united states district court for the district of … › 2017 › 11 › 31-1-us-motion-for... ·...

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

__________________________________________ REDDING RANCHERIA, ) a federally-recognized Indian tribe, ) ) Plaintiff ) ) v. ) Civ. No: 14-2035 (RMC) ) SYLVIA MATTHEWS BURWELL, Secretary, ) United States Department of Health & ) Human Services, et al., ) ) Defendants. ) __________________________________________)

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Case 1:14-cv-02035-RMC Document 31-1 Filed 03/15/16 of 47

i

TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................... 1

STATUTORY AND REGULATORY BACKGROUND .............................................................. 3

I. Contract Health Services......................................................................................... 4

II. Catastrophic Health Emergency Fund .................................................................... 8

III. Indian Self-Determination and Education Assistance Act ...................................... 9

FACTUAL BACKGROUND ....................................................................................................... 10

I. Redding Rancheria’s CHS and Supplemental Programs ...................................... 10

II. Redding Rancheria’s Requests for CHEF Reimbursement .................................. 12

III. Redding Rancheria’s Administrative Requests .................................................... 14

A. Redding Rancheria’s request to amend Redding Rancheria’s compact and funding agreement .................................................................................... 15

B. Redding Rancheria’s claim for breach of contract .......................................... 16

C. Redding Rancheria’s request for regulatory waiver ........................................ 17

D. Redding Rancheria’s requests for informal conference .................................. 17

IV. Plaintiff’s Complaint ............................................................................................. 18

STANDARD OF REVIEW .......................................................................................................... 19

I. Applicable Standard of Review for the IHS’ Decisions ....................................... 19

II. Statutory Interpretation and Indian Law ............................................................... 21

ARGUMENT ................................................................................................................................ 22

I. Plaintiff’s First, Second, Third, Fifth, and Sixth Causes of Action Are Expressly Precluded by Statute ............................................................................. 22

A. The CHEF statute plainly precludes Plaintiff from seeking a contract remedy under the ISDEAA or CDA ............................................................... 22

B. The Declaratory Judgment Act does not provide a stand-alone cause of action ............................................................................................................... 27


ii

II. Even if Plaintiff’s Claims Were Not Expressly Precluded, Plaintiff’s “Final Offer” Amendment Triggered Two of the ISDEAA’s Declination Criteria and Was Properly Rejected ...................................................................... 29

III. Even If Plaintiff’s Claims Were Not Statutorily Barred, Plaintiff’s Proposals Violate the ACA ................................................................................... 33

A. Section 2901(b) of the ACA contains a payer of last resort provision that applies to services provided under a CHS program ................................. 34

B. IHS’ policy-based exception for tribal self-insurance is therefore invalid ............................................................................................................. 37

C. Even if IHS’ exception for tribal self-insurance were not invalid, it would be inapplicable to Plaintiff’s Supplemental Program .......................... 38

CONCLUSION ............................................................................................................................. 40


iii

TABLE OF AUTHORITIES

Federal Cases Al-Fayed v. C.I.A.,

254 F.3d 300 (D.C. Cir. 2001) ................................................................................................. 20 Ali v. Rumsfeld,

649 F.3d 762 (D.C. Cir. 2011) ................................................................................................. 27 Berlin v. Bank of Am.,

101 F. Supp. 3d 1 (D.D.C. 2015) ............................................................................................. 27 BlackLight Power, Inc. v. Rogan,

295 F.3d 1269 (Fed. Cir. 2002)................................................................................................ 21 C&E Servs., Inc. of Wash. v. D.C. Water & Sewer Auth.,

310 F.3d 197 (D.C. Cir. 2002) ................................................................................................. 28 Carcieri v. Salazar,

555 U.S. 379 (2009) ................................................................................................................. 20 Caremark, Inc. v. Goetz,

480 F.3d 779 (6th Cir. 2007) ................................................................................................... 36 Cherokee Nation of Okla. v. United States,

190 F. Supp. 2d (E.D. Okla. 2001) ......................................................................................... 19 Citizen Potawatomi Nation v. Salazar,

624 F. Supp. 2d 103 (D.D.C. 2009) ......................................................................................... 20 Dickson v. Sec’y of Def.,

68 F.3d 1396 (D.C. Cir. 1995) .................................................................................................. 20 Heckler v. Chaney,

470 U.S. 821 (1985) ................................................................................................................. 25 Lincoln v. Vigil,

508 U.S. 182 (1993) ............................................................................................................. 3, 25 Maniilaq Ass’n v. Burwell,

72 F. Supp. 3d 227 (D.D.C. 2014) ........................................................................................... 20 Montana v. Blackfeet Tribe,

471 U.S. 759 (1985) ................................................................................................................. 21 Muscogee (Creek) Nation v. Hodel,

851 F.2d 1439 (D.C. Cir. 1988) ............................................................................................... 21 Salazar v. Ramah Navajo Chapter,

132 S. Ct. 2181 (2012) ....................................................................................................... 21, 22 Seneca Nation of Indians v. HHS,

945 F. Supp. 2d 135 (D.D.C. 2013) ................................................................................... 20, 21 Shoshone-Bannock Tribes of the Fort Hall Reservation v. Shalala,

988 F. Supp. 1306 (D. Or. 1997) ............................................................................................. 20 Skelly Oil Co. v. Phillips Petroleum Co.,

339 U.S. 667 (1950) ................................................................................................................. 28 Tunica–Biloxi Tribe of La. v. United States,

577 F. Supp. 2d 382 (D.D.C. 2008) ......................................................................................... 21


iv

United States v. Carlo Bianchi & Co., 373 U.S. 709 (1963) ................................................................................................................. 20

Workplace Health & Safety Council v. Reich, 56 F.3d 1465 (D.C. Cir. 1995) ................................................................................................. 20

Federal Statutes 25 U.S.C. § 13 ................................................................................................................................. 3 25 U.S.C. § 47 ........................................................................................................................... 7, 34 25 U.S.C. § 450 ................................................................................................................. 1, 7, 9, 23 25 U.S.C. § 450f(a)(1) .................................................................................................................... 9 25 U.S.C. § 450j-1(a)(1) ..................................................................................................... 9, 10, 29 25 U.S.C. § 450l(c) ....................................................................................................................... 10 25 U.S.C. § 450l(a) ......................................................................................................................... 9 25 U.S.C. § 450m-1(a) ...................................................................................................... 18, 19, 27 25 U.S.C. § 450m-1(d) .................................................................................................................. 24 25 U.S.C. § 458aaa(a)(4) .............................................................................................................. 30 25 U.S.C. § 458aaa-16(e) .............................................................................................................. 26 25 U.S.C. § 458aaa-3(a) .................................................................................................................. 9 25 U.S.C. § 458aaa-3(b) ............................................................................................................... 31 25 U.S.C. § 458aaa-4(e) ................................................................................................................ 31 25 U.S.C. § 458aaa-6 ............................................................................................................. passim 25 U.S.C. § 458aaa-6(b) ................................................................................................... 10, 23, 29 25 U.S.C. § 458aaa-6(c)(1) ........................................................................................................... 10 25 U.S.C. § 458aaa-8 .................................................................................................................... 32 25 U.S.C. § 458aaa-10(a) .................................................................................................. 18, 19, 27 25 U.S.C. § 1601 ............................................................................................................................. 3 25 U.S.C. § 1603 ................................................................................................................. 7, 34, 35 25 U.S.C. § 1621a ..................................................................................................................... 8, 24 25 U.S.C. § 1621a(b) .......................................................................................................... 2, 22, 30 25 U.S.C. § 1621a(b)(3)(A) ............................................................................................................ 8 25 U.S.C. § 1621a(c).............................................................................................................. passim 25 U.S.C. § 1621e ..................................................................................................................... 6, 37 25 U.S.C. § 1621e(a)..................................................................................................................... 37 25 U.S.C. § 1621e(f) ................................................................................................................. 6, 37 25 U.S.C. § 1623(b) ............................................................................................................... passim 25 U.S.C. § 1646 ............................................................................................................................. 5 28 U.S.C. § 1331 ..................................................................................................................... 18, 27 28 U.S.C. § 2201 ........................................................................................................... 1, 18, 19, 27 41 U.S.C. § 7101 ............................................................................................................................. 1 41 U.S.C. § 7102(a) ...................................................................................................................... 24 41 U.S.C. § 7104(b)(4) ................................................................................................................. 20 42 U.S.C. § 2001(a) ........................................................................................................................ 3

