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Indian Health Service: The Federal Health Program for American Indians and Alaska Natives
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Apply Here for Financial Freedom - LRP IHS Loan Repayment Program

Termination/Breach of Contract and Default

 Woman Health Professional

Prior to Receiving Payments

The LRP may terminate your contract prior to you receiving your payment for the following reasons:

  • Failure to report to your 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 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 commitment.
  • 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 commitment.

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]

in which:

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 participant 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 participant's period of obligated service in accordance with Section 108

s is the number of months of the service obligation period served by the participant 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.

Example 1
Dr. John Doe received the maximum loan repayment award for a two-year contract. He received a total of $51,672. Dr. Doe completed one year (12 months) of his two-year (24-month) service commitment and then left his position for personal reasons.

A=3(Z)[(t-s/t)]
A=3($51,672) [(24 months - 12 months)/24 months]
A= $155,016[.50]
A=$77,508 plus interest

Example 2
Dr. Jane Doe received the maximum loan repayment award for a one-year contract extension. She received a total of $25,836. Dr. Doe completed two months of her one-year (12-month) service commitment and was terminated for poor performance.

A=3(Z)[(t-s/t)]
A=3($25,836)[(12 months - 2months)/12 months]
A=$77,508[.83]
A=$64,590 plus interest

Download the LRP Participant Guide [PDF - 470KB] for information regarding breach of contract and default.

Waivers

In cases where a participant's compliance with the LRP service commitment is impossible or would involve extreme hardship, as determined by IHS, the service commitment 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 commitment on the part of an LRP participant for service or payment of damages will be canceled upon the death of the individual.

In cases where a participant declares bankruptcy, the LRP payment commitment 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 commitment would involve extreme hardship.