Prior to Receiving Payments
The LRP may terminate your contract prior to you receiving your payment for the following reasons:
- Failure to report to duty site
- Failure to provide the LRP with a valid license to practice
Individuals who sign an LRP contract may terminate that contract without penalty if they contact the LRP office in writing via letter or email prior to
receiving their first payment via direct deposit.
After Receiving Payments
Once you have begun receiving payments from the LRP, you will be in breach of contract and placed in default for the following reasons:
- Changing to a position outside of your health profession discipline without prior LRP approval
- Transferring to another Indian health system facility without prior LRP approval
- Failure to begin your service obligation
- Termination of your employment by the IHS, Tribe or Tribal Organization, Urban Indian program or Buy Indian program because of unsatisfactory performance
- Failure to complete (for any reason) your service obligation
The United States will be entitled to recover from you an amount to be determined in accordance with the following formula:
A = 3Z[(t-s)/t]
A is the amount the United States is entitled to recover
Z is the sum of the amounts paid under Section 108 to, or on behalf of, the recipient plus the interest* on such amounts that would be payable if, at the time the amounts were paid, they were bearing interest at the maximum legal prevailing rate, as determined by the US Treasurer
t is the total number of months in the recipient's period of obligated service in accordance with Section 108
s is the number of months of the service obligation period served by the recipient in accordance with Section 108
The above information concerning damages for breach of the LRP contract is taken from Section 108 of the Indian Health Care Improvement Act (IHCIA).
* Penalties and interest will begin to accrue the day the contract is breached and will continue until restitution is complete.
Dr. John Doe received the maximum loan repayment award for a two-year contract. He received a total of $51,672 ($37,288 directly deposited into his bank account
and, on his behalf, the IHS LRP sent the IRS $8,000 for federal taxes and $6,384 for FICA taxes). Dr. Doe completed one year (12 months) of his two-year (24-month)
service obligation and then left his position for personal reasons.
A=3($51,672) [(24 months – 12 months)/24 months]
A=$77,508 plus interest
Dr. Jane Doe received the maximum loan repayment award for a one-year contract extension. She received a total of $25,836 ($18,644 directly deposited into her
bank account and, on her behalf, the IHS LRP sent the IRS $4,000 for federal taxes and $3,192 for FICA taxes). Dr. Doe completed two months of her one-year
(12-month) service obligation and was terminated for poor performance.
A=3($25,836)[(12 months - 2months)/12 months]
A=$64,590 plus interest
Download the LRP Policy Clarifications Memo [PDF - 466KB] for information regarding
breach of contract and default.
In cases where a recipient's compliance with the LRP service obligation is impossible or would involve extreme hardship, as determined by IHS, the service
obligation and/or any damages for noncompliance may be waived partially or totally by the Secretary of the Department of Health and Human Services. Waivers will
be considered on a case-by-case basis.
Any obligation on the part of an LRP recipient for service or payment of damages will be canceled upon the death of the individual.
In cases where a recipient declares bankruptcy, the LRP payment obligation may be released only if the discharge is granted five years after the first date
that payment of damages is required, and only if the bankruptcy court finds that non-discharge of the obligation would involve extreme hardship.