`AK Bar No. 7906040
`Rebecca A. Patterson
`AK Bar No. 1305028
`SONOSKY, CHAMBERS, SACHSE,
` MILLER & MONKMAN, LLP
`725 East Fireweed Lane, Suite 420
`Anchorage, AK 99503
`(907) 258-6377
`Fax: (907) 272-8332
`lloyd@sonosky.net
`rebecca@sonosky.net
`
`Attorneys for Plaintiff Alaska Native Tribal Health Consortium
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF ALASKA
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`Case No. ___________________
`
`
`COMPLAINT
`
`
`
`
`
`v.
`
`
`
`ALASKA NATIVE TRIBAL HEALTH
`CONSORTIUM,
`
`
`
`
`
`XAVIER BECERRA, Secretary, U.S.
`Department of Health and Human
`Services,
`
`and
`
`UNITED STATES OF AMERICA,
`
`
`
`
`Plaintiff,
`
`Defendants.
`
`
`
`I. INTRODUCTION
`
`1.
`
`This action seeks damages for the failure of the Secretary of Health and
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`Human Services, through the Indian Health Service (IHS), to pay the Alaska Native Tribal
`
`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 1 of 18
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`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 1 of 18
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`
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`Health Consortium (ANTHC) certain “contract support costs” due under ANTHC’s
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`contract with IHS in Fiscal Year (FY) 2014. ANTHC’s rights arise under its contract and
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`the statute under which the contract was awarded, the Indian Self-Determination and
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`Education Assistance Act, 25 U.S.C. §§ 5301–5423 (ISDA).
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`2.
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`This action follows several Supreme Court decisions finding the federal
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`government’s failure to pay full contract support costs to contractors like ANTHC to be
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`contrary to law and a breach of contract. See Salazar v. Ramah Navajo Chapter, 567 U.S.
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`182, 192-94 (2012); Arctic Slope Native Ass’n v. Sebelius, 133 S. Ct. 22 (2012), on remand
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`501 Fed. App’x 957, 959 (Fed. Cir. 2012) (Arctic Slope II); Cherokee Nation v. Leavitt,
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`543 U.S. 631, 636-38 (2005) (consolidated cases).
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`3.
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`ANTHC seeks as damages the unpaid contract support cost funds which the
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`Secretary should have paid in FY 2014.
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`II. JURISDICTION
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`4.
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`This Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1331,
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`1362; 25 U.S.C. §§ 5331(a), 5531(d); and 41 U.S.C. § 7104 of the Contract Disputes Act
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`(CDA).
`
`III. PARTIES
`
`5.
`
`The Alaska Native Tribal Health Consortium (ANTHC) is a tribal
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`organization and at all relevant times carried out a self-governance compact and associated
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`funding agreement with the Secretary of Health and Human Services pursuant to Title V
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`of the ISDA, 25 U.S.C. §§ 5381–5399 and section 325 of Pub. L. No. 105-83, 111 Stat. 55
`
`(1997).
`
`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 2 of 18
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`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 2 of 18
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`6.
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`Xavier Becerra is the Secretary of the U.S. Department of Health and Human
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`Services (DHHS). Secretary Becerra exercises limited responsibilities delegated to him by
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`Congress pursuant to the ISDA and other applicable law, including authority to enter into
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`contracts on behalf of the United States with Indian tribes and tribal organizations pursuant
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`to the ISDA and other applicable law. Secretary Becerra has further delegated some of
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`these responsibilities to officials of the Indian Health Service (IHS), an agency located
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`within DHHS. As used throughout this Complaint (and unless context commands
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`otherwise), the terms “Secretary,” “DHHS,” and “IHS” are used interchangeably.
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`7.
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`The United States of America is responsible for payment of all contracts with
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`the Federal government. Pursuant to provisions of the CDA and the ISDA, the United
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`States has waived its sovereign immunity from suit for breach of contract actions.
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`IV. FACTS AND GENERAL ALLEGATIONS
`
`A.
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`The Contract Documents.
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`8.
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`During FY 2014, ANTHC operated various Federal health care programs,
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`functions, services, and activities pursuant to Compact No. 58G990058 and its associated
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`funding agreement (collectively referred to in this Complaint as the “contract”).
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`9.