Federal Regulations 25 C.F.R. Part 900......................................................................................................................... 17


v

25 C.F.R. § 900.140 .......................................................................................................... 14, 16, 17 25 C.F.R. § 900.145(e).................................................................................................................. 17 25 C.F.R. § 900.148 ................................................................................................................ 14, 16 42 C.F.R. Part 136......................................................................................................................... 11 42 C.F.R. § 136.11(c)...................................................................................................................... 4 42 C.F.R. § 136.12 .......................................................................................................................... 4 42 C.F.R. § 136.21(d) ..................................................................................................................... 4 42 C.F.R. § 136.24(b) ..................................................................................................................... 5 42 C.F.R. § 136.3 .......................................................................................................................... 38 42 C.F.R. § 136.21(f) ...................................................................................................................... 5 42 C.F.R. § 136.23(a)...................................................................................................................... 4 42 C.F.R. § 136.24(c)...................................................................................................................... 5 42 C.F.R. § 136.61 .............................................................................................................. 5, 34, 35 42 C.F.R. § 136.61(b) ..................................................................................................................... 6 42 C.F.R. § 136.61(b)(1) ................................................................................................................. 5 42 C.F.R. § 136.61(b)(3) ............................................................................................................... 35 42 C.F.R. § 136.61(c)............................................................................................................ 6, 8, 38 42 C.F.R. § 137.415 ...................................................................................................................... 32 42 C.F.R. § 137.421 .................................................................................................... 14, 17, 28, 32

Other Authorities Executive Order 13175 ........................................................................................................... 13, 18 43 Fed. Reg. 34,650 (Aug. 4, 1978).............................................................................................. 35 81 Fed. Reg. 4,239 (Jan. 26, 2016) ................................................................................................. 8 Pub. L. No. 99-500, 100 Stat. 1783 (Oct. 18, 1986) ....................................................................... 8 Pub. L. No. 100-713, Title II, § 202 (1988) .................................................................................... 8 Pub. L. No. 111-88, Title III, 123 Stat. 2945-2948 ......................................................................... 8 S. 1790, 111th Cong. (2010) ........................................................................................................... 8


1

INTRODUCTION

This is a challenge, brought under Section 110 of the Indian Self-Determination and

Education Assistance Act of 1975, 25 U.S.C. §§ 450 et seq. (“ISDEAA”), and the Declaratory

Judgment Act, 28 U.S.C. § 2201, to three decisions of the Indian Health Service (“IHS”): first,

its decision to decline to enter into Redding Rancheria’s October 15, 2013 proposed amendment

to its compact and funding agreement; second, its decision, to deny Redding Rancheria’s

October 15, 2013 breach of contract claim under the Contract Disputes Act, 41 U.S.C. §§ 7101 et

seq. (“CDA”); and, third, its decision to decline Redding Rancheria’s October 15, 2013 request

for regulatory waiver. Redding Rancheria also alleges that IHS rejected its proposed amendment

without providing technical assistance in violation of the ISDEAA and that IHS has breached its

common law and statutory fiduciary duties to Redding Rancheria.

At the January 19, 2016, Conference, the parties agreed to bifurcate this proceeding into

two phases. Phase One includes Plaintiff’s claims relating to the IHS’ decisions to decline

Redding Rancheria’s proposed final offer to amend its compact and funding agreement, its

breach of contract claim, its regulatory waiver request, and its request for an informal conference

(“Phase One Claims”). See Status Conf. Tr. 7:21-25, Jan. 19, 2016. Phase Two will include

Plaintiff’s claims for breach of trust and failure to provide technical assistance. See Status Conf.

Tr. 9:10-12. As a result, Defendants are only requesting summary judgment on Plaintiff’s Phase

One Claims—the second, third, and fifth causes of action, as well as portions of the first and

sixth causes of action—at this time. See Compl. ¶¶ 121–23, 125–26 (First Cause of Action:

Violation of 25 U.S.C. § 458aaa-6; Failure to Approve Amendment); ¶¶ 127–34 (Second Cause

of Action: Violation of 25 U.S.C. § 458aaa-6; Failure to Sever); ¶¶ 135–40 (Third Cause of


2

Action: Breach of Contract/Compact—Failure to Accept CHS Payments); ¶¶ 144–51 (Fifth

Cause of Action: Breach of ISDEAA); ¶¶ 152, 153(a)-(f), 153(h)-(i), 153(k)-(n), 154–55 (Sixth

Cause of Action: Declaratory Relief). The remaining claims in the Complaint’s fourth cause of

action and portions of the first and sixth causes of action relating specifically to breach of trust

and failure to provide technical assistance would fall under Phase Two of this litigation. See

Compl. ¶ 124 (First Cause of Action: Violation of 25 U.S.C. § 458aaa-6; Failure to Approve

Amendment); ¶¶ 141-43 (Fourth Cause of Action: Breach of Trust / Breach of Fiduciary Duty);

¶¶ 153(g), 153(j) (Sixth Cause of Action: Declaratory Relief). The parties have also agreed to

brief only the question of liability at this stage of the proceeding. See Status Conf. Tr. 15:16-20.

The IHS decisions at issue in this proceeding are a result of Redding Rancheria’s various

attempts to use contract theories to address the IHS’ denial of Plaintiff’s requests for

reimbursement from the Catastrophic Health Emergency Fund (“CHEF”). The CHEF is a

specific type of appropriation which cannot be the subject of a contract or grant under any law.

Congress specifically delegated authority for the administration and allocation of CHEF to the

headquarters of the IHS. See 25 U.S.C. § 1621a(b). When it did so, Congress unequivocally

stated that “[n]o part of CHEF or its administration shall be subject to contract or grant under any

law, including the Indian Self-Determination and Education Assistance Act.” 25 U.S.C.

§ 1621a(c). Even if the CHEF statute did not expressly preclude Plaintiff from seeking a

contract remedy under the ISDEAA or CDA, Redding Rancheria’s proposal to amend its

compact through a “Final Offer” triggers two of the ISDEAA’s declination criteria, 25 U.S.C.

§ 458aaa-6(c)(1)(A)(i), (ii), and the IHS properly rejected Redding Rancheria’s proposed “Final

Offer” amendment on that statutory basis. Finally, even if Plaintiff’s proposed contract remedies


3

were not statutorily barred, their application would result in a contract that directly conflicts with

Section 2901(b) of the Patient Protection and Affordable Care Act (“ACA”), 25 U.S.C.

§ 1623(b). Accordingly, this Court should grant Defendants’ motion for summary judgment and

enter judgment for Defendants on Plaintiff’s Phase One Claims.

STATUTORY AND REGULATORY BACKGROUND

The principal mission of the IHS is the provision of health care to American Indians and

Alaska Natives throughout the United States. See Lincoln v. Vigil, 508 U.S. 182, 185 (1993). In

carrying out that mission, IHS operates under two primary authorizing statutes. The first statute,

the Snyder Act, authorizes IHS to expend such moneys as Congress may from time to time

appropriate for the conservation of the health of Indians. See 25 U.S.C. § 13 (providing that the

Bureau of Indian Affairs (“BIA”) will expend funds as appropriated for, among other things, the

conservation of health of Indians); 42 U.S.C. § 2001(a) (transferring the responsibility for Indian

health care from BIA to IHS). The second statute, the Indian Health Care Improvement Act

(“IHCIA”), establishes numerous programs to address particular health initiatives, such as

alcohol and substance abuse and diabetes. 25 U.S.C. §§ 1601 et seq.

Under these authorities, IHS provides health care services through three separate

mechanisms: (1) directly through a nationwide network of federal facilities and clinics; (2)

through contracts with Indian tribes and tribal organizations pursuant to the ISDEAA, under

which those tribes independently operate health care delivery programs previously provided by

IHS; and (3) pursuant to contracts and grants awarded to urban Indian organizations to operate

health programs in urban locations. The range of services provided by IHS may vary from


4

location to location, so that a patient is not guaranteed that specific services will be available at

all locations.1

I. Contract Health Services

In addition to the three mechanisms described above, the Snyder Act and the Transfer

Act authorize IHS to pay for medical care provided to IHS beneficiaries by other public or

private providers as contract health services (“CHS”).2 IHS pays for care under CHS when

direct services are unavailable and no alternate resources exist to pay for such care.

Generally speaking, an individual seeking coverage under CHS must be eligible for IHS

services under 42 C.F.R. § 136.12 and must also live on the reservation or live in the contract

health service delivery area (“CHSDA”) for his or her tribe (which may be broader than the

boundaries of a reservation).3 Payment for CHS care may be authorized if “necessary health

services by an Indian Health Service facility are not reasonably accessible or available . . . .” 42

C.F.R. § 136.23(a). For non-emergency care, prior notification and approval is required under

1 See Services Available, 42 C.F.R. § 136.11(c) (“The Service does not provide the same health services in each area served. The services provided to any particular Indian community will depend upon the facilities and services available from sources other than the Service and the financial and personnel resources made available to the Service.”). 2 The Consolidated Appropriation Act of 2014 adopted a new name, Purchased/Referred Care (“PRC”), for IHS’ CHS program. The new name better describes the purpose of the program and its funding, which is generally for both purchased care and for referred care outside of IHS. The name change does not otherwise change the program and is not intended to have any effect on the laws that govern or apply to CHS. IHS continues to administer PRC in accordance with all laws applicable to CHS. To avoid confusion and maintain uniformity with existing rules, this memorandum uses the term CHS. 3 A CHSDA is “the geographic area within which contract health care services will be made available by the IHS to members of an identified Indian community who reside in the area, subject to the provisions of this subpart.” 42 C.F.R. § 136.21(d).


