(CN) - The Department of Health and Human Services does not have to pay more than $2.6 million in contract shortfalls demanded by an Alaskan Native American group, the Federal Circuit ruled.
Arctic Slope Native Association (ASNA) sued Kathleen Sebelius, secretary of Health and Human Services, for withholding funding in 1999 and 2000 because of statutory cap limitations. The group argued that the funds could have been awarded if the different tribes of the region sued separately.
The Indian Self-Determination Act, as amended in 1994, authorizes Health and Human Services to enter into contracts with tribes, under which the tribes supply health services that a government agency would otherwise provide.
Though the secretary paid approximately $1.29 million for fiscal year 1999 and approximately $3 million for fiscal year 2000, ASNA says she should have covered the shortfall, in this case the difference between the amount of support costs specified in the annual funding agreement and ASNA's actual expenditures.
Sebelius argued that Congress had stipulated the appropriations were "not to exceed" annual funding agreements. Paying the shortfall would reduce funds for programs serving other tribes, she claimed.
Writing for the three-judge appellate panel, Judge Timothy Dyk affirmed a lower court's finding that granted Sebelius summary judgment.
"Adopting ASNA's approach would effectively defeat the statutory cap because the secretary would be obligated to pay a total amount of tribal obligations exceeding the cap," Dyk wrote.
He added that reallocating funds from one tribe to another would be a "particularly inappropriate" violation.
The annual funding agreements provide that "the secretary is not required to reduce funding for programs, projects or activities serving a tribe to make funds available to another tribe or tribal organization," the ruling states.
ASNA had argued that the shortfall occurred because Sebelius did not request enough funding, but the appeals court found that Congress imposed the cap despite knowledge that costs had outpaced the available funding.
"The contract explicitly specified that funding may be inadequate to fully fund the secretary's obligations," Dyk wrote.
The Arctic Slope is one of 12 regions named in the 1971 Alaska Native Claims Settlement Act. It spans an area larger than Washington state and is the largest municipality in the United States.