Tribe v. Becerra

Decision Date21 November 2022
Docket Number21-15641
PartiesSAN CARLOS APACHE TRIBE, Plaintiff-Appellant, v. XAVIER BECERRA, Secretary, U.S. Department of Health and Human Services; BENJAMIN SMITH,[*] Principal Deputy Director, Indian Health Service; UNITED STATES OF AMERICA, Defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Argued and Submitted March 7, 2022 Phoenix, Arizona

Appeal from the United States District Court for the District of Arizona No. 2:19-cv-05624-NVW Neil V. Wake, District Judge Presiding

Lloyd B. Miller (argued), Rebecca A. Patterson, and Whitney A Leonard, Sonosky Chambers Sachse Miller &Monkman LLP Anchorage, Alaska; Alexander B. Ritchie, San Carlos Apache Tribe, San Carlos, Arizona; for Plaintiff-Appellant.

John S. Koppel (argued) and Daniel Tenny, Appellate Staff Attorneys; Glenn McCormick, Acting United States Attorney Brian M. Boynton, Acting Assistant Attorney General; for Defendants-Appellees.

Caroline P. Mayhew, Hobbs Straus Dean &Walker LLP, Washington, D.C.; Geoffrey D. Strommer and Stephen D. Osborne, Hobbes Straus Dean &Walker LLP, Portland, Oregon; for Amici Curiae Native American Tribes, Tribal Organizations, Indian Health Boards, and the National Congress of American Indians.

Before: Michael Daly Hawkins, Richard A. Paez, and Paul J. Watford, Circuit Judges.

SUMMARY [**]
Tribal Issues

The panel reversed the district court's dismissal of the San Carlos Apache Tribe's ("the Tribe") claim alleging that federal defendants must cover the "contract support costs" ("CSC") for the third-party-revenue-funded portions of the Tribe's healthcare program.

The Indian Self-Determination and Education Assistance Act ("ISDA") allowed tribes to run their own healthcare programs, funded by Indian Health Services ("IHS") in the amount IHS would have spent on a tribe's health care. Because it was too expensive for the tribes to run the programs, Congress enacted a fix by requiring IHS to provide tribes with CSC-the amount of money a tribe would need to administer its healthcare programs. In addition, Congress allowed the tribes to bill outside insurers directly, and allowed tribes to keep the third-party revenue without diminishing their IHS grants, so long as tribes spent that revenue on health care.

At issue is who pays the CSC for the additional money the Tribe recovers from outside insurers. The Tribe contends that the IHS must cover those additional CSC. The Tribe filed suit to recover the CSC for program years 2011-2013. The parties settled all claims but Claim 2, which alleges that defendants must cover CSC for the third-party-revenue-funded portions of the Tribe's healthcare program. The panel held that the text of the governing statute, 25 U.S.C. § 5325(a), compelled reversal and remand for additional proceedings.

The federal defendants contended that the language of the contract under which the Tribe operated its healthcare programs foreclosed the Tribe's claim because the Tribe received the amount of CSC specified by the contract, a properly calculated amount that 25 U.S.C. § 5325(a) did not override. The panel held that this argument ignored the flexibility written into the contract, which allowed those amounts to be adjusted in the event of certain changes. A determination that the Tribe is owed CSC by statute for third-party-revenue-funded portions of its health-care program would fall under this umbrella. Additionally, because the contract incorporated the provisions of the ISDA, if that statute requires payment of the disputed funds, it controlled. The panel concluded that the contract was not dispositive and proceeded to determine whether the Tribe was owed those additional CSC by statute.

The panel started with the CSC provisions of the relevant statute, 25 U.S.C. § 5325(a), and held that Sections (a)(2) and (a)(3)(A)(ii), together, pointed toward requiring the defendants to cover CSC for activities funded by third-party revenues. The panel noted that this conclusion departed from the only other circuit to have considered the issue in Swinomish Indian Tribal Cmty. v. Becerra, 993 F.3d 917, 920 (D.C. Cir. 2021). The panel held that it could not conclude that § 5325(a) unambiguously excluded those third-party-revenue-funded portions of the Tribe's healthcare program from CSC reimbursement. The plain language of this section appears to include those costs. None of the additional statutory language to which defendants pointed erased this ambiguity.

The Tribe merely needed to demonstrate that the statutory language was ambiguous, and the Tribe met this burden. Because the statutory language was ambiguous, the Indian canon applied, and the language must be construed in favor of the Tribe. The panel held that the ISDA required payment of CSC for third-party-funded portions of the Federal healthcare program operated by the Tribe. The panel found that the Tribe met its burden under Fed.R.Civ.P. 12(b)(6), reversed the dismissal of the claim, and remanded for further proceedings.