5

42 C.F.R. § 136.24(b) and, for emergency care,4 timely notification is required. 42 C.F.R.

§ 136.24(c).5 The requirement for prior notification may be waived at the discretion of IHS (or

the tribe in the case of a tribally operated program) if the patient notifies IHS within 72 hours

after the beginning of treatment. 42 C.F.R. § 136.24(b).

CHS is also a residual resource for health care services. IHS is the payor of last resort for

services provided through its programs, and IHS only assumes liability after all alternate

resources have been considered. 42 C.F.R. § 136.61; see also 25 U.S.C. § 1623(b). Under IHS’

“payor of last resort” rule, CHS will not be authorized for services when “[t]he Indian is eligible

for alternate resources.” 42 C.F.R. § 136.61(b)(1).6 IHS’ regulations define “alternate

4 “Emergency” means any medical condition for which immediate medical attention is necessary to prevent the death or serious impairment of the health of an individual. 42 C.F.R. § 136.21(f). 5 For elderly and disabled patients receiving emergency treatment, IHS is directed by statute to allow 30 days for notification as a condition of payment. 25 U.S.C. § 1646. 6 The current payor of last resort regulation, 42 C.F.R. § 136.61, states:

(a) The Indian Health Service is the payor of last resort of persons defined as eligible for contract health services under these regulations, notwithstanding any State or local law or regulation to the contrary.

(b) Accordingly, the Indian Health Service will not be responsible for or authorize payment for contract health services to the extent that:

(1) The Indian is eligible for alternate resources as defined in paragraph (c), or

(2) The Indian would be eligible for alternate resources if he or she were to apply for them, or

(3) The Indian would be eligible for alternate resources under State or local law or regulation but for the Indian’s eligibility for contract health services, or other health services, from the Indian Health Service, or Indian Health Service funded programs.

(c) “Alternate resources” means health care resources other than those of the Indian Health Service. Such resources include health care providers and institutions, and health care programs for the payment of health services including


6

resources” as “health care resources other than those of the Indian Health Service.” 42 C.F.R.

§ 136.61(c). If a patient is eligible or potentially eligible for alternate resources, he or she must

apply for them before CHS funds will be authorized. 42 C.F.R. § 136.61(b).

Tribal self-insurance is thus an alternate resource to CHS programs pursuant to IHS’

regulations, and this was mirrored in IHS policy in Section 2-3.8(I) of the Indian Health Manual

(“IHM”). See Administrative Record (“AR”) at IHS000149. Before 2010, IHS had adopted a

narrow policy-based exception to this rule, providing in the IHM that certain tribally-funded self-

insured health plans would not be considered “alternate resources” under IHS’ payor of last

resort regulation in an effort to be consistent with the then-prevailing Congressional intent not to

burden tribal resources. See id. at IHS000149 (citing Section 206(f) of the IHCIA, 25 U.S.C.

§ 1621e(f)7). In order to qualify for this exception from the payor of last resort regulation

requirements, the health plan “must meet the definition of a Tribal self-insurance plan, as defined

in this chapter, and include an exclusionary clause prohibiting payment if the patient is eligible

for CHS[.]” Id. IHS requires verification that a health plan meets these requirements through

the submission of documentation describing “how and from what resources the plan is funded”

and “[a] copy of the self-insurance policy, with [the] exclusionary clause clearly indicated.” Id.

(IHM, § 2-3.8(I)(2)). “If a Tribal health plan refuses to submit requested documentation, the IHS

will not consider the plan to be a Tribal self-insurance plan. Plans that are not self-insured are

but not limited to programs under title XVIII and XIX of the Social Security Act (i.e. Medicare, Medicaid), State or local health care programs and private insurance.

7 As noted infra, note 20, 25 U.S.C. § 1621e pertains specifically to IHS’ right to bill for direct care services, which is not implicated here but which was cited as evidence of Congressional intent when IHS adopted its narrow policy-based exception for certain tribally-funded self-insured health plans from the payor of last resort regulation requirements in the IHM.


7

considered to be an alternative resource and the Payor of Last Resort guidance is to be

followed.” Id. (IHM, § 2-3.8(I)(3)).

However, in 2010, through the enactment of Section 2901(b) of the ACA, 25 U.S.C.

§ 1623(b), Congress established IHS as the payer of last resort for services provided through

IHS, superseding all contrary federal laws.8 As a result, IHS’ narrow policy-based exception in

the IHM for certain tribally-funded self-insured health plans has been invalidated, and the payor

of last resort rule and IHS’ long-standing policy defining alternate resources for CHS

beneficiaries, which prohibit authorization of CHS for services when an individual is eligible for

8 25 U.S.C. § 1623(b) establishes IHS as the payer of last resort for care provided to IHS beneficiaries:

Health programs operated by the Indian Health Service, Indian tribes, tribal organizations, and Urban Indian organizations (as those terms are defined in section 4 of the Indian Health Care Improvement Act (25 U.S.C. § 1603)) shall be the payer of last resort for services provided by such Service, tribes, or organizations to individuals eligible for services through such programs, notwithstanding any Federal, State, or local law to the contrary.

As relevant to Section 1623, 25 U.S.C. § 1603 provides the following definitions:

(12) Indian health program

The term “Indian health program” means--

(A) any health program administered directly by the Service;

(B) any tribal health program; and

(C) any Indian tribe or tribal organization to which the Secretary provides funding pursuant to [25 U.S.C. § 47, commonly known as the “Buy Indian Act”]. . . .

(25) Tribal health program

The term “tribal health program” means an Indian tribe or tribal organization that operates any health program, service, function, activity, or facility funded, in whole or part, by the Service through, or provided for in, a contract or compact with the Service under the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450 et seq.).


8

alternate health care resources such as tribal self-insurance, stand without exceptions. See 42

C.F.R. § 136.61(c); 25 U.S.C. § 1623(b).

II. Catastrophic Health Emergency Fund

Congress originally established the CHEF in a 1987 IHS appropriation bill to reimburse

IHS and tribal programs for certain high cost CHS cases in order to mitigate the risk that a few

catastrophic health incidents could wipe out a CHS program’s budget. Pub. L. No. 99-500, 100

Stat. 1783 (Oct. 18, 1986). Congress then added the CHEF to the IHCIA. Pub. L. No. 100-713,

Title II, § 202 (1988). CHEF is available to meet “the extraordinary medical costs associated

with the treatment of victims of disasters or catastrophic illnesses who are within the

responsibility of the Service.” 25 U.S.C. § 1621a. CHEF is historically funded through a line

item in the IHS appropriation, which in recent years has authorized CHEF funds to remain

available until expended. See, e.g., Department of the Interior, Environment, and Related

Agencies Appropriations Act, 2011, Pub. L. No. 111-88, Title III, 123 Stat. 2945-2948.

In 2010, Congress passed the Indian Health Care Improvement Reauthorization and

Extension Act of 2009, S. 1790, 111th Cong. (2010) (“IHCIREA”), as Section 10221(a) of the

ACA. Through IHCIREA, Congress permanently reauthorized and amended the IHCIA, and

Section 202 of IHCIA, 25 U.S.C. § 1621a, permanently established the CHEF. The IHCIREA

also directed the IHS to promulgate regulations governing reimbursement procedures for the

CHEF, including a “procedure for the reimbursement of the portion of the costs incurred . . . in

rendering treatment that exceeds [the CHEF] threshold cost.” 25 U.S.C. § 1621a(b)(3)(A). IHS

published these proposed regulations in January 2016. 81 Fed. Reg. 4,239 (Jan. 26, 2016).

While developing these regulations, IHS has continued to follow operating guidelines that were


9

first developed in August 1987. These guidelines were developed with input from tribal

organizations and IHS personnel who work with the daily processing and management of CHS

resources and were approved by the Office of Management and Budget for the management of

the CHEF. See id. Pursuant to Section 2-3.17(B) of the IHM, “CHEF resources are expended

according to the CHS requirements and while CHEF funds are available they are to be used to

partially reimburse IHS direct and tribally contracted programs for patient expenditures that

would qualify for the CHEF program.” AR at IHS000159.001 (emphasis added). In addition,

“[a]ll requirements for alternate resources must be met before reimbursement can be made from

the CHEF.” Id.

III. Indian Self-Determination and Education Assistance Act

A tribe’s authority to contract with the IHS to operate many of the programs that IHS

previously operated for the benefit of Indians, including CHS programs, arises under the

ISDEAA, 25 U.S.C. §§ 450 et seq. Tribes may do so either by entering into self-determination

contracts under Title I of ISDEAA or into self-governance “compacts” under Title V. See 25

U.S.C. §§ 450l(a), (c), 458aaa-3(a). This process begins when a tribe submits a proposal to

“plan, conduct, and administer” one or more programs, functions, services, or activities currently

operated by IHS for the benefit of the tribe. 25 U.S.C. § 450f(a)(1).

