Becerra v. San Carlos Apache Tribe

STATUTORY INTERPRETATION OF § 5325(A)

The Secretary argues that 25 U.S.C. § 5325(a) of the ISDA should be interpreted narrowly to require the IHS to provide administrative “contract support costs” only for directly IHS-funded programs. Brief for Petitioners, Xavier Becerra et al. at 19. Citing congressional reports that discuss the funding imbalances between IHS-run programs and programs administered by tribes, which § 5325(a)(2) was intended to address, the Secretary links the funding to cover contract support costs provided by § 5325(a)(2) to the reimbursement for direct expenses provided by § 5325(a)(1). Id. at 20–21. The Secretary adds that specific references to “direct program expenses” and “in connection with the operation of the Federal program that is the subject of the contract” in § 5325(a)(3)(A) reinforce that the funding is limited only to the ISDA program itself. Id. at 22.

The Secretary warns that if IHS is required to fund contract support costs on “services funded by other resources,” tribes could demand repayment for unlimited contract support costs on expenses beyond what is paid for by third-party program income, imposing a burden on the government which goes beyond the statute’s scope. Id. at 38–39. Also, the Secretary points out that the provision on which the Ninth Circuit relies to find the alleged contractual requirement comes not from the ISDA but instead from the Indian Health Care Improvement Act (“IHCIA”). Id. at 34. The Secretary maintains that these provisions of the IHCIA do not create any requirements for tribes in relation to their activities as contractors in ISDA contracts, and thus that these provisions cannot be used to create a contractual requirement that IHS provide support costs for third-party revenue spending. Id. at 34–35.

The Secretary notes that the only mention of any obligation for tribes to spend third-party revenue is § 5325(m)(1)’s mandate that such monies be spent in furtherance of the “general purposes of the contract,” arguing that the vagueness of the phrase “general purposes” undermines reading it as a strict restriction on how funds are spent. Id. at 33. In support of this, the Secretary points to the express mention of a similar mandate in § 5325(a)(4)(A), arguing that if Congress wanted to treat tribes’ spending of third-party funding as a contractually required activity, it would have stated so. Id. at 33–34. Similarly, the Secretary suggests that if Congress had expected and intended the ISDA to include the expenditure of third-party income as grounds for increasing the amount tribes receive, it would have included that in § 5325(m)(2), which forbids using third-party income as grounds to reduce the amount tribes receive. Id. at 23.

The San Carlos Apache Tribe (“the Tribe”) counters that § 5325(a)(3)(A)(ii) must be construed broadly, pointing to the use of words such as “any,” “other expense,” and “in connection with,” in contrast to narrower language used in the preceding section. Brief for Respondent, San Carlos Apache Tribe at 21–22. The Tribe contends that the “Federal program” discussed in the statute includes those program elements that are funded by third-party program income, such as Medicare, Medicaid, and private insurance funding, since they would be an inseparable part of any equivalent IHS-administered program. Id. at 23. The Tribe highlights that such programs are covered by the model IHS-tribal agreement in § 5329(c), due to its express mention of programs “supported by financial resources other than those provided by the Secretary.” Id.

The Tribe argues that the phrase “pursuant to the contract” in § 5325(a)(3)(A)(ii) draws a sufficient distinction between program income (income generated from billing third parties) and money channeled from other sources of outside income, as money generated by the programs must, per the terms of the ISDA contract, be reinvested into healthcare, while no such restriction applies to money from other sources. Id. at 26. Thus the Tribe concludes that the reimbursement obligation only applies to expenses funded by program income. Id. Although the Tribe maintains some discretion, it contends that its third-party program income must nonetheless be spent in some way that furthers the ISDA contract’s “general purpose.” Id. at 29. The Tribe asserts that although components of the mandate come from the IHCIA, the extensive cross-referencing with the ISDA is such that the two statutes should be “interpreted together, as though they were one law.” Id. at 22.

