James O. Browning, UNITED STATES DISTRICT JUDGE.
Motion ¶ 4, at 4 (setting forth this fact). See Response ¶ 4, at 2 (not disputing this fact); FAC ¶ 8, at 4 (setting forth this fact); Answer ¶ 8, at 2 (admitting this fact).
Motion ¶ 5, at 4 (setting forth this fact). See Response ¶ 5, at 2 (not disputing this fact); FAC ¶ 8, at 4 (setting forth this fact); Answer ¶ 9, at 2 (admitting this fact). "Defendant [Frank] Dayish 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." Motion ¶ 6, at 5 (setting forth this fact). See Response ¶ 6, at 2 (not disputing this fact); FAC ¶ 10, at 4-5 (setting forth this fact); Answer ¶ 10, at 2 (admitting this fact). "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." Motion ¶ 6, at 5 (setting forth this fact). See Response ¶ 6, at 2 (not disputing this fact); FAC ¶ 10, at 4-5 (setting forth this fact); Answer ¶ 10, at 2 (admitting this fact).
"Effective in 2009[,] Sage contracted with IHS under the ISDEA." Motion ¶ 7, at 5 (setting forth this fact). See Response
Motion ¶ 8, at 5 (setting forth this fact). See Response ¶ 8, at 2 (not disputing this fact); FAC ¶ 20, at 10 (setting forth this fact); Answer ¶ 20, at 3 (admitting this fact). "Sage and IHS extended the 2009 Contract without interruption for successive years, through September 30, 2013." Motion ¶ 9, at 5 (setting forth this fact). See Response ¶ 9, at 2 (not disputing this fact); FAC ¶ 21, at 10 (setting forth this fact); Answer ¶ 21, at 3 (admitting this fact); 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"); Annual Funding Agreement Between Navajo Health Foundation/Sage Memorial Hospital and the Secretary of the Department of Health and Human Services Fiscal Year 2013, filed January 13, 2015 (Doc. 21-2)("2013 AFA"); Declaration of Christi El-Meligi ¶ 4, at 1 (dated May 28, 2015), filed June 1, 2015 (Doc. 68-1)("El-Meligi 2d Decl.").
"Sage proposed a three-year ISDEA contract renewal and [Annual Funding Agreement (`AFA')] for fiscal year (`FY') 2014 to IHS by letter dated August 22, 2013." Motion ¶ 11, at 6 (setting forth this fact). See Response ¶ 11, at 2 (not disputing this fact); FAC ¶ 21, at 11-12 (setting forth this fact); Answer ¶ 21, at 3 (admitting this fact); Letter from Ahmad R. Razaghi, Chief Executive Officer of Navajo Health Foundation — Sage Memorial Hospital, Inc., to Alva Tom, Acting Director of the Office of Indian Self-Determination at the Navajo Area Indian Health Service (dated Aug. 22, 2013), filed January 13, 2015 (Doc. 21-3)("Aug. 22, 2013, Ltr."); 2013 Renewal; 2014 AFA; El-Meligi 2d Decl. ¶ 4, at 1.
"As of September 19, 2014, IHS and Sage had extended the FY 2011-2013 ISDEA contract and FY 2013 AFA through September 30, 2014." Motion ¶ 17, at 7. See Response ¶ 17, at 3 (not disputing this fact); El-Meligi 2d Decl. ¶ 5, at 2; Letter from Floyd Thompson, Executive Officer of the Navajo Area Indian Health Service to Ahmad Razaghi, Chief Executive Officer of Navajo Health Foundation — Sage Memorial Hospital, Inc. (dated Sept. 17, 2013), filed June 1, 2015 (Doc. 68-1)("Sept. 17, 2013, Ltr."). "With the end of fiscal year 2014 looming and without an indication from IHS as to IHS' plans regarding Sage, Sage was unsure as to the status and acceptability to IHS of its proposed three-year contract renewal proposal for the period ending September 30, 2016." Motion ¶ 17, at 7 (setting forth this fact). See El-Meligi 2d Decl. ¶ 7, at 2-3.
"One day before the end of FY 2014, on September 29, 2014, IHS hand-delivered a letter dated September 26, 2014 (the `Declination') to Sage. The Declination relied on and included as attachments the July 25, 2014 Moss Adams Audit and the September 15, 2014 IHS Review." Motion ¶ 24, at 9 (setting forth these facts). See Response ¶ 24, at 4 (not disputing these facts); FAC ¶ 26, at 12 (setting forth these facts); Answer ¶ 26, at 3 (admitting these facts); Letter from the Department of Health and Human Services to Stenson Wauneka, President of the Board of Directors of the Navajo Health Foundation (dated Sept. 26, 2014), filed January 13, 2015 (Doc. 21-12)("1st Declination").
"IHS then formally declined Sage's second three-year contract renewal proposal and FY 2015 AFA, by letter dated December 12, 2014." Motion ¶ 27, at 9 (setting forth this fact). See Response ¶ 27, at 4 (not disputing this fact); Letter from the Department of Health and Human Services to Stenson Wauneka, President of the Board of Directors of the Navajo Health Foundation (dated Dec. 12, 2014), filed December 22, 2014 (Doc. 17-1)("2d Declination")
"On or about September 29, 2014, IHS instructed the Gallup Regional Service and Supply Center (`GRSSC') to cease delivering pharmaceuticals to Sage, at a substantial cost to Sage." Motion ¶ 29, at 10 (citations omitted). See Declaration of Christi El-Meligi ¶ 10, at 7 (dated Dec. 22, 2014), filed December 22, 2014 (Doc. 17-1)("El-Meligi 1st Decl."); FAC ¶ 44, at 20 (setting forth this fact); Answer ¶ 44, at 6 (admitting this fact).
Sage Hospital filed suit on October 23, 2014, see Complaint, filed October 23, 2014 (Doc. 1), and filed the SAC on June 30, 2015. Sage Hospital asserts five causes of action. First, Sage Hospital contends that the IHS' declination of the 2013 Renewal violates 25 U.S.C. § 450f(b)(2), and 25 C.F.R. §§ 900.32 and 900.33. See SAC ¶¶ 52-55, at 24-25. Sage Hospital asks the Court for immediate injunctive relief to: (i) reverse the IHS' declination of the 2013 Renewal; (ii) compel Burwell to award and fund the 2013 Renewal; (iii) provide coverage for Sage Hospital and its employees under the Federal Tort Claims Act, 28 U.S.C. § 1346(b)("FTCA"); (iv) restore Sage Hospital's ability to purchase pharmaceuticals and other supplies from
Sage Hospital argues that, even if has to demonstrate the traditional equitable grounds for obtaining injunctive relief, those traditional grounds are easily met. See SAC ¶ 57, at 26-27. Sage Hospital contends that the IHS' declination of the 2013 Renewal is causing Sage Hospital immediate and irreparable injury, because it threatens to ruin Sage Hospital's healthcare business, force it to close, and cause it to lose its patients' good will. See SAC ¶ 57A, at 26. Sage Hospital asserts that it will likely succeed on the case's merits, because the Defendants clearly violated the ISDEA and its implementing regulations. See SAC ¶ 57B, at 26. Sage Hospital points out that 25 C.F.R. § 900.33 prohibits the IHS from declining to renew Sage Hospital's ISDEA contract based on performance concerns to the extent that there were no material and substantial changes to the scope or funding of Sage Hospital's programs and services. See SAC ¶ 57B, at 26. Sage Hospital asserts that 25 C.F.R. § 900.32 prohibits the IHS from declining Sage Hospital's proposed 2014 AFA, because that proposed agreement is substantially the same as the 2013 AFA. See SAC ¶ 57B, at 26. Sage Hospital says that the IHS' refusal to provide Sage Hospital with technical assistance to address the IHS' concerns is "concededly in violation of 15 U.S.C. § 450f(b)(2)." SAC ¶ 57B, at 26. Sage Hospital argues that the balance of hardships tips in its favor, because, while an injunction will merely require the Defendants to comply with federal law, the Court's failure to order an injunction will ruin Sage Hospital's business and cause two hundred Sage Hospital employees to lose their jobs. See SAC ¶ 57C, at 27. Sage Hospital asserts that an injunction will also be in the public interest, because it will allow American Indians to get much-needed and high-quality healthcare at Sage Hospital rather than obtaining lower-quality healthcare at more distant IHS facilities. See SAC ¶ 57D, at 27.
Second, Sage Hospital contends that the IHS' declination of the 2014 Renewal — to the extent that it is substantially the same as the 2013 Renewal — violates 25 U.S.C. § 450f(b)(2), and 25 C.F.R. §§ 900.32 and 900.33. See SAC ¶¶ 59-60, at 27. Sage Hospital asks the Court for immediate injunctive relief to: (i) reverse the IHS' declination of the 2014 Renewal to the extent that it is substantially the same as the 2013 Renewal; (ii) compel Burwell to award and fund the 2014 Renewal to the extent that it is substantially the same as the 2013 Renewal; (iii) provide FTCA coverage for Sage Hospital and its employees; (iv) restore Sage Hospital's ability to purchase pharmaceuticals and other supplies from its suppliers; and (v) cease the IHS' disparagement of Sage Hospital's business. See SAC ¶ 61, at 27-28. Sage Hospital reiterates that, because the ISDEA provides for both injunctive and mandamus relief to remedy violations of the ISDEA and its implementing regulations, it does not need to prove the traditional equitable grounds for obtaining injunctive relief. See FAC ¶ 61, at 27-28. Sage Hospital argues that, even if it has to demonstrate the traditional equitable grounds for obtaining injunctive relief, those grounds are easily met for the 2014 Renewal for the same reasons that they are met for the 2013 Renewal. See SAC ¶ 62, at 28-29.
Third, Sage Hospital asserts that, because it is entitled to immediate injunctive relief to reverse the IHS' declination of the
Fourth, Sage Hospital argues that IHS violated the Contract Disputes Act, 41 U.S.C. §§ 7101-09 ("CDA"). See SAC ¶¶ 67-72, at 30-32. Sage Hospital explains that it submitted its Contract Support Costs claim on August 25, 2014 (the "Claim"). SAC ¶ 68, at 30. According to Sage Hospital, its claim specifies, for each FY from 2009 to 2013, Sage Hospital's total CSC shortfall. See FAC ¶ 69, at 30. Sage Hospital asserts that IHS responded to the Claim with "an inapplicable form letter," and that the IHS' proposed date for deciding the Claim — October 21, 2015 — is unreasonable, because the Claim and its exhibits provide all of the information that the IHS needs to decide the Claim. SAC ¶¶ 70-71, at 30-31. Sage Hospital argues that, consequently, the letter violates the CDA. See SAC ¶ 71, at 31. Sage Hospital, accordingly, asks the Court to direct the IHS to issue a decision on the Claim in a specified period of time that the Court finds reasonable. See SAC ¶ 72, at 31-32.
Fifth, and finally, Sage Hospital asserts that the Defendants violated the ISDEA by failing to pay the full amount of Sage Hospital's CSC for FY 2009 through FY 2013. See SAC ¶ 76, at 32. Sage Hospital contends that the Defendants owe Sage Hospital $36,258,493 in CSC and $26,311,188 in lost third-party revenues — totaling $62,569,681 plus interest. See SAC ¶¶ 76-79, at 32-33. Sage Hospital says that, in a Memorandum Opinion and Order, filed June 17, 2015 (Doc. 73)("MOO"), the Court deemed the Claim denied, because of Dayish's failure to set forth a date certain by which he would decide the claim. SAC ¶ 79, at 33.
Sage Hospital filed the Motion on June 10, 2015, seeking summary judgment on Counts I through III of the SAC. The Motion addresses five issues. First, Sage Hospital says that, under the law-of-the-case doctrine, the Court's holdings in Sage "`govern the same issues in subsequent phases of the same case.'" Motion at 17 (quoting Mocek v. City of Albuquerque, 3 F.Supp.3d 1002, 1046 (D.N.M.2014)(Browning, J.)). Sage Hospital notes that, among other things, the Court decided several legal issues of significance to the Motion:
Motion at 20-21.