The ISDEAA provides two types of potential funding for tribal contracts. The first,

known as the “Secretarial” or “106(a)(1)” amount, is the amount the Secretary “would have

otherwise provided for the operation of the programs.” 25 U.S.C. § 450j-1(a)(1). In addition to

the Secretarial amount, tribal contractors may receive contract support costs (“CSCs”), which are

limited to reasonable costs for activities necessary for contract compliance and prudent


10

management that are not already funded through the Secretarial amount. 25 U.S.C.

§ 450j-1(a)(1). In short, a contract “transfer[s] the funding [for the Secretarial amount] and the []

related programs [or activities] (or portions thereof)” from the IHS to a tribal organization. 25

U.S.C. § 450l(c), model agreement § (a)(2).

If the Secretary and a tribe are unable to agree on the terms of a Title V compact or

funding agreement, the tribe may submit a “final offer” to the Secretary pursuant to 25 U.S.C.

§ 458aaa-6(b). Once a final offer has been received by the Secretary, the Secretary has 45 days

to review the proposal and determine whether to reject it. See 25 U.S.C. § 458aaa-6(b). The

agency may reject all or a portion of a final offer that meets at least one of the four bases for

rejection, including if “the amount of funds proposed in the final offer exceeds the applicable

funding level to which the Indian tribe is entitled under this part” or if “the program, function,

service, or activity (or portion thereof) that is the subject of the final offer in an inherent Federal

function that cannot legally be delegated to an Indian tribe.” 25 U.S.C. § 458aaa-6(c)(1)(A). If

the agency rejects a final offer, the agency must provide the tribe with written notification of the

specific bases for rejection, technical assistance, and an opportunity for a hearing. 25 U.S.C.

§ 458aaa-6(c)(1). Further, the Secretary must provide the tribe with the option of entering into

the severable portions of a final proposed compact or funding agreement that the Secretary did

not reject. 25 U.S.C. § 458aaa-6(c)(1)(D).

FACTUAL BACKGROUND

I. Redding Rancheria’s CHS and Supplemental Programs

Plaintiff Redding Rancheria operates a CHS Program under a Title V ISDEAA compact

and funding agreement (“Compact”). Compl. ¶¶ 10–11; AR at IHS000323–IHS000322.


11

According to Plaintiff, it also administers a “self-insurance program” for its tribal members,

referred to in its Complaint as the Supplemental Program.9 Compl. ¶ 23; AR at IHS000351–

IHS000474. This tribal Supplemental Program is not part of Plaintiff’s compacted CHS Program

under the ISDEAA. See Compl. ¶ 24. Under the Supplemental Program, Plaintiff is able to take

advantage of Blue Cross’s network rates, which might be lower than the applicable CHS rate

established under 42 C.F.R. Part 136, Subpart D. See Compl. ¶ 29.

Plaintiff has devised a framework for coordinating benefits between its CHS Program

operated through its ISDEAA Compact and its independently operated Supplemental Program in

an effort to ensure that all claims are paid at the lowest possible rate, whether that is the Blue

Cross network rate or the regulatory CHS rate. Compl. ¶¶ 28, 29. Plaintiff asserts that it makes

provisional payments for most or all care through its Supplemental Program. Compl. ¶ 31. A

CHS referral form provided by Redding Rancheria when requesting reimbursement from the

CHEF, labeled “Form of Payment Authorization,” noted that the “Primary Coverage” for the

patient was “Private Insurance,” or “Blue Cross”—Plaintiff’s Supplemental Program. AR at

IHS000095. The form also indicates that Redding Rancheria’s CHS program was not “Primary”

coverage, but rather, it was only responsible as a “Secondary” party. Id. The form is signed by

Redding Rancheria’s Health Operations Director. Id.; see also AR at IHS000079.

Plaintiff also asserts that it has the ability to decide through a coordination of benefits

review whether it will make CHS or the Supplemental Program primary. Compl. ¶ 32.

9 Plaintiff has described its Supplemental Program as a tribal self-insurance plan in the Complaint and in its October 15, 2013, administrative requests that are at issue in this proceeding. IHS did not make an independent determination as to whether or how much of Plaintiff’s Supplemental Program is a tribally-funded self-insured health plan, as such a determination was not required for the agency decisions that are at issue here. Such additional factual analysis would only be required at the damages phase, if any, in this proceeding.


12

Plaintiff’s Tribal Government Policies on Tribal Self-Insurance Plan Coordination are expressly

intended to “provide for identification of health services for which [IHS] and [CHS] programs

shall cover as the primary payer and those circumstances under which the Tribal Self-Insurance

Program will be treated as an alternate resource or as a secondary payer.” AR at IHS000488.

Redding Rancheria’s coordination policy states that its Supplemental Program “will not be

treated as an alternate resource with regard to services or coverage provided by an IHS facility

(direct care) or [CHS] program” and the Supplemental Program “shall pay for only that care

which is otherwise excluded from IHS or CHS coverage.” AR at IHS000489. However, the

coordination policy also provides that Plaintiff’s CEO can make the Supplemental Program

“primary” to the CHS Program for services other than those enumerated in the policy for which

the Supplemental Program “will always be secondary.” Id. In addition, “[t]he Tribe’s

[coordination of benefits] procedures do not allow the Supplemental Program to assume primary

liability for CHS care that is eligible for federal CHEF reimbursements.” Compl. ¶ 37; see also

AR at IHS000382 (excluding services eligible for reimbursement under CHEF from the

Supplemental Program’s coverage). Plaintiff alleges that its coordination procedures allow its

CHS Program to “reimburse” its Supplemental Program if Plaintiff decides to make CHS

primary for services provisionally paid by the Supplemental Program. Compl. ¶ 33.

II. Redding Rancheria’s Requests for CHEF Reimbursement

The IHS administrative decisions at issue in this proceeding, discussed in more detail

infra Section III, are a result of Redding Rancheria’s attempts to use contract theories to compel

reimbursement from the CHEF in order to indirectly address the IHS’ denial of Plaintiff’s

requests for such reimbursement. On March 1, 2013, Redding Rancheria requested


13

reimbursement from the CHEF for certain medical claims for which its CHS Program had

reimbursed the Supplemental Program on February 21, 2013. AR at IHS000078-IHS000097,

IHS000341-IHS000350. IHS rejected these reimbursement requests, and Redding Rancheria

requested reconsideration of this rejection by letter dated March 26, 2013. AR at IHS000010-

IHS000022. Redding Rancheria also requested waiver of the CHEF procedures and consultation

pursuant to Executive Order 13175. Id.; see also AR at IHS000528. After meeting with

Redding Rancheria to discuss its concerns, AR at IHS000531, IHS upheld the rejection of

Redding Rancheria’s reimbursement requests on August 8, 2013. AR at IHS000076-IHS000077.

IHS denied the CHEF reimbursement requests for claims that were coordinated through

Redding Rancheria’s coordination of benefits process, Compl. ¶ 58, finding with respect to such

claims, that: (i) Redding Rancheria was seeking reimbursement for payments made to its

Supplemental Program; (ii) such payments are not valid CHS obligations; and (iii) only valid

CHS obligations are reimbursable under the CHEF. Compl. ¶ 69; AR at IHS000076. IHS also

denied Redding Rancheria’s request for an administrative waiver under Executive Order 13175,

finding that considering such a request would be inconsistent with the agency’s statutory duty to

consistently apply procedures governing reimbursement of the CHEF to ensure that all IHS and

CHS programs are given the same opportunity to seek reimbursement and are treated in a fair

and uniform manner. AR at IHS000077. Redding Rancheria did not directly appeal the IHS’

denial of Plaintiff’s requests for reimbursement from the CHEF, but instead attempted to use

contract theories to compel such reimbursement through the administrative requests discussed

below.


14

III. Redding Rancheria’s Administrative Requests

After IHS denied Redding Rancheria’s CHEF reimbursement requests, on October 15,

2013, Plaintiff submitted a proposed “Final Offer” under Title V of the ISDEAA, a breach of

contract claim under the CDA, and a request for a regulatory waiver (or determination of

superseded law or regulation) pursuant to 25 C.F.R. §§ 900.140 and 900.148. Compl. ¶ 75; AR

at IHS000106-IHS000130, IHS000023-IHS000075, IHS000506-IHS000525. IHS rejected each

of these requests. IHS noted in its final decisions that each request was related to IHS’ denial of

Redding Rancheria’s reimbursement requests from the CHEF. IHS further explained that

reimbursing a tribal self-insurance program for its expenditures is not consistent with the

statutory purpose for which CHS funds are provided to the tribe, and CHS expenditures must fall

within the allowable scope of the tribe’s ISDEAA contract. AR at IHS000002, IHS000099,

IHS000502. In addition, IHS noted that Redding Rancheria was not able to provide IHS with the

required medical claim forms and documentation required under CHEF procedures because

Redding Rancheria used CHS funds to reimburse its Supplemental Program. AR at IHS000002,

IHS000099.

