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MONDAY, JULY 7, 2003

A federal appeals court last week sided with an Oklahoma tribe in a federal funding dispute, disagreeing with two other circuits on the way government agencies dole out money for self-determination contracts.

On July 3, the Federal Circuit Court of Appeals said the federal government owes the Cherokee Nation $8 million for breach of contract. A three-judge panel unanimously held that the Department of Health and Human Services (HHS) failed to provide adequate funds to the tribe to cover the costs of administering its own health care program.

In making the decision, the court cited "confusing and contradictory" arguments advanced by government lawyers in the case, which was an appeal from the Department of Interior's Board of Contract Appeals. Specifically, the judges said the arguments departed from those made to the 9th Circuit and the 10th Circuit in "nearly identical" self-determination litigation.

Citing direction from Congress, the 9th Circuit and the 10th Circuit held that that government doesn't have to provide "indirect" support costs for self-determination contracts. Both courts deferred to the "discretion" of the federal agencies, turning away the Cherokee Nation and the Duck Valley Shoshone-Paiute Tribe of Nevada in one case, and the Shoshone-Bannock Nation of Idaho in the other.

The Federal Circuit rejected this line of thought, holding that the appropriations acts at issue did not contain legally binding language. "We cannot agree that the Secretary had discretion to refuse to reprogram to meet his contractual obligations," wrote Judge Timothy B. Dyk.

The court's ruling would appear to impact the Cherokee Nation's appeal of the 10th Circuit case, which was decided in November 2002. The tribe has asked the Supreme Court to review the case, and in light of the conflicting interpretations of law in the circuits, the high court could resolve the issue once and for all.

Along with a separate case involving the Navajo Nation, tribes nationwide have watched the litigation closely. A group of tribes and the National Congress of American Indians (NCAI), the largest inter-tribal organization, submitted briefs to back up their views on self-determination funding.

Under the the Indian Self-Determination and Education Assistance Act, first passed in 1975, tribes can take over federal programs by entering into contracts with federal agencies. The contracts are supposed to cover the amount of money the agency would have normally used to carry out the same functions but the General Accounting Office (GAO) has identified shortfalls as high as $81 million, according to late 1990s studies.

In the Navajo Nation case, which involved a welfare contract, Judge Betty B. Fletcher broke the case down this way: "Reduced to its simplest terms, the majority opinion defeats the purpose of the Indian Self-Determination Act by allowing Indians to administer federal programs but denying them the funds to do the job."

The Supreme Court has accepted briefs in the 10th Circuit case but won't make a decision whether to accept it until the justices return to session in early October.

The Federal Circuit decision applies to a Cherokee Nation contract for the fiscal years 1994, 1995, and 1996. The tribe contracts all hospitals, health clinics, dental services, mental health programs, and alcohol and substance abuse programs that were formerly administered by the government. According to the case, HHS provided $18.3 million, $24.3 million and $24.7 million to the tribe for the respective fiscal years.

The "indirect" support costs could be used to cover annual financial audits or other activities associated with carrying out a government program.

Get the Decision:
Thompson v. Cherokee Nation (July 3, 2003)

Related Decisions:
10th Circuit: Cherokee Nation v. Thompson, No. 01-7106 (November 26, 2002) | 9th Circuit: Shoshone-Bannock v. Thompson (October 16, 2001) | 9th Circuit: Navajo Nation v. HHS, No. 99-16129 (April 8, 2003)

Relevant Documents:
Docket Sheet No. 02-1472: Cherokee Nation v. Thompson (Supreme Court)

Relevant Links:
Cherokee Nation - http://www.cherokee.org
Indian Health Service - http://www.ihs.gov

Related Stories:
Appeals court turns down Navajo Nation again (04/09)
Court rebuffs tribes on contract funding dispute (11/27)
Navajo Nation challenges contract policy (10/04)