Second, Sage Hospital argues that the ISDEA requires Burwell to approve and fully fund the 2013 Renewal and the 2014 AFA. See Motion at 16-19. Sage Hospital explains that the HHS Secretary must fully fund a contract renewal proposal if "`no material and substantial change to the scope or funding of a program, function, services, or activities [PFSAs] has been proposed by the tribal organization.'" Motion at 16 (alterations in Motion but not in quoted source)(quoting 25 C.F.R. § 900.33)(citing Sage, 100 F.Supp.3d at 1161-62, 1182-83 (holding that the HHS Secretary's authority to decline a contract proposal is "strictly limited to the contract renewal proposal's contents")). Sage Hospital says that, because the 2013 Renewal proposes no changes to Sage Hospital's PFSAs or budget, Burwell is legally required to award and fully fund it. See Motion at 22 (citing Sage, 100 F.Supp.3d at 1182 ("The 2013 Renewal proposes only minor amendments to update the 2013 Renewal for a new three-year term and to fix a few typographical errors. The 2013 Renewal offers no modifications to the provisions of the 2010 Contract that speak to the scope and funding of Sage Hospital's PFSAs.")).
Sage Hospital argues that, similarly, the HHS Secretary must approve and fully fund a proposed successor AFA that is "`substantially the same'" as its predecessor. Motion at 22 (quoting 25 C.F.R. § 900.32)(citing Sage, 100 F.Supp.3d at 1161-62, 1179-80 (holding that the HHS Secretary should determine if the declination criteria apply based on the information within the "four corners" of the AFA documents)). Sage Hospital explains that the 2013 AFA "was automatically amended, without an additional writing, to reflect any additional funding." Motion at 23. Sage Hospital asserts that, because the 2014 AFA is substantially the same as the 2013 AFA, the ISDEA requires Burwell to provide $20,116,437 in funding to Sage Hospital for FY 2014. See Motion at 24.
Third, Sage Hospital maintains that the ISDEA requires Burwell to approve and fully fund the 2014 Renewal and the 2015 AFA. See Motion at 25. Sage Hospital asserts that its second proposed three-year contract renewal — under which the Defendants would fund Sage Hospital through September 30, 2017 — proposes no changes to Sage Hospital's PFSAs. See Motion at 25. Sage Hospital contends that, accordingly, Burwell must approve and fully fund it. See Motion at 25 (citing 25 C.F.R. § 900.33; Sage, 100 F.Supp.3d at 1183 (explaining that the HHS Secretary's authority to decline a contract proposal is "strictly limited to the contract proposal's contents")). Sage Hospital then turns to the 2015 AFA and says that, although the Defendants "have not argued that Sage's proposed 2015 AFA is not substantially the
Sage Hospital contends that, even if the proposed 2015 AFA is not substantially the same as the 2013 AFA and Burwell could apply the ISDEA's Declination criteria to it, Burwell "must invoke the particular criterion or criteria that she can justify with clear and convincing evidence." Motion at 27 (citing Cheyenne River Sioux Tribe v. Kempthorne, 496 F.Supp.2d 1059, 1068 (D.S.D.2007)("Simply reciting the declination criteria is absolutely insufficient. The law requires a detailed explanation of the Secretary's rationale for his decision and a disclosure of the facts or documents on which he relied for his decision.")). Sage Hospital asserts that the IHS declined to enter into the proposed 2015 AFA, "`for the same reasons IHS declined [Sage's] August 23, 2013 Proposal, as articulated in IHS's [1st Declination].'" Motion at 27 (first alteration in Motion but not in quoted source)(quoting 2d Declination at 11). Sage Hospital explains that the 1st Declination, in turn, invoked two of the ISDEA's Declination criteria: (i) "`the service to be rendered to the Indian beneficiaries of the particular program or function to be contracted will not be satisfactory'"; and (ii) "`the proposed project or function to be contracted for cannot be properly completed or maintained by the proposed contract.'" Motion at 28 (quoting 1st Declination at 3-4). Sage Hospital contends that the IHS "did not even mention the only declination criterion that could arguably support its present litigation position": that the "`amount of funds proposed under the contract is in excess of the applicable funding level for the contract.'" Motion at 28 (quoting 25 U.S.C. § 450f(a)(2)).
Sage Hospital maintains that the ISDEA's regulations prescribe the steps which the HHS Secretary must take to properly decline a proposed AFA:
Motion at 28-29. Sage Hospital asserts that Burwell "did none of this" in declining the proposed 2015 AFA. Motion at 29. Sage Hospital argues that the Court should therefore reverse the 2d Declination, and compel Burwell to accept the 2015 AFA and to "add to the contract the full amount proposed, i.e., $32,614,916." Motion at 29.
Fourth, Sage Hospital argues that both the 1st Declination and the 2d Declination "are illegal for IHS' failure to provide technical assistance." Motion at 29 (capitalization and bolding omitted for readability). Sage Hospital says that this violation "provides an independent ground for reversing the declinations" of the 2013 Renewal, the 2014 AFA, the 2014 Renewal, and the 2015 AFA. Motion at 30 (citing Sage, 100 F.Supp.3d at 1161-62 (stating that, if the HHS Secretary declines a contract proposal, he or she must "provide assistance to the ... tribal organization to overcome the stated objections"); Cheyenne River Sioux Tribe v. Kempthorne,
Fifth, and finally, Sage Hospital asks the Court to schedule a hearing on damages. See Motion at 30. Sage Hospital points out that the preliminary injunction which is currently in place provides only prospective relief to Sage Hospital. See Motion at 30. Sage Hospital asserts that the ISDEA provides a remedy in "`money damages'" for Sage Hospital's lost revenue. Motion at 31 (quoting Sage, 100 F.Supp.3d at 1163-64). Sage Hospital also notes that it has incurred other damages which the Defendants' unlawful declination decisions caused, "including additional insurance costs, costs for pharmaceutical supplies, and employee turnover." Motion at 31 (citations omitted). Sage Hospital says that the ISDEA permits the award of consequential damages, "including lost third-party reimbursements and intangible damages." Motion at 31 (citing Ramah Navajo Sch. Bd., Inc. v. Leavitt, No. CIV 07-0289 MV/SMV, Memorandum Opinion and Order at 61-72, filed May 9, 2013 (D.N.M.)(Vazquez, J.)(Doc. 143)). Sage Hospital says that the Court should therefore set a hearing on the issue of damages. See Motion at 31.
The Defendants responded to the Motion on July 6, 2015. See Defendants' Response to Plaintiff's Motion for Summary Judgment on Its First Three Claims for Relief, filed July 6, 2015 (Doc. 80)("Response"). The Response attacks the Motion on five grounds. First, the Defendants contend that Sage Hospital incorrectly argues that the Court's holdings in the Sage opinion govern the Court's resolution of the Motion. See Response at 7 (citing Motion at 12). The Defendants argue that the "`district courts generally remain free to reconsider their earlier interlocutory orders. In fact, in the Tenth Circuit, law of the case doctrine has no bearing on the revisiting of interlocutory orders, even when a case has been reassigned from one judge to another.'" Response at 7 (quoting Mocek v. City of Albuquerque, 3 F.Supp.3d at 1046)(emphasis omitted).
Second, the Defendants contend that, in the Sage opinion, the Court improperly held that the canon of construction under which courts interpret ambiguous statutes and regulations in favor of American Indian tribes and tribal organizations trumped the deference typically afforded to an agency's interpretation of its own regulations under Auer v. Robbins, 519 U.S. 452, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997)("Auer"). Response at 7-8 (citing Sage, 100 F.Supp.3d at 1163-64, 1175-76). According to the Defendants, the Court then improperly held that Burwell's interpretation of 25 C.F.R. §§ 900.32 and 900.33 — which allowed the Defendants to look beyond the four corners of Sage Hospital's contract proposals to determine whether they were "substantially the same" as their predecessors — was not persuasive. Response at 7-9 (citing Mashantucket Pequot Tribal Nation v. IHS, DHHS Departmental Appeals Board, Appellate Division, No. A-06-60, Decision No. 2028, 2006 WL 1337439 (May 3, 2006)("Pequot")). The Defendants assert that the canon of Indian deference "`is inapplicable when the competing interests at stake both involve Native Americans.'" Response at 8 (quoting Cherokee Nation of Okla. v. Norton, 241 F.Supp.2d 1374, 1380 (N.D.Okla.2002)(citing United States v. Jicarilla Apache Nation, 564 U.S. 162, 131 S.Ct. 2313, 2328, 180 L.Ed.2d 187
The Defendants explain that,
Response at 8-9 (citations omitted). The Defendants argue that, because the interests of the Navajo nation and its members are at stake in this case, resolving it "is not a simple matter of deferring to a tribal organization's litigation position over a federal agency's interpretation of its own regulation." Response at 9. The Defendants assert that the canon of Indian deference thus does not apply, and that Burwell's interpretation of §§ 900.32 and 900.33 should control "unless it is plainly erroneous or inconsistent with the regulation." Response at 9 (citing Utah v. Babbitt, 53 F.3d 1145, 1150 (10th Cir.1995); Auer, 519 U.S. at 461, 117 S.Ct. 905).
Third, the Defendants ask the Court to revisit its holding in the Sage opinion that the IHS' "offer of technical assistance in the second declination letter was an `empty gesture.'" Response at 10 (quoting Sage, 100 F.Supp.3d at 1143 n. 19). The Defendants contend that the language in the 2d Declination is standard and "used by IHS in most declinations." Response at 10. The Defendants add that, although the Court faulted IHS for putting "`the onus on Sage Hospital to identify what assistance it needed,' the ISDEAA and its regulations in fact do place the onus on the tribal organization to identify what assistance is needed." Response at 10 (emphasis in original). According to the Defendants, the ISDEA required them to provide technical assistance to Sage Hospital only "`upon the request of any tribal organization and subject to the availability of appropriations.'" Response at 10 (quoting 25 U.S.C. § 450h(d)(3))(citing 25 C.F.R. § 900.28 (describing the HHS Secretary's duty as providing "any necessary requested technical assistance" to avoid declination); 25 C.F.R. § 900.30 (same)).
Fourth, the Defendants argue that, even if the declinations violated the ISDEA, the Court should not deem Sage Hospital's contract proposals accepted. See Response at 11. According to the Defendants, the ISDEA provides that, upon receiving a contract proposal, the HHS Secretary "`shall approve the proposal and award the contract,' unless she issues a declination letter within 90 days of [receiving] the proposal." Response at 11 (quoting 25 U.S.C. § 450f(a)(2)). The Defendants assert that the ISDEA "is therefore very specific that the Secretary must decline a proposal within 90 days; if she does not, the contract must be awarded." Response at 11. The Defendants contend that similar language "is decidedly absent from the other provisions of law that Sage Hospital claims were violated in this case" — for example, the requirement to provide technical assistance and the ISDEA's prohibition of applying the Declination criteria to contract proposals which are substantially the same as their predecessors. Response at 11 (citing 25 U.S.C. § 450f(b)(2); 25 C.F.R. §§ 900.32-.33). The Defendants assert that "[t]his absence is telling" and that, "[p]articularly where the consequences are so severe (i.e., deemed approval of a contract), this Court should not read such penalties into the ISDEAA." Response at 11-12.
Fifth, the Defendants challenge Sage Hospital's assertion that the ISDEA requires them to fully fund Sage Hospital's contract proposals. See Response at 11. The Defendants point out that, when a contract proposal is deemed approved under the ISDEA, the HHS Secretary must "`add to the contract the full amount of funds pursuant to section 106(a) of the Act.'" Response at 12 (quoting 25 C.F.R. § 900.18). The Defendants say that § 106, in turn, provides that the amount of funds under an ISDEA contact "`shall not be less than the appropriate Secretary otherwise would have provided for the operation of the programs or portions thereof for the period covered by the contract'" — i.e., the Secretarial amount. Response at 12 (quoting 25 U.S.C. § 450j-1(a)(1)). The Defendants assert that Sage Hospital's contract proposals "do not necessarily reflect that amount; the Secretary still has to review the proposal and determine the appropriate level of funding." Response at 12. The Defendants contend:
Response at 12. The Defendants add that the ISDEA does not require the HHS Secretary to provide Sage Hospital the higher funding levels set forth in the proposed 2015 AFA. See Response at 13. The Defendants assert that Sage Hospital's request for a permanent injunction ordering them to fully fund the proposed 2015 AFA "is akin to a request for mandamus, which is only available if there is a clear statutory command to perform a certain action."