On January 2, 2014, Redding Rancheria requested an informal conference pursuant to 42

C.F.R. § 137.421 in response to IHS’ rejection of its proposed “Final Offer” amendment and

breach of contract claim. AR at IHS000303-IHS000308. On February 14, 2014, Redding

Rancheria similarly requested an informal conference in response to IHS’ rejection of its request

for regulatory waiver. AR at IHS000311-IHS000312. These requests were denied. AR at

IHS000299-IHS000301.


15

A. Redding Rancheria’s request to amend Redding Rancheria’s compact and funding agreement

IHS received Redding Rancheria’s proposed “Final Offer” under Title V of the ISDEAA

on October 21, 2013. AR at IHS000106. The purpose of this proposed amendment to Redding

Rancheria’s Compact was to “clarify the Tribe’s right to coordinate member care between the

[CHS] Program and the Tribe’s [Supplemental Program] and to ensure eligibility for

reimbursement under the Catastrophic Health Emergency Fund (CHEF) for eligible care that is

coordinated between [these programs].” AR at IHS000110. On December 4, 2013, IHS rejected

Redding Rancheria’s proposed “Final Offer.” AR at IHS000098-IHS000105.

Although IHS did not believe CHEF is subject to the ISDEAA and Redding Rancheria’s

proposed amendment could therefore not constitute a “Final Offer” under Title V of the

ISDEAA, out of an abundance of caution, the agency declined Redding Rancheria’s “Final

Offer” proposal pursuant to declination criteria (i) and (ii). 25 U.S.C. § 458aaa-6(c)(1)(A)(i),

(ii). Under declination criteria (i), IHS determined that “the amount of funds proposed in the

final offer exceeds the applicable funding level to which the Indian tribe is entitled under this

part” because the CHEF is neither part of the Secretarial amount nor considered contract support

costs for Redding Rancheria’s Compact. AR at IHS000101; 25 U.S.C. § 458aaa-6(c)(1)(A)(i).

Under declination criteria (ii), IHS determined that “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” because the administration and allocation of CHEF is an

inherent federal function that cannot be legally delegated to Redding Rancheria—through an

amendment to the tribe’s compact or otherwise—and IHS could not legally agree to an

amendment that would ensure reimbursement for the tribe’s claims from the CHEF without


16

regard to IHS’ procedures for determining eligibility for such funds. AR at IHS000103; 25

U.S.C. § 458aaa-6(c)(1)(A)(ii).

B. Redding Rancheria’s claim for breach of contract

IHS received Redding Rancheria’s CDA claim for breach of its ISDEAA Compact on

October 23, 2013. AR at IHS000023. This claim alleged that IHS owed Redding Rancheria an

additional $1,044,545.76 under its Compact due to the IHS’ failure to reimburse Redding

Rancheria for medical claims from the CHEF. AR at IHS000024-IHS000029. On December 17,

2013, IHS denied Redding Rancheria’s CDA claim. AR at IHS000001-IHS000009.

Although IHS did not believe its denial of Redding Rancheria’s CHEF reimbursement

requests is subject to appeal under the CDA, out of an abundance of caution, the agency rejected

Redding Rancheria’s breach of contract claim because it had met its contractual obligations to

the tribe. AR at IHS000006-IHS000007. IHS determined that Redding Rancheria’s funding

agreement provides that CHEF funds would be made available “in accordance with the CHEF

policy,” which the agency had applied in its CHEF denial decisions. AR at IHS000007. As

such, the agency had met its contractual obligations to make CHEF available in accordance with

CHEF policy. AR at IHS000007-IHS00009 (citing Sections 6 and 16 of Plaintiff’s funding

agreement, see AR at IHS000315, IHS000318). IHS also noted that it had consulted with tribal

organizations when developing its reimbursement procedures, and that Redding Rancheria’s

compact provision exempting Redding Rancheria from “any circular, policy, manual, guidance,

or rule adopted by the [IHS]” “unless expressly agreed to by the Tribe” did not waive the

applicability of IHS’ funding methodologies for determining the funding a tribe may be eligible

to receive. AR at IHS000008.


17

C. Redding Rancheria’s request for regulatory waiver

IHS received Redding Rancheria’s request for a regulatory waiver (or determination of

superseded law or regulation) pursuant to 25 C.F.R. §§ 900.140 and 900.148 on October 21,

2013. See AR at IHS000501, IHS000506-IHS000525. Redding Rancheria requested a waiver of

“the specific procedures and regulatory or other legal requirements, if any, that IHS has relied

upon in its August 8, 2013 denial” of Redding Rancheria’s request for reimbursement from the

CHEF, as well as a determination that the laws and regulations relied upon were superseded by

the tribe’s assumption of CHS responsibilities under the ISDEAA. AR at IHS000506. On

January 16, 2014, IHS denied Redding Rancheria’s request for regulatory waiver and found that

no applicable law or regulation was superseded in the enactment of the ISDEAA. AR at

IHS000501-IHS000505.

IHS declined Redding Rancheria’s request for a regulatory waiver pursuant to declination

criteria (e), finding that “the program, function, service, or activity (or portion thereof) that is the

subject of the proposal is beyond the scope of programs, functions, services, or activities that are

contractible under this Act because the proposal includes activities that cannot lawfully be

carried out by the contractor.” 25 C.F.R. § 900.145(e); AR at IHS000503-IHS000504. IHS

noted that the administration and allocation of CHEF is outside the scope of the ISDEAA and its

implementing regulations in 25 C.F.R. Part 900, so the regulatory waiver provision in 25 C.F.R.

900.140—which only applies to regulations under 25 C.F.R. Part 900—is not applicable to

Redding Rancheria’s request. AR at IHS000503-IHS000504.

D. Redding Rancheria’s requests for informal conference

IHS received Redding Rancheria’s request for an informal conference pursuant to 42

C.F.R. § 137.421 in response to IHS’ rejection of its proposed “Final Offer” amendment and


18

breach of contract claim on January 7, 2014. See AR at IHS000303, IHS000299. IHS denied

this request for informal conference on February 5, 2014, finding that the CHEF is not subject to

the ISDEAA and the ISDEAA’s informal conference appeal procedures are therefore not

available to resolve CHEF disputes. AR at IHS000299. The decision noted several IHS offices

available to provide technical assistance to Redding Rancheria. Id.

IHS received a similar request for an informal conference in response to IHS’ rejection of

its request for regulatory waiver on February 18, 2014. AR at IHS000311, IHS000300. Redding

Rancheria’s second request also included a request for consultation under Executive Order

13175. AR at IHS000311. IHS denied this request for informal conference on March 11, 2014,

finding that the CHEF is not subject to the ISDEAA and the ISDEAA’s informal conference

appeal procedures are therefore not available to resolve CHEF disputes. AR at IHS000300-

IHS000301. IHS noted its willingness to engage in consultation with Redding Rancheria and

described two ways for Redding Rancheria to schedule such consultation—through personalized

consultation at a Tribal Delegation Meeting or through the IHS California Area Office 2014

Annual Tribal Consultation meeting on March 13, 2014. AR at IHS000301.

IV. Plaintiff’s Complaint

After IHS’ decisions described above, Plaintiff brought this action under the ISDEAA

and the Declaratory Judgment Act. Compl. ¶ 4 (citing 25 U.S.C. §§ 450m–1(a), 458aaa-10(a);

28 U.S.C. § 1331; 28 U.S.C. § 2201). Plaintiff alleges six causes of action in its Complaint.

Consistent with the parties’ agreement to bifurcate this proceeding into two phases, Defendants

are only requesting summary judgment on the Phase One Claims at this time, which include

Plaintiff’s second, third, and fifth causes of action, as well as portions of the first and sixth


19

causes of action that do not relate specifically to breach of trust and failure to provide technical

assistance. See Status Conf. Tr. 7:21-25, Jan. 19, 2016; Compl. ¶¶ 121–23, 125–26 (First Cause

of Action: Violation of 25 U.S.C. § 458aaa-6; Failure to Approve Amendment); ¶¶ 127–34

(Second Cause of Action: Violation of 25 U.S.C. § 458aaa-6; Failure to Sever); ¶¶ 135–40

(Third Cause of Action: Breach of Contract/Compact—Failure to Accept CHS Payments);

¶¶ 144–51 (Fifth Cause of Action: Breach of ISDEAA); ¶¶ 152, 153(a)-(f), 153(h)-(i), 153(k)-

(n), 154–55 (Sixth Cause of Action: Declaratory Relief).10

With regard to the first, second, third, and fifth causes of action, Plaintiff is seeking a

contract remedy under the portions of the ISDEAA pertaining specifically to contracts and

contract disputes, 25 U.S.C. §§ 450m–1(a) and 458aaa-10(a). With regard to the sixth cause of

action, Plaintiff has separately stated a request for declaratory relief under 28 U.S.C. § 2201.

