                                                                          F I L E D
                                                                  United States Court of Appeals
                                                                          Tenth Circuit
                         UNITED STATES COURT OF APPEALS
                                                                          MAY 20 1997
                                        TENTH CIRCUIT
                                                                        PATRICK FISHER
                                                                              Clerk


BRETT L. ARRON,

                Plaintiff - Appellant,                    No. 96-2086
        v.                                              (D. New Mexico)
UNITED STATES OF AMERICA,                          (D.C. No. CIV 95-0885-M)

                Defendant - Appellee.
--------------------------------------------

BRETT L. ARRON,
                                                          No. 96-2288
                Plaintiff - Appellant,
                                                        (D. New Mexico)
        v.
                                                    (D.C. No. 96-CV-52-LH)
UNITED STATES OF AMERICA;
DEPARTMENT OF HEALTH AND
HUMAN SERVICES; PUBLIC HEALTH
SERVICE; INDIAN HEALTH
SERVICES; NAVAJO INDIAN
HEALTH SERVICE; DONNA E.
SHALALA, Secretary of the Department
of Health and Human Services;
TIMOTHY FLEMING; DOUGLAS
PETER; GARY ESCUDERO; JOHN
HUBBARD, National Health Service
Corps; DONALD L. WEAVER, Director
of National Health Service Corps; and
MYRIAM CURET,

                Defendants - Appellees.
                             ORDER AND JUDGMENT*


Before ANDERSON, TACHA, and BALDOCK, Circuit Judges.



      After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of this

appeal. See Fed. R. App. P. 34 (a); 10th Cir. R. 34.1.9. This cause is therefore ordered

submitted without oral argument.

      The United States obtained a judgment against Appellant Brett L. Arron after he

breached the terms of his National Health Service Corps scholarship agreement. In lieu

of paying the judgment, Arron agreed to work for the Indian Health Service for two years.

During his first year as a probationary employee, however, the Indian Health Service

terminated Arron’s employment. After pursuing his remedies for wrongful termination

under the Civil Service Reform Act, Arron brought two separate actions in the District

Court of New Mexico, seeking redress for his grievances arising from his termination.

The district court dismissed the actions, and denied Arron’s motions for leave to amend.

We consolidate Arron’s appeals from the district court’s order in each case; and because



      *
        This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.

                                            -2-
we find that the Civil Service Reform Act preempts Arron’s claims, we affirm both

judgments.



                                    BACKGROUND

       The seeds of this dispute were planted on May 1, 1979, when Arron applied for a

National Health Service Corps (NHSC) scholarship in order to finance his medical

education at Tulane University. Congress created the NHSC “to provide primary health

services in health professional shortage areas.” 42 U.S.C. § 254d(a)(2). The NHSC

provides scholarships to students in certain health care education programs and, in return,

the students agree to work for a certain period of time in health professional shortage

areas. 42 U.S.C. §§ 254l(b)(4), 254m(a). During the time that a scholarship recipient is

performing the service obligation, the recipient becomes either a member of the federal

civil service or a commissioned officer of the Public Health Service. 42 U.S.C.

§§ 254d(a)(1), 254m(b)(1)(A)-(B).

       Arron received the scholarship and executed a contract in which he agreed to

serve one year as a member of the NHSC and to provide clinical services in a designated

health professional shortage area for each year of the award. Thereafter, he received

$27,835 for two academic years. Following his studies at Tulane, Arron received a

deferment from his service obligation in order to complete a three-year residency in

internal medicine. See 42 U.S.C. § 254m(b)(5)(A)(i) (authorizing deferment to allow


                                            -3-
scholarship recipient to complete a residency). A dispute developed between Arron and

the NHSC regarding his deferment for his third year in residency and the location where

he would perform his service obligation. The NHSC eventually notified Arron that he

was assigned to a clinic in Texas, but Arron refused to accept this assignment. The

United States filed suit against Arron seeking damages for his breach of the scholarship

contract. See 42 U.S.C. § 254o(b)(1)(A) (setting forth damages formula in the event a

scholarship recipient fails to begin service obligation). The District Court for the Eastern

District of Louisiana entered judgment against Arron for $221,131.62, and the Fifth

Circuit affirmed. United States v. Arron, 954 F.2d 249, 251, 253 (5th Cir. 1992).