Sixth, the Defendants argue that, if the Court deems all of Sage Hospital's contract proposals approved, it should not order the Defendants to fund the 2015 AFA to the full extent requested. See Response at 14. The Defendants say that, as the Court has noted, the 2015 AFA asks for substantially more funding than either the 2013 AFA or the 2014 AFA. See Response at 14. The Defendants argue that an AFA is not substantially the same as its predecessor when it contains a "`different proposed funding amount.'" Response at 14 (quoting 25 C.F.R. § 900.32). The Defendants assert that, accordingly, the portion of the 2015 AFA that requests funding in excess of the 2013 AFA is subject to the ISDEA's Declination criteria. See Response at 14.
In response to Sage Hospital's argument that Burwell "`failed to predicate the declination of the proposed 2015 AFA on the basis that it sought a different funding amount,'" the Defendants argue that Sage Hospital "confuses the regulations, which explain when declination criteria may be invoked, with the declination criteria themselves." Response at 14-15 (quoting Motion at 29). The Defendants assert that
Response at 15.
The Defendants contend that Sage Hospital's argument that the Court must approve the 2015 AFA, because Burwell did not furnish a decision on it within ninety days of receiving it, is "factually untrue." Response at 15. The Defendants point out that Sage Hospital submitted the proposed 2015 AFA on September 19, 2014, and the IHS issued the 2d Declination on December 12, 2014 — eighty-four days later. See Response at 15. The Defendants also attack Sage Hospital's argument that the 2d Declination violated the ISDEA because it did not "invoke valid, applicable declination criteria, and did not offer technical assistance." Response at 15. The Defendants assert that the sole basis for this argument is the Sage opinion, which consisted of preliminary findings only and listed a number of categories of evidence that the Defendants could present which might change the Court's mind on those preliminary findings. See Response at 15 (citing Sage, 100 F.Supp.3d at 1186-89). The Defendants argue that they would present that evidence "in a full hearing on the merits of its declination proposal after completion of discovery." Response at 15 (citing Sage, 100 F.Supp.3d at 1167-68 (describing
The Defendants contend that an assumption underlying Sage Hospital's argument "seems to be that the Secretary not only had to explain her declination decision and set forth reasons, but also... support that decision by clear and convincing evidence." Response at 16 (internal quotation marks omitted). The Defendants assert that the ISDEA "disproves that assumption," because it requires only that a declination letter "`contain[] a specific finding that clearly demonstrates that' one or more declination criteria are applicable." Response at 17 (alterations in Response but not quoted source)(quoting 25 U.S.C. § 450f(a)(2)). The Defendants maintain that the 2d Declination contains "highly specific findings invoking applicable criteria"; it was not also required to demonstrate those findings with clear and convincing evidence. Response at 17. The Defendants urge that the ISDEA imposes the clear and convincing evidence standard "in the course of subsequent litigation, not the declination process." Response at 17. The Defendants argue that Burwell is entitled to take discovery and justify her declination decision with evidence at a full hearing. See Response at 17. The Defendants contend that the Motion is therefore premature and the Court should either deny it or defer ruling on it until after discovery and trial. See Response at 17.
Seventh, and finally, the Defendants say that they do not oppose Sage Hospital's request for a hearing on the issue of damages so long as it occurs after the completion of discovery and "after the entry of final judgment on the declination decision." Response at 17. The Defendants argue that, at this point, Sage Hospital's purported damages "are supported by conclusory, untested affidavits." Response at 17. The Defendants maintain that they are entitled to take the affiants' depositions and request all relevant documents. See Response at 17. They add that delaying a decision on damages until the current trial date — which is in early April 2015 — would not prejudice Sage Hospital, because it will continue to receive roughly $1.5 million in funding per month until trial. See Response at 17.
Sage Hospital replied to the Response on July 20, 2015. See Plaintiff's Reply to Defendants' Response to Plaintiff's Motion for Summary Judgment on its First Three Claims for Relief, filed July 20, 2015 (Doc. 85)("Reply"). Sage Hospital reiterates that the Sage opinion resolved many of the legal disputes that the Defendants raise in the Response. See Reply at 7. Sage Hospital contends that the law-of-the-case doctrine posits that, "`when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.'" Reply at 9 (quoting United States v. Monsisvais, 946 F.2d 114, 115 (10th Cir.1991)). Sage Hospital argues that the Defendants have not provided any proper justification for the Court to revise its rulings in the Sage opinion. See Reply at 9.
Sage Hospital says that the Defendants' main argument — which is that the canon of Indian deference does not apply in this case and that the Court should instead defer to the HHS' interpretation of the ISDEA's regulations — is "erroneous." Reply at 10. Sage Hospital explains that this dispute is between the IHS and Sage Hospital, and no other tribal interests are
Sage argues that the Court's interpretation of §§ 900.32 and 900.33 in the Sage opinion not only properly applied the canon of Indian deference, but was also consistent with the ISDEA, the ISDEA's implementing regulations, and Sage Hospital's ISDEA contract. See Reply at 10 (citing 25 U.S.C. § 450l (c)("Each provision of the Indian Self-Determination and Education Assistance Act ... and each provision of this Contract shall be liberally construed for the benefit of the Contractor to transfer the funding and the following related functions, services, activities, and programs...."); 2010 Contract at 14 (providing a similar provision); 25 C.F.R. § 900.3(a)(5)("Congress has further declared that each provision of the Act and each provision of contracts entered into thereunder shall be liberally construed for the benefit of the tribes or tribal organizations to transfer the funding and the related functions, services, activities, and programs...."); 25 C.F.R. § 900.3(b)(11)). Sage Hospital says that "[t]here is simply no basis for IHS' contention that th[e] Court erred in not deferring to ... an unpublished administrative decision in a case distinguishable in several major respects." Reply at 11 (citing Sage, 100 F.Supp.3d at 1173-81 & n. 26).
Next, Sage Hospital challenges the Defendants' assertion that ordering the Defendants to approve and fund the 2013 Renewal and the 2014 AFA moots Sage Hospital's request that the Court order the Defendants to approve and fund the 2014 Renewal and the 2015 AFA. See Reply at 11. According to Sage Hospital, "[s]tandard principles of contract law ... dictate otherwise." Reply at 12 (citation omitted)(internal quotation marks omitted). Sage argues that, "`[w]hen two parties execute a second contract that deals with the same subject matter as the first, the two contracts must be interpreted together; insofar as the contracts are inconsistent, the later one prevails.'" Reply at 12 (quoting K & V Sci. Co., Inc. v. BMW, 164 F.Supp.2d 1260, 1263 (D.N.M.2011) (Black, J.), rev'd on other grounds, 314 F.3d 494 (10th Cir.2002)). Sage Hospital says that, in New Mexico, this concept is known as the merger doctrine. See Reply at 12 (citing K & V Sci. Co., Inc. v. BMW, 164 F.Supp.2d at 1263 n. 2). Sage Hospital asserts that, accordingly, if the Court orders the Defendants "to execute the first contract renewal, that contract will be merged into the second renewal proposal,
Sage Hospital reiterates that Burwell did not validly decline the proposed 2014 Renewal and the 2015 AFA within ninety days of its submission. See Reply at 12-13. Sage Hospital says that, once it filed the 2014 Renewal and the 2015 AFA, Burwell had ninety days to decline them "to the extent the proposed funding is `in excess of the applicable funding level for the contract'" as determined under § 450j-1(a) of the ISDEA. Reply at 14 (citations omitted)(quoting 25 U.S.C. § 450f(a)(2)(D)). Sage Hospital argues that Burwell did not cite that criterion for declining the proposals, but instead invoked the same inapposite reasons for declining the 2014 Renewal and the 2015 AFA as it did for the 2013 Renewal and the 2014 AFA. See Reply at 14 (citing 2d Declination at 13-16; Sage, 100 F.Supp.3d at 1182-83). Sage Hospital asserts that, if Burwell believes that the amount of funds that Sage Hospital seeks is excessive, she has the ability and the duty to invoke — within the ninety-day period which the ISDEA prescribes — the one declination criterion that would apply: Sage Hospital's contract proposal is in excess of the applicable funding level. See Reply at 14 (citing Seneca Nation of Indians v. HHS, 945 F.Supp.2d 135, 150 (D.D.C.2013)). Sage Hospital contends that, in Seneca Nation of Indians v. HHS, the
Reply at 14-15. Sage Hospital says that other decisions are in accord. See Reply at 15 (citing Cheyenne River Sioux Tribe v. Kempthorne, 496 F.Supp.2d at 1068; Maniilaq Ass'n v. Burwell, 72 F.Supp.3d 227, 239-41 (D.D.C.2014); Yurok Tribe v. Dep't of the Interior, 785 F.3d 1405, 1408 (Fed.Cir.2015); Crownpoint Inst. of Tech. v. Norton, No. CIV 04-0531 JP/DJS, Findings of Fact and Conclusions of Law, filed Sept. 16, 2005 (D.N.M.)(Parker, J.)(Doc. 86)("Crownpoint")).
Sage Hospital argues that the ISDEA and its regulations reflect Congress' intent that tribal organizations have potent rights
Reply at 17 (alterations in Reply but not in quoted source)(quoting 25 U.S.C. § 450m-1(a)). Sage Hospital maintains that it is therefore entitled to such relief. See Reply at 17.
Sage Hospital reiterates that the IHS violated § 900.30 by refusing to provide Sage Hospital technical assistance before declining Sage Hospital's contract proposals. See Reply at 17. Sage Hospital states that, contrary to the Defendants' contentions, "the requirement for IHS to provide technical assistance does not require a request from the tribal contractor." Reply at 17. Instead, Sage Hospital argues, the applicable regulation states:
Reply at 17 (bold in original; italics in Reply but not in original)(quoting 25 C.F.R. § 900.30). Sage Hospital asserts that the Defendants omitted the first half of this regulation when they quoted it in the Response. See Reply at 17. Sage Hospital asserts that the Defendants are not entitled to obtain evidence on this issue through discovery, because, "if there is any evidence that IHS offered technical assistance before December 12, 2014 (or at any time thereafter) it would be in IHS' possession!" Reply at 13.
Sage Hospital says that the Defendants' argument that summary judgment is premature at this stage of the case "ignores the Court's prior rulings on the applicable law and does not satisfy the requirements of Fed.R.Civ.P. 56(d)." Reply at 19. Sage Hospital contends that, under rule 56(d), the Defendants must: (i) file an affidavit; (ii) identify the probable facts not available, their relevance, and what steps have been taken to obtain those facts; (iii) explain why facts precluding summary judgment cannot be presented; and (iv) state with specificity how the desired time would enable the nonmoving party to meet its burden in opposing summary judgment. See Reply at 19-20. Sage Hospital argues that the Belgrove Decl. has not satisfied these requirements, noting that "[i]t is not enough for IHS to say that facts necessary to oppose summary judgment are unavailable or are in Sage's exclusive control." Reply at 20-21. Sage Hospital asserts that one of the issues mentioned in the Belgrove Decl. is relevant to whether the contents of Sage Hospital's contract proposals "significantly differ from that of their predecessors or show how discovery would justify either the retroactive use of a declination criterion not invoked when IHS rejected [the 2015 AFA] or validate the use of the two criteria that IHS did
The Court held a hearing on July 31, 2015. See Transcript of Hearing (taken July 31, 2015), filed August 12, 2015 (Doc. 94)("Tr."). The hearing was relatively short, with the parties largely sticking to their briefing. The parties raised a few new issues, however. First, Sage Hospital explained that the Defendants have not served it with any discovery requests. See Tr. at 8:15-19 (Frye). The Defendants said that they have not requested any discovery, because they believe that the Court can resolve three issues at the summary-judgment stage: (i) whether the 2014 AFA and the 2013 Renewal were substantially the same as the 2010 Contract and the 2013 AFA; (ii) whether Sage Hospital's claim that the Defendants unlawfully declined the 2014 Renewal and the 2015 AFA are moot if the Court grants Sage Hospital the requested relief regarding the 2013 Renewal and the 2014 AFA; and (iii) if Sage Hospital's claims regarding the 2014 Renewal and the 2015 AFA are not moot, whether those proposals are substantially the same as the 2010 Contract and the 2013 AFA. See Tr. at 32:22-25 (Grohman). The Defendants explained that, if the Court holds that Sage Hospital's claims regarding the 2014 Renewal and 2015 AFA are not moot, but determines that those proposals are not substantially the same as the 2010 Contract and the 2013 AFA, there is a remaining fourth issue: whether the Defendants properly applied the Declination criteria to the 2014 Renewal and 2015 AFA. See Tr. at 33:10-18 (Grohman). The Defendants said that, because they "don't have endless resources," they did not want to attempt to obtain discovery on the fourth issue before litigating the Motion if the Court's resolution of the Motion would make discovery on the fourth issue irrelevant. Tr. at 34:11-16 (Grohman). The Defendants noted, however, that if the Court holds that Sage Hospital's claims regarding the 2014 Renewal and 2015 AFA are not moot, but determines that those proposals are not substantially the same as the 2010 Contract and the 2013 AFA, it should allow the Defendants to obtain discovery and proceed to trial on the whether they properly applied the Declination criteria to the 2014 Renewal and 2015 AFA. See Tr. at 33:20-34:3 (Grohman).