STANDARD OF REVIEW

I. Applicable Standard of Review for the IHS’ Decisions

At the September 11, 2015, Conference, this Court determined that this case is subject to

de novo review. Status Conf. Tr. 22:8-18, Sept. 11, 2015. Now that the parties have bifurcated

this proceeding, Defendants believe that de novo review should only be applied to Plaintiff’s

Phase Two claims for breach of trust and failure to provide technical assistance. Plaintiff’s

Phase One Claims are straightforward challenges to certain IHS administrative decisions.

Plaintiff’s Phase One Claims were brought under the ISDEAA through 25 U.S.C. § 450m-1(a),

10 The remaining claims in the Complaint’s fourth cause of action and portions of the first and sixth causes of action relating specifically to breach of trust and failure to provide technical assistance would fall under Phase Two of this litigation. See Compl. ¶ 124 (First Cause of Action: Violation of 25 U.S.C. § 458aaa-6; Failure to Approve Amendment); ¶¶ 141-43 (Fourth Cause of Action: Breach of Trust / Breach of Fiduciary Duty); ¶¶ 153(g), 153(j) (Sixth Cause of Action: Declaratory Relief).


20

Compl. ¶ 4, a provision that does not specify a particular standard of judicial review. Cherokee

Nation of Okla. v. United States, 190 F. Supp. 2d 1254 (E.D. Okla. 2001), aff’d, 311 F.3d 1054

(10th Cir. 2002), rev’d on other grounds, 543 U.S. 631 (2005); Shoshone-Bannock Tribes of the

Fort Hall Reservation v. Shalala, 988 F. Supp. 1306, 1313 (D. Or. 1997). When a statute

provides for judicial review of an agency decision but fails to set forth the standards for that

review, it is well accepted that the courts look to the Administrative Procedure Act (“APA”) for

guidance. United States v. Carlo Bianchi & Co., 373 U.S. 709, 715 (1963); Al-Fayed v. C.I.A.,

254 F.3d 300, 304 (D.C. Cir. 2001) (quoting Dickson v. Sec’y of Def., 68 F.3d 1396, 1404 n.12

(D.C. Cir. 1995) and citing Workplace Health & Safety Council v. Reich, 56 F.3d 1465, 1467

(D.C. Cir. 1995)). The APA’s arbitrary and capricious standard of review is the appropriate

standard for claims brought under ISDEAA. See Citizen Potawatomi Nation v. Salazar, 624 F.

Supp. 2d 103, 109 (D.D.C. 2009) (applying the APA standard of review to claims under the

ISDEAA).

In Maniilaq Ass’n v. Burwell, 72 F. Supp. 3d 227, 233–34 (D.D.C. 2014), a court in this

Circuit noted that there is disagreement about whether this standard, or de novo review, should

apply to claims under the ISDEAA.11 However, under either standard of review it is evident that

Plaintiff is not entitled to the relief sought in its Phase One Claims.

11 The Maniilaq court acknowledged the decision in Seneca Nation of Indians v. HHS, 945 F. Supp. 2d 135, 141 (D.D.C. 2013), but noted that “the Seneca Nation court did not explicitly find that de novo review always applied to ISDEAA cases, because in that case, the parties agreed that de novo review applied.” 72 F. Supp. 3d at 234. IHS agreed to de novo review in Seneca Nation because it had determined that the Plaintiff had brought claims under the CDA, which requires de novo review under 41 U.S.C. § 7104(b)(4). See Exhibit 7, 1:12-cv-01494-RMC, ECF # 15 at 9 (“Pursuant to the CDA, under which this action is brought, a contracting officer’s decision is reviewed de novo.”).


21

II. Statutory Interpretation and Indian Law

In interpreting a statute, the general rule is that a court “must first determine whether the

statutory text is plain and unambiguous.” See Carcieri v. Salazar, 555 U.S. 379, 387 (2009)

(interpreting the Indian Reorganization Act, 25 U.S.C § 465) (citations omitted). “The Supreme

Court has clarified that canons of statutory construction are slightly different when courts

consider laws governing relations between the United States and Indian nations.” Seneca

Nation of Indians v. United States HHS, 945 F. Supp. 2d 135, 142 (D.D.C. 2013); see also

Muscogee (Creek) Nation v. Hodel, 851 F.2d 1439, 1444–45 (D.C. Cir. 1988) (quoting Montana

v. Blackfeet Tribe, 471 U.S. 759, 766 (1985)); Tunica–Biloxi Tribe of La. v. United States, 577 F.

Supp. 2d 382, 421 (D.D.C. 2008) (“The result, then, is that if the [statutory text] can reasonably

be construed as the [t]ribe [or tribal organization] would have it construed, it must be construed

that way”) (quoting Muscogee, 851 F.2d at 1445; alterations in original)).

Nevertheless, “[i]n seeking to give effect to the provisions of the ISDEAA, as with any

statute, the Court must treat the ‘object and policy’ of that statute as its polestar.” Seneca Nation

of Indians, 945 F. Supp. 2d at 142 (citing BlackLight Power, Inc. v. Rogan, 295 F.3d 1269, 1273

(Fed. Cir. 2002)). Moreover, the question of whether to liberally or strictly construe a statutory

provision only matters “when there is some ambiguity to construe.” Salazar v. Ramah Navajo

Chapter, 132 S. Ct. 2181, 2199 (2012) (Roberts, C.J., dissenting). In this case, Plaintiff’s Phase

One Claims are clearly statutorily barred.


22

ARGUMENT

I. Plaintiff’s First, Second, Third, Fifth, and Sixth Causes of Action Are Expressly Precluded by Statute

Plaintiff’s Phase One Claims assert that the IHS decisions at issue in this proceeding: (1)

violated the procedural provisions governing Final Offers set forth in the ISDEAA, 25 U.S.C.

§ 458aaa-6 (the First and Second Causes of Action); (2) breached the Compact between the

Secretary and plaintiff in violation of the ISDEAA and the IHCIA (the Third Cause of Action);

and (3) breached the ISDEAA’s provision permitting Plaintiff to design its own CHS Program

(the Fifth Cause of Action). In addition, Plaintiff alleges a separate cause of action for

declaratory relief (the Sixth Cause of Action).

The IHS’ denial decisions are a result of Redding Rancheria’s various attempts to use

contract theories to address the IHS’ denial of Plaintiff’s requests for reimbursement from the

CHEF. However, no part of CHEF or IHS’ administration of CHEF is subject to the ISDEAA or

the CDA. In addition, the Declaratory Judgment Act does not provide a stand-alone cause of

action.

A. The CHEF statute plainly precludes Plaintiff from seeking a contract remedy under the ISDEAA or CDA.

The CHEF is a specific appropriation of funding established “solely for the purpose of

meeting the extraordinary medical costs associated with the treatment of victims of disasters or

catastrophic illnesses who are within the responsibility of the [Indian Health] Service.” 25

U.S.C. § 1621a(b). Congress specifically reserved authority for the administration and allocation

of the CHEF to the Secretary of the HHS, acting through the headquarters of the IHS. Id. When

it did so, Congress expressly placed conditions on the use of the fund and limitations on IHS’

ability to further delegate responsibility for the administration of the CHEF. 25 U.S.C.


23

§ 1621a(c). Specifically, 25 U.S.C. § 1621a(c) provides that “[n]o part of CHEF or its

administration shall be subject to contract or grant under any law, including the Indian Self-

Determination and Education Assistance Act (25 U.S.C. 450 et seq.), nor shall CHEF funds be

allocated, apportioned, or delegated on an Area Office, Service Unit, or other similar basis.” 25

U.S.C. § 1621a(c) (emphasis added).

Plaintiff’s First and Second Causes of Action challenge IHS’ rejection of Plaintiff’s

proposed “Final Offer” amendment to the parties’ Compact pursuant to Title V of the ISDEAA.

However, the purpose of this proposed amendment to the Compact was to “clarify the Tribe’s

right to coordinate member care between the [CHS] Program and the Tribe’s [Supplemental

Program] and to ensure eligibility for reimbursement under the Catastrophic Health Emergency

Fund (CHEF) for eligible care that is coordinated between [these programs].” AR at IHS000110.

Indeed, Plaintiff’s First Cause of Action asserts that Plaintiff “is entitled to approval of the

proposed amendment” as well as “to CHEF reimbursements for all CHS claims properly paid

. . . .” Compl. ¶¶ 125–26. Plaintiff’s proposed “Final Offer” amendment was simply an attempt

to contractually compel the IHS to commit funding that is not subject to the ISDEAA.

