Feds Lose Battle in Tribal Services Funding Crisis

WASHINGTON (CN) - The government may owe damages after deadline extensions kept underpaid providers of tribal health care in limbo, a federal judge ruled.

Tuba City Regional Health Care Corp., a contractor that provides American Indians and Alaska Natives with health services, had filed the case at hand in 2013, on the heels of a monumental decision by the Supreme Court.

In Salazar v. Ramah Navajo Chapter, a five-justice majority found that the congressionally imposed appropriations cap did not let federal agencies off the hook with regard to their obligations to pay tribes for activities they conduct in compliance with the Indian Self-Determination and Education Assistance Act (ISDA)

Tuba City is one such contractor that has systematically been underpaid by the Indian Health Service (IHS).

After the Supreme Court's decision, the contractor submitted to IHS six letters detailing its underpayments and damages dating back to 2006.

It filed suit when HIS contracting officer Frank Dayish failed to make a determination and instead gave himself three deadline extensions.

U.S. District Judge Rudolph Contreras refused to dismiss the case Friday, rejecting the government's claim that Tuba City had failed to exhaust administrative remedies.

"If the contracting officer believes the claims are unsupported at the time a final decision is required to be made, the contractor may deny the claims," Contreras wrote. "Alternatively, the contracting officer may abstain from issuing a decision; when the deadline passes, the claim will be deemed denied. In either case, the contractor may appeal; the contracting officer does not have the power to let the claim languish in bureaucratic purgatory."

Contreras also found it "particularly inapt" for the government to invoke the statutory purpose of the Contract Disputes Act, the law under which Tuba City seeks damages.

Though the government said that the CDA aims "to induce resolution of more contract disputes by negotiation prior to litigation," Contreras noted that the statute is also supposed to "insure fair and equitable treatment to contractors and government agencies."

"Both sides agree that the only way settlement can occur is if the litigation proceeds; otherwise, the government cannot pay judgments out of the Judgment Fund," he added.

In the action that spurred the Supreme Court blowout, the Ramah Navajo Chapter, Oglala Sioux Tribe and Pueblo of Zuni complained that funding shortfalls were keeping their tribes from supporting medical programs.

A New Mexico federal judge ruled in favor of the government based on the phrase "subject to the availability of appropriations," included in the ISDA and all self-determination contracts. The court held that the language eliminated the government's obligation to pay contract-support costs unless Congress appropriates funds to pay all costs on every self-determination costs.

The Supreme Court had affirmed a 10th Circuit reversal.

"When an agency makes competing contractual commitments with legally available funds and then fails to pay, it is the government that must bear the fiscal consequences, not the contractor," Justice Sonia Sotomayor wrote for the majority.

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