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, District Judge.
• Citation: 100 F.Supp.3d 1122
• Parties: NAVAJO HEALTH FOUNDATION—SAGE MEMORIAL HOSPITAL, INC., Plaintiff, v. Sylvia Mathews BURWELL, Secretary of the United States Department of Health and Human Services; Yvette Roubideaux, Acting Director of Indian Health Services; John Hubbard, Jr., Area Director, Navajo Area Indian Health Services ; and Frank Dayish, Contracting Officer, Navajo Area Indian Health Services, Defendants.
• Decision Date: 09 April 2015
• Docket Number: No. CIV 14–0958 JB/GBW.

100 F.Supp.3d 1122

NAVAJO HEALTH FOUNDATION—SAGE MEMORIAL HOSPITAL, INC., Plaintiff
v.
Sylvia Mathews BURWELL, Secretary of the United States Department of Health and Human Services; Yvette Roubideaux, Acting Director of Indian Health Services; John Hubbard, Jr., Area Director, Navajo Area Indian Health Services ; and Frank Dayish, Contracting Officer, Navajo Area Indian Health Services, Defendants.

No. CIV 14–0958 JB/GBW.

United States District Court, D. New Mexico.

Filed April 9, 2015.

100 F.Supp.3d 1125

Paul E. Frye, Albuquerque, NM, for Plaintiff.

Angela M. Belgrove, Office of the General Counsel, Region IX, United States Department of Health & Human Services, San Francisco, CA, Damon P. Martinez, United States Attorney, Karen Grohman, Assistant United States Attorney, United States Attorney's Office, Albuquerque, NM, for Defendants.

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on the Plaintiff's Motion for Immediate Injunctive Relief With Supporting Memorandum of Points and Authorities, filed December 22, 2014 (Doc. 17)(“Motion”). The Court held a hearing on February 12, 2015. The primary issues are: (i) whether the Court will order a permanent injunction; and (ii) whether the Court will order a preliminary injunction. The Court will not order a permanent injunction. The Court will, however, order a preliminary injunction to require Defendants Sylvia Matthews Burwell, Yvette Roubideaux, John Hubbard, Jr., and Frank Dayish (collectively, “the Defendants”), to fund the Navajo Health Foundation—Sage Memorial Hospital, Inc., according to the terms of: (i) the Annual Funding Agreement Between Navajo Health Foundation /Sage Memorial Hospital and the Secretary of the Department of Health and Human

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Services Fiscal Year 2013, filed January 13, 2015 (Doc. 21–2)(“2013 AFA”); and (ii) the Indian Self–Determination Contract Between Navajo Health Foundation/Sage Memorial Hospital and the Secretary of the Department of Health and Human Services, filed January 13, 2015 (Doc. 21–1)(“2010 Contract”), until this case is resolved on the merits. The Court will also order both parties to comply with the terms and conditions of the 2013 AFA and the 2010 Contract until this case is resolved on the merits. Among other things, this means that the Defendants must reinstate Sage Hospital's coverage under the Federal Tort Claims Act, 28 U.S.C. § 1346(b) (“FTCA”), as Section 4 of the 2013 AFA provides. The Court will not require Sage Hospital to post a bond.

FACTUAL BACKGROUND

The Court must make findings of fact to order a preliminary injunction. See Herrera v. Santa Fe Pub. Sch., 792 F.Supp.2d 1174, 1179 (D.N.M.2011) (Browning, J.). “[T]he findings of fact and conclusions of law made by a court granting a preliminary injunction are not binding at trial on the merits.” Attorney Gen. of Okla. v. Tyson Foods, Inc., 565 F.3d 769, 776 (10th Cir.2009) (quoting Univ. of Tex. v. Camenisch, 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981) ). “The Federal Rules of Evidence do not apply to preliminary injunction hearings.” Heideman v. S. Salt Lake City, 348 F.3d 1182, 1188 (10th Cir.2003).

1. This case arises from the Navajo Area Office of the Indian Health Service's (“NAIHS”)¹ decision not to renew its contract with Sage Hospital to provide healthcare to Navajo Indians in the Navajo Nation under the Indian Self Determination and Education Assistance Act, 25 U.S.C. § 450 (“ISDEA”).²

2. The Navajo Nation Council has formally designated Sage Hospital a Navajo “tribal organization”³ under the ISDEA.

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Declaration of Stenson Wauneka ¶ 3, at 1,⁴ filed December 22, 2014 (Doc. 17–1) (“Wauneka 1st Decl.”).

3. Sage Hospital employs approximately 200 people on a campus in Ganado, Arizona—which lies within the Navajo Nation. See Declaration of Christi El–Meligi ¶ 3, at 5, filed December 22, 2014 (Doc. 17–1)(“El–Meligi 1st Decl.”).

1. Sage Hospital's Tumultuous History.

4. From 1974 to 2007, Sage Hospital's facilities grew increasingly obsolete, and the quality of its healthcare services plummeted. See Declaration of Ahmad Razaghi ¶ 3, at 21, filed December 22, 2014 (Doc. 17–1) (“Razaghi 1st Decl.”).