If the requested language of Plaintiff’s proposed “Final Offer” amendment were added to

the Compact, it would violate 25 U.S.C. § 1621a(c), because the statute specifically states that no

part of CHEF may be subject to an ISDEAA contract. For this reason, Plaintiff could not submit

a valid “Final Offer” under the ISDEAA in its attempt to ensure payment from the CHEF. The

ISDEAA anticipates that IHS and tribes may not always agree on the terms of a compact or

funding agreement. It provides that a tribe may submit a “final offer” to the Secretary as a result

of such disagreements and the Secretary must review and render a determination on any final


24

offer within the timeframe proscribed by statute. See 25 U.S.C. § 458aaa-6(b). While Plaintiff

presented a purported “Final Offer” to IHS, the proposal did not arise from a disagreement

concerning the terms of the Compact. Instead, the disagreement stemmed from the IHS’ denial

of Plaintiff’s CHEF applications—a subject that may not legally be a term of the Compact as

making CHEF the subject of an ISDEAA agreement is expressly prohibited by federal law.12

See 25 U.S.C. § 1621a(c). Based upon this statutory prohibition, the contract provisions of the

ISDEAA could not apply to CHEF disputes.

Plaintiff’s Third and Fifth Causes of Action fare no better. Congress made CDA

remedies applicable to tribal self-determination contracts pursuant to Section 110 of the

ISDEAA. 25 U.S.C. § 450m-1(d). As noted above, the CHEF statute expressly carves CHEF

and its administration out of the contract provisions of the ISDEAA. Independent of the

ISDEAA, however, the CDA could not apply to CHEF disputes. The CDA only applies to

express and implied contracts made by executive agencies. See 41 U.S.C. § 7102(a). IHS is not

permitted to contract for any portion of the CHEF or its administration under the express

language of 25 U.S.C. § 1621a. 25 U.S.C. § 1621a(c) (“No part of CHEF or its administration

shall be subject to contract or grant under any law, including the [ISDEAA.]”) (emphasis added).

In addition, the CHEF statute plainly provides IHS with the discretion to administer and

allocate the money in this fund. The Supreme Court has held:

12 The parties’ Compact currently includes general language recognizing that IHS would make CHEF available in accordance with existing IHS policies and procedures. AR at IHS000315. However, Plaintiff’s Compact does not contain any language requiring IHS to approve Plaintiff’s CHEF reimbursement requests. Nothing in the Compact makes any part of the CHEF or the agency’s administration of CHEF subject to the terms of the Compact, as this would be in violation of the clear statutory prohibition set forth in the CHEF statute.


25

The allocation of funds from a lump-sum appropriation is another administrative decision traditionally regarded as committed to agency discretion. After all, the very point of a lump-sum appropriation is to give an agency the capacity to adapt to changing circumstances and meet its statutory responsibilities in what it sees as the most effective or desirable way.

Lincoln v. Vigil, 508 U.S. 182, 192 (1993). The Vigil Court went on to note that “the ‘agency is

far better equipped than the courts to deal with the many variables involved in the proper

ordering of its priorities.’” Id. at 193 (citing Heckler v. Chaney, 470 U.S. 821, 831–32 (1985)).

The statute at issue here presents an even stronger case for agency discretion than the facts of

Vigil, because the CHEF statute specifically delegates the authority to administer this

appropriation and it prohibits IHS from conferring any rights or responsibilities in the CHEF by

contract or grant. Even if the IHS wished to do so, the language of 25 U.S.C. § 1621a(c)

prohibits the IHS from promising or conveying any portion of the CHEF or its administration

pursuant to a contract.

Plaintiff asserts in its Third Cause of Action that the IHS breached its Compact with

Plaintiff when it “refused to treat CHS payments from the Tribe as contract health service

payments.” Compl. ¶ 138. This breach of contract claim alleged that IHS owed Redding

Rancheria an additional $1,044,545.76 under its Compact due to the IHS’ failure to reimburse

Redding Rancheria for medical claims from the CHEF. AR at IHS000024-IHS000029. In

addition, Plaintiff alleges that the IHS refused to consult in good faith with Redding Rancheria as

required by the Compact and the ISDEAA. Compl. ¶ 139. Plaintiff alleges damages “in the

amount of all CHEF denials based on IHS’ refusal to treat CHS payments from the Tribe as

contract health service payments eligible for reimbursement under CHEF.” Compl. ¶ 140.

However, the contract provisions of the CDA and the ISDEAA cannot apply to CHEF disputes,


26

and as such the remedies and consultation procedures provided to tribes under the CDA and

ISDEAA contract provisions are not available to Plaintiff here.

In its Fifth Cause of Action, Plaintiff alleges a “Breach of ISDEAA,” claiming that it had

the right “to design its own CHS payment process” under its Compact. Compl. ¶ 145. Plaintiff

argues that IHS’ rejection of its coordination of benefits process is “contrary to long-standing

IHS policy exempting tribal self-insurance programs from the [payor of last resort rule.]”

Compl. ¶¶ 147–48. As noted below, IHS’ narrow policy-based exception from its payor of last

resort regulation for tribal self-insurance was preempted by the payer of last resort provision

contained in Section 2901(b) of the ACA, and even if it weren’t preempted, Plaintiff’s

Supplemental Program would not have qualified for this exception. See AR at IHS000103.

Moreover, Plaintiff’s coordination of benefits process is only at issue here to the extent it relates

to IHS’ rejection of Plaintiff’s requests for reimbursement from the CHEF. IHS’ decisions

regarding these requests cannot be a breach of the ISDEAA, as the CHEF statute expressly

prohibits any attempt to contract for the administration of CHEF pursuant to the ISDEAA. See

25 U.S.C. § 1621a(c). Plaintiff also cites 25 U.S.C. § 458aaa-16(e), which provides that tribes

are not generally “subject to any agency circular, policy, manual, guidance, or rule adopted by

the [IHS]” unless expressly agreed to by the compacted tribe, Compl. ¶ 149. However, this

provision does not waive the agency’s ability to uniformly apply its funding methodologies

across tribes. As noted above, the allocation of appropriations like the CHEF is committed to


27

agency discretion, and the IHS is not required to approve payment for a tribe that does not follow

the CHEF procedures.13

The IHS followed the plain language of the CHEF statute when it rejected Plaintiff’s

efforts to secure reimbursement from the CHEF through a proposed amendment to its Compact

and through a breach of contract claim. IHS’ decisions were not determinations on how Plaintiff

must spend its CHS Program funds or whether Plaintiff can redesign its coordination of benefits

processes. They were decisions on Plaintiff’s attempts to ensure payment from the CHEF for

CHS Program costs that were coordinated in a manner that IHS does not recognize, and contract

law remedies under the ISDEAA or the CDA simply do not apply to the IHS’ allocation or

administration of CHEF payments pursuant to the CHEF statute. This statutory bar precludes

Plaintiff’s First, Second, Third, Fifth, and Sixth Causes of Action, which seek a contract remedy

under portions of the ISDEAA specifically pertaining to contracts and contract disputes.

Accordingly, this Court should enter judgment for Defendants on Plaintiff’s Phase One Claims.

B. The Declaratory Judgment Act does not provide a stand-alone cause of action.

Plaintiff’s Second and Sixth Causes of Action seek declaratory relief, but these claims

cannot form independent bases for relief pursuant to the Declaratory Judgment Act. Plaintiff

brought this action under the ISDEAA and the Declaratory Judgment Act. See Compl. ¶ 4

(citing 25 U.S.C. §§ 450m–1(a), 458aaa-10(a); 28 U.S.C. § 1331; 28 U.S.C. § 2201). However,

13 For this reason, even if it were not expressly precluded, Plaintiff’s breach of contract claim in its Third Cause of Action must fail because the agency met its contractual obligations to make CHEF available in accordance with CHEF policy. AR at IHS000007-IHS00009 (citing Sections 6 and 16 of Plaintiff’s funding agreement, see AR at IHS000315, IHS000318). Plaintiff’s Compact does not contain any language requiring IHS to approve Plaintiff’s CHEF reimbursement requests.


28

the Declaratory Judgment Act neither independently vests courts with jurisdiction nor

“provide[s] a cause of action.” See Ali v. Rumsfeld, 649 F.3d 762, 778 (D.C. Cir. 2011); see also

Berlin v. Bank of Am., 101 F. Supp. 3d 1, 11 (D.D.C. 2015) (“To the extent Plaintiffs seek to

assert a cause of action for ‘declaratory judgment,’ it is dismissed.”). Courts have long

recognized that the Declaratory Judgment Act simply authorizes declaratory relief where a cause

of action created by another statute already exists. See, e.g., Skelly Oil Co. v. Phillips Petroleum

Co., 339 U.S. 667, 671-72 (1950); C&E Servs., Inc. of Wash. v. D.C. Water & Sewer Auth., 310

F.3d 197, 201 (D.C. Cir. 2002) (“[T]he availability of declaratory relief presupposes the

existence of a judicially remediable right.”).

