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Two Alaska health care providers file federal civil suits

Elyssa Loughlin

The Yukon-Kuskokwim Health Corporation (YKHC) is suing the United States Department of Health and Human Services (DHHS) and Department Secretary Xavier Becerra. On Friday, March 29, YKHC filed a civil suit in U.S. District Court alleging Becerra and his department owe nearly $26 million in unpaid contract support costs dating back to fiscal year 2016.

According to the complaint, those costs may include things like indirect administrative or overhead costs, and costs associated with financial management or other recurring expenses like worker's compensation insurance.

YKHC’s suit was filed a day after the Southeast Alaska Regional Health Consortium (SEARHC) filed a similar suit, also against DHHS and Secretary Becerra for $8 million in unpaid costs. Those expenses were incurred by both tribal health care providers for billing third-party private insurance, Medicare, and Medicaid.

SEARHC’s lawsuit was filed in the U.S. District Court of Alaska on March 28, 2024, the last day the health consortium could litigate the eight-year-old dispute. It names the Secretary of the U.S. Department of Health and Human Services, Xavier Becerra, and the United States of America as co-defendants.

In the suit, SEARHC argues that the Indian Health Service failed to account for the indirect costs of managing “third-party revenues” when it reimbursed for expenses in 2016. “Third-party revenues” are the payments SEARHC receives from private insurance, Medicare, and Medicaid. Although SEARHC is primarily funded by the Indian Health Service under an agreement called the Alaska Tribal Health Compact, the lawsuit argues that the government is obligated to pay “full contract support costs,” and that, says SEARHC, includes the expenses in billing third parties.

SEARHC’s brief cites a number of U.S. Supreme Court rulings as justification for its claim, but the U.S. Department of Health and Human Services, which oversees the Indian Health Service (IHS), sees things differently. In a letter to SEARHC CEO Charles Clement in 2023 rejecting the claim, the department wrote that IHS paid SEARHC almost $59 million in 2016, including over $3 million for contract support costs, and $17 million for indirect contract support costs. It states: “Nothing in the parties’ compact or Funding Agreement includes an agreement that Contract Support Costs include any expenditures other than the amount identified in the compact.”

The department goes on to say that SEARHC supplied no evidence or documentation that it is owed an additional $8 million for the costs it incurred through billing private insurance, Medicare, and Medicaid.

SEARHC and YKHC are represented by the Anchorage law firm of Sonosky, Chambers, Sachse, Miller & Monkman. The Secretary of the U.S. Department of Health and Human Services has 60 days to reply to both suits

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