OPINION

PAEZ, CIRCUIT JUDGE

This case presents a question of Native sovereignty in the context of a healthcare dispute.

Indian Health Service ("IHS") administers health care programs for Native tribes. Those programs bill insurance like any other doctor's office: if a patient is covered by Medicare, Medicaid, or private insurance, IHS bills that insurance for the cost of the procedure and retains that third-party revenue.

In an attempt to further tribal sovereignty, Congress in the Indian Self Determination and Education Assistance Act ("ISDA") allowed tribes to run their own healthcare programs, funded by IHS in the amount IHS would have spent on a tribe's health care.[1] 25 U.S.C. § 5325(a)(1). This furthered the goal of "assuring maximum Indian participation in the direction of . . . Federal services to Indian communities so as to render such services more responsive to the needs and desires of those communities." 25 U.S.C. § 5302(a). But tribes quickly ran into a roadblock: absent the bureaucracy and legal protections the Federal government enjoys, it was too expensive for tribes to run those programs. Congress enacted a fix by requiring IHS to provide tribes with "contract support costs" ("CSC"), or the amount of money a tribe would need to administer its healthcare programs, so that the tribe could provide "at least the same amount of services" as IHS otherwise would. 25 U.S.C. § 5325(a)(2)-(3); S. Rep. No. 100-274, at 16 (1987).

This helped. But amici tribes explain that they still did not enjoy parity with IHS, because IHS billed outside insurers slowly, and only imperfectly remitted that money to tribes. Tribes were thus losing some of their third-party revenue. So Congress stepped in again and allowed tribes to bill outside insurers directly. 25 U.S.C. § 1641(d)(1). Congress additionally allowed the tribes to keep the third-party revenue without diminishing their IHS grants, so long as tribes spent that revenue on health care. 25 U.S.C. §§ 1641(d)(2)(A), 5325(m).

A simplified example clarifies this scheme. Assume that a tribe administers a $3 million healthcare program for its members. It costs the tribe $500,000 in administrative costs to do so. IHS therefore will pay the tribe $3.5 million. Additionally, the tribe recovers $1 million for those procedures from outside insurers. It is statutorily required to spend that $1 million on health care as well.

But there is a hole in this statutory scheme. Who pays the CSC for that additional $1 million in health care that the tribe must provide with its third-party revenue? At the heart of this lawsuit is Plaintiff-Appellant San Carlos Apache Tribe's ("the Tribe") contention that IHS must cover those additional CSC.

The Tribe, a federally recognized Indian Tribe in Arizona, exercises its sovereignty by running its own healthcare programs and billing outside insurers directly. As required by contract and statute, it spends third-party revenue on additional health care for its members. But doing so is expensive, and the Tribe does not receive CSC from IHS to cover additional services. It filed suit to recover the CSC for program years 2011-2013. Defendant-Appellees Xavier Becerra, Secretary of the U.S. Department of Health &Human Services; Benjamin Smith, Principal Deputy Director of IHS; and the United States of America (collectively, "Defendants") contend that the Tribe must cover the additional CSC.

The parties settled all claims but Claim 2, which alleges that Defendants must cover CSC for the third-party-revenue-funded portions of the Tribe's healthcare program. The district court granted Defendants' motion to dismiss this claim. The Tribe timely appealed that dismissal.[2] We hold that the text of the governing statute, 25 U.S.C. § 5325(a), compels reversal and remand for additional proceedings.

I.

Defendants contend that the language of the contract under which the Tribe operated its healthcare programs ("the Contract") forecloses the Tribe's claim.

The section of the Contract concerning CSC reads:

CONTRACT SUPPORT COSTS

The parties agree that the CSC funding under this Funding Agreement (FA) will be calculated and paid in accordance with Section 106(a) of the [ISDA]; IHS CSC Policy (Indian Health Manual - Part 6, Chapter 3) or its successor; and any statutory restrictions imposed by Congress. In accordance with these authorities and available appropriations for CSC the parties agree that under this FA the San Carlos Apache Tribe will receive direct CSC in the amount of $135,203, and indirect CSC in the amount of $423,731. These amounts were determined using the FY 2010 IHS CSC appropriation, and the San Carlos Apache direct cost base and indirect rate as of December 7, 2010, and may be adjusted as set forth in the IHS CSC Policy
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