Opinion ID: 2014591
Heading Depth: 1
Heading Rank: 5

Heading: Breach of the Scholarship Contracts

Text: Wiley also argues that the circuit court erred in granting the Department summary judgment on count I because there are material questions of fact as to whether she breached any of the scholarship contracts. As noted, the appellate court rejected this argument, holding that, among other things, Wiley breached the scholarship contracts by failing to work in a location approved by the Department and by failing to begin her service commitment within 30 days of the completion of her residency. 348 Ill.App.3d at 820, 284 Ill.Dec. 824, 810 N.E.2d 614. Each of Wiley's scholarship contracts required her to work as a full-time primary care physician in a designated shortage area approved as a practice site(s) by the Department. Each contract also required Wiley to begin fulfilling her service obligation within 30 days of the completion of her residency. Wiley did not fulfill either of these requirements. After her residency, Wiley began a fellowship in gastroenterology at the University of Illinois at Chicago. In her deposition testimony, Wiley acknowledged that Yocum told her the fellowship was not an approved practice location. This fact was confirmed in the Department's January 1992 letter to Wiley, which stated that she did not yet have an approved practice site, and again in the Department's June 1992 letter, which repeated the same statement. Further, Wiley did not obtain the Department's approval for her subsequent position at the University of Illinois at Chicago or with the Veteran's Administration. In addition, Wiley did not begin her service commitment at an approved practice site within 30 days of the completion of her fellowship. Wiley argues, however, that obtaining approval from the Department for a practice site and beginning her service obligation within the 30 day period are merely administrative requirements and that the failure to fulfill those requirements resulted in no harm to the Department. Wiley then points to the common law doctrine of de minimis non curat lex, [3] a doctrine which provides that if a breach of contract causes only slight harm, then no remedy exists. See, e.g., Pacini v. Regopoulos, 281 Ill.App.3d 274, 216 Ill.Dec. 433, 665 N.E.2d 493 (1996) (applying the doctrine to a shopping center sale contract where 95% occupancy was required and 94.9953% was achieved); 4 A. Corbin, Corbin on Contracts § 946, at 813 (1951). Relying on this doctrine, Wiley contends that she did not breach the scholarship contracts. The Department, in response, contends that the defense of de minimis non curat lex is not available in this case because common law contract defenses may not be applied to contracts whose terms are established by the Act, rather than through negotiations conducted by the parties. In support of this contention, the Department cites to several federal court decisions that discuss the National Health Service Corps scholarship program (42 U.S.C. §§ 2541 through 254s (1988)), a program similar to the one created by the Act. These decisions generally hold that, because the contractual terms and conditions imposed upon a federal scholarship recipient arise from statutory directives, rather than negotiations, common law contract principles are inapplicable. Instead, the governing principle is statutory intent. See, e.g., United States v. Vanhorn, 20 F.3d 104 (4th Cir.1994); United States v. Melendez, 944 F.2d 216 (5th Cir.1991); United States v. Bloom, 925 F.Supp. 426 (E.D.La.1996). In addition, the Department argues that, even if Wiley may raise the doctrine of de minimis non curat lex in this case, she cannot prevail because the breaches which she committed were not trivial and real harm was caused. With respect to the contractual requirements of obtaining approval from the Department for a practice site, and beginning the service commitment within a 30 day period, we agree with Wiley that common law contract principles apply. Each of Wiley's scholarship contracts expressly incorporates the Family Practice Residency Act into the terms of the agreements. The Act, in turn, gives the Department a general power [t]o establish a program of medical student scholarships and to award scholarships to eligible medical students. 110 ILCS 935/4.03 (West 2002). However, other than the term [e]ligible medical student (110 ILCS 935/3.07 (West 2002)) and the treble damages requirement (110 ILCS 935/10 (West 2002)), the Act does not specify what the terms or conditions of the scholarship contract must be. This is in contrast to the detailed scheme set forth in the statutes governing the National Health Services Corps program. See, e.g., 42 U.S.C. § 2541(f)(1)(B)(iv) (1988) (the federal scholarship contract must contain a provision that the recipient agrees to serve in a health professional shortage area to which he is assigned by the Secretary as a member of the Corps); see also Department of Public Health v. Jackson, 321 Ill.App.3d 228, 232, 254 Ill.Dec. 434, 747 N.E.2d 474 (2001) (noting that the Act contains far less detail than the federal statutes that govern the National Health Services Corps program). Although they are part of Wiley's scholarship contracts, both the requirement that the Department approve of the scholarship recipient's practice site and the 30-day start date are not found in the Act. Because these requirements have not been imposed by the General Assembly, we conclude that ordinary contract principles apply to them and that Wiley may raise the doctrine of de minimis non curat lex. However, while Wiley may invoke this defense, it is not successful here. The requirements that the Department approve the scholarship recipients' practice locations and that the service commitments begin in a timely fashion are critical to the efficacy of the scholarship program. Departmental approval of a practice site is needed to ensure that medical services are being distributed throughout the state and being provided to those who are most in need. The Department must be able to retain control over where and when the scholarship recipients serve or the program will be ineffective and the purpose of the Act frustrated. See Jackson, 321 Ill.App.3d at 232, 254 Ill.Dec. 434, 747 N.E.2d 474; see also Vanhorn, 20 F.3d at 114 (under the National Health Service Corps program, scholarship recipients may not unilaterally, without proper approval, decide where they wish to serve if the program is to be effective); United States v. Duffy, 879 F.2d 192, 197 (6th Cir.1989) (if recipients are able to demand assignment to a particular location, then the purpose of the [federal] scholarship program is defeated). Wiley's failure to obtain approval of her practice location and begin working within 30 days were not slight or technical matters. Rather, these were material breaches of core obligations contained in the scholarship contracts. Accordingly, we decline to find that the doctrine of de minimis non curat lex is applicable in this case. We therefore affirm the judgment of the appellate court that Wiley breached the scholarship contracts.