Navajo Health Found.—Sage Mem'l Hosp., Inc. v. Burwell
| Decision Date | 17 December 2015 |
| Docket Number | No. CIV 14-0958 JB/GBW,CIV 14-0958 JB/GBW |
| Citation | 157 F.Supp.3d 1119 |
| Parties | Navajo Health Foundation—Sage Memorial Hospital, Inc., Plaintiff, v. Sylvia Matthews Burwell, Secretary of the United States Department of Health and Human Services; Robert McSwain, Acting Director of Indian Health Service; John Hubbard, Jr., Area Director, Navajo Area Indian Health Service ; and Frank Dayish, Contracting Officer, Navajo Area Indian Health Service, Defendants. |
| Court | U.S. District Court — District of New Mexico |
Lloyd B. Miller, Sonosky, Chambers, Sachse, Miller & Munson, LLP, Anchorage, AK, Paul E. Frye, Frye Law Firm PC, Albuquerque, New Mexico, Attorneys for the Plaintiff
Damon P. Martinez, United States Attorney, Karen Grohman, Assistant United States Attorney, United States Attorney's Office, District of New Mexico, Albuquerque, New Mexico, Devin A. Wolak, Russell J. Upton, United States Department of Justice, Washington, DC, Attorneys for the Defendants
James O. Browning
THIS MATTER comes before the Court on the Plaintiff's Motion to Dismiss Counterclaim, filed August 7, 2015 (Doc. 92)(“MTD”). The Court held a hearing on November 17, 2015. The primary issues are: (i) whether the Court lacks subject-matter jurisdiction over the Defendants' Counterclaim, see Answer to Second Amended Complaint and Counterclaim, filed July 17, 2015 (Doc. 84) (“Counterclaim”), because Defendant Frank Dayish, contracting officer (“CO”) for the Navajo Area HIS, lacked the authority to make his purported July 16, 2015, final decision because Plaintiff Navajo Health Foundation—Sage Memorial Hospital Inc.'s Contract Support Cost (“CSC”) claim was already being litigated in this Court; and (ii) whether the Court lacks subject-matter jurisdiction over the Defendants' Counterclaim, because Dayish's July 16, 2015, letter, see Letter from Frank Dayish, Chief Contracting Officer, to Stenson D. Wauneka, Board Chairman, Sage Memorial Hospital, Inc. (dated July 16, 2015), filed July 17, 2015 (Doc. 84–1)(“July 16, 2015 Dayish Letter”), was not sufficiently detailed under the Contract Disputes Act (“CDA”) in that it provided several bases for liability, yet specified only one damages figure. The Court concludes that it has subject-matter jurisdiction over the Defendants' Counterclaim, because: (i) Dayish retained the authority to issue a final decision on the Defendants' claim for indirect contract support costs funding that Sage Hospital did not expend on CSC-eligible activities in fiscal years 2009–2013; and (ii) the July 16, 2015, letter was sufficiently detailed under the CDA, even though it provided several bases for liability, yet specified only one damages figure. The Court therefore denies the MTD.
The Court takes this factual background from the facts that it concluded were undisputed in Navajo Health Foundation—Sage Memorial Hospital, Inc. v. Burwell, 110 F.Supp.3d 1140 (D.N.M.2015)
(Browning, J.)(“Sage ”).1 The Court provides this factual background to give a summary how the case began and to tell a coherent story.
“Sage is a health care facility in Ganado, Arizona, within the exterior boundaries of the Navajo Reservation.” 110 F.Supp.3d at 1145
. “Sage is a Navajo tribal organization for the purpose[ ] of contracting with IHS under the [Indian Self–Determination Education Assistance Act (“ISDEAA”) ].” 110 F.Supp.3d at 1145. “IHS is an agency within the Department of Health and Human Services and is responsible for providing federal health services to American Indians and Alaska Natives.” 110 F.Supp.3d at 1145.
“Since 2004, Sage has contracted with IHS under the ISDEAA to provide health services to a largely Navajo patient population.” 110 F.Supp.3d at 1145
. “Defendant [Frank] Dayish is the Contracting Officer for the Navajo Area IHS.” 110 F.Supp.3d at 1145. “Dayish is responsible for ISDEAA contracts and funding agreements for IHS programs, functions, services and activities undertaken by ISDEAA contractors within the Navajo Area of IHS, including Sage.” 110 F.Supp.3d at 1145. “Dayish has exercised the authority to sign ISDEAA contracts and funding agreements with Sage for such IHS programs and to award funds pursuant to those agreements.” 110 F.Supp.3d at 1145. “As Contracting Officer, Dayish has exercised the authority to decide initially disputes arising under ISDEAA contracts.” 110 F.Supp.3d at 1145.
