dissenting:
I respectfully dissent.
The majority declines to follow the federal cases holding that ordinary contract principles should not govern when, as here, the terms of the agreement between the parties are set by statute. The majority points out that the Vanhorn court described the contracts at issue as being governed by a “comprehensive statutory scheme,” and argues that the Illinois Act is “nowhere near as detailed” as the NHSC program. 321 Ill. App. 3d at 232. In my view, (1) the NHSC scholarship program and the Act employ the same means to reach virtually identical goals, and (2) the federal cases on point are well reasoned and persuasive. Accordingly, the majority errs by not interpreting the Act as the federal courts have viewed the NHSC scholarship program.
The NHSC scholarship program was created to address the problem of a declining number of doctors available to serve in rural areas by providing a generous scholarship program for students who would agree to serve in areas that, in the judgment of the Secretary of Health and Human Services, had difficulty attracting health professionals. Vanhorn, 20 F.3d at 107. Under the NHSC scholarship program, the NHSC grants scholarships to medical students who sign a contract promising to serve in a “Health Manpower Shortage Area” (HMSA) for a term equal in duration to the number of years for which they received scholarship support. Hatcher, 922 F.2d at 1404. Scholarship recipients may apply for a deferment to complete a residency program. The Secretary of the NHSC has authority to designate geographic areas as HMSAs and assign scholarship recipients to them. Scholarship recipients can apply to be assigned to specific HMSAs but are not guaranteed assignment to the HMSA they request. Hatcher, 922 F.2d at 1404. A scholarship recipient who defaults under the NHSC program is required to pay stipulated damages of triple the dollar value of the scholarship, plus interest. Hatcher, 922 F.2d at 1405.
In cases where the NHSC has filed suit against a scholarship recipient for his failure to fulfill his duty to serve at a HMSA, federal courts have held that the conditions imposed on the scholarship recipient arise from statutory directives, not from a negotiated agreement between the parties, and therefore, contract principles do not govern. See Vanhorn, 20 F.3d at 112 (substantial compliance, economic duress, and estoppel are not valid defenses under the statutory scheme creating the NHSC scholarship program); United States v. Bloom, 925 F. Supp. 426, 434 (E.D. La. 1996) (even though the relationship between the scholar and the NHSC is evidenced by a contract, breach of contract, impossibility, and accord and satisfaction defenses are not applicable because the relationship is statutory), aff’d, 112 F.3d 200 (5th Cir. 1997); Becker, 995 F.2d at 783 (statutory intent is more relevant to interpretation of the conditions of a NHSC scholarship program contract than are principles of contract law); Melendez, 944 F.2d at 219 (contract principles do not apply because conditions imposed on a NHSC scholarship recipient arise from statutory directives, not a negotiated agreement).
In Vanhorn, the court explained that the NHSC scholarship program is analogous to grant-in-aid programs under which the federal government provides money for specific purposes and places conditions on the recipient. Such programs are an exercise of the federal government’s spending power to bring about a public policy goal— namely, the provision of medical services to underserved areas. Vanhorn, 20 F.3d at 111-12. Under such a statutory scheme, conditions for the receipt of scholarship funds do not arise from a negotiated agreement between the parties but are provided for in the statute. Statutory intent, therefore, is more relevant to the interpretation of the conditions than common-law contract principles. See Hatcher, 922 F.2d at 1406, quoting Rendleman, 860 F.2d at 1541-42.
In light of the similarities between the NHSC scholarship program and the language of the Act, I conclude that the Illinois General Assembly did not intend for contract principles to govern the interpretation of the relationship between the Department and a scholarship recipient. I therefore would hold that Jackson’s substantial performance defense does not raise an issue of fact, and the trial court did not err by granting summary judgment in the Department’s favor. The Department proved (1) the contract, (2) its funding of Jackson, and (3) that Jackson did not perform her obligation to commence service in an approved designated shortage area within 30 days of completing her residency in accordance with the Illinois Administrative Code and the Act. See Vanhorn, 20 F.3d at 111. Therefore, as a matter of law, the Department is entitled to summary judgment and damages pursuant to section 10 of the Act (110 ILCS 935/10 (West 1998)).