5. Consequently, by 2007, Sage Hospital was fighting multiple regulatory and financial battles to stay afloat. See Razaghi 1st Decl. ¶ 3, at 21. See id. ¶ ¶ 7–8, at 23.

6. The Centers for Medicare and Medicaid Services⁵ was threatening to terminate Sage Hospital's certification, the Arizona Department of Health Services was threatening to revoke Sage Hospital's Rural General Hospital license, and the Joint Commission on Accreditation of Health Care Organizations (“Joint Commission”)—an independent, non-profit organization that accredits hospitals throughout the United States—was threatening to refuse Sage Hospital accreditation. Razaghi 1st Decl. ¶ 3, at 21. See id. ¶¶ 7–8, at 23.

7. Sage Hospital was also in violation of Administrative Orders that the Environmental Protection Agency (“EPA”) issued in 1999 and 2006, and was also in ongoing litigation against the NAIHS. See Razaghi 1st Decl. ¶ 7, at 23.

8. Because of its substandard employee housing and benefits, and its precarious financial condition, Sage Hospital struggled to recruit and retain top-quality staff. See Razaghi 1st Decl. ¶ 13, at 25.

9. Consequently, Sage Hospital was forced to close its general surgery and obstetric care departments before January, 2007. See Razaghi 1st Decl. ¶ 8, at 23.

10. In October, 2007, Sage Hospital's Board of Directors (the “Board”) rejected a plan to close the hospital, and instead chose to hire M. Morgan & Associates—a third-party management company⁶ —to oversee its financial and personnel management,

100 F.Supp.3d 1128

and to make the necessary changes to turn around its operations. See Razaghi 1st Decl. ¶ 3, at 21; Wauneka 1st Decl. ¶ 5, at 1.

11. The Board hired Ahmad Razaghi—one of M. Morgan & Associates' principals—to serve as its temporary Chief Executive Officer (“CEO”). Wauneka 1st Decl. ¶ 5, at 1.

12. Under Razaghi's tutelage, Sage Hospital's turnaround effort succeeded. See Razaghi 1st Decl. ¶ 10, at 23.

13. From 2007 to 2009, Sage Hospital negotiated with the Centers for Medicare and Medicaid Services and the Arizona Department of Health Services to keep Sage Hospital open without losing additional healthcare services. See Razaghi 1st Decl. ¶ 9, at 23.

14. In 2009, Sage Hospital settled its lawsuit against the NAIHS. See Razaghi 1st Decl. ¶ 9, at 23.

15. In September, 2009—for the first time in a decade—Sage Hospital received both an unconditional Arizona Department of Health Services license, and its Centers for Medicare and Medicaid Services certification. See Razaghi 1st Decl. ¶ 10, at 23–24.

16. On May 4, 2009, the Joint Commission awarded Sage Hospital its “Gold Seal of Approval,” signifying that Sage Hospital exemplified the highest quality of patient care. Razaghi 1st Decl. ¶ 10, at 23–24.

17. In March, 2010, the United States Surgeon General, Vice Admiral Dr. Regina M. Benjamin, on behalf of the Department of Health and Human Services (“HHS”), awarded Razaghi the “Chief Executive Officer Managerial Excellence Award” for “leadership, successes and improvements which equate to improved and enhanced patient care.” Razaghi 1st Decl. ¶ 10, at 23–24.

18. In June, 2012, Sage Hospital received the American Hospital Association Institute for Diversity's “Best in Class Hospital Award” for leadership in addressing health disparities and improving diversity in governance; the award recognized Sage Hospital and only one other hospital out of 900 hospitals nationwide. Wauneka 1st Decl. ¶ 7, at 2.

19. In a January 10, 2012, letter, the EPA informed Sage Hospital that it had fulfilled all of the requirements of the EPA's 1999 and 2006 Administrative Orders. See Razaghi 1st Decl. ¶ 11, at 24.

20. On September 12, 2013, the Arizona Department of Health Services licensed Sage Hospital as a Rural General Hospital through September 30, 2016. See Razaghi 1st Decl. ¶ 11, at 24.

21. In March, 2014, the Joint Commission granted Sage Hospital “Critical Access Hospital Accreditation,” stating that it could not identify any requirements for improvements. Razaghi 1st Decl. ¶ 11, at 24.

22. Each year, from 2007 to 2013, Sage Hospital also received an unqualified—i.e., “clean”—audit from its independent auditors. Razaghi 1st Decl. ¶ 11, at 24.

23. Sage Hospital completed its turnaround effort without eliminating any services, and began expanding its services in 2009. See Razaghi 1st Decl. ¶ 12, at 24.

24. Sage Hospital's overhead—which includes Board stipends and payments to Razaghi and his related companies—has decreased steadily from $9 million in FY 2006, which constituted 41.9% of total expenses for that year, to $8 million in FY 2013, which constituted 24.5% of total expenses for that year. See Declaration of...