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Contract Breach and Default Clause

Failure to complete service obligation for any reason is a breach of the Delaware State Loan Repayment Program and subject to monetary damages required by Section 338E of the Public Health Service Act (42 U.S.C. 254o), as amended. Any participant who fails to complete his or her term of obligated service under the terms and conditions of the executed State Loan Repayment Contract will be considered to have breached the Participation Contract.

Participants who falsify or misrepresent information on the Application or Verification Forms or any other required program document will be disqualified from participating. If the participant has already signed the contract they will be considered in breach of contract. Participants must not have breached a prior service obligation to the Federal/State/Local government or other entity, even if the obligation was subsequently satisfied.

If the participants' employment is terminated for good cause, as determined by the employer and deemed valid by the HCC, the participant is subsequently in breach of contract. If the termination is beyond the control of the participant (e.g. site closure) the participant must immediately find placement in another federally designated HPSA site. If the participant is not employed by another designated and approved HPSA site within 30 days the participant will consequently be placed in breach status. Until such time that a new site is obtained, the practitioner will have the option to request a suspension as defined on page 14 of this manual in order to prevent a breach of contract. Finding a new practice site, and the required match funding, will be the sole responsibility of the practitioner. Waivers will not be granted for this situation.

Participant contracts/MOUs will adhere to the federally required default provisions as defined by the National Health Service Corp (NHSC) LRP as found at 42 U.S.C. 254o(c)(1). These components include:

  • Termination provision;
  • Waiver provision; and
  • Breach Provision and incorporate the NHSC LRP default formula.

For more information and examples on this topic please refer to page 12 in the Delaware Program Guidance Manual.



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