Second, the parties and the Court took up what the Defendants asserted was "the biggest mistake or error that [the Court] made in the [Sage] opinion" — which is that the canon of Indian deference trumps Auer deference. Tr. at 18:1-3 (Court). The Defendants reiterated the argument from the Response that, when American Indians' interests are pitted against each other in a case, the canon of Indian deference does not apply. See Tr. at 19:23-20:7 (Grohman). Although the Defendants initially said that Auer deference applies to agencies' interpretations of regulations stated in legal briefs filed at the district court level, see Tr. at 21:2-22:10 (Grohman)(citing Qwest Corp. v. Colo. Pub. Utils. Comm'n, 656 F.3d 1093 (10th Cir. 2011)), they later clarified that they are not "asking [the Court] to defer to the brief [, but are instead] asking for deference for the Secretary's interpretation, as expressed in an administrative decision,
The Defendants replied that Sage Hospital's contractual argument is erroneous, because the parties "don't have a contract," and the Court is not being asked to interpret a provision of an existing contract between the parties. Tr. at 44:19 (Grohman). The Defendants assert that the ISDEA's regulations are similarly inapposite, because "[i]f a tribe and a tribal organization are at odds, there is not a clear-cut picture of who to defer to." Tr. at 44:24-45:1 (Grohman). The Defendants explain:
Tr. at 45:2-11 (Grohman). With the final word on the matter, Sage Hospital asserted that, even if the Court concludes that the Indian canon of deference does not trump Auer deference, the HHS' interpretation of § 900.32 in the Pequot decision is "plainly inconsistent with the plain language of the regulations." Tr. at 45:20-24 (Frye).
Third, addressing Sage Hospital's merger argument — that the Court can essentially combine the 2013 Renewal, the 2014 Renewal, the 2014 AFA, and the 2015 AFA — the Defendants state that the merger doctrine applies only when parties execute two contracts and requires courts to read those two contracts together. See Tr. at 50:8-10 (Grohman). The Defendants contend that the merger doctrine is irrelevant, because "[n]o contracts have been executed," and "IHS's intent is not to enter into a contract." Tr. at 50:11-13. The Defendants said that the issue is: "[I]f IHS and Sage are deemed to have a contract running from 2013 to 2016, should they also be deemed to have this contract for an overlapping term from 2014 to 2017?" Tr. at 50:14-17 (Grohman). The Defendants contend that Sage Hospital improperly proposed the 2015 AFA when they were no longer under contract with the IHS. See Tr. at 50:20-51:11 (Grohman). Sage Hospital clarified that it was still under contract with the IHS when they proposed the 2015 AFA, because it was "getting ... monthly letters from the IHS that are in the record saying, [w]e are going to extend your contract through this period." Tr. at 51:21-52:6 (Frye). At the end of the hearing, the Court said that it would try to issue an opinion on the Motion by mid-September. See Tr. at 67:13-16 (Court).
Sage Hospital filed the Supplemental Authorities on Issue of Deference on August 10, 2015 (Doc. 93)("Notice"). In the Notice, Sage Hospital clarified a few issues from the hearing. First, Sage Hospital addressed the Defendants' argument that the Court should defer to the HHS' interpretation
Notice at 2-3 (alterations in Notice but not in quoted sources)(emphases in Notice but not in quoted source).
Second, Sage Hospital clarifies that, although the Defendants said at the hearing that, when Sage Hospital submitted the 2014 Renewal and 2015 AFA, "no contracts had been executed," two of Sage Hospital's exhibits suggest otherwise. Notice at 3 (brackets omitted)(citing 2014 Renewal; Letter from Floyd Thompson, Executive Officer of the Navajo Area Indian Health Service to Ahmad Razaghi, Chief Executive Officer of Navajo Health Foundation — Sage Memorial Hospital, Inc. (dated July 11, 2014) at 26, filed June 1, 2015 (Doc. 68-1)("July 11, 2014, Ltr.")). Third, and finally, Sage Hospital notes that, although the Defendants stated at the hearing that they have funding Sage Hospital from "January to October" of 2015 pursuant to the Sage opinion, the Court issued that opinion on April 9, 2015, and the Defendants have provided prospective funding to Sage Hospital only from that date. Notice at 3-4 (citations omitted)(internal quotation marks omitted).
Rule 56(a) of the Federal Rules of Civil Procedure states: "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(a). "The movant bears the
The party opposing a motion for summary judgment must "set forth specific facts showing that there is a genuine issue for trial as to those dispositive matters for which it carries the burden of proof." Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990). See Vitkus v. Beatrice Co., 11 F.3d 1535, 1539 (10th Cir. 1993) ("However, the nonmoving party may not rest on its pleadings but must set forth specific facts showing that there is a genuine issue for trial as to those dispositive matters for which it carries the burden of proof." (internal quotation marks omitted)). Rule 56(c)(1) provides: "A party asserting that a fact ... is genuinely disputed must support the assertion by... citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials." Fed.R.Civ.P. 56(c)(1). It is not enough for the party opposing a properly supported motion for summary judgment to "rest on mere allegations or denials of his pleadings." Anderson v. Liberty Lobby, Inc., 477 U.S. at 256, 106 S.Ct. 2505. See Abercrombie v. City of Catoosa, 896 F.2d 1228, 1231 (10th Cir.1990); Otteson v. United States, 622 F.2d 516, 519 (10th Cir.1980)("However, once a properly supported summary judgment motion is made, the opposing party may not rest on the allegations contained in his complaint, but must respond with specific facts showing the existence of a genuine factual issue to be tried." (citation omitted)(internal quotation marks omitted)). Nor can a party "avoid summary judgment by repeating conclusory opinions, allegations unsupported by specific facts, or speculation." Colony Nat'l Ins. Co. v. Omer, No. CIV 07-2123 JAR, 2008 WL 2309005, at *1 (D.Kan. June 2, 2008)(Robinson, J.)(citing Argo v. Blue Cross & Blue Shield of Kan., Inc., 452 F.3d 1193, 1199 (10th Cir.2006); Fed. R.Civ.P. 56(e)). "In responding to a motion for summary judgment, `a party cannot rest on ignorance of facts, on speculation, or on suspicion and may not escape summary judgment in the mere hope that
To deny a motion for summary judgment, genuine factual issues must exist that "can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. at 250, 106 S.Ct. 2505. A mere "scintilla" of evidence will not avoid summary judgment. Vitkus v. Beatrice Co., 11 F.3d at 1539 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. at 248, 106 S.Ct. 2505). Rather, there must be sufficient evidence on which the fact finder could reasonably find for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 251, 106 S.Ct. 2505 (quoting Schuylkill & Dauphin Improvement Co. v. Munson, 81 U.S. 442, 448, 14 Wall. 442, 20 S.Ct. 867 (1871)); Vitkus v. Beatrice Co., 11 F.3d at 1539. "[T]here is no evidence for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable ... or is not significantly probative, ... summary judgment may be granted." Anderson v. Liberty Lobby, Inc., 477 U.S. at 249, 106 S.Ct. 2505 (citations omitted). Where a rational trier of fact, considering the record as a whole, could not find for the nonmoving party, there is no genuine issue for trial. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
When reviewing a motion for summary judgment, the court should keep in mind certain principles. First, the court's role is not to weigh the evidence, but to assess the threshold issue whether a genuine issue exists as to material facts requiring a trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 249, 106 S.Ct. 2505. Second, the ultimate standard of proof is relevant for purposes of ruling on a summary judgment, such that, when ruling on a summary judgment motion, the court must "bear in mind the actual quantum and quality of proof necessary to support liability." Anderson v. Liberty Lobby, Inc., 477 U.S. at 254, 106 S.Ct. 2505. Third, the court must resolve all reasonable inferences and doubts in favor of the nonmoving party, and construe all evidence in the light most favorable to the nonmoving party. See Hunt v. Cromartie, 526 U.S. 541, 550-55, 119 S.Ct. 1545, 143 L.Ed.2d 731 (1999); Anderson v. Liberty Lobby, Inc., 477 U.S. at 255, 106 S.Ct. 2505 ("The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor."). Fourth, the court cannot decide any issues of credibility. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 255, 106 S.Ct. 2505.
There are, however, limited circumstances in which the court may disregard a party's version of the facts. This doctrine developed most robustly in the qualified immunity arena. In Scott v. Harris, 550 U.S. 372, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007), the Supreme Court concluded that summary judgment was appropriate where video evidence "quite clearly contradicted" the plaintiff's version of the facts. 550 U.S. at 378-81, 127 S.Ct. 1769. The Supreme Court explained:
Scott v. Harris, 550 U.S. at 380-81, 127 S.Ct. 1769 (emphasis in original).
The Tenth Circuit applied this doctrine in Thomson v. Salt Lake County, 584 F.3d 1304 (10th Cir.2009), and explained:
Thomson v. Salt Lake Cnty., 584 F.3d at 1312 (brackets omitted). "The Tenth Circuit, in Rhoads v. Miller, [352 Fed. Appx. 289 (10th Cir.2009)(Tymkovich, J.)(unpublished),
Rhoads v. Miller, 352 Fed.Appx. at 291-92 (internal quotation marks omitted). See Lymon v. Aramark Corp., 728 F.Supp.2d at 1249-50 (quoting Rhoads v. Miller, 352 Fed.Appx. at 291-92). In a concurring opinion in Thomson v. Salt Lake County, the Honorable Jerome A. Holmes, United States Circuit Judge for the Tenth Circuit, stated that courts must focus first on the legal question of qualified immunity and "determine whether plaintiff's factual allegations are sufficiently grounded in the record such that they may permissibly comprise the universe of facts that will serve as the foundation for answering the legal question before the court," before inquiring into whether there are genuine issues of material fact for resolution by the jury. 584 F.3d at 1326-27 (Holmes, J., concurring)(citing Goddard v. Urrea, 847 F.2d 765, 770 (11th Cir.1988)(Johnson, J., dissenting))(observing that, even if factual disputes exist, "these disputes are irrelevant to the qualified immunity analysis because that analysis assumes the validity of the plaintiffs' facts").
The ISDEA authorizes American Indian tribes and tribal organizations to contract with either the DOI or the HHS Secretary
An ISDEA contract proposal typically consists of two parts: (i) a multi-year agreement that satisfies 25 U.S.C. § 450l (c); and (ii) an AFA. See 25 U.S.C. § 450j(c). The AFA must contain: (i) "terms that identify the programs, services, functions, and activities to be performed or administered, the general budget category assigned, the funds to be provided, and the time and method of payment"; and (ii) "such other provisions, including a brief description of the programs, services, functions, and activities to be performed (including those supported by financial resources other than those provided by the Secretary), to which the parties agree." 25 U.S.C. § 450l(c).
The ISDEA contracting process begins when a tribe or tribal organization submits a contract proposal to the Secretary. See 25 U.S.C. § 450a(2). Unless the tribe or tribal organization agrees to an extension, the Secretary must approve or decline the proposal within ninety days. See 25 U.S.C. § 450a(2)(A); 25 C.F.R. §§ 900.16, 900.17. Otherwise, the proposal is deemed approved. See 25 U.S.C. 450j-1(a); 25 C.F.R. § 900.18.
