Supreme Court Rules in Favor of Tribes in Contract Support Costs Case

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Yesterday, June 6, 2024, the Supreme Court of the United States ruled in favor of tribal governments in a 5-4 decision on the San Carlos Apache Tribe/Northern Arapaho Tribe case on contract support costs. The case, argued in March of this year, is about what tribes are entitled to regarding contract support costs, how they are controlled, and the impact they have on Tribes’ ability to carry out transferred federal healthcare programs. Centered around the Indian Self-Determination and Education Assistance Act (ISDA), the decision ruled that tribes could sue the federal government to recoup certain administrative expenses associated with running their own healthcare programs.

“The Supreme Court’s decision in Becerra v. San Carlos Apache Tribe and Becerra v. Northern Arapaho Tribe stands as a historic victory for tribal self-determination. It reaffirms Tribal Nations’ entitlement to full reimbursement for all healthcare program costs, thereby establishing parity with Indian Health Service programs and, crucially, ensuring they possess the resources required to deliver quality care to their communities. NAFOA takes pride in its contribution to this landmark decision. Our amicus brief earlier this year, informed by the expertise of tribal financial professionals, provided the Court with valuable insights into the practical realities of these healthcare contracts in Indian Country.” 

Chairman Rodney Butler
Mashantucket Pequot Tribal Nation
NAFOA Board President

The majority found that the government had to reimburse administrative costs associated with third-party entities like private insurers, Medicare, and Medicaid.

The San Carlos Apache Tribe in southeastern Arizona says the government underpaid it by about $3 million for a three-year contract. The Northern Arapaho Tribe in west central Wyoming says they were underpaid approximately $1.5 million over two years. Earlier this year, NAFOA filed an amicus brief in support of tribes. The brief outlined two key principles, that ISDA contract support cost mandates are constrained by established federal contracting principles and rigorous financial controls, and that program income expenditures satisfy Section 5326 because they are directly attributable to ISDA contracts.

Delivering the opinion of the Court, Chief Justice Roberts wrote:
Here, the self-determination contract itself requires tribes to spend program income to further healthcare programming. The contract support costs tribes incur when they do so are recoverable under Sections 5325(a) and 5326.

Joining Chief Justice Roberts in the majority opinion are justices Sotomayor, Kagan, Gorsuch, and Jackson. Joining the dissent are justices Thomas, Alito, and Barrett.

Writing for the dissent, Justice Kavanaugh stated:
But today, the Court upends that long-settled understanding and requires the Federal Government to furnish additional funding to the tribes for the costs of spending the third-party income. The Federal Government estimates that adopting the tribes’ position could cost between $800 million and $2 billion annually (and potentially many billions more in retroactive payments). Yet as of now, Congress appropriates about $8 billion annually for Indian healthcare.

For any other questions or concerns, please contact Susan Masten, Interim Executive Director, at susan@nafoa.org.

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