“Over 1,600 CSC CDA claims have been presented to IHS.” 110 F.Supp.3d at 1146
. “Upon receipt of a [CSC] claim, the IHS CO sends a letter acknowledging the claims, request[ing] additional documentation and explanation of the claims that are not available to IHS and are necessary to complete its analysis, and sets forth a date for responding to those claims.” 110 F.Supp.3d at 1147. “Due to the complexity of the CSC claims, as well as IHS's goal to ensure consistency in the analysis of all claims, the claims are then analyzed by an IHS team that includes financial analysts and staff from the appropriate IHS Area Office, including the CO.” 110 F.Supp.3d at 1147. “IHS hired an outside financial accounting firm, Cotton & Co., additional staff in its Office of Finance and Accounting (OFA), and new attorneys in the HHS Office of the General Counsel, to assist in handling the claims.” 110 F.Supp.3d at 1147. “ In addition, numerous staff in IHS's twelve Area Offices, thirty attorneys in the HHS Office of General Counsel, as well as numerous attorneys in the U.S. Attorney's Office, are assisting in tracking, evaluating, and resolving the CSC CDA claims.” 110 F.Supp.3d at 1148
. “Extensive documentation is needed to evaluate the claims, and the analysis is complex.” 110 F.Supp.3d at 1148.
“After IHS completes its analysis of the tribal contractor's claims, it notifies the tribal contractor of the results of the analysis or reaches out to the tribal contractor and typically its legal counsel and financial expert to discuss the claims.” 110 F.Supp.3d at 1148
. “The IHS's legal counsel, financial experts, and frequently IHS Area Office staff participate in these meetings.” 110 F.Supp.3d at 1148. “IHS is attempting to resolve the claims expeditiously and in cooperation with tribal contractors, without resorting to litigation.” 110 F.Supp.3d at 1148. “[I]nformation needed is not readily apparent from financial documents and, instead, requires in-depth conversations between the financial experts for both the tribe and IHS in order for the parties to reach an understanding.” 110 F.Supp.3d at 1148.
Most of the time, IHS and the tribal contractor are able to reach an understanding about the eligible costs actually incurred by the tribal contractor but not paid by the IHS as CSC under the tribal contractor's ISDEAA contract and annual funding agreement, allowing the parties to quickly settle the claims at the next step of the CDA process.
. “[I]t is the IHS's goal to work cooperatively with tribal contractors to exchange relevant documents and discuss the claims prior to issuing its final decision.” 110 F.Supp.3d at 1148. This process “is time consuming and resource intensive, and the time required to respond to each claim is heightened due to the complexity of each claim, the total number of claims being addressed by IHS, and the time needed to meet with and discuss the claims with tribal contractors.” 110 F.Supp.3d at 1148. “As IHS continues to make progress in resolving the claims, the majority of which have already been resolved, IHS does anticipate that the time required to reach resolution will be shortened.” 110 F.Supp.3d at 1148.
“By letter dated August 25, 2014 to Defendant Dayish, Sage submitted to IHS a CSC claim for FY 2009 through FY 2013 for a total of $62,569,681.” 110 F.Supp.3d at 1148
. “Sage submitted approximately 270 pages of documents with its CDA claims letter for $62,569,681, including Sage's audited financial statements for (FYs) 2009–2013.” 110 F.Supp.3d at 1149. Sage Hospital also submitted “contracts and funding agreements between Sage and IHS in the custody of IHS, a Schedule of Attachments A and B prepared by Sage showing details of the CSC shortfalls, expectancy damages, and total claim....” 110 F.Supp.3d at 1149.
“Sage did not rely on IHS' reports to Congress, and Sage's claim expressly states that Sage has used the method of calculating the shortfall preferred by IHS, namely, full amount of CSC minus amount of CSC paid.” 110 F.Supp.3d at 1149
. “The Claim specifies, [for fiscal years 2009–13,] the CSC shortfall based on the full amount of CSC incurred by Sage minus the amount of CSC paid by IHS, the expectancy damages from lost billings, and the total claim for each such year.” 110 F.Supp.3d at 1149. “The Claim ... explains the expectancy damages claim for lost third-party revenues and the manner of calculating them.” 110 F.Supp.3d at 1149.
Dayish responded to the Claim with a letter “based on a template designed to ensure consistent responses to all tribes with CSC claims” that was dated October 23, 2014. 110 F.Supp.3d at 1150
. The Dayish Letter states in pertinent part:
; 25 C.P.R. § 900.223(a). At this time, the IHS has not had an opportunity to adequately review and make a final decision on your claim for a variety of reasons, including the...
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