Should the Secretary decide to decline the proposal in part or in its entirety, he or she must do so based on one of these five reasons:
25 U.S.C. § 450f(a)(2). See 25 C.F.R. § 900.22 (setting forth the same declination criteria).
There are a number of limitations on the Secretary's authority to apply § 450f(a)(2)'s declination criteria. The Secretary cannot decline a contract renewal proposal "where no material and substantial change to the scope or funding of a program, functions, services, or activities has been proposed by the Indian tribe or tribal organization." 25 C.F.R. § 900.33. Similarly, the Secretary cannot decline a successor AFA proposal that is "substantially the same" as its predecessor. 25 C.F.R. § 900.32. The Secretary also cannot decline any proposal based on any objections "that will be overcome through the contract." 25 C.F.R. § 900.33. Moreover, if the Secretary can decline only a portion of a contract proposal, he or she must approve all other severable portions of the proposal. See 25 C.F.R. § 900.25.
After the Secretary declines a proposal, he or she must: (i) state any objections in writing to the tribe or tribal organization; (ii) provide assistance to the tribe or tribal organization to overcome the stated objections; and (iii) provide the tribe or tribal organization with a hearing on the record with the right to engage in full discovery
The Secretary also has the authority to reassume ISDEA contracts. See 25 U.S.C. § 450m. Reassumption means "rescission, in whole or in part, of a contract and assuming or resuming control or operation of the contracted program ... without consent of the Indian tribe or tribal organization." 25 C.F.R. § 900.246. A federal agency within the HHS or the DOI may unilaterally reassume a contract on either an emergency or non-emergency basis. See 25 C.F.R. § 900.246. An emergency reassumption is permitted when a tribe or tribal organization fails to fulfill the ISDEA contract's requirements, and that failure poses either: (i) an immediate threat of imminent harm to any person's safety, or (ii) an imminent substantial and irreparable harm to trust funds, trust lands, or interest in such lands. See 25 C.F.R. § 900.247. A non-emergency reassumption is permitted when there has been either: (i) a violation of the rights, or endangerment of the health, safety, or welfare of any person, or (ii) gross negligence or mismanagement in the handling or use of contract funds, trust funds, trust lands, or interest in trust lands under the contract. See 25 C.F.R. § 900.247.
In an emergency reassumption, the Secretary must: (i) immediately rescind, in whole or in part, the contract; (ii) assume control or operation of all or part of the program; and (iii) give written notice of the rescission to the tribe or tribal organization, and to the community that the contract serves. See 25 C.F.R. § 900.252. The written notice must include: (i) a detailed statement of the findings that support the Secretary's decision; (ii) a statement explaining the tribe or tribal organization's right to a hearing on the record within ten days of the reassumption, or such later date as the tribe or tribal organization may approve; (iii) an explanation that the tribe or tribal organization may be reimbursed for actual and reasonable "wind up costs" incurred after the effective date of the reassumption; and (iv) a request for the return of property, if any. 25 C.F.R. § 900.253.
In a non-emergency reassumption, the Secretary must: (i) notify the tribe or tribal organization in writing of the deficiencies in contract performance; (ii) ask the tribe or tribal organization to take specific corrective action within a reasonable period of time, which cannot be less than forty-five days; and (iii) offer and provide, if requested, the necessary technical assistance and advice to help the tribe or tribal organization overcome the deficiencies. See 25 C.F.R. § 900.248. If the tribal organization fails to ameliorate the deficiencies, the Secretary shall provide a second written notice to the tribe or tribal organization that the Secretary will reassume the contract, in whole or in part.
The ISDEA provides a comprehensive range of remedies for a tribe or tribal organization whose contract the Secretary unlawfully terminates. See 25 U.S.C. § 450m-1(a). In any action brought under the ISDEA, the district court "may order appropriate relief," including
25 U.S.C. § 450m-1(a).
Applying § 450m-1(a) to the DOI Secretary's contract declination decision in Crownpoint, Judge Parker said that "[t]he specific mandamus relief authorized by the ISDA relieves [the plaintiff] of proving the usual equitable elements including irreparable injury and absence of an adequate remedy at law." Crownpoint at 26 (citations omitted). Other federal district courts have similarly concluded that a tribe or tribal organization does not need to demonstrate the traditional grounds for equitable relief to obtain injunctive or mandamus relief under the ISDEA. See, e.g., Pyramid Lake Paiute Tribe v. Burwell, 70 F.Supp.3d 534, 544-45 (D.D.C.2014)("Because the IDEAA specifically provides for both injunctive and mandamus relief to remedy violations of the Act, 25 U.S.C. § 450m-1(a), however, the Tribe need not demonstrate the traditional equitable grounds for obtaining the relief it seeks."); Red Lake Band of Chippewa Indians v. Dep't of the Interior, 624 F.Supp.2d 1, 25 (D.D.C.2009)(granting specific performance on an ISDEA contract without considering the ordinary grounds for such relief, because the statute provides for injunctive relief); Susanville Indian Rancheria v. Leavitt, No. CIV 07-259 GEB/DAD, 2008 WL 58951, at *10-11 (E.D.Cal. Jan. 3, 2008)(holding that a plaintiff seeking injunctive relief under the ISDEA need not satisfy the traditional equitable requirements); Cheyenne River Sioux Tribe v. Kempthorne, 496 F.Supp.2d at 1068 (ordering a writ of mandamus where the plaintiffs had not established the traditional equitable requirements, but had established that the DOI Secretary's contract declination decision violated the ISDEA).
When faced with an ambiguous federal statute, federal courts typically defer to the administering agency's interpretation. See Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837, 842-45, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). In cases involving American Indians, however, the Tenth Circuit has "taken a different approach to statutory interpretation," holding that the "normal rules of construction
The ISDEA is designed to "circumscribe as tightly as possible the discretion of the Secretary." Ramah Navajo Sch. Bd. v. Babbitt, 87 F.3d 1338, 1344 (D.C.Cir.1996). The ISDEA instructs that "[e]ach provision of [the ISDEA] and each provision of contracts entered into thereunder shall be liberally construed for the benefit of the tribes or tribal organizations...." 25 C.F.R. § 900.3(a)(5). The Tenth Circuit has confirmed that the canon of construction favoring American Indian tribes applies to ISDEA claims, noting that "it would be entirely inconsistent with the purpose of the [ISDEA], as well as with the federal policy of Native American self-determination in general, to allow the canon favoring Native Americans to be trumped in this case." Ramah Navajo Chapter v. Lujan, 112 F.3d at 1462. The Tenth Circuit has explained that this canon of construction "controls over more general rules of deference to an agency's interpretation of an ambiguous statute." S. Ute Indian Tribe v. Sebelius, 657 F.3d 1071, 1078 (10th Cir.2011). Consequently, in the Tenth Circuit, federal courts must not afford Chevron deference to the HHS' or the DOI's interpretation of the ISDEA's ambiguous provisions.
Only a few federal district courts have addressed whether the "arbitrary and capricious standard" of the Administrative Procedure Act, 5 U.S.C. §§ 701-06 ("APA"), applies to ISDEA claims. The majority of district courts have concluded that ISDEA's text, its legislative history, and the general presumption favoring Indian tribes dictates a de novo review of ISDEA claims. See, e.g., Pyramid Lake Paiute Tribe v. Burwell, 70 F.Supp.3d at 542; Seneca Nation of Indians v. Dep't of Health and Human Servs., 945 F.Supp.2d at 141-42 & n. 5; Cheyenne River Sioux Tribe v. Kempthorne, 496 F.Supp.2d at 1066-67; Cherokee Nation of Okla. v. United States, 190 F.Supp.2d 1248, 1258 (E.D.Okla.2001), rev'd on other grounds by, 543 U.S. 631, 125 S.Ct. 1172, 161 L.Ed.2d 66 (2005); Shoshone-Bannock Tribes of the Fort Hall Reservation v. Shalala, 988 F.Supp. 1306, 1318 (D.Or. 1997). A minority of district court cases — three of which are unpublished — used the APA's arbitrary-and-capricious standard to review ISDEA claims. See, e.g., Citizen Potawatomi Nation v. Salazar, 624 F.Supp.2d 103, 108 (D.D.C.2009); Suquamish Tribe v. Deer, No. CIV 96-5468 (W.D.Wash. Sept. 2, 1997); Cal. Rural Indian Health Bd., Inc. v. Shalala, No. CIV 96-3526 (N.D.Cal. Apr. 24, 1997); Yukon-Kuskokwim Health Corp. v. Shalala, No. CIV 96-155 (D. Alaska April 15, 1997). Those courts have reasoned that, because the ISDEA does not provide a standard of review, courts must use the APA's arbitrary-and-capricious standard. See Citizen Potawatomi Nation v. Salazar, 624 F.Supp.2d at 108 ("Both the Supreme Court and [the D.C. Circuit] Court of Appeals have declared that, where a statute does not provide a standard of review, as is true of the ISD[E]A, courts must look to the APA standard.").
The Court will grant the Motion. The conclusions of law in the Sage opinion do
Sage Hospital asserts that the law-of-the-case doctrine dictates that the Court's conclusions of law in the Sage opinion "continue to govern the same issues in subsequent stages in the same case." Reply at 9 (citations omitted)(internal quotation marks omitted). The Court disagrees. The Supreme Court of the United States has explained that a preliminary injunction is intended to serve the limited purpose of preserving "the relative positions of the parties until a trial on the merits can be held." Univ. of Tex. v. Camenisch, 451 U.S. at 395, 101 S.Ct. 1830.
Univ. of Tex. v. Camenisch, 451 U.S. at 395, 101 S.Ct. 1830. If the Court's findings of fact and conclusions of law for a preliminary injunction are not binding at trial, the Court sees no reason why they would bind the Court at the summary-judgment stage. See aaiPharma, Inc. v. Thompson, 296 F.3d 227, 234 (4th Cir. 2002)("[A] party addressing only issues of preliminary relief should not ordinarily be bound by its abbreviated and only partially informed presentation of the merits."); Hamilton Watch Co. v. Benrus Watch Co., 206 F.2d 738, 742 (2d Cir.1953)("[A] preliminary injunction ... is, by its very nature, interlocutory, tentative, provisional, ad interim, impermanent, mutable, not fixed or final or conclusive, characterized by its for-the-time-beingness."); 11A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2950, at 270-71 (3d ed. 2004)("Based, as they usually are, on incomplete evidence and a relatively hurried consideration of the issues, [a court's] provisional decisions [in issuing a preliminary injunction] should not be used outside the context in which they originally were rendered."). That the Court gave inclinations in the Sage opinion on Sage Hospital's likelihood of success on the merits of its claims therefore has no bearing on the Court's resolution of those issues in this Memorandum Opinion and Order.
Section 900.32 prohibits the HHS Secretary from declining a successor AFA proposal that is "substantially the same" as its predecessor. 25 C.F.R. § 900.32. The text of the 2014 AFA is substantively identical to the text of the 2013 AFA. Compare 2014 AFA passim, with 2013 AFA passim. Section 900.32 affords no discretion to the HHS Secretary to decline or approve such a proposal. When faced with such a proposal, the Secretary's duty is clear: he or she "shall approve and add to the contract the full amount of funds to which the contractor is entitled, and may not decline, any portion of a successor annual funding
The Defendants do not challenge Sage Hospital's argument that the 2014 AFA's text is substantially the same as its predecessor's. Instead, they argue that the 2014 AFA is not substantially the same as the 2013 AFA, because an internal audit uncovered information about Sage Hospital's operations of which they were not previously aware. The Defendants rely only on Pequot — an unpublished administrative decision — to support their position.
The Court provided a detailed description of the Pequot decision in the Sage opinion:
Sage, 100 F.Supp.3d at 1173-75 (citations omitted). The Court explained that the final sentence of the block-quoted paragraph from the Pequot opinion — "which states that `the OIG report raised legal issues concerning the proposal which might not have been apparent to IHS when it approved the FY 1999 AFA' — is the only line in the decision that can be construed as supporting the Defendants' argument." Sage, 100 F.Supp.3d at 1178 (quoting Pequot, 2006 WL 1337439, at *17). The Court said that, arguably, that line "suggests that the [HHS Secretary] may consider information beyond the proposed AFA's text — like the Moss Adams Report and the NAIHS Report's findings — in determining whether the [AFA] proposal is `substantially the same' as its predecessor." Sage, 100 F.Supp.3d at 1178 (quoting 25 C.F.R. § 900.32).
