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Seneca Nation of Indians v. U.S. Department of Health and Human Services

United States District Court, D. Columbia

November 13, 2015


          For SENECA NATION OF INDIANS, Plaintiff: Steven D. Gordon, LEAD ATTORNEY, HOLLAND & KNIGHT LLP, Washington, DC.


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         JOHN D. BATES, United States District Judge.

         This case arises from a protracted contract dispute between the Seneca Nation and the U.S. Department of Health and Human Services. Under the contract in question, Seneca Nation assumed responsibility for administering health programs previously administered by the Indian Health Service. In return, the Secretary provides federal funds in the amount required by annual funding agreements (AFAs). Every year between 2012 and 2015, Seneca Nation has proposed amending its AFA to include additional funding. But every year, the Secretary has refused. Seneca Nation has appealed the Secretary's 2012 refusal to the Interior Board of Indian Appeals; it has challenged the Secretary's 2013, 2014, and 2015 refusals in this Court, seeking declaratory and injunctive relief and damages for breach of contract. Now, the Secretary has moved to dismiss all of Seneca Nation's claims for lack of jurisdiction. Alternatively, it seeks a stay of this action, pending resolution of the 2012 claim by the Interior Board of Indian Appeals. For the reasons explained below, the Court will enter a stay.


         Under the Indian Self-Determination and Education Assistance Act, tribal organizations may contract with the Department of Health and Human Services to administer programs, functions, services, or activities previously administered by that agency for the benefit of Indians. See 25 U.S.C. § 450f. Once a tribe contracts to administer a program, the amount of funding due under the contract may be renegotiated annually. Id. § 450j(c)(2). The resulting annual funding agreement becomes part of the overarching contract, and the Secretary must fund the program in the amount specified. Id. § 450l(c)(b)(4).

         Ongoing contract negotiations are heavily structured by the statute and implementing regulations. The Secretary may deny contract amendments proposed by tribal organizations only under limited circumstances--and if the Secretary does not act on a proposed amendment within 90 days or obtain an extension, the amendment

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automatically becomes part of the contract. See id. § 450f(a)(2). Negotiated funding levels may never dip below a statutory " base amount," equal to the amount that the Secretary would allocate to the tribally administered program if administering it herself, plus support costs. See id. § 450j-1(a). And, of particular importance here, the statutory scheme restricts the Secretary's ability to reduce funding from one year to the next. The Secretary may not decline " any portion of a successor annual funding agreement," if " it is substantially the same as the prior annual funding agreement." 25 C.F.R. § 900.32; see also 25 U.S.C. § 450j-1(b) (Secretary may only reduce statutory base amount under limited circumstances).

         If a dispute arises, tribal organizations may seek damages, injunctive relief, or mandamus against the Secretary in federal court. See 25 U.S.C. § 450m-1(a). But not every complaint can arrive in court by the same route. Complaints seeking payment of a specific sum under a contract, requesting adjustment or interpretation of a contract's terms, or advancing " [a]ny other claim relating to" a contract, must first be submitted to the contracting officer for decision in accordance with the Contract Disputes Act. 25 C.F.R. § 900.218(a); 25 U.S.C. § 450m-1(d) (the Contract Disputes Act " shall apply to self-determination contracts" ). Complaints challenging contract or amendment declinations, on the other hand, may be brought directly to federal court. See 25 C.F.R. § § 900.150, 900.153. Alternatively, they may be appealed administratively to the Interior Board of Indian Appeals and, from there, to the Secretary. See id. § § 900.152, 900.165. If a tribal organization pursues the latter path, it may ultimately obtain judicial review of the Secretary's actions under the Administrative Procedure Act.

         The dispute between Seneca Nation and the Secretary traces to their 2010 and 2011 AFAs. In April 2011, well after those agreements had been adopted, Seneca Nation wrote to the Indian Health Service (IHS) to propose an amendment: the addition of approximately $3.8 million in funding to each agreement, in order to account for a " recently discovered [and] substantial undercount of [Seneca Nation's] active user population." Am. Compl. [ECF No. 14] ¶ ¶ 14-15. IHS provided no response. After waiting four months without an answer, Seneca Nation sent a second letter, arguing that its proposed amendments had been approved by operation of law when the Secretary failed to respond within the statutory 90-day window. This second letter drew a response from IHS, which took the position that Seneca Nation's proposals were properly brought as claims under the existing AFAs--not as amendments to them. Heeding that position, Seneca Nation resubmitted its proposals as claims under the Contract Disputes Act. See Defs.' Mot. [ECF No. 20] at 9-10. When IHS denied those claims, Seneca Nation sued. And it won. Judge Collyer concluded that Seneca Nation's proposals, properly construed as amendments, were approved by operation of law when the Secretary failed to address them by the statutory deadline. Seneca Nation of Indians v. United States HHS, 945 F.Supp.2d 135, 152 (D.D.C. 2013).

         Meanwhile, the parties continued negotiating AFAs. Not surprisingly, their success was somewhat limited--each subsequent negotiation has prompted litigation. After the Secretary's 90-day window for dealing with the 2010 and 2011 amendments had closed, but before it had filed its suit, Seneca Nation proposed adding the same $3.8 million to ...

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