## Facts

- U.S. Nursing Corp., a nurse staffing agency, contracted with Saint Joseph Medical Center on January 8, 1993, to supply nurses during a strike.
- The contract allowed termination on seven days’ notice and required the hospital to pay an amount equal to seven additional days of earnings if it terminated without notice.
- At contract formation and during performance, U.S. Nursing lacked the Illinois nurse agency license required by the Illinois Nurse Agency Licensing Act (225 ILCS 510/1–510/15).
- The Illinois Department of Labor advised U.S. Nursing that it proposed to deny the license based on unlicensed operation, alleged lack of financial solvency, and alleged failures in training and credential/reference verification.
- On February 2, 1993, the Department notified the hospital that using U.S. Nursing violated the Act and instructed it to immediately stop using U.S. Nursing’s services.
- The hospital terminated the contract effective February 4, 1993, paid for services rendered through that date, and refused to pay the additional seven-day amount.
- U.S. Nursing sued in federal court (diversity) for breach of contract to recover the seven-day amount; the district court granted summary judgment to the hospital on public-policy grounds.

## Issues

1. Whether Illinois public policy bars enforcement of a contract payment provision when the plaintiff’s performance required operating a nurse agency without a statutorily required regulatory license.
2. Whether a hospital may be held liable for a contractual “seven-day” amount after terminating an agreement to comply with regulators’ instruction to cease using an unlicensed nurse agency.

## Decision

- The Seventh Circuit affirmed summary judgment for Saint Joseph Medical Center.
- The court held the contract was unenforceable as against Illinois public policy because U.S. Nursing operated in Illinois without the required nurse agency license.
- The court refused to enforce the seven-day payment provision, emphasizing that the hospital had already paid for all services actually provided.

## Legal Principles

- Under Illinois law, courts will not enforce contracts that require performance of illegal acts.
- When a licensing statute is regulatory (aimed at protecting public health and safety), contracts made or performed in violation of the statute are generally void or unenforceable.
- The regulatory/revenue-raising distinction matters: noncompliance with a public-protection licensing regime more strongly supports non-enforcement than noncompliance with a purely revenue-raising scheme.
- A court may deny contract damages where enforcement would reward or encourage continued illegal, unlicensed activity, even if the defendant received and paid for some performance.

## Conclusion

Because the Illinois nurse agency licensing requirement was a regulatory public-health measure and U.S. Nursing performed without the required license, Illinois public policy barred enforcement of the contract’s seven-day payment clause, and judgment for the hospital was affirmed.


U.S. Nursing Corp. v. Saint Joseph Med. Ctr., 39 F.3d 790 (7th Cir. 1994)