       In lieu of paying the judgment, Arron agreed to serve two years in a designated

health professional shortage area. During the two years of service, the judgment debt

would be reduced by approximately $10,000 per month and, at that rate, the entire

judgment would be satisfied at the end of the two years of service. Accordingly, on about

August 8, 1992, Arron became a member of the federal civil service and began working

as an anesthesiologist, in probationary employee status for the first year, at the Gallup

Indian Medical Center (the Gallup Center), a medical facility in Gallup, New Mexico.

The Gallup Center operates under the purview of the Indian Health Service, which is a

component of the Public Health Service and the United States Department of Health and

Human Services. Arron alleges that while he was employed at the Gallup Center, the

Center was badly mismanaged and provided substandard care to its patients. Arron


                                             -4-
alleges that he refused to provide substandard care and “[m]ade various reports” about the

mismanagement and care problems at the Gallup Center. Appellant’s App. in First

Action at 13 (Compl.); Appellant’s App. in Second Action at 43 (Am. Compl.). He

contends that because of his refusal to provide substandard care and because he reported

the mismanagement and care problems, he was wrongfully terminated on June 5, 1993.

       The Civil Service Reform Act of 1978 (CSRA), Pub. L. No. 95-454, 92 Stat. 1111

(codified as amended in scattered sections of 5 U.S.C., primarily §§ 1214, 2302), provides

federal employees procedures for redressing grievances regarding their employment.

Because Arron was terminated during his probationary period, he was entitled to minimal

procedural protections from the Indian Health Service. The agency was only required to

“notify[] him in writing as to why he [was] being separated and the effective date of the

action.” 5 C.F.R. § 315.804(a). The agency was also required to indicate in the notice its

“conclusions as to the inadequacies of his performance or conduct.” Id.

       Under the CSRA, all employees, including probationary employees, are entitled to

report to the Office of Special Counsel that they have been subjected to a “prohibited

personnel practice.” 5 U.S.C. § 1214(a)(1)(A).1 Special Counsel is required to

       1
        “Prohibited personnel practice[s]” include (1) taking a personnel action with
respect to any employee “because of . . . any disclosure of information by an employee . .
. which the employee . . . reasonably believes evidences . . . a violation of any law, rule,
or regulation, or [] gross mismanagement, a gross waste of funds, an abuse of authority,
or a substantial and specific danger to public health or safety” (whistleblowing), (2)
taking a personnel action against any employee “for refusing to obey an order that would
require the individual to violate a law,” (3) discriminating against any employee “on the
                                                                                (continued...)

                                             -5-
“investigate the allegation to the extent necessary to determine whether there are

reasonable grounds to believe that a prohibited personnel practice has occurred, exists, or

is to be taken.” Id. If Special Counsel determines that there are reasonable grounds to

believe that a personnel action was taken or is to be taken as a result of a prohibited

personnel practice, the following relief is available: (1) Special Counsel may request the

Merit Systems Protection Board (Board) to order a stay of the personnel action, 5 U.S.C.

§ 1214(b)(1)(A)(i); (2) if Special Counsel determines that corrective action is required, it

must report the determination to the Board, the agency involved, and the Office of

Personnel Management, 5 U.S.C. § 1214(b)(2)(B); (3) if the agency does not take

corrective action within a reasonable period of time, Special Counsel may petition the

Board for corrective action, 5 U.S.C. § 1214(b)(2)(C); and (4) if Special Counsel petitions

the Board, the Board must receive comments from Special Counsel, the agency, the

Office of Personnel Management, and the employee, and then order such corrective

action as it considers appropriate. 5 U.S.C. § 1214(b)(3)-(4).

