The settlement resolved a lawsuit filed in 1996 claiming the U.S. Department of the Interior had mismanaged funds held in trust on behalf of Native Americans. The trust money was from transactions involving land allotted to individual Native Americans under an 1887 law.

The proposed settlement initially was reached in December 2009, ratified by Congress the following year and received final approval from a federal judge about a year ago.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit rejected a challenge to the settlement by class member Kimberly Craven.

Craven argued the settlement was unfair, cited a conflict among class members that violated constitutional due process rights and said class members did not benefit equally.

But the appeals court disagreed. It said the record in the case failed to confirm the existence of a conflict among the class members or a violation of due process rights.

"This case is extraordinary in that Congress not only expressly authorized, ratified and confirmed the settlement, but also appropriated $3.4 billion to fund it," Judge Judith Rogers wrote in the opinion.

One part of the settlement involving $1.51 billion provided for each class member to receive at least $1,000 in compensation in exchange for the releasing the Interior Department from its duty to perform a historical accounting of the trust funds.

Another part established a $1.9 billion consolidation fund to buy interest in trust lands and created an education scholarship fund for Native Americans.

The appeals court case is Elouise Cobell v. Kenneth Salazar, No. 11-5205.

(Reporting By James Vicini; Editing by Cynthia Osterman)