Navajo Health Found.—Sage Mem'l Hosp., Inc. v. Burwell, No. CIV 14–0958 JB/GBW

• Court: United States District Courts. 10th Circuit. District of New Mexico
• Writing for the Court: James O. Browning, UNITED STATES DISTRICT JUDGE
• Citation: 220 F.Supp.3d 1190
• Parties: NAVAJO HEALTH FOUNDATION—SAGE MEMORIAL HOSPITAL, INC, Plaintiff, v. Sylvia Mathews BURWELL, Secretary of the United States Department of Health and Human Services; Mary Smith, Acting Director of Indian Health Services; Douglas Gene Peter., M.D., Acting Area Director, Navajo Area Indian Health Service ; and Margaret Shirley–Damon, Contracting Officer, Navajo Area Indian Health Service, Defendants.
• Decision Date: 23 November 2016
• Docket Number: No. CIV 14–0958 JB/GBW

220 F.Supp.3d 1190

NAVAJO HEALTH FOUNDATION—SAGE MEMORIAL HOSPITAL, INC, Plaintiff,
v.
Sylvia Mathews BURWELL, Secretary of the United States Department of Health and Human Services; Mary Smith, Acting Director of Indian Health Services; Douglas Gene Peter., M.D., Acting Area Director, Navajo Area Indian Health Service ; and Margaret Shirley–Damon, Contracting Officer, Navajo Area Indian Health Service, Defendants.

No. CIV 14–0958 JB/GBW

United States District Court, D. New Mexico.

Filed November 23, 2016

220 F.Supp.3d 1194

Paul E. Frye, Frye Law Firm, Albuquerque, New Mexico and Stephen D. Hoffman, Lewis Brisbois Bisgarrd & Smith, LLP, Phoenix, Arizona and Lloyd B. Miller, Sonosky, Chambers, Sachse, Miller, & Munson, LLP, Anchorage, Alaska, Attorneys for the Plaintiff

Damon P. Martinez, United States Attorney, Karen F. Grohman, Assistant United States Attorney, United States Attorney's Office, District of New Mexico, Albuquerque, New Mexico and Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Robert E. Kirshman, Jr. Director, Steven J. Gillingham, Assistant Director, Devin Wolak, Russell J. Upton, Trial Attorneys, United States Department of Justice, Washington, D.C., Attorneys for the Defendants

MEMORANDUM OPINION AND ORDER

James O. Browning, UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court on the Plaintiff's Motion for Summary Judgment on the Issue of Liability on Its Sixth Claim for Relief (Unlawful Declination of Proposed FY 2016 AFA), filed July 29, 2016 (Doc. 196)(" MSJ"). The Court held a hearing on September 16, 2016. The primary issues are: (i) whether the Defendants (collectively the "United States") unlawfully declined to approve Plaintiff Navajo Health Foundation—Sage Memorial Hospital's proposed successor fiscal year ("FY") 2016 Annual Funding Agreement ("AFA"); and (ii) whether, if IHS unlawfully

220 F.Supp.3d 1195

declined the FY 2016 AFA, the Court should order the United States to pay Sage Hospital the funds IHS allegedly owes it under the FY 2016 AFA.

FACTUAL BACKGROUND

"Sage is a Navajo tribal organization for purposes of contracting with the Indian Health Service (IHS) under the Indian Self–Determination and Education Assistance Act (ISDEA), 25 U.S.C. §§ 450, 450a et seq. , that operates a health care facility in Ganado, Arizona, within the exterior boundaries of the Navajo Reservation." MSJ ¶ 1, at 3 (stating this fact)(internal quotation marks omitted). See Response to Plaintiff's Motion for Summary Judgment on the Issue of Liability on Its Sixth Claim for Relief (Unlawful Declination of Proposed FY 2016 AFA) ¶ 1, at 1, filed August 15, 2016 (Doc. 210)("Response")(not disputing this fact). "IHS is an agency within the United States Department of Health and Human Services ("HHS") and is responsible for providing federal health services to American Indians and Alaska Natives." MSJ ¶ 2, at 4 (stating this fact). See Response ¶ 2, at 1 (not disputing this fact). "Defendant Burwell is the Secretary of HHS and has ultimate responsibility for carrying out all the functions, authorities, and duties of HHS including contracting on behalf of the United States with Indian tribal organizations under the ISDEA to provide health care to Native Americans." MSJ ¶ 3, at 4 (stating this fact). See Response ¶ 3, at 1 (not disputing this fact).

Defendant Smith, substituted for Defendant [Yvette] Roubideaux under Fed. R. Civ. P. 25(d), is the Acting Director of the IHS and has the overall responsibility for carrying out all the functions, authorities, and duties of the IHS within HHS regarding contracting with Indian tribal organizations under the ISDEA to provide health care to Native Americans.

MSJ ¶ 4, at 4 (stating this fact). See Response ¶ 4, at 1 (not disputing this fact).¹

Defendant Peter, substituted for Defendant Hubbard under Fed. R. Civ. P. 25(d), is the Acting Area Director of the Navajo Area IHS ("NAIHS") and has the responsibility for carrying out all the functions, authorities, and duties of the IHS within the Navajo Nation, including such functions, authorities, and duties delegated to him regarding contracting with Indian tribal organizations under the ISDEA.