       If Special Counsel determines that there are not reasonable grounds to believe that

a personnel action was taken or is to be taken as a result of a prohibited personnel

       (...continued)
       1

basis of conduct which does not adversely affect the performance of the employee . . . or
the performance of others,” (4) taking a personnel action which “violates any law, rule or
regulation implementing, or directly concerning, the merit system principles” set forth at
5 U.S.C. § 2301. 5 U.S.C. § 2302(b)(8)(A), (9)(D), (10), (11). One such merit principle
provides that “[a]ll employees . . . should receive fair and equitable treatment in all
aspects of personnel management . . . with proper regard for their privacy and
constitutional rights.” 5 U.S.C. § 2301(b)(2).

                                             -6-
practice, it may terminate the investigation. If Special Counsel terminates the

investigation, it must notify the employee of: (1) the “relevant facts ascertained by the

Special Counsel, including the facts that support, and the facts that do not support, the

allegations;” and (2) the reasons for the termination. 5 U.S.C. § 1214(a)(2)(A).

       If Special Counsel terminates an investigation regarding an allegation that the

employee was subjected to a prohibited personnel practice in retaliation for

whistleblowing, as defined in 5 U.S.C. § 2302(b)(8), the employee is entitled to file an

individual right of action in order to seek corrective action directly from the Board. 5

U.S.C. §§ 1214(a)(3), 1221(a). The Board must order “such corrective action as the

Board considers appropriate if the employee . . . has demonstrated that a disclosure

described under section 2302(b)(8) was a contributing factor in the personnel action.” 5

U.S.C. § 1221(e)(1). However, the Board may not order corrective action if the agency

demonstrates “by clear and convincing evidence that it would have taken the same

personnel action in the absence of such disclosure.” 5 U.S.C. § 1221(e)(2). The

employee may appeal the Board’s final decision to the United States Court of Appeals for

the Federal Circuit. 5 U.S.C. §§ 1221(h), 7703(b)(1).2




       These provisions, providing greater protections within the CSRA scheme to
       2

whistleblowers, were enacted as part of the Whistleblower Protection Act of 1989, Pub.
L. No. 101-12, 103 Stat. 16, (codified in scattered sections of 5 U.S.C.), an amendment to
the CSRA.

                                             -7-
       On June 14, 1993, Arron filed a complaint with the Office of Special Counsel,

alleging that he was subjected to prohibited personnel practices, including retaliation for

whistleblowing. Special Counsel declined to seek a stay of Arron’s termination or any

other corrective action from the Board. Then, on November 18, 1994, Special Counsel

issued a letter declining to proceed with the whistleblower complaints. Arron filed an

individual right of action appeal, seeking corrective action from the Board regarding his

whistleblower complaints. According to the record, that appeal is pending.

       Thereafter, in August of 1995, Arron sued the United States in district court. In

his complaint, Arron alleged that his supervisors failed to follow personnel policies in

managing the Gallup Center, failed to follow personnel policies in terminating Arron, and

terminated Arron in retaliation for his refusal to provide substandard care and because he

reported problems regarding the Center. Based on these allegations, Arron claimed that

the United States was liable under the Federal Tort Claims Act (FTCA), 28 U.S.C.

§§ 1346(b), 2671 et seq.,3 for various state torts, including negligence, retaliatory

discharge, prima facie tort, and tortious interference with economic advantage. Arron

claimed that as a result of his termination he suffered “moving costs, loss of income,

damage to reputation, emotional distress, loss of ability to repay the NHSC obligations,

increased costs, interest and penalties on the judgment, costs of seeking other


       3
        The Federal Tort Claims Act provides that the “United States shall be liable,
respecting the provisions of this title relating to tort claims, in the same manner and to the
same extent as a private individual under like circumstances . . . .” 28 U.S.C. § 2674.

