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Fort Mcermitt Paiute and Shoshone Tribe v. Azar

United States District Court, District of Columbia

September 26, 2019

ALEX M. AZAR et al., Defendants.


          Timothy J. Kelly, United States District Judge.

         The Indian Self-Determination and Education Assistance Act provides eligible Indian tribes with the option to contract with federal agencies to directly assume operations of services and programs that those agencies ordinarily provide. This action concerns just such an arrangement. The Fort McDermitt Paiute and Shoshone Tribe negotiated with the Indian Health Service to take over operations of two health programs that that agency had been providing. But the parties reached an impasse on several issues, including, as relevant here, the appropriate amount of federal funding. The Tribe, as the statute provides, submitted a “final offer, ” which the agency rejected in full. The Tribe now sues.

         Before the Court are the parties’ cross-motions for summary judgment. For the reasons that follow, the Court will grant the Tribe’s motion and deny the agency’s motion.[1]



         A. Statutory Framework

         Congress passed the Indian Self-Determination and Education Assistance Act of 1975 (ISDEAA or “the Act”), 25 U.S.C. § 5301 et seq., “to help Indian tribes assume responsibility for programs or services that a federal agency would otherwise provide to the tribes’ members.” Navajo Nation v. U.S. Dep’t of the Interior, 852 F.3d 1124, 1126 (D.C. Cir. 2017). Title V of the Act authorizes a tribe to enter into “self-governance compacts” with the Indian Health Service (IHS), an agency of the Department of Health and Human Services (HHS), to shift responsibility to the tribe to operate health services ordinarily provided by IHS. See 25 U.S.C. §§ 5381-99.

         As part of that arrangement, IHS must negotiate and enter into a written funding agreement with the contracting tribe for the continued provision of federal funds for the transferred services and programs. See Id . § 5385. Relevant to the dispute here, Title V entitles a contracting tribe to a recurring award not less than the amount “the Secretary [of HHS] would have otherwise provided for the operation of the programs or portions thereof for the period covered by the contract.” 25 U.S.C. § 5325(a)(1); see also Id . §§ 5385(g), 5388(c); Defs.’ MSJ at 4.[2] That amount is often called a tribe’s “Secretarial amount” or “base amount, ” and it is generally not subject to reduction in future years. See Seneca Nation of Indians v. U.S. Dep't of Health & Human Servs., 945 F.Supp.2d 135, 143 (D.D.C. 2013); Defs.’ MSJ at 4. Indeed, the Act specifically states that that amount “shall not be reduced by the Secretary in subsequent years except pursuant to” a limited set of reasons. 25 U.S.C. § 5325(b)(2). The statute nevertheless provides that, “[notwithstanding any other provision in [the Act], the provision of funds under [the Act] is subject to the availability of appropriations and the Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe or tribal organization under [the Act].” Id. § 5325(b).

         ISDEAA directs IHS to negotiate in good faith with a contracting tribe. See id. §§ 5385(a), 5387(e). But if IHS and a tribe cannot agree on the terms of a self-governance compact or a funding agreement, including funding amounts, the tribe may submit a “final offer” to IHS presenting its position on the issues in dispute. Id. § 5387(b). Within 45 days, IHS “shall review and make a determination with respect to such offer.” Id. If IHS determines to reject a final offer in whole or in part, it must provide timely written notice to the tribe. Id. § 5387(c). But a rejection may be based only on the four grounds enumerated in the statute:

(i) the amount of funds proposed in the final offer exceeds the applicable funding level to which the Indian tribe is entitled under this subchapter;
(ii) the program, function, service, or activity (or portion thereof) that is the subject of the final offer is an inherent Federal function that cannot legally be delegated to an Indian tribe;
(iii) the Indian tribe cannot carry out the program, function, service, or activity (or portion thereof) in a manner that would not result in significant danger or risk to the public health; or
(iv) the Indian tribe is not eligible to participate in self-governance under section 5383 of [Title V].

Id. § 5387(c)(1)(A). And the written notice must “contain[] a specific finding that clearly demonstrates” the ground(s) relied on or “is supported by a controlling legal authority.” Id. “In the absence of a timely rejection of the offer, in whole or in part, made in compliance with subsection (c) of this section, the offer shall be deemed agreed to by [IHS].” Id. § 5387(b).