The Tribe adds that even without § 5325(a)(3), § 5325(a)(2) covers the expenses at issue as those incurred for “activities which must be carried on by a tribal organization as a contractor to ensure compliance with the terms of the contract and prudent management.” Id. at 27. The Tribe argues that the contract, by obligating compliance with § 5325(m)(1)’s “general purpose” requirement, mandates that funds generated by the program be reinvested into healthcare services, making that ISDA-relevant spending under § 5325(a)(2). Id. The Tribe argues that the mandate-establishing language in § 5325(a)(4)(A) is unrelated and that § 5325(m)(2) exists merely to protect tribes from IHS underfunding; in any case, the Tribe asserts that neither inferences are sufficient to overcome the plain text of § 5325(a)(2)–(3). Id. at 30–31. The Tribe also emphasizes that the phrase “in connection with” in § 5325(a)(3)(A)(ii) implies the existence of costs incurred outside the Federal program itself that should be reimbursed. Id. at 24. The Tribe contends that if Congress wished to restrict reimbursement to costs tied to the direct administration of the Federal funds, it would have said so. Id.

§ 5326 LIMITATIONS ON COSTS

The Secretary also cites § 5326, arguing that its limitations on IHS funds preclude the Tribes’ claims. Brief for Petitioners at 25–26. The Secretary suggests that discretionary expenditures made with third-party funds are not “directly attributable” to the ISDA self-determination contract, and that case law indicates that “directly” requires a “close” and “immediate” connection. Id. at 26. Thus, the Secretary argues that reimbursement for the expense of third-party program income is barred by § 5326’s first clause, which limits reimbursement money to costs that are “directly attributable” to the ISDA contract. Id. at 26–27. The Secretary further argues that, because the requested funds would be associated with the tribes’ agreements with Medicare, Medicaid, and private insurers, § 5326’s clause against using IHS funds for non-IHS contracts similarly defeats the Tribes’ claims. Id. The Secretary contends that § 5326 applies because the case that precipitated the passage of § 5326, in which IHS was forced to pay contract support costs for activities funded by other sources including other federal agencies, is essentially similar to the current dispute. Id. at 40.

The Tribe counters that the overhead expenses from spending program income are “directly attributable” to the ISDA contracts and that the role of § 5326 is to protect Indian healthcare funds, not the government’s coffers. Brief for Respondent at 37, 40. The Tribe argues that the funding is not discretionary and is required by the contract. Id. at 38. The Tribe promotes a narrow reading of § 5326 since a broad reading of the statute would encompass many contracts that are indisputably eligible for reimbursement and suggests that arrangements with third-party payors are more akin to compensation than the “funding” barred by § 5326. Id. at 42–43. The Tribe also objects to the government’s reading of “associated with,” noting that the expenditure of program income is not “associated with” any third-party payor contract but with the ISDA contract. Id. at 44. The Tribe also argues that, unlike in the cases that precipitated the passage of § 5326, the indirect costs here are ancillary to the IHS program. Id. at 40.

AMBIGUITY AND THE INDIAN CANON

The Secretary objects to the invocation of the “Indian canon of construction” and § 5321(g), both of which require that ambiguous provisions in laws should be construed in favor of tribes. Brief for Petitioners at 46. The Secretary contends that no such ambiguity exists. Id. The Secretary argues that, even if one can stretch the meaning of individual components of the statute to find ambiguities, read altogether the provisions of IHS are unambiguous. Id. As such, the Secretary concludes that the Indian canon and § 5321(g) are irrelevant. Id.

The Tribe maintains that the Indian canon is both relevant and governing, citing its strength not just as a precedential norm but as an explicit component of both the statute and the ISDA contracts and a critical protection against agency recalcitrance. Brief for Respondent at 46–47. Although the Tribe maintains that it has put forward the most compelling interpretation of the statute, it contends that even if there were any ambiguity to be found, the Indian canon would require that ambiguity be resolved in favor of the Tribe. Id.