                                             -8-
employment, loss of personal property through execution on the above judgment,

attorneys fees and general damages.” Appellant’s App. in First Action at 16 (Compl.).

       The United States moved to dismiss Arron’s complaint, arguing that the Civil

Service Reform Act provides the exclusive remedy for his grievances regarding his

employment. In response, Arron moved for leave to amend his complaint to add a claim

under the Administrative Procedures Act (APA), 5 U.S.C. § 701 et seq.,4 and to add

additional defendants. Arron’s proposed amended complaint alleged that his supervisors’

actions were arbitrary and capricious, violated his constitutional rights, and violated

procedures required by law. The district court granted the United States’ motion to

dismiss with prejudice and denied Arron’s motion for leave to amend as futile.

       However, in January of 1996, before the district court made these decisions in the

first action, Arron brought a second action, naming the United States, the Department of

Health and Human Services, the Indian Health Service, the Navajo Area Indian Health

Service, the National Health Service Corps, and certain employees of these agencies (in



       The Administrative Procedures Act provides that:
       4



        A person suffering legal wrong because of agency action, or adversely
       affected or aggrieved by agency action within the meaning of a relevant
       statute, is entitled to judicial review thereof. . . . Nothing herein (1) affects
       other limitations on judicial review or the power or duty of the court to
       dismiss any action or deny relief on any other appropriate legal or equitable
       ground; or (2) confers authority to grant relief if any other statute that grants
       consent to suit expressly or impliedly forbids the relief which is sought.

5 U.S.C. § 702.

                                              -9-
their individual and official capacities) as defendants (the Defendants). His first amended

complaint contained substantially the same allegations as the complaint in the first action

and claimed (1) that the Defendants violated Arron’s First, Fourth, and Fifth Amendment

rights to free speech, freedom of association, substantive and procedural due process

rights, freedom from deprivation of liberty and property interests, and right of privacy,

and (2) that the Defendant’s actions were arbitrary and capricious. Appellant’s App. in

Second Action at 62 (Am. Compl.). As relief, Arron requested that the court declare that

the Defendants acts were unlawful and unconstitutional, restore him to his position with

back pay, grade, benefits, and full credit toward the judgment, and award him costs and

attorney’s fees.

       The Defendants moved to dismiss Arron’s amended complaint in the second

action, also arguing that the Civil Service Reform Act provides Arron’s exclusive remedy

for his grievances. In response, Arron moved for leave to amend his complaint to make

further allegations regarding his Fifth Amendment claim in the event the court found this

claim insufficient. The district court granted the Defendants’ motion to dismiss with

prejudice and denied Arron’s motion for leave to amend as futile.



                                      DISCUSSION

       We review de novo a district court’s dismissal of a complaint pursuant to Fed. R.

Civ. P. 12(b)(6). Maez v. Mountain States Tel. & Tel., Inc., 54 F.3d 1488, 1496 (10th


                                            -10-
Cir. 1995); Steele v. United States, 19 F.3d 531, 532 (10th Cir. 1994). In doing so, we

accept all well-pleaded allegations as true and uphold a dismissal only if it appears that

the plaintiff can prove no set of facts in support of his claim that would entitle him to

relief. Maez, 54 F.3d at 1496.

       We review a district court’s denial of a motion for leave to amend for abuse of

discretion. Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993); TV

Communications Network, Inc. v. Turner Network Television, Inc., 964 F.2d 1022, 1028

(10th Cir. 1992). “Although Fed.R.Civ.P. 15(a) requires leave to amend be given freely,

that requirement does not apply where an amendment obviously would be futile.” TV

Communications, 964 F.2d at 1028. A proposed amendment is futile if the complaint, as

amended, would be subject to dismissal. TV Communications, 964 F.2d at 1028.