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`Pursuant to the contract, in FY 2014 ANTHC co-managed the Alaska Native
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`Medical Center (ANMC), a 173-bed tertiary-care hospital located in Anchorage, Alaska,
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`through which it provides comprehensive medical services (including inpatient hospital
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`care and specialty care) for the Alaska Tribal Health System. These services included
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`critical care, emergency medicine, internal medicine, ophthalmology, orthopedic services,
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`otolaryngology, surgery, cardiology, hematology-oncology, clinical and anatomic
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`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 3 of 18
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`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 3 of 18
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`laboratory, imaging, pharmacy, respiratory care, and social services. Further, ANTHC
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`provided wellness programs, disease research and prevention, and rural provider training,
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`and supported efforts in public health, traditional foods and nutrition, epidemiology,
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`environmental health, and dental health education (among other programs).
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`10.
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`The programs described in paragraph 9 of this Complaint were operated
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`pursuant to the Alaska Tribal Health Compact (“the Compact”) with IHS.1 Ex. A. The
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`Compact is the basic contract document at issue in this case. The terms of the Compact are
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`required by and inextricably intertwined with the ISDA. The Compact states that it “shall
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`be liberally construed to achieve its purposes[.]” Compact, art. I, § 2. Similarly, Title V,
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`which governs the Compact, provides that “[e]ach provision of [Title V] and each provision
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`of a compact or funding agreement shall be liberally construed for the benefit of the Indian
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`tribe participating in self-governance and any ambiguity shall be resolved in favor of the
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`Indian tribe.” 25 U.S.C. § 5392(f).
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`11.
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`The Compact was written to “carry out a Self-Governance Program
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`authorized by Title V, and is intended to transfer to tribal governments, at a tribe’s request,
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`the power to decide how federal programs, services, functions and activities (or portions
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`thereof) shall be funded and carried out.” Compact, art. I, § 2(a). It was also meant to
`
`
`1 The Alaska Tribal Health Compact has been frequently amended and restated since the
`first version went into effect on October 1, 1994. Relevant to the claims presented here is
`the FY 2011 version that went into effect on October 1, 2010, and all citations in this
`Complaint are to that version.
`
`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 4 of 18
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`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 4 of 18
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`“promote[] the autonomy of the Tribes in Alaska in the realm of health care.” Id.
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`Consistent with this purpose, the Compact relies heavily on the provisions of the ISDA.
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`12.
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`The core purpose of the Compact between IHS and ANTHC is:
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`to enable [ANTHC] to re-design health programs, activities, functions, and
`services of the Indian Health Service; to reallocate funds for programs,
`activities, functions, or services according to the priorities of [ANTHC]; to
`enhance the effectiveness and long-term financial stability of [ANTHC]; and
`to streamline the federal Indian Health Service bureaucracy.
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`Compact, art. I, § 2(b).
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`13.
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`The contract documents also include ANTHC’s Funding Agreement (FA).
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`Funding agreements can cover single or multiyear periods and may be amended throughout
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`the year to take account of appropriations changes and new funds that are made available.
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`See 25 U.S.C. § 5385(e) (“[E]ach funding agreement shall remain in full force and effect
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`until a subsequent funding agreement is executed.”). In FY 2014, ANTHC operated
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`pursuant to the multiyear FY 2011-2015 FA for its Title V funds. Ex. B (excluding
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`exhibits). ANTHC’s FA was incorporated in its entirety into the Compact. See Compact,
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`art. II, § 2(c).
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`14.
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`The contract documents that are controlling for the FY 2014 claim asserted
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`here are the Alaska Tribal Health Compact, the FA in effect for that year under the
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`Compact, modifications to those documents, and the various statutory and administrative
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`provisions incorporated by law into the contract documents, including the ISDA.
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`B.
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`The Contract Agreement.
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`15. ANTHC’s contractual obligation was to administer designated health care
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`programs and to provide certain health care services and functions previously provided by
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`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 5 of 18
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`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 5 of 18
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`IHS. IHS’s contractual obligation to ANTHC was to make certain specified payments to
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`ANTHC, including payments required for ANTHC to carry out its administrative duties
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`and other costs of carrying out the Compact.
