes pursuant to the default provisions incorporated into the Scholarship Agreements.² 

ARGUMENT

Fowler denies that she defaulted on her service obligation. To the contrary, she claims that the government breached its obligations by (1) failing to consider her needs and preferences in making the regional assignment and (2) by failing to assign her to a specific HMSA within the region. She also argues that she has fulfilled her service obligation through her work in an HMSA in Oakland, California. We examine each claim seriatim.

Fowler's first contention presupposes that the Information Bulletins impose a duty on the Secretary to consider the physician's needs, background and preferences in making the assignment. We have not previously decided whether the Secretary is bound by such a duty or whether the Secretary has absolute discretion.³  Resolution of this issue, however, is unnecessary to our disposition because we conclude that the Secretary did consider Fowler's needs, background and preferences.

The Secretary scored Fowler's Site Selection Questionnaire not once but twice. Although Fowler's highest marks were in her first choice, Region IX (California, Nevada, Hawaii, Arizona, Guam, Trust Territories), her point total in that region, even after giving Fowler credit for her companion's home state, did not warrant her placement there. Region IX is a traditionally competitive placement location and had already received its allotted share of health professionals. Other more needy regions had not. The only other Region in which Fowler scored was Region V, but she had not ranked Region V in her list of her top five preferences. Region VI (Arkansas, Louisiana, New Mexico, Oklahoma, Texas), to which she was assigned, was her fifth choice. The staffing needs of her second, third and fourth choices, like the first, were met by candidates with higher scores for the particular region.⁴ 

We reject Fowler's argument that had the Secretary properly considered her personal needs and preferences she would have been assigned to Region IX because she would have scored 118 additional points in the Absolute Personal Category. Her needs were not sufficiently compelling to warrant points awarded under the "Absolute Personal" category.⁵ 

The government has explained its reasons for placing Fowler in Region VI. We have studied the record and are satisfied that it shows that Fowler's needs, background and preferences were considered. Because Fowler has not made a prima facie showing, either through her affidavit or through other support in the record, of the Secretary's alleged failure to consider these factors, summary judgment on this issue was proper. See Celotex Corp. v. Cartrett, 106 S. Ct. 2548 (1986).

Fowler next claims that her service obligation never matured because the Secretary breached its obligation to assign her to a specific HMSA within Region VI. We disagree. True, the Secretary never made such an assignment, but that is because the government had declared her in default prior to the date on which the specific assignment would otherwise have been made. We refuse to hold that the Secretary must make an assignment to a specific HMSA to place a physician in default when, as here, the physician has flatly declared that she would not accept it. The law does not require useless acts.

Indeed, to hold otherwise would thwart the legislature's intentions in setting up the scholarship and NHSC program. To require assignment in such circumstances would not only be meaningless, but it might very well prevent the assignment of another physician to a needy site. The areas in the most need, presumably in areas of the country less desirable than others, would be the victims of such an irrational approach to construing the parties' obligations.

Fowler's reliance on cases in which the NHSC did make the actual assignment to a specific HMSA even after the physician expressed her unwillingness to go there is misplaced. In those cases, unlike here, the NHSC had not placed the physician in default. Whether the NHSC interpreted the physician's communications in those cases as simply expressing reluctance rather than unequivocal renunciation of the obligation we do not know. Suffice it to say, however, that in those cases the Secretary made the assignment because there was a chance the physician would take it. In this instance the government regarded (and we believe with full justification) Fowler's communications as an anticipatory repudiation of her service obligation. Fowler, of course, denies that she renounced her intention to fulfill her service obligation. Whatever her putative intention may have been, the determinative issue is the reasonableness of the government's interpretation of her communications. We conclude the government's interpretation and its placing Fowler in default status were reasonable.

By letter to Dr. Schneider dated October 29, 1982, Fowler advised the NHSC that its assignment was "totally unacceptable." She told the NHSC Central Office by telephone on November 18 that she "would not accept any assignment in Arkansas, Texas or Oklahoma." And in a letter on the same date, Fowler wrote "I have a service obligation with the PHS [Public Health Services]. I have been assigned to a region which is unacceptable to me and my appeal has been refused. Please send me information regarding how I can make monetary repayment of my obligation, ie how much will it cost me?"

The government made it clear to Fowler that it had concluded she had renounced her obligation and that she would be in default as of July 1, 1983. Thus, on February 23, 1983, the NHSC wrote that it "understands that you do not intend to begin your service obligation on July 1, 1983. You will therefore be in breach of the conditions of your award as of that date." The letter also outlined Fowler's resulting financial obligations. Another letter much to the same effect was sent on June 29, 1983.

Even if Fowler had misstated her intentions, she was clearly on notice of any such error and had ample opportunity to avoid the threatened default. But she did not. The first communication from Fowler after she was on notice of the government's position was not until almost two years later in July of 1984 when she requested approval of her self-selected private placement option.

Because Fowler anticipatorily repudiated her service obligation, the NHSC was not thereafter obliged to assign Fowler to a specific HMSA. No genuine issues of fact existing, summary judgment on this issue was also proper.

Because Fowler defaulted on July 1, 1983, we need not address her next argument that she has fulfilled her obligation through her service at a self-selected HMSA in Oakland, California. Cf. Rendleman, 653 F. Supp. at 320 (finding that Dr. Rendleman had fulfilled his service obligation by working at a self-selected site because he would not have been in default had the NHSC properly considered his HMSA designation request). Both in her briefs and at argument, Fowler conceded that the private placement option is available only to those physicians with a "service obligation." Fowler's "service obligation" was terminated upon default, 42 U.S.C. § 234f(1) (1973); 42 U.S.C. § 254o(b) (1); 42 CFR 62.10(c), and was converted to a financial obligation.

AFFIRMED.