       In Bush v. Lucas, 462 U.S. 367 (1983), the Supreme Court addressed the remedial

scheme of the CSRA, stating that “[f]ederal civil servants are now protected by an

elaborate, comprehensive scheme that encompasses substantive provisions forbidding

arbitrary action by supervisors and procedures--administrative and judicial--by which

improper action may be redressed. They apply to a multitude of personnel decisions that

are made daily by federal agencies.” Id. at 385. Because of the CSRA’s comprehensive

remedial scheme, the Bush Court refused to recognize a Bivens remedy, under the facts of

that case, for the alleged violation of First Amendment rights in federal personnel

decisions. Id. at 390.


                                             -11-
       Several years later, the Supreme Court in United States v. Fausto, 484 U.S. 439

(1988), was presented with the question of whether the CSRA, which provides no review

of an agency’s decision to suspend a nonpreference eligible excepted service employee

without pay, precluded the employee from seeking review in the Court of Federal Claims

under the Back Pay Act. Id. at 440-41. The Court noted that Congress intentionally

excluded nonpreference eligible excepted service and probationary employees from the

right to review of certain agency actions afforded other categories of employees and, thus,

held that the CSRA’s “deliberate exclusion of employees in respondent’s service category

from the provisions establishing administrative and judicial review for personnel action of

the sort at issue here prevents respondent from seeking review in the Claims Court under

the Back Pay Act.” Id. at 455.

       Based on the principles of Bush and Fausto, we have stated that it is “beyond

dispute that the CSRA was intended to provide the exclusive procedure for challenging

federal personnel decisions.” Petrini v. Howard, 918 F.2d 1482, 1485 (10th Cir. 1990).

Accordingly, we have held that “Federal and state court actions ‘complain[ing] of

activities prohibited by the CSRA . . . are preempted by the CSRA.’” Steele v. United

States, 19 F.3d 531, 533 (10th Cir. 1994) (quoting Petrini, 918 F.2d at 1485). Arron’s

FTCA claims and proposed APA claim in the first action, as well as his APA claim and

constitutional claims5 in the second action--all of which challenge the conditions of his


       There is some dispute about whether Arron’s constitutional claims in his second
       5

                                                                               (continued...)

                                            -12-
employment, the procedures or lack of procedures leading up to his termination, and the

termination of his employment--fall within the scope of, and are, therefore, preempted by,

the CSRA. See 5 U.S.C. § 2302 (broadly defining “prohibited personnel practice”); supra

n.1 (listing prohibited personnel practices at issue in this case).6

       Although acknowledging this weighty precedent, Arron argues, primarily, (1) that

this court should reexamine the trend of cases regarding the preemptive effect of the

CSRA, and follow the dissent in Fausto, (2) that “as an NHSC payback scholar and

debtor, [he] has a higher expectation and right to judicial protections than the ‘mine run’

probationary employee,” Appellant’s Br. in First Action at 10, and (3) that he should be

       5
        (...continued)
action are Bivens claims for damages or claims for equitable relief. In his brief on
appeal, Arron contends that he is “seeking declaratory, Mandamus and equitable relief in
this action, not money. Therefore, none of the cases holding that Bivens remedies are
barred by the CSRA apply, because this is not a Bivens action.” Appellant’s Br. in
Second Action at 11. The Defendants maintain that Arron argued before the district court
that he should be able to maintain a Bivens action. Thus, they assert that he “should not
now be able to refocus his argument on an issue not presented below and ask this Court to
allow him to pursue non-Bivens constitutional claims.” Defendants’ Br. at 15. However,
whether we construe Arron’s constitutional claims as Bivens or equitable claims, both are
federal actions complaining of activities prohibited by the CSRA and, thus, are preempted
under our case law.