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`16. ANTHC’s contract was authorized by Title V of the ISDA, 25 U.S.C. §§
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`5381-5399. Section 508(c) of Title V of the ISDA, 25 U.S.C. § 5388(c), requires that “[t]he
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`Secretary shall provide funds under a funding agreement under this subchapter in an
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`amount equal to the amount that the Indian tribe would have been entitled to receive under
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`self-determination contracts under this chapter, including amounts for direct program costs
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`specified under section 5325(a)(1) of this title and amounts for contract support costs
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`specified under section 5325(a) (2), (3), (5), and (6) . . . .” This provision entitled ANTHC
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`to the same amount it would have received had it been operating a contract with IHS that
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`was awarded under Title I of the Act, 25 U.S.C. §§ 5321-5332, and specifically the funding
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`provisions set forth in 25 U.S.C. § 5325(a). Thus, at all relevant times, 25 U.S.C. §
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`5325(a)(2), (3), and (5), and related funding provisions of Title I of the ISDA, controlled
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`the Secretary’s funding obligations under the contract. These are the same provisions that
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`the Supreme Court construed in Cherokee Nation and Ramah, and that the Federal Circuit
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`construed in Arctic Slope II.
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`17.
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`The ISDA and ANTHC’s contract required that IHS pay contract support
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`costs. 25 U.S.C. § 5325(a)(2) provides that “[t]here shall be added to the amount required
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`by paragraph (1) [i.e., the program amount] contract support costs which shall consist of
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`an amount for the reasonable costs for activities which must be carried on by a tribal
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`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 6 of 18
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`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 6 of 18
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`organization as a contractor to ensure compliance with the terms of the contract and prudent
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`management . . . .”
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`18. Contract support costs are mostly “administrative expenses,” Cherokee
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`Nation, 543 U.S. at 634, although they more precisely fall into one of two subcategories:
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`(1) indirect administrative (or overhead) contract support costs, “such as special auditing
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`or other financial management costs,” id. at 635 (citing § 5325(a)(3)(A)(ii)), and (2) direct
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`contract support costs for certain annually recurring costs attributable directly to the
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`personnel and facilities employed to carry out the contracted IHS programs, “such as
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`workers’ compensation insurance,” id. (citing § 5325(a)(3)(A)(i)).
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`19.
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`The ISDA defines these costs with particularity:
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`[t]he contract support costs that are eligible costs for the purposes of
`receiving funding under this chapter shall include the costs of reimbursing
`each tribal contractor for reasonable and allowable costs of—
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`(i) direct program expenses for the operation of the Federal program
`that is the subject of the contract, and
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`(ii) any additional administrative or other expense related to the
`overhead incurred by the tribal contractor in connection with the
`operation of the Federal program, function, service, or activity
`pursuant to the contract,
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`except that such funding shall not duplicate any funding provided under
`subsection (a)(1) of this section.
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`Id. § 5325(a)(3)(A). The focus of this statutory provision is the “Federal program” that is
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`the subject of the contract.
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`20.
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`The foregoing provision of law obligates IHS to pay (1) all of the “reasonable
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`and allowable costs” associated with additional “direct program expenses for the operation
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`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 7 of 18
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`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 7 of 18
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`of the Federal program” under contract, plus (2) all of the “reasonable and allowable costs”
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`for “any additional administrative or other expense related to the overhead incurred by the
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`tribal contractor in connection with the operation of the [contracted] Federal program.” Id.
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`The only limitation on this payment obligation is that a contract support cost payment may
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`not duplicate a program payment already made to the contractor (i.e., the amount “provided
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`under subsection (a)(1) of [§ 5325]”).
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`21.
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`The ISDA directs that “[u]pon the approval of a . . . contract, the Secretary
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`shall add to the contract the full amount of funds to which the contractor is entitled under
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`[§ 5325(a)], subject to adjustments for each subsequent year that such tribe . . . administers
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`a Federal program, function, service, or activity under such contract.” Id. § 5325(g); see
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`id. § 5396(a) (providing that § 5325(a)-(k) “shall apply to compacts and funding
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`agreements authorized by [Title V]”).
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`22.
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`The ISDA permits, but does not require, that contract support costs be
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`determined in a negotiation between the parties. Id. § 5325(a)(3)(B) (Tribes “shall have
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`the option to negotiate with the Secretary the amount of funds that the tribe or tribal
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`organization is entitled to receive under such contract pursuant to this paragraph.”). The
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`Secretary’s duty to add full contract support costs to a contract is not contingent upon such
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`a negotiation.
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`23.
