Cherokee Nation of Oklahoma & Shoshone-Paiute Tribes of the Duck Valley Reservation v. Thompson, Tommy (Health & Hu (03/01/2005)

Questions presented: (1) Whether the Indian Self-Determination and Education Assistance Act (ISDA), 25 U.S.C. 450-450n, requires the Secretary of Health and Human Services to pay "contract support costs" associated with carrying out self-determination contracts with the Indian Health Service, where appropriations were otherwise insufficient to fully fund those costs and would require reprogramming funds needed for non-contractable, inherently federal functions such as having an Indian Health Service? (2) Whether Section 314 of the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Pub. L. No. 105-277, 112 Stat. 2681-288, bars the Cherokee Nation of Oklahoma from recovering its contract support costs?BY JUAN-CARLOS RODRIGUEZ, MEDILL NEWS SERVICE

Melissa Gower, executive director of health services for the Cherokee Nation, doesn’t mince words about how necessary federal funding is for her tribe’s health services.

"If we don’t get the money," she said, "then if someone comes in with cancer or a cardiovascular problem, their fatality is probably imminent."

Gower said when the Cherokee Nation’s health services aren’t fully funded, specialty practices like orthopedics and cancer detection and treatment are the first to get cut.

But sometimes there just isn’t enough money to fully fund all the tribe’s programs, according to the Department of Health and Human Services (HHS).

Two lawsuits illustrate the funding struggles between the federal government and Indian health care services.

On Sept. 27, 1996, the Cherokee Nation submitted a claim to a federal contract officer, saying that their health care service had been under-funded by the Secretary of HHS from 1994 to 1996, and asking for relief. It was denied.

Then on March 5, 1999, the Shoshone-Paiute and Cherokee tribes filed suit against the Secretary in the U.S. District Court for the Eastern District of Oklahoma. This claim addressed Shoshone-Paiute funding gaps for 1996 and 1997, and Cherokee gaps for 1997.

The major points of contention in these two cases are: must the U.S. government, by virtue of a contract with a tribe, fully fund its health services, are there limits to what the government is required to do, and whether the government actually had the money to cover funding costs during the years in question.

Before 1975, the U.S. government directly controlled social service programs for Native American tribes, such as education and health care systems. But that year Congress passed the Indian Self-Determination and Education Assistance Act (ISDEA). It gave tribes the option of assuming control of those programs by way of entering into a contract with the government.

A section of the act said, "Federal domination of Indian service programs has served to retard, rather than enhance the progress of Indian people…"

According to the ISDEA, if a tribe chose to enter into a contract and become independent from the Indian Health Service (IHS), the branch of HHS controlling the administration of Indian health care, the tribe would take over the administrative duties of a health care facility or service, and Congress would continue to fund the program in the same amount it would have cost the government to provide the service.

Over the next decade, many tribes decided to take the government up on its offer and signed contracts to run some of their own health care services.

But in many cases, tribes felt funding was insufficient and difficult to obtain. One specific complaint was that the Secretary wasn’t giving enough money for indirect costs, also known as contract support costs. Contract support costs include expenses that are not spelled out in the contract but occur naturally in the administration of a health care facility, such as program startup costs and malpractice insurance.

In 1988 and 1994, Congress amended the ISDEA in order to satisfy some of the tribes’ wishes. The amendments provided, among other things, that federal money would be provided for contract support costs.

But despite the amendments, disagreements over money between tribes and the Secretary persisted. Much of the problem lay in how each side interpreted the ISDEA.

In the Cherokee claim to the federal contract officer in 1996, they said that the government owed them money for contract support costs. They said that because the Secretary was required to give as much money to the tribe as it would have cost HHS to run the programs, and that Congress had amended the ISDEA specifically to deal with contract support costs, there was no reason the tribe should be short-changed.

The Secretary countered by citing the "availability clause" and the "reduction clause" of the ISDEA: "… the provision of funds under this subchapter is subject to the availability of appropriations and the Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe or tribal organization under this subchapter."

