---
kind: "section"
citation: "42 U.S.C. § 254o–1"
title: "42"
title_heading: "The Public Health and Welfare"
number: "254o–1"
heading: "Fund regarding use of amounts recovered for contract breach to replace services lost as result of breach"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/254o-1"
units:
  - "Chapter 6A — Public Health Service"
  - "Subchapter II — General Powers and Duties"
  - "Part D — Primary Health Care"
  - "Subpart iii — scholarship program and loan repayment program"
---

# §254o–1. Fund regarding use of amounts recovered for contract breach to replace services lost as result of breach

- (a) **Establishment of Fund—** There is established in the Treasury of the United States a fund to be known as the National Health [Service](/usc/42/201.md?p=a) Corps Member [Replacement](/usc/42/300j–21.md?p=5) Fund (hereafter in this section referred to as the “Fund”). The Fund shall consist of such amounts as may be appropriated under [subsection (b)](#b) to the Fund. Amounts appropriated for the Fund shall remain available until expended.
- (b) **Authorization of appropriations to Fund—** For each fiscal year, there is authorized to be appropriated to the Fund an amount equal to the sum of—
  - (1) the amount collected during the preceding fiscal year by the Federal Government pursuant to the liability of individuals under [section 254o](/usc/42/254o.md) of this title for the breach of contracts entered into under section [254l](/usc/42/254l.md) or [254l–1](/usc/42/254l–1.md) of this title;
  - (2) the amount by which grants under [section 254q–1 of this title](/usc/42/254q–1.md) have, for such preceding fiscal year, been reduced under [subsection (g)(2)(B)](/usc/42/254q–1.md?p=g-2-B) of such section; and
  - (3) the aggregate of the amount of interest accruing during the preceding fiscal year on obligations held in the Fund pursuant to [subsection (d)](#d) and the amount of proceeds from the sale or redemption of such obligations during such fiscal year.
- (c) **Use of Fund—**
  - (1) **Payments to certain health facilities—** Amounts in the Fund and available pursuant to appropriations Act may, subject to [paragraph (2)](#c-2), be expended by the [Secretary](/usc/42/201.md?p=c) to make payments to any entity—
    - (A) to which a Corps member has been assigned under [section 254f of this title](/usc/42/254f.md); and
    - (B) that has a need for a health professional to provide primary health [services](/usc/42/201.md?p=a) as a result of the Corps member having breached the contract entered into under section [254l](/usc/42/254l.md) or [254l–1](/usc/42/254l–1.md) of this title by the individual.
  - (2) **Purpose of payments—** An entity receiving payments pursuant to [paragraph (1)](#c-1) may expend the payments to recruit and employ a health professional to provide primary health [services](/usc/42/201.md?p=a) to patients of the entity, or to enter into a contract with such a professional to provide the [services](/usc/42/201.md?p=a) to the patients.
- (d) **Investment—**
  - (1) **In general—** The [Secretary](/usc/42/201.md?p=c) of the Treasury shall invest such amounts of the Fund as such [Secretary](/usc/42/201.md?p=c) determines are not required to meet current withdrawals from the Fund. Such investments may be made only in interest-bearing obligations of the United States. For such purpose, such obligations may be acquired on original issue at the issue price, or by purchase of outstanding obligations at the market price.
  - (2) **Sale of obligations—** Any obligation acquired by the Fund may be sold by the [Secretary](/usc/42/201.md?p=c) of the Treasury at the market price.

## Source credit

(July 1, 1944, ch. 373, title III, § 338F, as added Pub. L. 101–597, title II, § 204, Nov. 16, 1990, 104 Stat. 3027.)

## Notes

### Editorial Notes

### Prior Provisions

A prior section 338F of act July 1, 1944, was renumbered section 338G by Pub. L. 101–597 and is classified to section 254p of this title.

Another prior section 338F of act July 1, 1944, was renumbered section 338G by section 201(2) of Pub. L. 100–177 and classified to section 254q of this title, prior to repeal by Pub. L. 100–177, title II, § 203, Dec. 1, 1987, 101 Stat. 999.