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`ISDA delegates to the Secretary limited regulatory and discretionary
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`authority. See Ramah Navajo Sch. Bd. v. Babbitt, 87 F.3d 1338, 1344 (D.C. Cir. 1996)
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`(“Congress has clearly expressed in the [ISDA] . . . its intent to circumscribe as tightly as
`
`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 8 of 18
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`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 8 of 18
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`possible the discretion of the Secretary,” and “[t]he statute itself reveals that not only did
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`Congress not intend to commit allocation decisions to agency discretion, it intended quite
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`the opposite; Congress left the Secretary with as little discretion as feasible in the allocation
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`of [contract support costs]” (citation omitted)). The Secretary possesses no delegated
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`authority from Congress to issue regulations concerning contract support costs.
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`24.
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`Title V provides that, “[u]nless expressly agreed to by the participating
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`Indian tribe in the compact or funding agreement, the participating Indian tribe shall not be
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`subject to any agency circular, policy, manual, guidance, or rule adopted by the Indian
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`Health Service, except for the eligibility provisions of section 5324(g) of this title and
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`regulations promulgated under this section.” 25 U.S.C. § 5397(e). This provision was
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`expressly incorporated into ANTHC’s contract. See Compact, art. I, § 9(a)-(b); FY 2011-
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`2015 FA § 8. The Secretary’s Title V regulations do not address contract support cost
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`issues, other than to note that the Secretary must provide contract support costs as specified
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`in the ISDA. 42 C.F.R. §§ 137.79, 137.143. In sum, the ISDA provides for full recovery
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`of all contract support costs incurred in carrying out the Federal programs that are the
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`subject of a contract.
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`25. During the fiscal year at issue here, IHS calculated and paid contract support
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`costs pursuant to Chapter 6-3 of the Indian Health Manual (“IHS Manual” or “IHM”). See
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`Ex. C, Indian Health Serv., Indian Health Manual, pt. 6, ch. 3 (2007). This chapter explains
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`how IHS determines contract support cost requirements, but it is not binding on tribal
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`contractors. Id. § 6-3.1(A); see also 25 C.F.R. § 900.5 (“Except as specifically provided
`
`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 9 of 18
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`in the [ISDA] . . . an Indian tribe or tribal organization is not required to abide by any
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`unpublished requirements such as program guidelines, manuals, or policy directives of the
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`Secretary . . . .”).
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`26.
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`The IHS Manual recognizes the statutory contract support costs provisions,
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`while providing additional “guidance to both Tribal and Agency personnel” in the
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`negotiation of contract support costs. IHM § 6-3.1(A). The version of the IHS Manual in
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`effect during the relevant time period acknowledged that:
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`Throughout the operation of the program by the awardee, total contract costs
`(including CSC) are eligible to be paid as either direct or indirect costs.
`Since Tribes often operate more than one program, many of the costs
`incurred by the awardee are paid through an indirect cost allocation process,
`usually negotiated by the “Federal Agency” as identified under the applicable
`[OMB] Circular.
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`. . . .
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`[The ISDA] authorizes awardees to be paid CSC costs whether they are
`“indirect” in nature (benefitting multiple programs) or additional costs
`associated with operating a single program, except that such funding shall
`not duplicate any funding provided under [the Secretarial amount].
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`Id. § 6-3.2(B) (emphasis added).
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`27. Contract support costs classified as administrative and overhead costs are
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`also known as indirect contract support costs. These costs are typically calculated by
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`reference to an indirect cost rate. An indirect cost rate is a common accounting tool that
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`recipients of federal funds employ to allocate administrative and overhead costs across
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`multiple programs supported by pooled administrative activities. Rumsfeld v. United
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`Techs. Corp., 315 F.3d 1361, 1363 (Fed. Cir. 2003). Such pooled activities typically
`
`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 10 of 18
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`include financial management and accounting systems, information technology systems,
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`insurance, facilities, procurement activities, and personnel management systems.
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`1.
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`An indirect cost rate is calculated by pooling these administrative costs into
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`an overarching “indirect cost pool,” and then dividing that pool by the total amount of
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`direct program costs that are supported, served, or benefited by the pool. This calculation
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`results in a ratio known as an indirect cost rate, which is then applied to the direct cost
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`base of each program supported by the pool.
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`28.
