N. Arapaho Tribe v. Cochran
| Decision Date | 07 July 2021 |
| Docket Number | Case No. 21-CV-0037 |
| Citation | 548 F.Supp.3d 1134 |
| Parties | NORTHERN ARAPAHO TRIBE, Plaintiff, v. Norris COCHRAN, in his official capacity as Acting Secretary, U.S. Department of Health and Human Services ; Elizabeth Fowler, in her official capacity as Acting Director, Indian Health Service ; United States of America, Defendants. |
| Court | U.S. District Court — District of Wyoming |
Geoffrey D. Strommer, Pro Hac Vice, Stephen Osborne, Pro Hac Vice, Hobbs Straus Dean & Walker LLP, Portland, OR, Lucas Evan Buckley, Hathaway & Kunz, Cheyenne, WY, for Plaintiff.
Nicholas Vassallo, US Attorney's Office, Cheyenne, WY, for Defendants.
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS
The Northern Arapaho Tribe brings this case against the Government for violation of law and breach of contract by the Indian Health Service ("IHS") in failing to pay full funding of contract support costs ("CSC") for the operation of its federal health program under a Contract and Annual Funding Agreement authorized by the Indian Self-Determination and Education Assistance Act (ISDEAA), 25 U.S.C. § 5301 et seq. CM/ECF Document ("Doc.") 1. Funding for CSC reimburses the Tribe for the additional, reasonable direct and indirect costs for contract administrative expenses1 and overhead to ensure contract compliance and prudent management. 25 U.S.C. § 5325(a)(3)(A). This case focuses on IHS's refusal "to pay CSC associated with that portion of the Tribe's health care program funded with third-party revenues – payments from Medicare, Medicaid, private insurers, and others"2 for fiscal year 2016 and FY2017.3 Id. at ¶¶ 3-4. With regard to FY2016, the Tribe claims it is entitled to $538,936.00 for IHS's failure to pay CSC on expended third party-revenues. Doc. 1, ¶ 34. For FY2017, the Tribe claims $1,001,201.00. Doc. 1, ¶ 37.
Defendants move to dismiss the Tribe's case arguing neither the law nor the contract with the Tribe support the Tribe's claim that IHS must pay CSC on that portion of the Tribe's federal health care program funded by third-party revenues such as payments from Medicare, Medicaid, private insurers and others. Doc. 18. The Tribe opposes dismissal, arguing Defendants misread the ISDEAA. The Tribe argues it is required by law and contract to collect third-party revenues and use them for additional services within the scope of the Tribe's contract with the Secretary of Health and Human Services. Further, the Tribe argues these additional services made possible by third-party revenue generate additional administrative and overhead costs of precisely the kind that Congress required be funded by CSC.
The Court concludes that the ISDEAA and the Tribe's contract entitle the Tribe to receive CSC funding on expenditures of funds received under the contract with the IHS, which does not include expenditures of third-party income. Therefore, the Court grants Defendants’ motion to dismiss.
The ISDEAA authorizes Indian tribes and tribal organizations to assume responsibility to administer programs, functions, services, and activities (PFSAs) the Secretary would otherwise be obligated to provide under federal law to American Indians and Alaska Natives. 25 U.S.C. § 5321(a)(1). Pursuant to this authorization, the Northern Arapaho Tribe has entered into a contract with the Secretary of Health and Human Services to assume responsibility for the Tribe's federal health care program. The purpose of the ISDEAA is to reduce federal domination of Indian programs and promote tribal self-determination and self-governance. See 25 U.S.C. § 5302(b) ; Cherokee Nation of Okla. v. Leavitt , 543 U.S. 631, 639, 125 S.Ct. 1172, 161 L.Ed.2d 66 (2005).
The ISDEAA requires the amount of funds provided to the Tribe "shall not be less than the appropriate Secretary would have otherwise provided for the operation of the programs or portions thereof for the period covered by the contract[.]" 25 U.S.C. § 5325(a)(1). The amount the Secretary otherwise would have provided to operate the program is commonly referred to as the "Secretarial amount." Further, the ISDEAA requires, in addition to the Secretarial amount, payment of direct and indirect CSC to cover the administrative and overhead expenses for activities which must be carried on by the Tribe as a contractor to ensure compliance with, and prudent management of the terms of the contract. 25 U.S.C. § 5325(a)(2).
This dispute involves funding for both direct and indirect CSC to cover the Tribe's expenditures of third-party income to further the general purposes of the Tribe's contract with IHS. The Tribe pursued its claims for underpaid CSC for FY2016 and FY2017, which the IHS denied by letter dated February 20, 2020. Doc. 1, ¶ 7. This civil action was filed within twelve months of receipt of the IHS decision, as required by the Contract Disputes Act, 41 U.S.C. § 7104(b)(3). Id. Therefore, this Court has jurisdiction to review the IHS denial under the Contract Disputes Act and Section 110 of the ISDEAA. 41 U.S.C. § 7104(b) ; 25 U.S.C. § 5331(a), (d).
Applicable law
In determining a Rule 12(b)(6) motion to dismiss, a court "must accept as true all well-pleaded facts, as distinguished from conclusory allegations, and those facts must be viewed in the light most favorable to the non-moving party." Moss v. Kopp , 559 F.3d 1155, 1159 (10th Cir. 2009). As this dispute arises under the Contract Disputes Act, the Court's review is de novo , and the Tribe has the burden of proof. 41 U.S.C. § 7104(b)(4) ; J.C. Equip. Corp v. England , 360 F.3d 1311, 1318 (Fed. Cir. 2004). When interpreting the ISDEAA, the Court begins with the "language of the statute." Barnhart v. Sigmon Coal Co. , 534 U.S. 438, 450, 122 S.Ct. 941, 151 L.Ed.2d 908 (2002).
Applicable Provisions of the Tribe's Scope of Work Incorporated in its Annual Funding Agreement
The Tribe's Business Office ... will have an established accounting system to monitor the number of billings submitted, claims completed and total payments received. It will maintain accreditation standards in order to qualify for funds through third party-payers....
By its complaint, the Tribe relies on 25 U.S.C. § 5325(a)(3)(A) for its claim that "the entire ‘Federal program’ that is the subject of the contract – including program income from that Federal program – generates CSC requirements." Doc. 1, ¶ 18. The Tribe also alleges that it is required by law and contract to collect third-party revenues in order to assure that the Indian health program is a payer of last resort. Id. at ¶ 20; 25 U.S.C. § 1623(b). The third-party revenues (or program income) must be expended on PFSAs included in the Tribe's Annual Funding Agreement, thus the expenditures from third-party program income must be included in the base...
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