The Secretary claimed that there hadn’t been enough money to fully fund all the contract support costs of tribes who had contracts with the government during the years in question. Therefore the Secretary had set up a first-come, first-served waiting list for available funds. Unfortunately for the Cherokee, they were too far down on the list and never received any money.

To support the position that funding had run out, the Secretary cited section 314 of the Omnibus Consolidated and Emergency Supplemental Appropriations Act for Fiscal Year 1999, which said that the money the Secretary spent from 1994 through 1996 was all that had been available.

The contract officer agreed with the Secretary and dismissed the Cherokee claim. The Cherokee then appealed to the Department of the Interior’s Board of Contract Appeals.

Meanwhile, on March 5, 1999, the Shoshone-Paiute and Cherokee, after losing a separate appeal to another contract officer, filed a suit against the Secretary and the Director of IHS in Oklahoma, repeating the accusation that HHS had under-funded tribal health care services.

Again, the Secretary said that the available funds had been exhausted, the "availability clause" prevented him from covering the gaps and that section 314 of fiscal year 1999 act proved that all funds had been spent.

In June 1999, the Interior Department’s Board of Contract Appeals reversed the contract officer’s decision in the first case and granted summary judgment to the Cherokee Nation. Judge Bernard Parrette wrote: "In making allocations and disbursements for indirect costs under compacts and contracts pursuant to Title III, when funded by unrestricted lump-sum appropriations, IHS remains bound by the mandatory language of the authorizing legislation and its agreements with Indian tribes executed pursuant thereto, despite any shortfalls in the total amounts appropriated, because in providing indirect costs under the Act, the Department is performing an essentially ministerial function, and it has no authority to modify administratively the clear statutory mandates giving priority to indirect costs."

In regards to section 314, Judge Parrette wrote: "Here, there is no clear indication, and certainly no proof, that the Congress intended either to modify or repeal the [contract support costs] mandate of the ISDA or to relieve IHS of its obligation to fully fund CSC for programs already undertaken and completed during the FY's in question."

The Secretary appealed to the Court of Appeals for the Federal Circuit in Nov. 2001.

In Oklahoma, a different judge reached a much different conclusion on the same issues. In June 2001, District Judge Frank Seay granted summary judgment for the defendants, found that the funds for tribal health care in the years in question had indeed been exhausted and that if the Secretary had paid the Cherokee, another tribe would have been under-funded.

The tribe appealed to the 10th Circuit Court of Appeals, which unanimously affirmed. Judge Stephen Anderson wrote, "As this case demonstrates, the adequacy of the funding provided for tribal indirect costs has been a recurring and troublesome issue."

But he also wrote that the availability clause was a "significant caveat to the funding obligations." He found that section 314 of fiscal year 1999 act proved the Secretary’s claim that all funds had been expended.

The Cherokee filed a petition for a writ of certiorari with the U.S. Supreme Court in April 2003.

On July 3, 2003, the Court of Appeals for the Federal Circuit unanimously upheld the Board’s ruling. Judge Timothy Dyk wrote:"We hold that there were available appropriations to pay the appellee its full indirect costs, because there were no statutory caps on funding in the appropriations acts for the relevant fiscal years, and that the Secretary has not shown that full payment would require the Secretary ‘to reduce funding for programs, projects or activities serving [another] tribe.’"

The Secretary filed a certiorari petition with the Supreme Court in December 2003.

All the parties said that the two cases could be consolidated into one case for the Supreme Court, since the issues were identical. On March 22, 2004, the Court granted both petitions and consolidated the cases.

Melissa Gower hopes that if the Court rules that the government must pay the tribe for funding gaps, it will bring new respect to the tribes. "I think that the case would put the tribe, which is a sovereign nation, on the same level playing field as other government vendors."

"That way, if a person does come in with heart disease or cancer, there will be money to provide those services."

On March 1, 2005, the Court sided unanimously with the tribes, holding that the government is legally bound to pay for the contract support costs.

Writing for the Court, Justice Stephen Breyer reasoned that the government had failed to provide any basis to treat the agreement any differently than standard government procurement contracts.

The vote was 8-0, with Chief Justice William Rehnquist, who was ill during the course of the deliberations, not participating in the opinion.