Indian Health Litigation Update Geoff Strommer Hobbs, Straus, Dean & Walker, LLP
Section 105(l) Leasing Chronic underfunding of facilities by IHS led to litigation and the landmark ruling in Maniilaq Association v. Burwell (2016). The court held that section 105(l) of the ISDEAA requires IHS to enter into—and fully fund—leases for tribal facilities used to carry out ISDEAA agreements. Section 105(l) leasing has proven wildly successful, with lease compensation growing from almost nothing a few years ago to an estimated $101 million in FY 2020. In recent years, this has required IHS to reprogram funds from elsewhere in the budget—primarily funding for medical inflation increases. In the Consolidated Appropriations Act, 2021, Congress provided an indefinite appropriation for “such sums as may be necessary” for lease compensation—ensuring full lease funding while protecting program funding. The appropriations act also introduces a new limitation on 105(l) lease compensation, specifying that the initial term of a lease begins no earlier than the date of receipt of the lease proposal. Finally, the appropriations act directs Interior and HHS to consult with tribes and tribal organizations on “how to implement a consistent and transparent process for the payment of [105(l)] leases.” Contract Support Cost (CSC) Claims and Policy Issues Since FY 2014, Congress has mandated full payment of CSC. But a 2016 court decision in the Sage Memorial case held that IHS owed CSC on health care services funded by third-party revenues such as Medicare, Medicaid, and private insurance. If that is so, IHS’s national CSC liability would likely more than double. Unfortunately, two other courts have ruled for IHS, in the Swinomish and San Carlos Apache cases. The Swinomish decision is currently on appeal in the D.C. Circuit, with a decision expected shortly. IHS has agreed to pay CSC on most coronavirus relief funds. But IHS has subjected the new COVID funds to the socalled “97/3 method” for avoiding duplication between the Secretarial amount and CSC. This means that IHS reduces the COVID direct cost base by 3% before applying the indirect cost rate, then offsets the 3% against the indirect CSC otherwise due. This appears to conflict with the IHS CSC Policy, which applies the 97/3 option only to “recurring service unit shares,” while the COVID funding is non-recurring. Opioid Litigation Update The Opioid multi-district litigation (MDL) involves approximately 3,000 plaintiffs—mostly government entities—seeking to hold opioid manufacturers and distributors accountable for fueling the opioid crisis. The MDL judge has designated certain “bellwether” cases to resolve legal claims and facilitate settlement. The first such case settled in October 2019, before going to trial. The Cherokee Nation’s case was selected as a tribal bellwether case and remanded to a federal district court in Oklahoma, where Defendants’ motions to dismiss are pending. Meanwhile, a handful of the opioid Defendants have filed or may be considering filing for bankruptcy—which generally halts all litigation against the filing entity while a bankruptcy plan is negotiated. A deal to resolve the Purdue Pharma bankruptcy (OxyContin) is nearly complete and includes about a set-aside for Tribes from the amount ultimately allocated to governmental plaintiffs 1 Swinomish Indian Tribal Community v. Azar, 406 F. Supp. 3d 18 (D.D.C. 2019); San Carlos Apache Tribe v. Azar, et al., 2020 WL 5111109 (D. Ariz.), Case No. 2:19-CV-05624-NVW (Aug. 31, 2020). 6 Northwest Portland Area Indian Health Board www.npaihb.org