376 F. Supp. 3d 100
D.C. Cir.2019Background
- Seminole Tribe of Florida contracted with HHS/IHS under the ISDEAA to run a tribal health program for FY2018; parties agreed on Secretarial amount and direct CSCs but disputed indirect CSCs.
- Tribe submitted a proposal using its IBC-negotiated indirect cost rate (28.32%) applied to salaries, wages, and fringe benefits in the health program, producing $1,900,269 in indirect CSCs.
- IHS rejected the proposal under 25 U.S.C. § 5321(a)(2)(D), asserting the Tribe had reallocated almost all Secretarial funds to salaries (98.93%), inflating the base and creating a mismatch between the rate and base that would make IHS pay more than its pro rata share.
- IHS offered to apply the Tribe’s rate to an ‘‘equitable’’ portion (initially ~71%, later 80%) of program costs, resulting in a lower indirect CSC figure and a $159,483 shortfall compared to Tribe’s demand.
- Tribe sued in federal court seeking declaration that IHS’s approach was unlawful and an order compelling funding of its proposed CSCs; both sides moved for summary judgment.
- The Court found material factual disputes (source of Tribe’s supplemental funds and specifics of the Tribe’s indirect cost-rate negotiation/inputs) and denied both motions, remanding to IHS for further consideration and staying the case pending negotiations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether IHS may reject Tribe's indirect CSC calculation based on Tribe's reallocation of Secretarial funds | Tribe: ISDEAA permits reallocation under §5386; IHS must accept the Tribe's agreed indirect rate and the rate applied to the Tribe's salaries/wages base | IHS: Reallocation inflated the CSC base and applying the salaries-based rate to that inflated base would make IHS fund costs not attributable to the IHS contract | Denied judgment to either side; factual questions remain whether the rate/base mismatch makes Tribe's proposal exceed the applicable funding level |
| Whether the Tribe’s proposed CSCs exceed the "applicable funding level" under §5321(a)(2)(D) | Tribe: Its proposal is within ISDEAA and OMB methodology; IHS's 80% cap lacks statutory basis | IHS: ISDEAA limits IHS to fund only costs attributable to the contract; mismatched rate/base can violate that limit | Court: IHS must prove by clear and convincing evidence if rejecting; IHS has not provided adequate evidence about the Tribe’s negotiated rate and program-wide cost inputs, so unresolved material facts preclude summary judgment |
| Whether third-party or tribal supplemental funds used by Tribe count toward CSC base | Tribe: Supplemental funds used to operate program may be included; relies on precedent allowing program income (e.g., Medicare/Medicaid) in CSC base | IHS: If supplemental funds are not ISDEAA program income, including them risks funding costs not attributable to the IHS contract | Court: Tribe has not shown its supplemental funds qualify as ISDEAA program income; unresolved factual issue whether funds are program income |
| Appropriate next step: judicial resolution vs. remand/negotiation | Tribe: Court should rule IHS denial unlawful and compel funding | IHS: Remand/negotiation is appropriate to resolve factual gaps | Court: Remand and stay case; parties to attempt further negotiation and file status reports every 60 days |
Key Cases Cited
- Cherokee Nation v. Leavitt, 543 U.S. 631 (explains CSCs and OMB indirect cost rate allocation principles)
- Ramah Navajo Sch. Bd. v. Babbitt, 87 F.3d 1338 (discusses ISDEAA’s limitation on Secretary discretion and pro-tribal construction)
- Tunica-Biloxi Tribe of La. v. United States, 577 F. Supp. 2d 382 (interprets ISDEAA limits on IHS funding indirect costs associated with non-IHS entities)
- Navajo Health Found.-Sage Memorial Hosp., Inc. v. Burwell, 263 F. Supp. 3d 1083 (held certain third-party program income must be included in CSC calculations)
- Cobell v. Norton, 240 F.3d 1081 (articulates Indian canon of statutory construction; courts give agency interpretations careful consideration but not deference)
- Citizen Potawatomi Nation v. Salazar, 624 F. Supp. 2d 103 (discusses standard of review when ISDEAA claims are raised with APA claims; relevant to scope of de novo review)