To the extent that § 900.32 is ambiguous, the Court will not afford Auer deference to Burwell's interpretation of § 900.32 in the Pequot decision, because the Indian canon of deference trumps Auer deference in this case. Even if the Court afforded Burwell's interpretation of § 900.32 Auer deference, that deference would not dictate a different outcome, because Burwell's interpretation is "plainly erroneous or inconsistent with the regulation." Auer, 519 U.S. at 461, 117 S.Ct. 905. The Court will therefore award summary judgment in favor of Sage Hospital on Count I.
When an agency interprets its own regulations — to, for example, adjudicate whether a regulated party was in compliance with them — courts typically afford its interpretation Auer deference. Under Auer deference, the Court accepts the agency's interpretation of its ambiguous regulation unless the regulation is "plainly erroneous or inconsistent with the
The Defendants ask the Court to depart from this closely analogous authority and to instead rely on a series of cases which hold that Indian deference "is inapplicable when the competing interests at stake both involve Native Americans." Response at 8 (quoting Cherokee Nation of Okla. v. Norton, 241 F.Supp.2d at 1380)(citing United States v. Jicarilla Apache Nation, 131 S.Ct. at 2328; N. Cheyenne Tribe v. Hollowbreast, 425 U.S. at 655 n. 7, 96 S.Ct. 1793; Chugach Alaska Corp. v. Lujan, 915 F.2d at 457 n. 4)(internal quotation marks omitted). There is no evidence, however, that there are American Indian interests on both sides of this case. First, unlike in Northern Cheyenne Tribe v. Hollowbreast, Utah v. Babbitt, and Cherokee Nation of Oklahoma v. Norton, neither the Navajo Nation nor any individual Navajos have intervened as a defendant in this case. See Northern Cheyenne Tribe v. Hollowbreast, 425 U.S. at 666 n. 7, 96 S.Ct. 1806 ("[T]he contesting parties [we]re an Indian tribe and a class of individuals consisting primarily of tribal members."); Utah v. Babbitt, 53 F.3d at 1147 (listing the Board of Trustees of the Utah Navajo Trust Fund, among others, as Plaintiffs-Appellees; the DOI, among others, as Defendants-Appellants; and the Navajo Nation as an Intervenor-Appellant); Cherokee Nation of Okla. v. Norton, 241 F.Supp.2d at 1375 (listing the Cherokee Nation of
Third, the Defendants have presented no evidence that the American Indian interests which gave rise to their investigation of Sage Hospital are ongoing. The Defendants say that two pieces of evidence demonstrate that they are representing American Indian interests: (i) a resolution that the Ganado Chapter of the Navajo Nation passed at an October 8, 2013, meeting, which asked Sage Hospital to terminate its then-CEO, Ahmad Razaghi, on the basis of allegations that he and his staff were misusing ISDEA funds; and (ii) a letter that Jonathan Hale — the Chairman of the Health, Education, Education and Human Services Committee of the Navajo Nation Council — wrote to then-HHS Secretary Kathleen Sebelius, which asked the Defendants to investigate allegations that Sage Hospital was misusing ISDEA funds. See Response at 8 (citing Letter from Jonathan Hale, Chairman of the Health, Education and Human Services Committee of the Navajo Nation Council, to Kathleen Sebelius, Secretary of the U.S. Department of Health and Human Services at 11 (Oct. 16, 2013), filed February 5, 2015 (Doc. 36-1)("Oct.16, 2013, Ltr."); Arlyssa Becenti, Ganado Officials Want Razaghi Out, The Gallup Independent (Oct. 9, 2013), filed December 22, 2014 (Doc. 17-1)("Becenti Article")). As an initial matter, Razaghi is no longer Sage Hospital's CEO; Christi El-Meligi replaced him at some point after the declination decisions. See El-Meligi 2d Decl. ¶ 2, at 1. Moreover, based on the evidence in the record, it appears that neither the resolution nor the Oct. 16, 2013, Ltr. asked for the Defendants to decline Sage Hospital's ISDEA contract proposals. The Defendants have likewise presented no evidence — declarations, affidavits, or depositions from current or former Navajo Nation delegates — that the concerns expressed almost two years ago in the resolution and in the Oct. 16, 2013, Ltr. are ongoing. Indeed, the only evidence in the record suggests the opposite: Sage Hospital has presented the declarations of four current and one former
In essence, the Defendants ask the Court to hold that any dispute over ISDEA funding which involves a tribe or tribal organization that Indians have criticized at any point in time for misusing ISDEA funds pits Indian against Indian. If that were correct, the Indian canon of deference would be largely nullified in declination disputes with the IHS, contrary to Congress' intent and Tenth Circuit law. See 25 C.F.R. § 900.3(a)(5) ("Congress has further declared that each provision of the [ISDEA] and each provision of contracts entered into thereunder shall be liberally construed for the benefit of the tribes or tribal organizations...."); 25 C.F.R. § 900.3(b)(11) ("The Secretary's commitment to Indian self-determination requires that [ISDEA] regulations be liberally construed for the benefit of Indian tribes and tribal organizations...."); Ramah Navajo Chapter v. Lujan, 112 F.3d at 1462 ("If the [ISDEA] can reasonably be construed as the Tribe would have it construed, it must be construed that way."). In theory, the IHS could point to some American Indian interest implicated in every case to argue that Indian deference does not apply. As the Court detailed in the Sage opinion, the ISDEA's legislative history is replete with references to agency malfeasance in the ISDEA contracting process. See Sage, 100 F.Supp.3d at 1179-81. Congress has amended the ISDEA multiple times to counteract the DOI's and the HHS' institutional inclination to unlawfully withhold ISDEA funding from tribes and tribal organizations. See Sage, 100 F.Supp.3d at 1180 ("[N]early every significant amendment that Congress has made to the ISDEA since its inception reflects a desire to curtail the DOI and HHS Secretaries' authority to administer ISDEA contracts, and to expand tribes and tribal organizations' authority to administer those contracts themselves."). Given this history, the Court is reluctant to simply take the Defendants at their word that they are protecting Navajo interests in this case.
A better approach is one that requires the United States to present some evidence that there are American Indian interests on both sides of a case for the Indian canon of deference to not apply. For example, American Indian tribes, organizations, or individuals can intervene as defendants, or they can present depositions, declarations, or affidavits explaining that they seek or oppose the requested
Pequot's expansive interpretation of § 900.32 is plainly erroneous or inconsistent with the ISDEA. Section 900.32 states:
25 C.F.R. § 900.32 (bold in original). Section 900.32 makes clear that whether the HHS Secretary may apply the Declination criteria to a proposed successor AFA turns on the proposal's contents, rather than on a holistic assessment of the tribe or tribal organization's performance of the existing AFA that incorporates information from
Second, the ISDEA already provides a remedy for the HHS Secretary in these situations. Where the Secretary can establish that the tribe or tribal organization is violating its patients' rights, endangering its patients' health or safety, or committing gross negligence or mismanagement in handling ISDEA funds — i.e., exactly what the Defendants allege that Sage Hospital is doing — it can cancel the ISDEA contract. The ISDEA authorizes the Secretary to reassume unilaterally a contract on either an emergency or a non-emergency basis. See 25 C.F.R. § 900.246. An emergency reassumption is permitted when a tribe or tribal organization fails to fulfill the ISDEA contract's requirements and that failure poses: (i) an immediate threat of imminent harm to any person's safety; or (ii) an imminent substantial and irreparable harm to trust funds, trust lands, or interest in such lands. See 25 C.F.R. § 900.247. A non-emergency reassumption is permitted when there has been: (i) a violation of the rights, or endangerment of the health, safety, or welfare, of any person; or (ii) gross negligence or mismanagement in the handling or use of contract funds, trust funds, trust lands, or interest in trust lands under the contract. See 25 C.F.R. § 900.247.
Section 900.33 prohibited the Defendants from declining the 2013 Renewal, because the 2013 Renewal did not contain a "material and substantial change to the scope or funding" of Sage Hospital's PFSAs. 25 C.F.R. § 900.33. Section 900.33 says that proposals for term contract renewals are not subject to § 450f(a)(2)'s declination criteria "where no material and substantial change to the scope or funding of a program, functions, services, or activities has been proposed by the Indian tribe or tribal organization." 25 C.F.R. § 900.33. The 2013 Renewal proposed the following amendments to the 2010 Contract — the added sections are underlined and the deleted sections are crossed out:
Article I, Section 2(B):
2013 Renewal at 5-6.
The 2013 Renewal proposes only minor amendments to update the 2013 Renewal for a new three-year term and to fix a few typographical errors. The 2013 Renewal offers no modifications to the provisions of the 2010 Contract that speak to the scope and funding of Sage Hospital's PFSAs. Compare 2013 Renewal at 5-6, with 2010 Contract passim. Because the 2013 Renewal did not propose a substantial and material change to Sage Hospital's PFSAs in the 2010 Contract, § 900.33 precluded the Defendants from applying § 450f(a)(2)'s declination criteria to it. Accordingly, the Defendants violated § 900.33 when it declined the 2013 Renewal.
To the extent that the Defendants argue that Pequot's interpretation of the phrase "substantially the same" in § 900.32 applies with equal force to § 900.33, the Court rejects Burwell's interpretation of § 900.33 for the same reasons that it rejected her interpretation of § 900.32. First, if there is any ambiguity in § 900.33's language, Indian deference trumps Auer deference and the Court must read the ambiguity in favor of Sage Hospital. Second, even if Auer deference trumps Indian deference, Burwell's interpretation of § 900.33 is plainly erroneous and inconsistent with the regulation.
Section 900.33 reads:
25 C.F.R. § 900.33 (bold in original). By using the words "has been proposed by," § 900.33 indicates that the Defendants' authority to decline a contract renewal proposal turns on the proposal's contents rather than on information that an outside report uncovers about the tribal organization's performance of the existing contract. 25 C.F.R. § 900.33. If § 900.33 provided the Defendants authority to consider such outside information in determining whether to apply § 450f(a)(2)'s declination criteria, it would read as follows:
25 C.F.R. § 900.33. That § 900.33 contains no such language or deletions shows that whether a contract proposal is "substantially the same" as its predecessor turns only on the contract renewal proposal's contents. 25 C.F.R. § 900.33 The Court therefore concludes that the Defendants unlawfully declined the 2013 Renewal.
The Court will deem the 2013 Renewal and the 2014 AFA approved. The Defendants argue that the Court should not deem Sage Hospital's contract proposals approved, but should instead order Burwell "to review Sage's proposals and fund them according to ISDEAA Section 106(a) within 90 days of the date of the order." Response at 12. The Defendants point out that, when a contract proposal is deemed approved under the ISDEA, the HHS Secretary must "`add to the contract the full amount of funds pursuant to section 106(a) of the Act.'" Response at 12 (quoting 25 C.F.R. § 900.18). The Defendants say that § 106, in turn, provides that the amount of funds under an ISDEA contact "`shall not be less than the appropriate Secretary otherwise would have provided for the operation of the programs or portions thereof for the period covered by the contract'" — i.e., the Secretarial amount. Response at 12 (quoting 25 U.S.C. § 450j-1(a)(1)). The Defendants assert that Sage Hospital's contract proposals "do not necessarily reflect that amount; the Secretary still has to review the proposal and determine the appropriate level of funding." Response at 12.
The Honorable Rosemary M. Collyer, United States District Judge for the District of Columbia, rejected similar arguments in Seneca Nation of Indians v. Department of Health and Human Services. Seneca Nation had proposed an increase of $3,774,392.00 over the $7,802,211.00 that it had been awarded the year before — a 48% increase. See 945 F.Supp.2d at 137-39. The HHS argued — much as the Defendants argue here — that the tribe should not get a "windfall" because of a "procedural technicality," 945 F.Supp.2d at 150; that such "windfall" would come at the expense of other tribal organizations, 945 F.Supp.2d at 151; that Judge Collyer should not get into the weeds on the validity of the tribe's calculations, see 945 F.Supp.2d at 151-52; and that Judge Collyer should instead "evaluate the bargain the parties have struck through their Contract and operation of law," 945 F.Supp.2d at 151-52. Judge Collyer rejected those arguments, stating:
945 F.Supp.2d at 150 (alterations in opinion but not in quoted statute)(quoting 25 U.S.C. § 450j-1(b)(5)). Judge Collyer thus concluded that, when the HHS Secretary fails to comply with her contractual duties under the ISDEA, the tribe's or tribal organization's contract proposal "automatically becomes part of the parties' Contract." 945 F.Supp.2d at 152. See Yurok Tribe v. Dep't of the Interior, 785 F.3d at 1408 ("In effect, if the Secretary does not timely respond to a[n ISDEA] proposal, the proposal is deemed approved and the Secretary is directed to award a contract based on the terms of the proposal." (emphasis added)); Crownpoint, slip op. at 25 (deeming approved three ISDEA contract proposals).
