DC Circuit Says Indian Health Service Does Not Owe Additional Funds to Swinomish

The District of Columbia Circuit on Tuesday affirmed a district court judgment that said the Indian Health Service does not owe the Swinomish Indian Tribal Community an extra $245,867 in contract support costs for running its health program.

Pursuant to the Indian Self-Determination and Education Assistance Act (ISDEAA), tribes receive federal funds to run their own health programs, negotiating contracts with the Indian Health Service (IHS).

“There are, however, limits to the negotiation,” the court noted. “No matter what, the government must pay the tribe at least what Indian Health Service would otherwise have spent to run the same program,” called the secretarial amount. The Indian Health Service must also pay for “contract support costs” outside of the secretarial amount, which cover expenses such as audits, computer systems, workers’ compensation, and unemployment taxes, the court explained.

“Indian Health Service pays the secretarial amount and contract support costs so that tribes will not have to use their own money to run and support the program,” the court said. “As a result, tribes typically don’t bill patients for their medical services. But that doesn’t mean tribes can’t earn money elsewhere. Like private hospitals and doctors’ offices, they can bill patients’ insurance companies, including Medicare and Medicaid.”

IHS’s funding toward tribes’ programs does not regard the extra insurance money, however — and this is what Swinomish disputed. The tribe argued that IHS must pay contract support costs on a percentage of the additional insurance money, equaling more than $245,000.

Swinomish originally filed suit against United States Department of Health and Human Services (HHS) Secretary Xavier Becerra in an attempt to recover the money to which it believed it was entitled. The district court granted HHS summary judgment, and the tribe appealed, to no avail.

The circuit court plainly stated that neither ISDEAA nor Swinomish’s contract with IHS require that IHS pay for contract support costs on insurance money that Swinomish receives, for two cited reasons: The ISDEAA does not mention third-party money received, such as through insurance companies, as being covered like contract support costs are; and the ISDEAA “repeatedly contemplates” that the parties involved in a contract will not consider insurance money a factor.

Holland & Knight LLP, Frye & Kelly P.C., and the Office of Tribal Attorney represent Swinomish. HHS retains its own counsel.