Paul, Weiss Files HHS Rulemaking Petition to Curb Medical Student Loan Debt Penalties

Paul, Weiss and the National Student Legal Defense Network filed a petition for rulemaking with the Department of Health and Human Services requesting that the agency rectify its imposition of crippling financial penalties against medical professionals who participate in the National Health Services Corps Loan Repayment Program.

The program assists healthcare professionals with their student debt in exchange for two to three years of service in medically underserved communities. Congress also gave HHS the authority to impose penalties on participants who abuse the program. As recently reported by The Wall Street Journal, however, the agency has administered the program so rigidly and inflexibly that participants who fell out of compliance through no fault of their own—due to loss of revenue during the pandemic or even incorrect advice given by the agency itself—are facing financial ruin at the hands of HHS. One nurse, for instance, received $8,300 in loan forgiveness under the program but now faces over $270,000 in penalties after accepting a promotion, which the agency incorrectly told her would comply with the program.

The petition requests that HHS amend its rules to waive financial penalties where a participant’s employment is terminated through no fault of their own and to clarify that breach of the service agreement occurs only when there is some fault on the part of the participant. The petition also proposes additional factors for the agency to consider in determining whether to suspend or waive a participant’s service or payment obligations.

The Paul, Weiss team includes, among others, pro bono attorney Tanaz Moghadam and litigation associates Brian Lipshutz, Libby Norford and Sherry Tanious.