The Court agrees with and will adopt Judge Collyer's approach. The Court would add only that the policy underlying the ISDEA supports her holding. When Congress enacted the ISDEA, it recognized that "the prolonged Federal domination of Indian service programs has served to retard rather than enhance the progress of Indian people and their communities by depriving Indians of the full opportunity to develop leadership skills crucial to the realization of self-government." 25 U.S.C. § 450(a)(1). The Defendants' proposed approach would hinder tribes and tribal organizations rather than help them. Without requiring federal agencies to fully fund the tribe's or tribal organization's contract proposal, the ISDEA would have no teeth. If federal agencies knew that they could unlawfully decline or fail to timely respond to a contract proposal, and that the only repercussion would be maintaining the prior year's funding level — or forcing a tribe or tribal organization back to the negotiating table yet again — there would be no reason for the agencies to ever approve a successor contract proposal. Tribes and tribal organizations would thus be forced to go through endless rounds of negotiations over the appropriate funding amounts with no way of enforcing their proposals, thus nullifying the streamlined ninety-day contract-approval process that the ISDEA sets forth. The Court will not force tribes and tribal organizations to participate in such a fruitless exercise. The ISDEA's text and its legislative history demonstrate that the Court's sole remedy when a federal agency unlawfully declines contract proposal is to order the agency to fully fund the proposal.
Granting summary judgment in Sage Hospital's favor on Count I does not moot Count II. Although the 2015 AFA is not substantially the same as the 2013 AFA, the Defendants have not presented any evidence to show a genuine dispute of material fact whether they properly applied the Declination criteria to the 2015 AFA. Moreover, the Defendants violated the ISDEA when they declined the 2014 Renewal, because it is substantially the same as the 2010 Contract. Finally, even if the Defendants properly declined the 2014 Renewal and the 2015 AFA, the Defendants violated § 900.30 of the ISDEA when they failed to offer Sage Hospital technical assistance in the 2d Declination. Accordingly, the Court will grant summary judgment in Sage Hospital's favor on Count II, and deem both the 2014 Renewal and the 2015 AFA approved.
The Defendants argue that granting summary judgment in Sage Hospital's
"When two parties execute a second contract that deals with the same subject matter as the first, the two contracts must be interpreted together; insofar as the contracts are inconsistent, the latter one prevails." K & V Sci. Co. v. BMW, 164 F.Supp.2d at 1263.
K & V Sci. Co. v. BMW, 164 F.Supp.2d at 1263 (quoting 6 Arthur L. Corbin, Corbin on Contracts, §§ 1293 and 1296 (1962))(internal quotation marks omitted).
Deeming both the 2013 Renewal and the 2014 Renewal approved leads to neither "overlapping contracts" nor "confusion as to which contract governs," because, if the Court approves both contract proposals, it may read the 2014 Renewal and the 2013 Renewal together. Insofar as the 2014 Renewal is inconsistent with the 2013 Renewal, the 2014 Renewal prevails. Thus, if the Court approves both proposals, the 2013 Renewal would be in place from October 1, 2013, to September 30, 2014, and the 2014 Renewal would be in place from October 1, 2014, to September 30, 2017.
The 2d Declination explains that the Defendants declined the 2015 AFA for the same reasons that they declined the 2014 AFA. See 2d Declination passim. The text of the 2015 AFA appears substantively identical to the text of the 2013 AFA. Compare 2015 AFA passim, with 2013 AFA passim. The cover letter for the 2014 AFA, however, explains that the 2015 AFA requests that the IHS fund Sage Hospital at a total amount of $32,614,916.00, with $19,995,900.00 in base funding, and $12,619,016.00 for direct and indirect contract support costs.
Upon satisfying § 900.33's threshold requirements, the HHS Secretary may decline a contract proposal only based on one of these five reasons:
25 U.S.C. § 450f(a)(2). See 25 C.F.R. § 900.22 (setting forth the same declination criteria). The Secretary must justify his or her contract declination decision "by clearly demonstrating the validity of the grounds for declining the contract proposal (or portion thereof)." 25 U.S.C. § 450f(e)(1).
The 2d Declination declined the 2015 AFA on two grounds: (i) "the service to be rendered to the Indian beneficiaries of the particular program or function to be contracted will not be satisfactory," 25 U.S.C. § 450f(a)(2)(A); and (ii) "the proposed project or function to be contracted for cannot be properly completed or maintained by the proposed contract," 25 U.S.C. § 450f(a)(2)(C). The Defendants have failed to create a genuine dispute of material fact under either (i) or (ii). Consequently, the Court will grant summary judgment in favor of Sage Hospital on Count II.
In the Sage opinion, the Court explained the deficiencies with the evidence which the Defendants submitted in support of the 2d Declination and what evidence the Defendants needed to present survive summary judgment:
Sage, 100 F.Supp.3d at 1184-88.
The Sage opinion thus spelled out the forms of proof that could help the Defendants survive summary judgment. Rather than heeding the Court's roadmap and warnings, however, the Defendants have presented no evidence — affidavits, deposition transcripts, or expert reports — to support the 2d Declination. Nor have they served any discovery requests on Sage Hospital or offered any undisputed facts to support the 2d Declination. Instead, the Defendants have said that, because they "don't have endless resources," they are "not going to do discovery on an issue [which the Court has] already made findings on." Tr. at 34:12-16 (Grohman). The Defendants have the burden of proof to "clearly demonstrat[e] the validity of the grounds for declining the contract proposal (or portion thereof)." 25 U.S.C. § 450f(e)(1). The Court agrees with the Defendants that the ISDEA imposes this burden on the HHS Secretary "in the course of subsequent litigation, not the declination process," Response at 17, but the parties are now in "subsequent litigation" and the Defendants must at least show a genuine dispute of material fact whether they properly applied the Declination criteria to the 2015 AFA to survive summary judgment. Because the Defendants have not offered any undisputed facts or competent evidence to support the 2d Declination, they have not met their burden and summary judgment is warranted on Count II.
The Defendants reference rule 56(d) in passing and have submitted a declaration from Angela Belgrove, one of their attorneys. To be sure, rule 56(d) allows the Court to defer consideration of a motion for summary judgment, deny such a motion, or allow a party time to obtain affidavits or take other discovery. See Fed.R.Civ.P. 56(d). The Belgrove Decl. fails to satisfy, however, the requirements that the Tenth Circuit has placed on rule 56(d) affidavits. A rule 56(d) affidavit or declaration must "explain why facts precluding summary judgment cannot be presented," which includes: (i) "identifying the facts not available and what steps have been taken to obtain these facts"; and (ii) explaining "how additional time will enable him to rebut movant's allegations of no genuine issue of fact." Price ex rel. Price v. W. Res., Inc., 232 F.3d 779, 783 (10th Cir.2000). The Defendants have neither identified unavailable facts nor explained how additional time would help them rebut the Motion.
The Belgrove Decl. contains a number of block quotations from the Sage opinion without providing any explanation why the Defendants have not served any discovery requests on Sage Hospital or any additional time is necessary. The only statement in the Belgrove Decl. which purports to explain the Defendants' inability to obtain the necessary discovery is that the Defendants "have not had an opportunity to fully develop this evidence, because they have not been entitled to take any discovery in this case yet." Belgrove Decl. ¶ 12, at 5. The Belgrove Decl. says nothing, however, about any discovery requests that it has served on Sage Hospital or any information
The 2d Declination explains that the Defendants declined the 2014 Renewal for the same reasons that it declined the 2013 Renewal. See 2d Declination passim. The 2014 Renewal appears to offer no modifications to the provisions of the 2010 Contract that speak to the scope and funding of Sage Hospital's PFSAs. Compare 2014 Renewal at 7-9, with 2010 Contract passim. As the HHS Secretary cannot decline a contract renewal proposal "where no material and substantial change to the scope or funding of a program, functions, services, or activities has been proposed by the Indian tribe or tribal organization," 25 C.F.R. § 900.33, the Defendants violated § 900.33 when it declined the 2014 Renewal. The Court will therefore deem the 2014 Renewal approved.
The Defendants contend that the language in the 2d Declination is standard and "used by IHS in most declinations." Response at 10. The Defendants add that, although the Court faulted the IHS for putting "`the onus on Sage Hospital to identify what assistance it needed,' the ISDEAA and its regulations in fact do place the onus on the tribal organization to identify what assistance is needed." Response at 10 (emphasis in original). According to the Defendants, the ISDEA required them to provide technical assistance to Sage Hospital only "`upon the request of any tribal organization and subject to the availability of appropriations.'" Response at 10 (quoting 25 U.S.C. § 450h(d)(3))(citing 25 C.F.R. § 900.28 (describing the HHS Secretary's duty as providing "any necessary
Section 900.30's plain language requires the Defendants to offer technical assistance to overcome the stated objections in the 2d Declination. Section 900.30 states:
25 C.F.R. § 900.30 (bold in original)(emphasis added). If the Defendants only had to provide technical assistance upon request, there would be no reason to specify in the second half of the regulation that they must also provide any "necessary requested technical assistance." 25 C.F.R. § 900.30. The ISDEA thus required the Defendants to offer to provide Sage Hospital technical assistance to overcome the stated objections.
The 2d Declination states, in pertinent part:
2d Declination at 11-12. Although the second sentence in this passage could be construed as an offer to provide technical assistance, the offer is undercut by the first sentence. To pass muster under the ISDEA, an offer to provide technical assistance should be unqualified rather than making it a foregone conclusion that such assistance will be futile. Accordingly, the Defendants violated the ISDEA when they failed to provide an unqualified offer of technical assistance to Sage Hospital. Cf. Navajo Health Foundation — Sage Memorial Hospital v. Burwell, 110 F.Supp.3d 1140, 1188-89, 2015 WL 3862952, at *37 (D.N.M.2015)(Browning, J.)("[I]n this area of the law, crisp rules with sharp corners are preferable to a round-about doctrine of opaque standards." (internal quotation marks omitted)). The Court is reluctant to deem the 2014 Renewal and the 2015 AFA approved based solely on the Defendants' failure to offer technical assistance to Sage Hospital in the 2d Declination. If the Court had not already deemed those contract proposals approved and the issue was before the Court at an earlier stage — where allowing Sage Hospital to obtain technical assistance could overcome the Defendants objections that led to the 2d Declination — the Court would be inclined to order the Defendants to offer technical assistance. At this late stage in the case, however — and because the Court has already deemed those contract proposals approved — that order would have no effect. Accordingly, the Defendants' failure to offer technical assistance in the 2d Declination does not lead to any additional relief for Sage Hospital beyond what has already obtained.
Count III of the SAC states, in its entirety:
SAC ¶¶ 63-66, at 29-30.
The Defendants do not appear to contest Count III. The Defendants do not mention Count III in their briefing and did not say anything about it at the hearing. The only mention of Count III in Sage Hospital's briefing suggests that the only relief which Sage Hospital seeks on that count is a damages hearing. See Motion at 6-7 ("The third claim seeks an accounting of and damages for IHS' underpayment of amounts due under the proposed 2014 AFA...."). The parties agree that Sage Hospital is entitled to a hearing on damages once discovery is complete. See Response at 17; Reply at 23. Both parties are entitled to request all relevant discovery pertaining to damages, but the Court is unsure what, if any, additional "accounting of funds" Sage Hospital seeks or which party would conduct an accounting of funds. Section 450m-1(a) says nothing about an "accounting of funds," and neither party has defined that phrase for the Court. 25 U.S.C. § 450m-1(a). Sage Hospital has asked the Court to schedule a hearing on damages for Counts I through III; the Defendants do not dispute that request, but have requested that the Court schedule the hearing after the conclusion of discovery in January, 2016. The Court will thus receive evidence on, among other issues, Sage Hospital's damages, and any additional "accounting of funds" which Sage Hospital seeks, at trial — which is currently set for April, 2016, on the Court's trailing docket. Beyond that, the Court cannot order any additional "accounting of funds," because the Court is unsure exactly what relief Sage Hospital seeks.
