ROSEMARY M. COLLYER, District Judge.
The Seneca Nation of Indians administers its own healthcare system through a self-determination contract with the Indian Health Service under the Indian Self-Determination and Education Assistance Act. The Nation submitted a contract amendment to the Indian Health Service to adjust the number of persons to be serviced under the contract and, as a result, to increase the funding provided to the Nation for fiscal years 2010 and 2011. IHS did not respond to the proposal within the 90 days as required by statute, and the Nation contends that its proposed amendment automatically became part of its contract with IHS upon the lack of a timely response. The Secretary of the Department of Health and Human Services, of which IHS is a constituent part, disagrees. The parties have briefed cross-motions for summary judgment, and the matter is ripe for decision. For the reasons set forth below, the Nation's motion for summary judgment will be granted.
The facts here are substantially undisputed, and the parties' dispute focuses almost exclusively on the legal effect to be ascribed to a single letter sent by the Nation to IHS. The Nation, which is based in Salamanca, New York, is an Indian tribal government recognized by the federal government. The Defendants are the Department of Health and Human Services ("HHS") and its Secretary, Kathleen Sebelius, sued in her official capacity; they are referred to in this Opinion collectively as "the Secretary." The Indian Health Service ("IHS") is an "HHS component whose principal mission is to provide primary health care for American Indians and Alaska Natives throughout the United States." Defs.' Cross-Mot. Summ. J. ("Defs. MSJ") [Dkt. 15] at 1 (citations omitted).
Under the Indian Self-Determination and Education Assistance Act ("ISDEAA"), Pub. L. 63-638, 88 Stat. 2203 (1975), codified as amended at 25 U.S.C. § 450 et seq., the Nation entered into a self-determination contract with IHS in 2000 so that the Nation could administer its own healthcare programs. See Self-Determination Contract ("Contract") & 2010 Annual Funding Agreement ("2010 AFA"), Pl. MSJ, Ex. A [Dkt. 14-4]. The Contract was executed on September 20, 1999 by Duane James Ray on behalf of the Nation and on January 3, 2000 by Ralph W. Ketcher, Jr., on behalf of IHS; it went into effect on January 1, 2000. Contract at 13. The Contract has an "indefinite" term, "subject to the annual appropriation of funds by the Congress, " with a "funding period... [to] be determined on the basis of a calendar year" or other period as the parties agree. Id. at 2. It provides that "[t]he total amount of funds to be paid under this Contract, pursuant to Section 106(a) of the Act [25 U.S.C. § 450j-1(a)], shall be determined in an Annual Funding Agreement ["AFA"] entered into between the Secretary and the Contractor, which shall be incorporated into this Contract." Contract at 7. For every fiscal year since the Contract was signed, the Nation and IHS have signed a new AFA.
Two provisions of the Contract are worth emphasizing. First, the Contract provides:
It is the intent of the Tribe to establish this Contract with the Secretary as a "mature contract".... Each provision of the [ISDEAA] 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 (or portions thereof), that are otherwise contractible under Section 102(a) of the Act, including all related administrative functions, from the Federal Government to the Contractor....
Contract at 1. As to "Modifications and Amendments, " the Contract states in Article V, Section 2:
(A) IN GENERAL-Except as provided in Article V, Section 2(B) of this Contract, no modification to this Contract shall take effect unless such modification is made in the form of a written amendment to this Contract, and the Contractor and the Secretary provide written consent for modification.
(B) EXCEPTION-The addition of supplemental funds for programs, services, functions and activities (or portions thereof) already included in the Annual Funding Agreement under Article VII, Section 2 of this Contract, or the reduction of funds pursuant to Section 106(b)(2) of the Act, shall not be subject to Article V, Section 2(A) above.
Contract at 9.
On October 26, 2009, the Nation's representative signed Modification # 71 and the 2010 AFA for the Contract, and Mr. Ketcher countersigned for IHS on November 12, 2009. See Modification # 71 and 2010 AFA [Dkt. 14-4] at 48-61. Modification # 71 provides that it is "executed to incorporate the FY 2010 Annual Funding Agreement" for the Contract. For the funding period October 1, 2009 through September 30, 2010, the Contract Amount was $8, 686, 927.00. Modification # 71 at 50. That amount, comprised of $7, 803, 211 for direct program funds and $883, 716 for indirect contract support costs, was to be paid to the Nation in a lump sum. 2010 AFA at 53. On March 7, 2011, IHS sent the Nation an executed copy of Modification #82, which "extend[ed] the current FY 2010 Annual Funding Agreement until 9/30/2011." Modification # 82, Pl. MSJ, Ex. B [Dkt. 14-5].
On April 29, 2011, the President of the Nation, Mr. Robert Odawi Porter, sent to IHS a letter ("April 29, 2011 Letter") with the subject "User Population Undercounts and Proposed Amendments, " stating:
I write on behalf of the Seneca Nation of Indians (the "Nation") with some urgency to appeal a recently discovered, substantial undercount of the Nation's active user population count and registrants by the Indian Health Service (the "IHS"). This undercount, in tum, has had a dramatic, negative impact on the Nation's allocation of federal funding. As you may know, over the past several years, staff of the Nation's Health Department have consistently submitted user population numbers that were much larger than what the IHS staff would ultimately conclude were our user population numbers for each year.