         The ISDEAA provides federal district courts with original jurisdiction over claims against the Secretary arising under Title V, including a tribe’s claim that IHS improperly rejected its final offer. See 25 U.S.C. § 5331(a); see also Id. § 5387(c)(1)(C) (providing that a tribe may forgo an administrative appeal and “directly proceed to initiate an action in a Federal district court pursuant to section 5331(a)”); Id. § 5391(a) (confirming that section 5331(a) applies to compacts and funding agreements under Title V). For purposes of a civil action challenging IHS’s rejection of a final offer, the Act expressly provides that IHS “shall have the burden of demonstrating by clear and convincing evidence the validity of the grounds for rejecting the offer (or a provision thereof) made under subsection (b) of [§ 5387].” Id. § 5387(d); see also Id. § 5398 (providing generally that the Secretary has the burden in any civil action to show by clear and convincing evidence “(1) the validity of the grounds for the decision made; and (2) that the decision is fully consistent with provisions and policies of [Title V]”). And the Act further authorizes the reviewing court to “order appropriate relief including money damages, injunctive relief . . ., or mandamus . . . (including immediate injunctive relief to reverse a declination finding . . .).” Id. § 5331(a).

         B. Factual Background

         The Fort McDermitt Paiute and Shoshone Tribe (“the Tribe”) is a federally-recognized Indian Tribe composed of Northern Paiute and Western Shoshone peoples. Joint SOF ¶ 1. The Tribe is located on a reservation encompassing lands in Nevada and Oregon. Id.

         IHS provides health services to the Tribe through the Schurz Service Unit, a division of IHS operating out of the Phoenix, Arizona area “serving multiple tribes through a combination of contracted and direct [health] programs.” Defs.’ MSJ at 6; see also AR 124 (table showing Indian tribes served by the Schurz Service United).[3] Since the 1970s, IHS has operated a health clinic in McDermitt, Nevada, (“the Clinic”) through the Schurz Service Unit for the benefit of the Tribe’s members. AR 143. The Clinic provides primary outpatient care, substance abuse treatment, diabetes prevention and treatment services, and other community wellness programs. Joint SOF ¶ 4; AR 147. While beneficiaries of the Clinic are mainly members of the Tribe, the Clinic also serves other IHS beneficiaries, including members of the nearby Winnemucca Indian Colony of Nevada (“Winnemucca”). See AR 144; Defs.’ MSJ at 7.

         Since 1993, IHS has also operated the Fort McDermitt Emergency Medical Services (“EMS”) program, again mainly for the benefit of the Tribe. See AR 144. In January 2013, the Tribe designated a separate tribe, the nearby Pyramid Lake Paiute Tribe (“Pyramid Lake”) as its “tribal organization” for purposes of contracting with IHS to undertake operations of the EMS program. Joint SOF ¶ 2.[4] Around that time, IHS had raised concerns with stakeholder tribes that the EMS program “had been exceeding the planned budget for the program for some time, ” requiring IHS to supplement the program with other resources from the Schurz Service Unit, including revenues collected through operation of the Clinic. AR 144. In July of that year, however, Pyramid Lake submitted a contract proposal to assume operation of the EMS program and requested $502, 611 in annual funding-the amount that IHS had expended on the program the prior year. See Joint SOF ¶ 3; AR 144–45. About a month later, IHS suspended the EMS program, before formally closing it on September 30, 2013. AR 144–45. IHS then rejected Pyramid Lake’s proposal that same day. AR 145.

         Pyramid Lake promptly filed an action in this district challenging IHS’s rejection. See Pyramid Lake Paiute Tribe v. Burwell,70 F.Supp.3d 534 (D.D.C. 2014). In its declination letter, IHS had argued that the applicable funding level for the EMS program was zero dollars, as IHS had at that point decided to cease operating the program. See Id. at 539. In the alternative, IHS declined to award Pyramid Lake any funding based on expenditures made using revenues collected from the Clinic, as opposed to the amount actually budgeted for the program by the agency. See Id. The court rejected those justifications, explaining that the applicable funding level should be determined at the time the contracting tribe submits the proposal and that that amount constitutes what IHS would have spent on the program, even if that includes revenue from other sources. See Id. at 543–44. Accordingly, and ...

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