United States District Court, District of Columbia
JOHN D. BATES United States District Judge
For more than twenty years, the Secretary of Health and Human Services has allocated $30, 921 a year in federal funds toward renting health clinic space in the Native American village of Kivalina, Alaska. Maniilaq Association, a regional health corporation that now owns and operates the clinic in Kivalina, believes that amount is insufficient to assure adequate healthcare in that community. In an attempt to remedy the Kivalina clinic's chronic underfunding, Maniilaq submitted a lease proposal based on section 105(1) of the Indian Self-Determination and Education Assistance Act. That section, Maniilaq argues, requires the Secretary to rent its Kivalina clinic space and pay it compensation, based on the clinic's operating costs, of $249, 842 a year. But the Secretary declined Maniilaq's proposal, arguing that it must pay Maniilaq no more than the $30, 921 it has provided previously. Maniilaq sued, and cross-motions for summary judgment are now pending before the Court.The Court will grant summary judgment for Maniilaq, and direct the parties to enter into discussions regarding Maniilaq's Kivalina lease proposal consistent with this opinion.
Under Title V of the Indian Self-Determination and Education
Assistance Act (the Act), qualifying tribes or inter-tribal consortia may enter
self-governance compacts to administer health services ordinarily provided by
the Department of Health and Human Services (the Secretary). In 1994, the
Alaska Native Tribal Health Consortium and the Secretary entered the Alaska
Tribal Health Compact (the Compact). See Ex. A to Pl.'s Mem. [ECF No. 10-2] (Compact). Maniilaq Association, a non-profit association that provides health care services to twelve member tribes, is one co-signer of the Compact. Each compacting tribe or inter-tribal consortium must also enter into a written funding agreement with the Secretary. See 25 U.S.C. § 458aaa-4(a); see also 25 U.S.C. § 458aaa(b) (definition of Indian tribe). These funding agreements should identify the programs to be administered by the tribe, see id § 458aaa-4(d)(1), and "authorize the Indian tribe to plan, conduct, consolidate, administer, and receive full tribal share funding" for the included programs, see id § 458aaa-4(b)(l).
The statute dictates the minimum amount of tribal funding. "The Secretary shall provide funds under a funding agreement... in an amount equal to the amount that the Indian tribe would have been entitled to receive under self-determination contracts under [Title I of the Act]." LI § 458aaa-7(c); see also Compact Art. II, § 3 ("Subject only to the appropriation of funds by the Congress of the United States and in accordance with [25 U.S.C. § 458aaa-7], the Secretary shall provide the total amounts specified in the Funding Agreements."). Title I, in turn, requires the Secretary to provide "not . . . less than" the amount that she "would have otherwise provided for the operation of the programs" administered by the tribal organization; contract support costs; and, in the first year of a contract, start-up costs.
Id. § 450j-l(a) (often referred to as section 106(a) of the Act). "At the option of an Indian tribe, a funding agreement may provide for a stable base budget specifying the recurring funds (including, for purposes of this provision, funds available under [section 106(a)]" to be transferred to the compacting tribal organization. LI § 458aaa-4(g).
In fiscal year 2011, for example, Maniilaq Association received approximately $41.5 million under its funding agreement with the Secretary. See
Ex. B to Pl.'s Mem. [ECF No. 10-3] (Funding Agreement) at 11-12. That amount was the sum of several component parts: recurring base funding, see id at 11, 13-14; non-recurring funding, distributed from available funds at the beginning of each fiscal year, see id at 11 & n.2; and tribal shares of available IHS headquarters and Alaska-area office funds, allocated among the Alaska tribes using methodologies "adopted in a caucus open to all Alaska Tribes and tribal organizations, " see id at 11-12 & nn.3-4. Under the Compact, Maniilaq reserves the right to "reallocate or redirect" its funds among compacted programs "in any manner . . . which [it] deems to be in the best interest" of its communities. Compact, Art. Ill. § 5. The Community Health Aide (CHAP) and Village Built Clinic (VBC) programs are the compacted programs relevant to this case.
