The three year period need not be spent in a HPSA if the work is for a Veterans Administration facility or is research work under the direct employment of a US government agency. Failure to meet the service obligation means no change of status or permanent residence status can be granted. The memorandum also addresses a little known but important provision of the law that bars doctors from changing status to an H-1B visa.
Consular processing is okay.
Applications for waivers granted due to extreme hardship or persecution are still covered by this provision and these doctors must leave the country to get their H-1B visas. For doctors who do not wish to re-acquire the home residency requirement due to failure to meet the three year obligation, a request needs to be submitted to the INS that includes an employment contract with another health care facility in a HPSA for the balance of the three years. If the VA was the sponsor, the new employer must also be a VA facility. The memorandum also interprets vague language in the statute regarding the timing of permanent residency and change of status applications. The law was not clear on whether the three year obligation must be completed before one could apply for a change of status or permanent residency or whether such applications can be held in abeyance until the three years are up.