       Our holding is consistent with numerous cases specifically holding that the CSRA
       6

preempts FTCA claims, see Steele, 19 F.3d at 533; Petrini, 918 F.2d at 1485; Grisham v.
United States, 103 F.3d 24, 27 (5th Cir. 1997), APA review, see McAuliffe v. Rice, 966
F.2d 979, 979 (5th Cir. 1992); Stephens v. Department of Health & Human Servs., 901
F.2d 1571, 1575 (11th Cir. 1990); Ryon v. O’Neill, 894 F.2d 199, 200 (6th Cir. 1990),
Bivens actions, see Bush, 462 U.S. at 390; Brothers v. Custis, 886 F.2d 1282, 1284-85
(10th Cir. 1989); Saul v. United States, 928 F.2d 829, 840 (9th Cir. 1991), and actions for
equitable relief for constitutional violations, see Lombardi v. Small Bus. Admin., 889
F.2d 959, 961-62 (10th Cir. 1989); Saul, 928 F.2d at 843.

                                              -13-
entitled to judicial review under the APA because even if the Board ordered him restored

to his employment status, it could not compel the NHSC to approve the assignment for

service credit and could not compensate him for his damages caused by the loss of his

ability to satisfy the judgment through service.

       As for Arron’s first argument, this court is bound by the Fausto majority and our

precedent regarding the CSRA’s exclusive remedial scheme. As for Arron’s second and

third arguments, we are not convinced that he should be exempted from the CSRA’s

exclusive remedial scheme. Although we recognize that Arron’s employment with the

federal civil service is somewhat unique because he accepted such employment in lieu of

paying his judgment debt to the United States, we do not believe that his status affords

him any greater procedural or substantive protections than any other federal employee. If

Congress wished to give NHSC scholarship recipients or judgment debtors greater

protections, it certainly could have done so. We do not believe that a judicially-created

exception to the CSRA’s exclusive remedies is appropriate.

       Furthermore, that the FTCA, APA, and constitutional claims would afford Arron

greater opportunities for judicial review and greater compensation for his alleged injuries

does not alter our analysis. See Fausto, 484 U.S. at 455 (holding CSRA preempts action

under Back Pay Act even though CSRA provided nonpreference excepted service

employee no administrative or judicial review of agency’s decision); Bush, 462 U.S. at

372, 390 (holding CSRA preempts Bivens action even though Court assumed that the


                                            -14-
“civil service remedies were not as effective as an individual damages remedy and did not

fully compensate [the employee] for the harm he suffered”); Brothers v. Custis, 886 F.2d

1282, 1284 (10th Cir. 1989) (refusing to imply Bivens action even though federal

employee was limited to petitioning Special Counsel and did not have a money damages

remedy); Hill v. Department of Air Force, 884 F.2d 1318, 1321 (10th Cir. 1989) (“Even

if the Civil Service Reform Act remedy were incomplete, but had not inadvertently

omitted damages remedies, no Bivens remedy would be implied.”). Likewise, Arron’s

contention that the Board could not compel the NHSC to approve service credit if he is

restored to his position does not help him. In the event that the Board restores him to his

position and the NHSC refuses to approve such service, Arron may then seek any

applicable remedies against the NHSC.7

       Because Arron’s FTCA, APA, and constitutional claims are preempted by the

CSRA, the district court properly granted the United States’ and Defendants’ motions to

dismiss in each action, and properly denied Arron’s motions for leave to amend.

Accordingly, we AFFIRM. The parties’ motions for consolidation are GRANTED and

all other outstanding motions are DENIED.



       7
         Arron argues that his amended complaint in the second action states a claim
against the NHSC for refusing to place him in a new position following his termination
and that such a refusal is not a “personnel action” under the CSRA. See Appellant’s Br.
in Second Action at 11, 17. Because Arron makes this argument for the first time on
appeal, we will not consider it. Sac & Fox Nation v. Hanson, 47 F.3d 1061, 1063 (10th
Cir.), cert. denied, 116 S. Ct. 57 (1995).

                                            -15-
       ENTERED FOR THE COURT


       Stephen H. Anderson
       Circuit Judge




-16-
