SEARHC sues US Gov’t for $8 million in indirect costs

The Southeast Alaska Regional Health Consortium is suing the United States for over $8 million dollars it claims it is owed for indirect costs in 2016.

The expenses were incurred by the tribal healthcare provider for billing third-party private insurance, Medicare, and Medicaid.

The lawsuit was filed in the US District Court of Alaska on March 28, 2024, the last day SEARHC 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 SEARCH 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 SEARCH – includes the expenses in billing third parties.

SEARCH’s brief cites a number of US Supreme Court rulings as justification for its claim, but the US  Department of Health and Human Services – which oversees the Indian Health Service – sees things differently. In a letter to SEARHC CEO Charles Clement last year rejecting the claim, the department wrote the IHS paid SEARCH 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 is being represented by the Anchorage law firm of Sonosky, Chambers, Sachse, Miller & Monkman. The Secretary of the US Department of Health and Human Services has 60 days to reply to the suit.