The CHAP funds the training of health aides and practitioners who provide acute, chronic, and preventative health care in remote village locations. The VBC program was created to lease clinic space for use by the CHAP practitioners, and has its origins in congressional appropriations bills that appropriated earmarked funds for that purpose. But Congress has not earmarked funds for VBC leases since 1989, so in the decades since, the Secretary has allocated lease funding out of its Hospitals and Clinics Budget Line Item. See
Pl.'s Mem. at 7-8. Most frequently, the Secretary leases clinic space owned by
the villages themselves, see Ex. K to Pl.'s Mem. [ECF No. 10-12] at 1, and
calculates the applicable lease amount pursuant to a 1991 circular, see Ex. J
to Pl.'s Mem. [ECF No. 10-11] at 1. The circular's formula makes the lease amount a function of a number of factors, including village population, clinic patient encounters, the price of fuel, the size of the clinic, and the available budget. See Id. at 3-4. The Secretary considers the resulting leases to be "full service, " meaning they are intended to compensate the lessor for "rental of the space, utilities, and all maintenance and operational costs associated with the clinic." LI at 4. But because the lease amount is not based explicitly on the fair market value of the clinic or on the real costs associated with running it, the lease amount often proves inadequate. According to a 2007 report by the Alaska Native Health Board, "lease funding [then] cover[ed]
only approximately 55% of the current operating costs." Ex. K to Pl.'s Mem., Executive Summary. That funding shortfall is the impetus behind this case.
Since 1996, Maniilaq has compacted to administer the VBC program-in other words, to secure clinic space in its constituent villages for the CHAP practitioners. Rather than lease the clinic space directly, Maniilaq obtained it through a buyback-withhold agreement with the Secretary, who leased clinic space on Maniilaq's behalf, then withheld the lease amount from the funding that Maniilaq received under the Compact. See
Ex. B to Pl.'s Mem. at App. E, ¶2.2.2. In February 2012, Maniilaq sought to change this arrangement. By that time, it owned clinic space in all but one of its constituent villages. And as a result, it had assumed the burden of the VBC leases' "chronic underfunding, " covering clinic costs by diverting funds from other programs when necessary.
Maniilaq proposed a two-step remedy in a memorandum to the Secretary. See
Ex. C to Pl.'s Mem. [ECF No. 10-4]. First, it would retrocede to the Secretary administration of the VBC program, essentially making the Secretary responsible for procuring the clinic space in its villages. See 25 U.S.C. § 458aaa-5(f) (governing retrocession). Next, it would lease its clinic spaces to the Secretary, through leases negotiated under section 105(1) of the Act. See 25 U.S.C. § 450j(l); see also 25 C.F.R. §§900.69-900.74 (implementing regulations). Section 105(1) requires the Secretary to enter into leases for tribally owned facilities used for the administration of services under the Act, upon the tribal owner's request. See 25 U.S.C. § 450j(l); see also Compact Art. II, § 8(d) ("Upon the request of a Co-Signer, the Secretary shall enter into a lease with the Co-Signer in accordance with section 105(1) of the [Act], as amended."). But more importantly, under Maniilaq's reading of the statute and its implementing regulations, the amount of compensation paid under those leases must be based on the reasonable expenses incurred through the operation of the clinics. See
Ex. C to Pl.'s Mem. at 1-2. Putting the two steps together, then, Maniilaq proposed exchanging the inadequate lease funding based on the Secretary's formula for much higher lease compensation based on its real costs.