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`To calculate the amount of indirect contract support costs IHS must
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`reimburse ANTHC, IHS identifies the funds ANTHC spends for the operation of the
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`Federal programs that are under contract with IHS, and calls this “the IHS direct cost base.”
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`It then allocates a proportionate share of ANTHC’s indirect cost pool to this IHS direct
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`cost base (i.e., [IHS direct cost base] x [ANTHC indirect cost rate]). This method allocates
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`a share of ANTHC’s pooled indirect costs to cover the operation of ANTHC’s contract
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`with IHS. The remainder of ANTHC’s pooled indirect costs are allocated to other
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`programs carried out by ANTHC (such as programs funded by grants from the State of
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`Alaska, from private foundations, or from other federal agencies).
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`29. When IHS runs Federal programs providing health care to Indian people, it
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`uses both appropriated funds from Congress and funds collected from Medicare, Medicaid,
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`and private insurers. See Dep’t of Health & Human Servs., FY 2014 IHS Congressional
`
`Budget
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`Justification,
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`at
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`CJ-14,
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`141
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`(available
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`at
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`https://www.ihs.gov/sites/budgetformulation/themes/responsive2017/documents/FY2014
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`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 11 of 18
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`BudgetJustification.pdf). That is, IHS bills Medicare, Medicaid, and private insurers, it
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`collects revenues from those sources, and it then uses those revenues to operate larger
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`Federal programs serving Indian people. See 42 U.S.C. §§ 1395–1395lll, 1396–1396w-5,
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`1397aa–1397mm; see also H.R. Rep. No. 94-1026, at 108 (1976) (“[T]he Committee
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`firmly expects that funds from Medicare and Medicaid will be used to expand and improve
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`current IHS health care services and not to substitute for present expenditures.”). Revenue
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`from these programs is generally called “third-party revenues,” and the generation and
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`expenditure of these revenues is an integral part of IHS operations.
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`30.
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`IHS applied ANTHC’s indirect cost rate to determine the amount of indirect
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`contract support costs due ANTHC each year. But, IHS failed to apply the rate to the entire
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`direct cost base associated with the full Federal program carried out by ANTHC under
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`ANTHC’s Compact with IHS. Instead, IHS applied the indirect cost rate only to the portion
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`of ANTHC’s IHS direct cost base that was funded with IHS-appropriated dollars. IHS
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`excluded from the IHS direct cost base the portion of that base that was funded with third-
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`party revenues that ANTHC collected and spent pursuant to its contract with IHS. It is
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`this agency action which gives rise to this Complaint.
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`31.
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`In the current version of the IHS Manual, IHS acknowledges that the portion
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`of a Tribe’s health care programs funded by third-party revenues may be considered when
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`calculating the amount of contract support costs owed to a Tribe. IHM §§ 6-3.2(E)(1)(a)(i),
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`(E)(1)(b) (calculating indirect contract support costs based in part upon “the total direct
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`costs of the total health care program”), 6-3.1(G)(34) (defining “Total Health Care
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`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 12 of 18
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`Program” to include “collections from Medicare, Medicaid, and private insurance” in
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`addition to IHS funding), https://www.ihs.gov/ihm/pc/part-6/p6c3/.
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`C.
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`Interpretation of the Contracts.
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`32.
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`In interpreting IHS’s obligations, the Supreme Court has directed that
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`“[c]ontracts made under ISDA specify that ‘[e]ach provision of the [ISDA] and each
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`provision of this Contract shall be liberally construed for the benefit of the
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`Contractor . . . .’” Ramah, 567 U.S. at 194 (quoting 25 U.S.C. § 5329(c) (model agreement
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`§ 1(a)(2)) (citation updated)). The Supreme Court has interpreted this language to mean
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`that the government “must demonstrate that its reading [of the ISDA] is clearly required
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`by the statutory language.” Id. As noted in paragraph 10, supra, this language is repeated
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`in the parties’ contract.
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`D.
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`Claims History.
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`33. On September 30, 2020, ANTHC filed a timely claim for reimbursement of
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`its unpaid contract support costs incurred in FY 2014. Ex. D.
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`34. ANTHC’s claim letter asserted a sum certain of “$41,709,576 plus interest.”