The Court will read the 2013 Renewal and the 2014 Renewal together rather than enacting two overlapping contracts. "When two parties execute a second contract that deals with the same subject matter as the first, the two contracts must be interpreted together; insofar as the contracts are inconsistent, the latter one prevails." K & V Sci. Co. v. BMW, 164 F.Supp.2d at 1263. It appears that the 2014 Renewal includes the following provisions that the 2013 Renewal does not have:
2014 Renewal at 7-8. Accordingly, these provisions are inconsistent with the 2013 Renewal and control Sage Hospital's contractual relationship with the Defendants after September 30, 2014. The 2013 Renewal is thus in effect from October 1, 2013, to September 30, 2014, and the 2014 Renewal is in effect from October 1, 2014, through September 30, 2017.
Letter from Paul E. Frye, Counsel for Plaintiff, to Hon. James O. Browning, filed September 4, 2015 (Doc. 97)(the "Frye Letter"). To correct the typographical mistakes identified in the Frye Letter, the Court issues this Amended Memorandum Opinion and Order ("AMOO"). As the Frye Letter suggests, the Court has changed references to "Sage Hospital's sole response" to "Defendants' sole response," as footnotes 16 and 20-24 of this AMOO reflect. The Frye Letter incorrectly states, however, that the MOO used the name "Bacenti" on pages 63 and 64; the Court used the name "Becanti" and only on page 64. The Court has therefore changed the name "Becanti" to "Becenti" on page 64, as this AMOO reflects.
25 U.S.C. § 450b(l)(emphasis in original).
Motion ¶ 13, at 6. The Defendants respond: "Sage's Proposed Fact No. 13 is a legal, not a factual, conclusion, as evidenced by its reliance on the analysis section of this Court's April 9, 2015, opinion. On that ground, Defendants dispute it." Response ¶ 13, at 3. The Court agrees with the Defendants. Whether the Defendants properly applied 25 U.S.C. § 450f(a)(2)'s declination criteria to the 2013 Renewal turns on whether "Sage's proposed three-year contract for the period ending September 30, 2016 is substantially the same as its immediately prior contract." Motion ¶ 13, at 6. If the 2013 Renewal was substantially the same as its predecessor, 25 C.F.R. § 900.33 precluded the Defendants from applying § 450f(a)(2)'s declination criteria to that proposal. See 25 C.F.R. § 900.33. On the other hand, if the 2013 Renewal was not substantially the same as its predecessor, § 900.33 permitted the Defendants to apply § 450f(a)(2)'s declination criteria to that proposal. See 25 C.F.R. § 900.33. Accordingly, Sage Hospital's proposed fact is a legal conclusion and not a fact. The Court will therefore not adopt Sage Hospital's proposed fact, but will instead address the issue in its Analysis.
Sage also asks the Court to find undisputed that "[t]he funding provided to Sage by IHS for FY 2013 under the ISDEA contract was $20,116,437, exclusive of any grant funding." Motion ¶ 14, at 6 (citing El-Meligi Decl. ¶ 6, at 2). The Defendants respond: "Defendants dispute Sage's Proposed Fact No. 14. Defendants provided Sage $18,259,828 for FY2013, an amount slightly less than the number cited by Sage due to Congressional cuts." Response ¶ 14, at 3 (citing Declaration of Floyd Thompson ¶¶ 12-13, at 2-3 (dated July 6, 2015), filed July 6, 2015 (Doc. 80-1)("Thompson Decl.")). Both parties accurately quote their respective declarations. Accordingly, the Defendants have specifically controverted Sage Hospital's proposed fact. The Court will therefore deem that fact disputed.
Response ¶ 15, at 3. The Court agrees with the Defendants for two reasons. First, the Aug. 22, 2013, Ltr. — the first source upon which Sage Hospital relies for its stated assertion — does not characterize Sage Hospital's funding request as either a "budget" or "modest." Aug. 22, 2013, Ltr. at 3. Second, although the Court has previously characterized the increase in Sage Hospital's funding request from the 2013 AFA to the 2014 AFA as "modest," Sage, 100 F.Supp.3d at 1130-31, that opinion made findings of fact for the purposes of issuing a preliminary injunction, which do not bind the Court at the summary judgment stage. The Honorable Shira A. Scheindlin, United States District Judge for the Southern District of New York, has explained:
Malletier v. Dooney & Bourke, Inc., 561 F.Supp.2d 368, 382 (S.D.N.Y.2008) (quoting DeSmeth v. Samsung Am., No. CIV 92-3710 SAS, 1998 WL 315469, at *2 (S.D.N.Y. June 16, 1998)). See Univ. of Tex. v. Camenisch, 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981)(explaining that a court's findings of fact and conclusions of law issues at preliminary injunction stage are not binding in later proceedings). Accordingly, the Court will omit Sage Hospital's characterizations of its funding request as "modest" and the word "budget" from its proposed fact and deem the remainder of Sage Hospital's proposed fact undisputed.
Sage Hospital also asks the Court to find undisputed that "Sage's proposed 2014 AFA is substantially the same as the approved 2013 AFA, having identical PFSAs." Motion ¶ 15, at 6. The Defendants respond: "The first sentence of Sage's Proposed Fact No. 15 is a legal, not a factual, conclusion." Response ¶ 15, at 3. The Court agrees with the Defendants.
Whether the Defendants properly applied 25 U.S.C. § 450f(a)(2)'s declination criteria to the 2014 AFA turns on whether it "is substantially the same as the approved 2013 AFA." Motion ¶ 15, at 6. If the 2014 AFA was substantially the same as its predecessor, 25 C.F.R. § 900.32 precluded the Defendants from applying § 450f(a)(2)'s declination criteria to that proposal. See 25 C.F.R. § 900.32. On the other hand, if the 2014 AFA was not substantially the same as its predecessor, § 900.32 permitted the Defendants to apply § 450f(a)(2)'s declination criteria to it. See 25 C.F.R. § 900.32. Accordingly, Sage Hospital's proposed fact is a legal conclusion and not a fact. The Court will therefore not adopt Sage Hospital's proposed fact, but will instead address the issue in its Analysis.
Response ¶ 16, at 3. Unlike the Defendants, the Court construes Sage Hospital's proposed fact as asserting that the Defendants did not approve or disapprove Sage Hospital's proposal at that time — or, put another way — the Defendants did not approve or disapprove the proposal until September 26, 2014. Moreover, Sage Hospital's proposed fact does not appear to convey its position that the disapproval was unlawful. Accordingly, the Court will adopt Sage Hospital's proposed fact, but modify it to reflect that the Defendants did not approve or disapprove the 2013 Renewal until September 26, 2014.
Response ¶ 17, at 3-4 (quoting Transcript of Hearing (taken Feb. 12, 2015) at 8:24-9:12 (Court), filed February 27, 2015 (Doc. 49)).
The Court has previously explained that "[a]rguments and concerns about the materiality and relevance of a fact do not dispute [it]." Walton v. N.M. State Land Office, 49 F.Supp.3d 920, 924 n. 2 (D.N.M.2014)(Browning, J.)(citing O'Brien v. Mitchell, 883 F.Supp.2d 1055, 1058 n. 1 (D.N.M.2012)(Browning, J.)("[The defendant's] argument that the facts underlying the state criminal case are immaterial does not specifically controvert those facts, and the Court will therefore deem those facts admitted.")). Accordingly, the Court will deem the proposed fact undisputed and will address the fact's materiality, if necessary, in its Analysis.
Motion ¶ 20, at 8. The Defendants assert that "Sage's Proposed Fact No. 20 is a legal, not a factual, conclusion. Defendants therefore dispute it." Response ¶ 20, at 4.
The Court agrees with the Defendants. Whether the Defendants properly applied 25 U.S.C. § 450f(a)(2)'s declination criteria to the 2014 Renewal turns on whether the 2014 Renewal is "substantially the same" as the 2010 Contract. Motion ¶ 20, at 8. If the 2014 Renewal was substantially the same as the 2010 Contract, 25 C.F.R. § 900.33 precluded the Defendants from applying § 450f(a)(2)'s declination criteria to that proposal. See 25 C.F.R. § 900.33. On the other hand, if the 2014 Renewal was not substantially the same as the 2010 Contract, § 900.33 permitted the Defendants to apply § 450f(a)(2)'s declination criteria to that proposal. Accordingly, Sage Hospital's proposed fact is a legal conclusion and not a fact. See 25 C.F.R. § 900.33. The Court will therefore not adopt Sage Hospital's proposed fact, but will instead address the issue in its Analysis.
Sage Hospital asks the Court to find it undisputed that "Sage's proposed 2015 AFA is substantially the same as the approved 2013 AFA and the proposed 2014 AFA, having identical PFSAs." Motion ¶ 21, at 8. The Defendants respond: "Sage's Proposed Fact No. 21 is a legal, not a factual, conclusion. Defendants therefore dispute it." Response ¶ 21, at 4.
The Court agrees with the Defendants. Whether the Defendants properly applied 25 U.S.C. § 450f(a)(2)'s declination criteria to the 2015 AFA turns on whether it is "substantially the same as the approved 2013 AFA and the proposed 2014 AFA." Motion ¶ 21, at 8. Accordingly, Sage Hospital's proposed fact is a legal conclusion and not a fact. The Court will therefore not adopt Sage Hospital's proposed fact, but will instead address the issue in its Analysis.
Sage Hospital has provided no support for its assertion that Sage Hospital received $20,738,846 in funding from the IHS for FY 2013. The portion of the Thompson Decl. that the Defendants cite specifically controverts Sage Hospital's proposed fact. See Thompson Decl. ¶ 13, at 3 ("As a result, the actual total disbursed [to Sage Hospital] was $18,259,828."). Accordingly, the Court will deem that portion disputed, deem the remainder of Sage Hospital's proposed fact undisputed, and modify the proposed fact accordingly.
D.N.M.LR-Civ. 56.1(b). Because the Response does not specifically controvert the proposed fact, the Court will deem it undisputed.
United States v. Austin, 426 F.3d 1266, 1274 (10th Cir.2005) (citations omitted). The Court finds that Rhoads v. Miller has persuasive value with respect to material issues, and will assist the Court in its preparation of this Memorandum Opinion and Order.
Decker v. Nw. Envtl. Def. Ctr., 133 S.Ct. at 1339-42 (Scalia, J., dissenting). Justice Scalia's attack on Auer was in a dissent, but two other Justices, the Honorable John G. Roberts and Samuel A. Alito, joined in a concurring opinion stating that "[i]t may be appropriate to reconsider [Auer deference] in an appropriate case. But this is not that case." 133 S.Ct. at 1338 (Roberts, C.J., concurring). Although the Court shares Justice Scalia's concerns about Auer deference, it is, for the time being, the law of the land, and, as a federal district court, the Court must apply it. Accordingly, were this case brought under another statute rather than the ISDEA, the Court would have to accord Auer deference to the HHS Secretary's interpretation of § 900.32.
Pequot, 2006 WL 1337439, at *17 (emphasis added). Given that the purported interpretation of § 900.32 is set forth in a single sentence which cites no authority and does not expressly state that the HHS can look beyond a successor AFA's four corners in determining whether it is substantially the same as its predecessor, the Court is reluctant to conclude that it "reflect[s] the [HHS'] fair and considered judgment on the matter in question." Christopher v. SmithKline Beecham Corp., 132 S.Ct. at 2166.
Defendants assert the Court's interpretation of § 900.32 would "lead to absurd results in other contexts as well." Response at 10 n.2. The Defendants state:
Response at 10 n.2. The Defendants' concern is unfounded, because such a situation would likely implicate the ISDEA's non-emergency reassumption provision — which allows the Defendants to cancel the ISDEA contract if the tribe or tribal organization commits gross negligence or mismanagement in the handling or use of contract funds, trust funds, trust lands, or interest in trust lands under the contract. See 25 C.F.R. § 900.47. That the ISDEA sets forth a separate procedure for canceling contracts in such circumstances underscores that whether a proposed AFA is "substantially the same" as its predecessor under § 900.32 turns on the proposal's contents rather than a holistic assessment of the tribal organization's performance of the ISDEA contract.
