GM 14-067

Maniilaq Association Wins ISDEAA Case Against the IHS

On August 22, 2014, Judge Thomas F. Hogan of the United States District Court for the District of Columbia issued a decision in Maniilaq Association v. Burwell, No. 13-380, that has the potential to open new funding options for tribally-owned health care facilities under the Indian Self-Determination and Education Assistance Act (ISDEAA). The decision establishes that a facilities lease requested under Section 105(l) of the ISDEAA can be incorporated into an ISDEAA funding agreement as a means of funding a contracted program, function, service, or activity (PFSA).

Section 105(l) of the ISDEAA provides that the Indian Health Service (IHS) must, upon the request of a tribe or tribal organization, enter into a lease for facilities owned by that tribe or tribal organization and used for the administration and delivery of health care services. Federal regulations govern compensation for Section 105(l) leases. Maniilaq Association, whose Village Built Clinic (VBC) facility in Ambler, Alaska had been vastly underfunded through Maniilaq Association’s ISDEAA funding agreements for many years, decided to return its funding for the Ambler VBC for FY 2013 to the IHS and instead request a fully compensated lease for the facility under Section 105(l) of the ISDEAA. Maniilaq Association further proposed that the Section 105(l) lease be incorporated into and attached to an amendment to Manillaq Association’s funding agreement.

When the IHS failed to either accept or reject Maniilaq Association’s amendment proposal within the 45 days required under the ISDEAA’s Title V final offer provisions, Maniilaq Association filed suit, asking the district court to declare that the proposal had been deemed accepted as a matter of law. The IHS argued that the Title V final offer provisions did not apply to the lease proposal, because a lease is not a PFSA and cannot be incorporated into an ISDEAA funding agreement. The IHS also argued that Maniilaq Association was required to submit the lease through the IHS’s Lease Priority System (LPS), and that IHS had discretion to provide “non-monetary compensation” for the lease in place of the amount proposed by Maniilaq Association.

Judge Hogan ruled that the 105(l) lease proposal was properly submitted under the final offer provisions of Title V, and that the lease could be incorporated into Maniilaq Association’s ISDEAA funding agreement. Therefore, Judge Hogan ruled, because the IHS failed to act on the final offer within 45 days as required by the ISDEAA the proposal was deemed accepted as a matter of law. In reaching his decision, Judge Hogan declined to extend any deference to the IHS’s interpretation of the ISDEAA and its implementing regulations, holding instead that the ISDEAA must be interpreted in the light most favorable to tribes, and that “Congress intended the ISDEAA to be implemented in a manner favoring flexibility in funding agreements like the one at issue in this case.”

The decision sets an important precedent for ISDEAA contractors wishing to request that a Section 105(l) facility lease be incorporated into a funding agreement as a source of facilities funding, and potentially opens the door to a new approach to mandatory funding for tribally-owned health facilities. The federal government has the option to appeal the ruling to the D.C. Circuit Court of Appeals.