Alaska Tribal Health Providers Sue Federal Government for Unpaid Millions

The federal government, according to two main Alaska tribal health care providers, owes them tens of millions of dollars in unreimbursed funds, as stated in a lawsuit.

The Southeast Alaska Regional Health Consortium and the Yukon-Kuskokwim Health Corporation filed their respective lawsuits in the U.S. District Court of Alaska on Thursday and Friday, respectively. The defendants named in both lawsuits are the U.S. Department of Health and Human Services and its secretary, Xavier Becerra.

Becerra and his department are alleged to be in default of nearly $26 million in unpaid contract support costs, which date back to fiscal year 2016, according to the legal counsel for YKHC in the complaint. As per the complaint, the aforementioned expenses may consist of indirect administrative or auxiliary costs, financial management expenses, worker’s compensation insurance, and other recurring costs.

The SEARHC lawsuit, which was lodged on the final day for the consortium to pursue legal action regarding its eight-year-old dispute, is charging DHHS $8 million in outstanding costs. The costs associated with invoicing Medicare and Medicaid, two forms of third-party private insurance, were borne by both tribal healthcare providers.

In the lawsuit, SEARHC claims that when DHHS’s Indian Health Service reimbursed for expenses in 2016, it neglected to account for the indirect costs of managing “third-party revenues” — the payments SEARHC receives from those parties.

The lawsuit contends that while SEARHC receives the majority of its funding from the health service under the Alaska Tribal Health Compact agreement, the federal government is responsible for covering “full contract support costs,” which encompass the costs associated with invoicing third parties.

Some U.S. Supreme Court decisions are cited in SEARHC’s brief to support its position, but DHHS holds a different opinion. The department denied the claim in a letter to SEARHC CEO Charles Clement in 2023, stating that IHS paid SEARHC nearly $59 million in 2016, of which more than $3 million was for contract support costs and $17 million was for indirect contract support costs.

It is explicitly stated that the compact and funding agreement does not contain any provision stipulating that Contract Support Costs shall encompass any expenses beyond the quantity specified in the compact.

Subsequently, the department asserts that SEARHC failed to provide any substantiating evidence or documentation regarding the $8 million in additional costs it incurred for invoicing third parties.

The Anchorage law firm Sonosky, Chambers, Sachse, Miller & Monkman represents SEARHC and YKHC. Becerra is required to respond to both lawsuits within sixty days.