The recent IHS report... reveals that more than 12, 150 patient visits of Indians with mailing addresses from towns within our IHS-approved Contract Health Service Delivery Area ("CHSDA") in western New York state were not counted as visits to our Nation's health facilities because they were assigned instead to towns with the same names in Arizona, California, Colorado, Connecticut, Iowa, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New Mexico, Pennsylvania, and South Carolina and thus not credited to active users within our CHDSA.
Consequently, IHS mis-allocated more than a third of the 34, 365 patient visits to the Nation's two facilities, Cattaraugus Health Center and Allegany Health Center, from October 1, 2009 to September 30, 2010....
As a result of this error, IHS has substantially undercounted the Nation's Active User Population. This had a measurable and costly effect on the IHS funds allocated to the Nation on the basis of Area and Headquarters tribal shares, as well as the funds otherwise allocated to the Nation on the basis of patient population share (e.g., diabetes; base funding). We estimate that a correction will require a proportional adjustment of our FY 2010 Active User Population total from 4, 122 to 6, 156, our FY 2010 Active Indian Registrants from 4, 365 to 5, 971, and our FY 2010 Total Indian Registrants from 4, 365 to 7, 713. In other words, our FY 2010 Active User Population was undercounted by 33% (4, 122/6, 156 = 66.95% or 2, 034 patients).
We ask you to give your immediate attention to correcting these errors and that you please provide the Nation with the following information:
§ Identify each of the years in which these errors resulted in an undercount, and by how much in each year.
§ Identify each of the years in which the Nation's suggested numbers differed substantially from the IHS's final determination, and the steps taken by the IHS to determine the root cause of the discrepancies.
§ Identify each of the years in which these errors resulted in lower funding allocations to Seneca Nation, and by how much funding by program and year.
§ A date within the next month by which we can renegotiate the current FY 2011 funding allocations, based on the corrected Active User Population.
§ Your proposal on how to locate and transfer funds to Seneca Nation in order to make Seneca Nation whole for the prior years in which this undercount was relied upon in fund allocations.
In the meantime, we ask that you agree to preserve any and all rights that the Nation has to appeal all funding allocations which were made in reliance upon the erroneously undercounted Active User Population and Registrants reports. By our initial calculation, we estimate that our claim for the FY 2010 agreement alone ranges from $2, 866, 686 (33% of budgeted amount of $8, 686, 927) to $6, 801, 696 (2, 034 patients not counted times the IHS per capita funding per the IHS National Benchmark provided by Cliff Wiggins used in preparation for budget formulation a per patient IHS cost figure of $3, 344), plus interest. This range is based upon the fact that our FY 2010 funding allocation was premised upon an Active User Population figure that was undercounted by approximately 33% or 2, 034 patients. Within this range is a claim for $3, 774, 392 (2, 034 un-counted patients times $1, 855.65) based on the per patient cost of $1, 855.65 determined by IHS last Fall when IHS proposed to withdraw $380, 000 from the Nation in response to the Nation's proposal to remove certain individuals from eligibility for services ($380, 000 divided by 205 patients).
Accordingly, pursuant to Pub. L. 93-638, as amended, we hereby propose an amendment to Seneca Nation's Contract # XXX-XX-XXXX, for FY 2010 to increase Modification #71 by $3, 774, 392, plus interest, and request that this amendment proposal be handled pursuant to 25 CFR 900, Subpart D.
Likewise, pursuant to Pub. L. 93-638, as amended, we hereby propose an amendment to Seneca Nation's Contract # XXX-XX-XXXX, extended for FY 2011 to increase Modification #81 by $3, 774, 392, plus interest, and request that this amendment proposal be handled pursuant to 25 CFR 900, Subpart D. Both claims in both amendment proposals are reasonable....
April 29, 2011 Letter, Pl. MSJ, Ex. D [Dkt. 14-7]; see also Porter Aff., Pl. MSJ, Ex. C [Dkt. 14-6] §§ 1, 7-8 (explaining undercount and methodology for requested amount).
The April 29, 2011 Letter was sent to Martha Ketcher, Area Director of the Nashville Area Office of the Indian Health Service, which is responsible for the Nation's IHS dealings, on May 3, 2011. See E-mail Chain, Pl. MSJ, Ex. D [Dkt. 14-7] at 6. Ms. Ketcher responded on May 4, 2011, writing: "We are in receipt of your letter and have made assignments to provide you with a response as soon as possible." Id.
Radio silence then ensued. IHS did not respond to the April 29, 2011 Letter, and the Secretary makes no claim that it did. On August 30, 2011, counsel for the Nation sent Ms. Ketcher an additional letter, stating that "[t]he [ISDEAA] and the regulations require that any proposal to amend an existing contract be deemed approved by the Secretary if it is not lawfully declined within 90 days of its receipt or within an extension of that period consented to by the Nation. The 90-day period has expired without lawful declination by the Secretary and the Nation has not consented to any extension of the 90-day period." Aug. 30, 2011 Letter, ...