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`The claim letter asserted that the Secretary’s duty to pay contract support costs includes
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`costs to support the portions of a tribal organization’s contracted programs funded with
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`third-party revenues received from Medicare, Medicaid and private insurers and spent to
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`carry out an ISDA contract “as the Court held in Navajo Health Foundation—Sage
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`Memorial Hospital, Inc. v. Burwell, Case No. 1:14-cv-00958 (D.N.M. Nov. 2, 2016).” Id.
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`See also Navajo Health Found.—Sage Mem’l Hosp., Inc. v. Burwell, 263 F. Supp. 3d 1083
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`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
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`Page 13 of 18
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`(D.N.M. 2016), appeal dismissed, No. 18-2043, 2018 WL 4520349 (10th Cir. July 11,
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`2018).
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`35. On November 30, 2020, the Secretary, acting through the IHS Deputy
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`Director for Management Operations, denied ANTHC’s claim. Ex. E. IHS denied that the
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`Secretary was required by contract and by law to reimburse ANTHC’s indirect costs
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`associated with the expenditure of third-party revenues spent to carry out the Federal
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`program under contract.
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`COUNT I: BREACH OF CONTRACT FOR UNDERPAYMENT OF
`INDIRECT CONTRACT SUPPORT COSTS ASSOCIATED WITH
`THE ENTIRE FEDERAL PROGRAM UNDER CONTRACT,
`INCLUDING THE PORTION OF THE FEDERAL PROGRAM
`SUPPORTED WITH THIRD-PARTY REVENUES
`
`36. ANTHC incorporates all previous allegations of fact and law into this Cause
`
`of Action.
`
`37. When ANTHC took over operation of IHS’s Federal programs, controlling
`
`law authorized ANTHC to continue to bill, collect, and spend third-party revenues, just as
`
`IHS had done prior to ANTHC’s operation of these Federal programs. 25 U.S.C. §§
`
`1621e(a), 1621f(a)(1), 1641(c)(1)(B), 1641(d), 5325(m); 42 U.S.C. §§ 1395qq, 1396j,
`
`1397aa–1397mm. The billing, collection and expenditure of third-party revenues to carry
`
`out the contract was expressly contemplated by the parties’ contract.
`
`38. ANTHC was entitled to have contract support costs added to support all the
`
`IHS Federal programs ANTHC operated in FY 2014, regardless of the extent to which
`
`those Federal programs were funded by appropriated dollars or third-party revenue dollars.
`
`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
`
`
`
`Page 14 of 18
`
`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 14 of 18
`
`
`
`39.
`
`IHS failed to calculate and pay the administrative costs of operating the third-
`
`party revenue-funded portion of its IHS Compact, even though generating those revenues
`
`and spending them on health care was expressly contemplated by the Compact and was an
`
`integral and essential part of the Federal program described in the Compact, see Compact,
`
`art. III, § 7; FY 2014 FA § 1.1.3, and even though the expenditure of those revenues
`
`pursuant to the contract caused ANTHC to incur substantial administrative costs.
`
`40.
`
`IHS’s failure to pay ANTHC indirect contract support costs associated with
`
`ANTHC’s third-party revenue-supported health care operations—that is, the failure to
`
`include these third-party revenues in the IHS direct program base against which ANTHC’s
`
`indirect cost rate was applied—resulted in significant under-reimbursements to ANTHC of
`
`indirect contract support costs. It was also contrary to law.
`
`41. General contract principles control the calculation of damages in government
`
`contract litigation. This is so because “[w]hen the United States enters into contract
`
`relations, its rights and duties therein are governed generally by the law applicable to
`
`contracts between private individuals.” United States v. Winstar Corp., 518 U.S. 839, 895
`
`(1996) (quoting Lynch v. United States, 292 U.S. 571, 579 (1934)); see also Mobil Oil Expl.
`
`& Producing Se., Inc. v. United States, 530 U.S. 604, 607-08 (2000) (quoting Winstar, 518
`
`U.S. at 895, and relying on the Restatement (Second) of Contracts); Franconia Assocs. v.
`
`United States, 536 U.S. 129, 141 (2002) (quoting Mobil Oil, 530 U.S. at 607, and applying
`
`principles of general contract law).
`
`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
`
`
`
`Page 15 of 18
`
`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 15 of 18
`
`
`
`42. General contract law on the issue of damages is clear that a contractor is
`
`entitled to damages which will protect “his ‘expectation interest,’ which is his interest in
`
`having the benefit of his bargain by being put in as good a position as he would have been
`
`in had the contract been performed . . . .” Restatement § 344(a) (emphasis added).