When the Secretary refused to accept the full retrocession of the VBC program, Maniilaq limited its retrocession offer to its clinic in Ambler, Alaska, which it had acquired in 2003. In the year before Maniilaq's Ambler proposal, the Secretary had provided about $30, 000 for the operation of the Ambler clinic. Based on "documentation of costs incurred and projected, " however, Maniilaq
proposed a lease amount of approximately $170, 000 a year. Ex. E to Pl.'s Mem. [ECF No. 10-6] at 4. The Secretary declined Maniilaq's
final offer, see Ex. F to Pl.'s Mem. [ECF No. 10-7]-but not within the 45-day window prescribed by the statute, see 25 U.S.C. § 458aaa-6(b). In the resulting lawsuit, Judge Hogan of this court concluded that a section 105(1) lease could be incorporated into a self-governance funding agreement, and held that the Ambler lease proposal had been added to Maniilaq's agreement as a matter of law. See Maniilaq Ass'n v. BurwelL 72 F.Supp.3d 227, 235-40 (D.D.C. 2014). But the court did not have occasion to address Maniilaq's argument that section 105(1) entitles it to fully funded leases for each of its clinics. See id at 231 n.4.
Maniilaq now seeks to establish that principle through this litigation about its Kivalina clinic. Beginning in October 1994, the Secretary leased a 927 square-foot clinic from the Kivalina
City Council. See Ex. H to Pl.'s Mem. [ECF No. 10-9] (Kivalina Declination) at 40, 10. After Maniilaq began administering the VBC program in 1996, the lease amount-$30, 921.01 a year- was withheld annually from its funding pursuant to the buyback-withhold agreement. But by January 2012 Maniilaq had secured a new, 1, 240 square-foot clinic in Kivalina, and so it instructed the Secretary to cancel its lease with the Kivalina City Council. See id at 12, 18. Per its request, Maniilaq began receiving the $30, 921 associated with the Kivalina clinic annually through its funding agreement. See id.
After the decision in Maniilaq Association, Maniilaq proposed retroceding the Kivalina VBC program and entering a section 105(1) lease for its new Kivalina clinic. Based on section 105(1)'s implementing regulations, and on its "actual expenditures" over the prior year, Maniilaq proposed that its new Kivalina clinic lease should be in the amount of $249, 842 per year. See Id. at 34-36. This time, the Secretary declined Maniilaq's final offer within the requisite time frame, on the grounds that "the amount of funds proposed in the final offer exceeds the applicable funding level to which the Tribe is entitled under [the Act]." LI at 2 (citing the statutory declination ground at 25 U.S.C. § 458aaa-6(c)(l)(A)(i)). By the Secretary's reasoning, Maniilaq was entitled only to the amount that she would pay if leasing Kivalina clinic space herself. And, "as demonstrated by the amount [she] did pay for Kivalina before the retrocession, " that amount was $30, 921. Id. at 2 (emphasis added). "[S]olong as [the Secretary] has provided Maniilaq what [she] otherwise would have provided for the [Kivalina lease], " neither Section 105(1) nor its implementing regulations required her to provide additional funding. See Id. at 6-7. Thus, in the Secretary's view, Maniilaq could receive its funding through a separately negotiated lease or through its funding agreement, but it was not entitled to more than $30, 921 a year for the Kivalina clinic. See id at 4-5.
Maniilaq sued, asking this Court to: (1) declare that compensation for section 105(1) leases is "mandatory" and must be funded in an amount "distinct from ... the amount the [Secretary] would have otherwise provided for [the Kivalina VBC program], " (2) reverse the Secretary's declination and compel her to incorporate Maniilaq's proposed lease into its funding agreement, and (3) order the Secretary to pay Maniilaq $249, 842 in lease compensation. See Compl. [ECF No. 1] ¶ 64. After a February 19, 2016, motions hearing, the parties' cross-motions for summary judgment are pending before the Court.
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall be granted "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); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). When ruling on a motion for summary judgment, the court must draw all justifiable inferences in the non-moving party's favor and accept the non-moving party's evidence as true. Anderson, 477 U.S. at 255. Here, under the Act, in any appeal of a declination, "the Secretary shall have the burden of demonstrating by clear and convincing evidence the validity of the grounds for rejecting the offer." 25 U.S.C. § ...