Alaska tribal health consortiums are legally immune in many cases, state Supreme Court says

The Alaska Supreme Court overturned a 20-year-old precedent Friday by ruling that Alaska Native tribal organizations can more easily receive the kind of sovereign legal immunity that individual tribes have.

Friday’s 4-1 decision means the tribal consortiums that provide health care for tens of thousands of Alaskans — both Native and non-Native — are largely immune from civil lawsuits in state court, unless those consortiums waive their immunity.

Under the decision, immunity is now established by a five-part test already used by some federal courts. Previously, state judges used a simpler test that examines only whether a consortium is financially separated from its member tribes.

Friday’s case began in 2019 when a woman named Yvonne Ito said she was wrongly fired by the Copper River Native Association, and the association claimed immunity. 

“This is a fantastic day for tribes in Alaska,” said Nathaniel “Tanner” Amdur-Clark, a lawyer for Copper River Native Association. “The court is recognizing that when tribes band together to do things like provide health care for their people, they’re doing that as part of the tribe.”

Attorney Jim Davis, of the Northern Justice Project in Fairbanks, represented Ito. He said he believes thousands of consortium employees now have no legal recourse in cases of sexual harassment, discrimination, or wage theft, unless the consortium has waived immunity in their employment contract.

“In light of this new decision, if you are an employee of one of these corporations and you are a victim of sexual harassment, racial discrimination, illegal demotion, wage theft, etc., you effectively have no remedy because of the immunity these corporations now have,” he said by email. “You can support tribes 100%. And the Northern Justice Project does. And also see today’s decision as a travesty for 1000s of Alaska employees.”

The decision does not apply to Native corporations created by the Alaska Native Claims Settlement Act, such as Arctic Slope Regional Corp., but even with that exemption, it has implications for many of the state’s largest employers.

A voluntary survey conducted by Alaska Business Magazine this year listed two health consortiums among the state’s 10 largest private-sector employers. When the Alaska Department of Labor conducted a detailed analysis in 2010, tribal associations represented six of the state’s top 50 private employers.

Two of the Alaska Supreme Court’s five justices — Peter Maassen and Dario Borghesan — recused themselves, leaving two semi-retired justices — Dana Fabe and Warren Matthews — to join Daniel Winfree, Susan Carney and Jennifer Henderson on the bench.

Henderson, writing for the majority, said that over the past 20 years, federal court rulings have shown that the Alaska Supreme Court was wrong in 2004 when it declared that “financial insulation” was the key test in determining whether a consortium is legally an arm of its member tribes and should share their sovereign immunity. 

“Multiple federal circuit courts have adopted frameworks for evaluating arm-of-the-tribe immunity, and none treat financial insulation as dispositive,” she said.

In place of the old test, Henderson wrote, state judges should use a five-part test adopted by the 9th U.S. Circuit Court of Appeals, which has jurisdiction over Alaska. 

Judges should examine the purpose of a consortium, the way it was created, the way it is controlled, the intent of the member tribes, and the financial relationship between the consortium and its member tribes.

The state of Alaska argued that because Copper River Native Association was incorporated under Alaska law, it should not be eligible for sovereign immunity.

Writing for the majority, Henderson said the state is wrong.

“No single factor is dispositive — even an entity’s incorporation under state law,” she wrote.

In overturning its prior precedent, the court said, it had to determine not only that circumstances had changed, but that changing its interpretation “will result in more good than harm.”

The four justices in the majority concluded that the benefit of a new ruling outweighs the harm, but Senior Justice Warren Matthews disagreed.

“In my opinion, the answer is ‘no,’ and the question is not close,” he wrote.

“Today’s decision immunizes these companies from the normal enforcement mechanisms built into Alaska’s health, safety, employment, and civil rights statutes, and municipal ordinances of all sorts including tax, planning, zoning, and building codes,” he said. “These laws are of vital importance. Once there is immunity, normal enforcement tools are no longer available.”

He went on to state that employees “will have no way of asserting claims against their employers. … Unpaid suppliers and contractors whose contracts have been breached will also be left without a remedy.”

He concluded, “Relegating employees to the powerless status they held in the early twentieth century and placing a sector of the economy off-limits to normal law enforcement efforts designed to protect public health and welfare cannot be regarded as other than seriously harmful.”

Amdur-Clark said “the kind of sky-is-falling issues” raised by Matthews “really aren’t going to come to pass.”

Consortiums said in legal filings that they were worried about frivolous lawsuits that could force them to spend money that might otherwise go to health care.

“The main benefit is security. … It makes sure these critical resources that are intended for the benefit of patients and Alaska Native people actually go toward that, rather than fending off legal claims.”

If someone is injured by a doctor and needs to file a malpractice claim, they can still do so in federal court, he said, and an employee or supplier working with a consortium can negotiate in their contract for a partial waiver of legal immunity, ensuring both sides are protected.

The case was closely watched by the state of Alaska, which filed friend-of-the-court briefs backing Ito, and the U.S. government, which did the same for the association.

Tribal groups across the state — including Tanana Chiefs Conference, Alaska Native Tribal Health Consortium, United Tribes of Bristol Bay, Maniilaq Association, and Southeast Alaska Regional Health Consortium, also expressed their interest in the issue via friend-of-the-court briefs.

Erin Dougherty Lynch is the managing attorney for the Native American Rights Fund, which filed some of those briefs. She said the case boils down to a fundamental issue: Tribes, practically since the founding of the United States, have been recognized as sovereign governments, with their own rights and responsibilities.

“Five individual tribes, each operating their own health care program, for example, each have tribal sovereign immunity,” she said. “If those same five tribes decide to join together and jointly run a health care program serving all five of their communities, why should the five individual Tribes essentially all lose their sovereign immunity, one of their fundamental sovereign powers?”