`
`43. ANTHC incurred no less than $41,709,576 in indirect contract support costs
`
`associated with the expenditure of third-party revenue that was generated and spent
`
`pursuant to the IHS contract. See Ex. D at 5. The Secretary admits that IHS did not pay
`
`any indirect costs associated with these expenditures. In failing to pay ANTHC this
`
`amount, the Secretary breached the Secretary’s contract with ANTHC.
`
`COUNT II: BREACH OF STATUTORY RIGHT FOR UNDERPAYMENT
`OF INDIRECT CONTRACT SUPPORT COSTS ASSOCIATED WITH
`THE ENTIRE FEDERAL PROGRAM UNDER CONTRACT, INCLUDING
`THE PORTION OF THE FEDERAL PROGRAM SUPPORTED WITH
`THIRD-PARTY REVENUES
`
`44. ANTHC incorporates all previous allegations of fact and law into this Cause
`
`of Action.
`
`45.
`
`The ISDA creates a right of action for money damages to remedy the
`
`Secretary’s breach of his obligations under the ISDA. 25 U.S.C. § 5331.
`
`46. Under 25 U.S.C. §§ 5325(a)(2)-(3), the Secretary in FY 2014 had a statutory
`
`duty to reimburse ANTHC’s full indirect contract support costs.
`
`47.
`
`The Secretary failed to pay ANTHC $41,709,576 in indirect contract support
`
`costs due in FY 2014.
`
`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
`
`
`
`Page 16 of 18
`
`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 16 of 18
`
`
`
`48.
`
`In order to remedy the Secretary’s breach of his statutory obligations,
`
`ANTHC is entitled to damages of no less than $41,709,576, plus applicable interest and
`
`attorneys’ fees and costs, all as specifically prayed below.
`
`PRAYER FOR RELIEF
`
`WHEREFORE, ANTHC prays that this Court grant the following relief:
`
`(a) A declaratory judgment that in FY 2014 the Secretary acted in violation of
`
`the ISDA by failing to pay ANTHC the full amount of contract support costs
`
`that ANTHC was due under its contract with the Secretary;
`
`(b) A declaratory judgment that in FY 2014 the Secretary breached his Contract
`
`with ANTHC by failing to pay ANTHC’s full contract support cost
`
`requirement;
`
`(c) A money judgment for $41,709,576;
`
`(d)
`
`Interest for one year from the date each unpaid amount comprising the
`
`$41,709,576 was due, as provided for under the Prompt Payment Act, 31
`
`U.S.C. §§ 3901-3907;
`
`(e)
`
`Interest under the Contract Disputes Act, 41 U.S.C. §§ 7101-7109, from the
`
`date the claim was filed to the date of final payment made pursuant to a
`
`judgment of this Court;
`
`(f)
`
`Costs and attorneys’ fees incurred in pursuing this claim, as provided for
`
`under the Equal Access to Justice Act, 5 U.S.C. § 504; 28 U.S.C. § 2412; the
`
`ISDA, 25 U.S.C. § 5331(c), and other applicable law; and
`
`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
`
`
`
`Page 17 of 18
`
`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 17 of 18
`
`
`
`(g)
`
`Such other monetary, declaratory, and equitable relief as this Court may find
`
`to be just.
`
`Dated this 29th day of November 2021.
`
`SONOSKY, CHAMBERS, SACHSE, MILLER
`& MONKMAN, LLP
`
`
`
`
`
`
`
`
`/s/ Lloyd B. Miller
`By:
`
`Lloyd B. Miller
` Alaska Bar No. 7906040
`
`Rebecca A. Patterson
` Alaska Bar No. 1305028
`
`725 East Fireweed Lane, Suite 420
` Anchorage, AK 99503
`
`Telephone: (907) 258-6377
`
`Lloyd@sonosky.net
`
`Rebecca@sonosky.net
`
`Attorneys for Plaintiff Alaska Native Tribal
`Health Consortium
`
`
`
`COMPLAINT
`ANTHC v. Becerra et al., Case No. _____________
`
`
`
`Page 18 of 18
`
`Case 3:21-cv-00260-HRH Document 1 Filed 11/29/21 Page 18 of 18
`
`