United States v. Hayes
United States District Court for the Middle District of North Carolina
633 F.Supp. 1183 (1986)
Marie Hayes (defendant) received a two-year National Health Service Corps (NHSC) medical scholarship after stating she intended to practice family medicine in a rural area, in exchange for a two-year service commitment after graduation. During residency, Hayes decided to switch to dermatology, and when the NHSC denied her request to serve as a dermatologist, she instead began practicing dermatology in Chapel Hill rather than fulfilling her service obligation. The government (plaintiff) sued her for breach of contract and moved for summary judgment, relying on the statute's treble-damages provision, and Hayes argued the provision was an unenforceable penalty that created a genuine factual dispute.
Whether a statutory treble-damages provision for breaching a medical scholarship service commitment is enforceable as liquidated damages, rather than void as a penalty, given the difficulty of estimating the value of a physician's promised service in advance.