Native Organization Seeks Supreme Court Review on Contract Payment Disputes

The Arctic Slope Native Association is waiting to hear whether the U.S. Supreme court will review a case involving underfunded contract payments between tribally ran medical facilities and the Indian Health Service.

At issue are two circuit court decisions that are in direct opposition. The 10th Circuit court in Denver found earlier this spring in a similar lawsuit over nonpayment of IHS contracts, that a government contractor that has satisfied its contract but is not fully paid, should have legal remedy against the government. The DC Federal Circuit court disagreed, essentially saying, if the federal government does not pay its bills, contractors can’t sue for damages. Attorney Lloyd Miller is handling the case for the Arctic Slope Native Association or ANSA. He says the IHS never asks congress for enough money to fully fund the contracts they award to tribes. For fiscal year 2012, IHS has contracted for $615 million but is seeking $465 million in appropriations.

“That’s not right, they know it, they know what’s going on, the president in the president’s budget, they tell congress straight up, in an honest way, we know this is not enough, we know the total requirement is $615 million, we also know that we’re not requesting $615 million and then they ask for congresses blessing to pay less. This is nuts,” Miller said.

Although Miller says that tribes are the only federal contractors that get short funded, other businesses that contract with the federal government are worried about the conflicting decisions. So much so that the Chamber of Commerce of the United States and the National Defense Industrial Association have filed briefs supporting ANSA’s Supreme court request seeking clarity. Miller says it’s unusual for support briefs to be filed before the court has even agreed to hear the case, but he says it’s an indication of how worried government contractors nationwide are about what the decision could be.

“Because the Federal circuit, that made the decision we’re talking about is the circuit that hears almost all government contract appeals. So if that court got it wrong, as the contractors are concerned they did, it means a whole new regime for government contractors in the country and that’s not an acceptable outcome for them,” Miller said.

Secretary of Health and Human Services Kathleen Sebelius was in Alaska last month. When asked about IHS contract underfunding, she said historically that has been the case, contract services have not been adequately funded.

“And I think there’s no question that the US, historically has never lived up to its treaty agreements. What has happened in this administration is a significant effort to close that gap. We’re still not there,” Sebelius said.

But she says progress has been made, pointing to IHS funding increases each year since she’s been secretary, even as other agencies have been cut. When asked why congressional requests are less than the contracts the agency has committed to, she says it’s because of the gap that has been in place.

“It still doesn’t meet, there was such a huge unmet need, so it’s one of the agencies out of the 11 under the umbrella of health and human services that has had an increase, all three years, but that increase is not enough to make up the historic gap. We’re trying to make up for a lot of lost time,” Sebelius said.

Attorney Lloyd Miller says if the government is running out of money with other federal contractors, such as defense businesses who provide food services or security, they ask congress for a supplemental appropriation. He says this is what should happen with the tribal organizations that are running hospitals in Oklahoma or Alaska.

“But the government never does it, not once in 25 years has the government gone to congress and requested a supplemental appropriation to pay the contracts in full. Not once,” Miller said.

Officials with the Arctic Slope Native Association did not respond to repeated requests for comment. It will likely be October before Supreme Court justices announce whether they will review the case where two different courts of appeals have come to two diametrically opposed answers on the same question.

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Lori Townsend is the news director and senior host for Alaska Public Media. You can send her program ideas for Talk of Alaska and Alaska Insight at or call 907-350-2058.

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