MSJ ¶ 5, at 4–5 (stating this fact). See Response ¶ 5, at 2 (not disputing this fact).²

220 F.Supp.3d 1196

Defendant Shirley–Damon, substituted for Defendant Dayish under Fed. R. Civ. P. 25(d), is the Contracting Officer for the NAIHS and is responsible for ISDEA contracts and funding agreements for IHS programs, functions, services, and activities ("PFSAs") undertaken by ISDEA contractors within the Navajo Area IHS, including Sage. Dayish has the authority to sign ISDEA contracts and funding agreements with Sage for such IHS programs and to award funds pursuant to those agreements.

MSJ ¶ 6, at 5 (stating this fact). See Response ¶, at 2 (not disputing this fact).

"Effective in 2009 Sage contracted with IHS under the ISDEA." MSJ ¶ 7, at 5 (stating this fact). See Response ¶ 7, at 2 (not disputing this fact). "Sage and IHS extended the 2009 contract without interruption for successive years, through September 30, 2013." MSJ ¶ 8, at 5 (stating this fact). See Response ¶ 8, at 2 (not disputing this fact). "This Court deemed Defendants to have approved (a) Sage's proposed three-year contract renewal for FY 2014–2016, (b) Sage's proposed three-year contract renewal for FY2015–2017, (c) Sage's proposed successor FY 2014 AFA, and (d) Sage's proposed FY 2015AFA, and ruled that Sage's proposals must be fully funded as proposed by Sage." MSJ ¶ 9, at 5 (stating this fact). See Response ¶ 9, at 2 (not disputing this fact).

"Sage submitted its Proposed 2016 AFA (at issue in this motion) by letter dated May 28, 2015." MSJ ¶ 10, at 5–6 (stating this fact). See Response ¶ 10, at 2 (not disputing this fact).

Such Proposed 2016 AFA was submitted in redline form, showing all the differences between it and the FY 2015 AFA that this Court held was deemed approved by Defendants in the Opinion. Those differences are confined to changes to the applicable years, non-substantive updates on pages 1 and 6 of the proposed AFA (Doc. 175–2 at 8, 13) and a change to the signature line of the agreement with the Gallup Regional Supply Service Center to reflect the replacement of former Sage CEO Ahmad Razaghi with current CEO Christi El–Meligi (Doc. 175–2 at 27).

MSJ ¶ 11, at 6 (stating this fact). See Response ¶ 11, at 2 (not disputing this

220 F.Supp.3d 1197

fact). "The Proposed 2016 AFA seeks the same amount of funding as approved under the FY 2015 AFA." MSJ ¶ 12, at 6 (stating this fact). See Response ¶ 12, at 2 (not disputing this fact). "The Proposed 2016 AFA proposes to continue the same PFSAs as approved under the FY 2015 AFA." MSJ ¶ 13, at 6 (stating this fact). See Response ¶ 13, at 2 (not disputing this fact).

"On October 26, 2015, the Navajo Area Indian Health Service (NAIHS) declined Sage's proposed FY 2016 AFA." Response at 2 (stating this fact).³ "NAIHS fully declined Sage's proposal for two reasons: (1) because "the service to be rendered to the Indian beneficiaries of the particular program or function to be contracted will not be satisfactory"; and (2) because "the proposed project or function to be contracted for cannot be properly completed or maintained by the proposed contract." Response at 2 (stating this fact).⁴

The NAIHS also partially declined Sage's proposal for three reasons: (1) because $8,760,323 of the proposed funding for the Secretarial amount was "in excess of the applicable funding level for the contract, as determined under [25 U.S.C. § 450j–1(a) ] ...; (2) because the proposed funding amounts were not supported by the statutory requirements that apply to CSC amounts paid under the ISDEAA and, therefore, were "in excess of the applicable funding level ...; and (3) to the extent that the declined portion of the Secretarial amount had an impact on Sage's CSC calculations, because such CSC amounts are "in excess of the applicable funding level" to which Sage is entitled ....

Response at 2–3 (stating this fact).⁵

PROCEDURAL HISTORY

Sage Hospital moves for summary judgment on the issue of liability on its Sixth Claim for Relief, which alleges that the Indian Health Service unlawfully declined to approve Sage Hospital's proposed 2016 AFA. See MSJ at 1. In an earlier opinion, the Court granted Sage Hospital summary judgment on its first three claims for relief,

220 F.Supp.3d 1198

ruling that: (i) the United States unlawfully declined Sage Hospital's proposed three-year renewal contracts for FY 2014–2016 and for FY 2015–2017; (ii) the United States unlawfully declined Sage Hospital's proposed successor FY 2014 and 2015 AFAs; (iii) the United States had deemed these contracts and AFAs approved; and (iv) the United States should fully fund the contracts and AFAs. See Memorandum Opinion and Order, No. CIV 14–0958 JB/GBW 55–91, filed...