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Three Affiliated Tribes of the Fort Berthold Indian Reservation v. United States

July 27, 2009


The opinion of the court was delivered by: John D. Bates United States District Judge


Plaintiff Three Affiliated Tribes of the Fort Berthold Reservation ("Three Tribes") brings this action against the United States of America, Michael O. Leavitt, Secretary of the U.S. Department of Health and Human Services, Robert G. McSwain, Director of the Indian Health Service ("IHS"), and Charlene M. Red Thunder, Acting Area Director of the IHS, in their official capacities (collectively, "defendants"). The dispute arises from a contract proposal Three Tribes submitted to defendants to provide health services within its reservation pursuant to the Indian Self-Determination and Education Assistance Act ("ISDEAA"), 25 U.S.C. § 450 et seq. Three Tribes claims that defendants improperly declined two portions of that proposal: (1) inclusion of contract support costs ("CSCs") in Three Tribes' annual funding agreement (Count I); and (2) permission to provide health care services to non-Indians pursuant to the Indian Health Care Improvement Act ("IHCIA"), 25 U.S.C. § 1680c(b) (Count II). Now before the Court is defendants' motion to dismiss. For the reasons explained below, the motion will be denied.


I. Statutory and Regulatory Background


Congress passed the ISDEAA in 1975 to promote Indian self-determination by providing for the transition of federal programs and services for Indians, including health care services, to the control of Indian communities. See 25 U.S.C. § 450a. Upon the request of Indian tribes, the Secretary of Health and Human Services or the Secretary of the Interior is required to enter into contracts with those tribes ("self-determination contracts" or "ISDEAA contracts") to provide such services. Id. § 450f(a)(1). The ISDEAA defines these "self-determination contracts" as contracts "between a tribal organization and the appropriate Secretary for the planning, conduct and administration of programs or services which are otherwise provided to Indian tribes and their members pursuant to Federal law." Id. § 450b(j). The appropriate Secretary must approve all proposals for self-determination contracts unless he or she provides a written "declination finding" that shows the proposal falls into one of five enumerated statutory exceptions.*fn1 Id. §§ 450f(a)(2), (4).

Each self-determination contract must include the provisions of a "model agreement" provided by the ISDEAA, as well as an annual funding agreement. Id. §§ 450l(a), (c). The annual funding agreement 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." Id. § 450l(c) (providing that an annual funding agreement be attached to the model agreement). The ISDEAA contract must also include "such other provisions as are agreed to by the parties." Id. § 450l(a).

There are two categories of contract funding under the ISDEAA. The first category --"base funding" -- must consist of the amount of funding that the appropriate Secretary would have spent on the program had it been administered by the federal government. 25 U.S.C. § 450j-1(a)(1). The second category, CSCs, must be provided to cover other reasonable costs incurred by the contracting tribe that either would not have been incurred by the government in the operation of the program or are provided from resources other than those under the contract. Id. § 450j-1(a)(2). The provision of ISDEAA contract funds is "subject to the availability of appropriations." Id. § 450j-1(b). For fiscal year 2008, Congress appropriated funding "not to exceed $271,636,000" for CSCs, of which "not to exceed $5,000,000 may be used for [CSCs] associated with new or expanded self-determination contracts...." Consolidated Appropriations Act of 2008, Pub. L. No. 110-161, 121 Stat. 1844, 2135 (2007).


Much of the IHS's authority to provide health care services to Indians flows from the IHCIA. Defs.' Mem. at 3. Congress passed the IHCIA in 1976 to facilitate the federal provision of health services to Indian communities. 25 U.S.C. § 1601. The IHCIA states that Indian tribes may provide health services to non-Indians in health care facilities operated under ISDEAA contracts. Id. § 1680c(b)(1)(B). The decision to provide these services must be a joint decision by the Secretary of Health and Human Services and the Indian tribe. Id. § 1680c(b)(1)(A)(ii).

II. Factual Background

Three Tribes is a federally recognized Indian tribe whose headquarters are on the Fort Berthold Indian Reservation in New Town, North Dakota. Compl. ¶ 5. On December 20, 2007, Three Tribes submitted a self-determination contract proposal to the IHS to assume responsibility for all programs, functions, services, and activities on its reservation for which it had not already contracted. Id. ¶ 18. The proposal included a request for CSCs and a request for permission to provide health care services to non-Indians under the IHCIA ("IHCIA proposal"). See id. ¶ 1. The IHS received the self-determination contract proposal on January 2, 2008, id. ¶ 18, and responded in a letter informing Three Tribes that it would have to agree to accept no CSC funding in fiscal year 2008 in order to have its proposal approved, id. ¶ 19. The IHS's letter reflected a policy decision -- originally adopted in 2006 -- to distribute congressional appropriations for new or expanded CSC contracts as shortfall for existing contracts. Id. ¶ 20. In a letter dated January 28, 2008, Three Tribes rejected the IHS's proposal, and informed the IHS that it believed Congress had specifically appropriated $5,000,000 for CSC funding for new or expanded ISDEAA contracts. Id. ¶21. The IHS and Three Tribes held negotiations on February 6, 2008 to resolve this dispute. Id. ¶ 22. As a result, the IHS declined only Three Tribes' request for CSC funding and approved its request for base funding. Id. ¶¶ 22-23. The IHS and Three Tribes entered a new ISDEAA contract on March 31, 2008 that reflected this agreement. Id. ¶¶ 23-24.

That same day -- and consistent with their negotiations -- the IHS sent Three Tribes a letter declining its request for CSCs. Id. The IHS declined the CSC proposal because "all the money for [CSCs] has been or will be used to pay CSC[s] related to existing contracts and compacts." Id. ¶ 25. In addition, the IHS declined Three Tribes' IHCIA proposal. Id.¶ 24. Three Tribes contends that this was a declination decision based on one of the ISDEAA's five declination criterion, i.e., that the proposal "include[d] activities that [could not] lawfully be carried out by the contractor." Id. ¶ 27 (citing 25 U.S.C. § 450f(a)(2)(E)). Defendants, however, assert that this decision was an act of agency discretion, not a declination decision under the ISDEAA, because they were not required under that statute to include the IHCIA proposal. See Defs.' Mem. at 42.

Three Tribes filed the present complaint on September 17, 2008. Three Tribes claims that defendants violated the ISDEAA by improperly declining its CSC proposal (Count I) and its IHCIA proposal (Count II). Defendants filed a motion to dismiss both counts of the complaint on December 17, 2008. They contend that Count I should be dismissed pursuant to Fed. R. Civ. P. 12(b)(7) because at least nineteen Indian tribes with ongoing ISDEAA contracts ("ongoing contractors") are required parties to this action under Fed. R. Civ. P. 19, but joinder is not feasible due to their sovereign immunity.Defs.' Mem. at 22-23. They argue that Count II should be dismissed pursuant to ...

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