Plaintiff cannot purport to maintain its Second and Sixth Causes of Action under the

Declaratory Judgment Act and must identify some other source of law that accords it the right to

bring these claims in a federal court and seek declaratory relief. In its Second Cause of Action,

Plaintiff requests “a declaration that IHS has violated 25 U.S.C. §§ 458aaa-6 and 42 C.F.R.

§ 137.421.” Compl. ¶ 134. In its Sixth Cause of Action, Plaintiff demands fourteen separate

declarations of law, all but two which all relate to Plaintiff’s Phase One Claims.14 Compl.

¶¶ 152, 153(a)-(f), 153(h)-(i), 153(k)-(n), 154–55. Plaintiff’s Phase One Claims under the

ISDEAA must fail in accordance with the express provisions of the CHEF statute, as discussed

above. As a result, Plaintiff’s Sixth Cause of Action and Plaintiff’s claim in its Second Cause of

Action seeking declaratory relief are without merit and should be rejected.

14 Requested declarations of law (g) and (j) relate to Plaintiff’s claim for breach of trust, which is a Phase Two Claim. See Status Conf. Tr. 9:10-12.


29

II. Even if Plaintiff’s Claims Were Not Expressly Precluded, Plaintiff’s “Final Offer” Amendment Triggered Two of the ISDEAA’s Declination Criteria and Was Properly Rejected.

Even if the CHEF statute did not expressly preclude Plaintiff from seeking a contract

remedy under the ISDEAA or CDA, Redding Rancheria’s proposal to amend the parties’

Compact through a “Final Offer” triggers two of the ISDEAA’s declination criteria, 25 U.S.C.

§ 458aaa-6(c)(1)(A)(i), (ii). IHS properly rejected Redding Rancheria’s proposed “Final Offer”

amendment on that statutory basis, and there was no severable portion of the proposed

amendment which could have been approved.15 Under the first statutory ground, a tribe’s final

offer may be rejected when “the amount of funds proposed in the final offer exceeds the

applicable funding level to which the Indian tribe is entitled under this part.” 25 U.S.C.

§ 458aaa-6(c)(1)(A)(i). Under the second statutory ground, a tribe’s final offer may be rejected

when “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.” 25

U.S.C. § 458aaa-6(c)(1)(A)(ii). Either one of these grounds is a sufficient basis for rejection, and

IHS cited both of these two grounds when it timely rejected Plaintiff’s proposed “Final Offer”

amendment.

First, IHS determined that Plaintiff’s proposed “Final Offer” amendment met the

ISDEAA’s first declination criteria, 25 U.S.C. § 458aaa-6(c)(1)(A)(i), and properly rejected it on

that basis. AR at IHS000101-IHS000103. As noted above, the ISDEAA provides two types of

potential funding for tribal contracts: (i) the “Secretarial” or “106(a)(1)” amount, which is the

15 Although IHS did not believe Plaintiff could submit a valid “Final Offer” under the ISDEAA in its attempt to ensure payment from the CHEF, out of an abundance of caution, IHS reviewed Plaintiff’s proposed amendment as a “Final Offer” and issued a determination within the 45-day period set forth in 25 U.S.C. § 458aaa-6(b).


30

amount the Secretary “would have otherwise provided for the operation of the programs,” and

(ii) CSCs, which are limited to reasonable costs for activities necessary for contract compliance

and prudent management that are not already funded through the Secretarial amount. 25 U.S.C.

§ 450j-1(a)(1). The CHEF is not a part of the Secretarial amount, nor does it qualify as CSC or

any other type of funding to which a tribe is entitled. Furthermore, unlike the Secretarial amount

or CSCs, the CHEF is specifically prohibited from being the subject of an ISDEAA agreement.

As a result, Plaintiff had no right to contract for the CHEF funds that it sought to secure through

its proposed “Final Offer” amendment to IHS. Plaintiff requested funds which “exceed[ed] the

applicable funding level to which [Plaintiff] is entitled,” 25 U.S.C. § 458aaa-6(c)(1)(A)(i), and

IHS properly rejected the proposed amendment as a result.

In addition, IHS determined that Plaintiff’s proposed “Final Offer” amendment met the

ISDEAA’s second declination criteria, 25 U.S.C. § 458aaa-6(c)(1)(A)(ii), and properly rejected it

on that basis. AR at IHS000103. The ISDEAA defines “inherent Federal functions” as “those

Federal functions which cannot legally be delegated to Indian tribes.” 25 U.S.C. § 458aaa(a)(4).

The administration and allocation of CHEF cannot legally be delegated to Indian tribes because

these duties are expressly reserved to IHS headquarters by the CHEF statute, which provides that

“CHEF shall be administered by the Secretary, acting through the headquarters of the Service.”

25 U.S.C. § 1621a(b). Subsection (c) further provides that no part of CHEF may be subject to a

contract or grant under any law, including the ISDEAA, “nor shall CHEF funds be allocated,

apportioned, or delegated on an Area Office, Service Unit, or other similar basis.” 25 U.S.C.

§ 1621a(c) (emphasis added). These statutory provisions prohibit the IHS from delegating its

responsibility administer the CHEF, including the responsibility to assess CHEF claims and


31

determine whether they should be paid from the CHEF. They also prohibit IHS from conferring

any contractual rights to the CHEF. Based upon the plain language of the CHEF statute,

Plaintiff’s proposed amendment involved “an inherent Federal function that cannot legally be

delegated to an Indian tribe,” 25 U.S.C. § 458aaa-6(c)(1)(A)(ii), and IHS properly rejected

Plaintiff’s proposed “Final Offer” as an attempt to contract for this inherent Federal function.

Furthermore, nothing in the ISDEAA required IHS to contractually agree to the

reimbursement of Plaintiff’s medical claims from the CHEF or to Plaintiff’s coordination of

benefits process between its CHS Program and non-IHS programs, such as Plaintiff’s

Supplemental Program. AR at IHS000104-IHS000105. The ISDEAA provides that “compacts

may only be amended by mutual agreement of the parties.” 25 U.S.C. § 458aaa-3(b). The

ISDEAA further provides that “unless otherwise agreed to by the parties, each funding

agreement shall remain in full force and effect until a subsequent funding agreement is

executed.” 25 U.S.C. § 458aaa-4(e). Plaintiff did not propose to negotiate a new compact or a

new funding agreement in this matter. Instead, Plaintiff asked IHS to amend the current

Compact in an attempt to secure payment from the CHEF. The IHS could not agree to amend

Plaintiff’s Compact as proposed by Plaintiff, because the proposed amendment is specifically

prohibited by 25 U.S.C. § 1621a(c) and IHS was not otherwise required to agree to the proposed

amendments under the ISDEAA.

Finally, when IHS rejected Plaintiff’s “Final Offer” amendment, it did not offer Plaintiff

the option of entering into any severable portions of that amendment because no portion of

Plaintiff’s “Final Offer” can be considered severable. A tribe has the option of entering into

portions of a final proposed compact or funding agreement under 25 U.S.C. § 458aaa-6(c)(1)(D),


32

if those portions are severable. Each portion of the proposed language in Plaintiff’s “Final

Offer” amendment is part and parcel of the same objective— Plaintiff is attempting to secure

payment from the CHEF through a proposed amendment to its ISDEAA Compact. Since this

objective is prohibited by statute, IHS could not offer Plaintiff the option of entering into any

portion of the proposed amendment.

Plaintiff contends that IHS should have allowed it to sever portions of its proposed

amendment, or that IHS should have provided it with an informal conference to address severing

the amendment. Compl. ¶¶ 129–133. Plaintiff does not specify which portions it believes to be

severable, but it seeks a declaration “that IHS has violated 25 U.S.C. § 458aaa-6 and 42 C.F.R.

§ 137.421.” Compl. ¶ 134. As set forth above, the ISDEAA contracting provisions, including

25 U.S.C. § 458aaa-6, do not apply to the CHEF. The regulation providing for informal

conference, 42 C.F.R. § 137.421, likewise only applies to decisions issued under the ISDEAA

contracting provisions, 25 U.S.C. §§ 458aaa-6 and 458aaa-8. See 42 C.F.R. § 137.415.16

Plaintiff’s further request for an injunction fails for the same reason. It seeks to enjoin

IHS to sever the “undisputed portions” and “enter into a conformed agreement” with Plaintiff.

Compl. ¶ 134. But Plaintiff fails to identify what, if any portions of its proposed “Final Offer”

amendment were “undisputed.” IHS did not offer Plaintiff the option of entering into severable

portions of its proposed amendment because, as explained above, no portion of Plaintiff’s “Final

Offer” can be considered severable.

16 Plaintiff’s requests for informal conference pursuant to 42 C.F.R. § 137.421 also did not specify which portions of its amendment it believes to be severable or even mention severability. AR at IHS000303-IHS000312. IHS properly denied Plaintiff’s requests for informal conference, finding that the CHEF is not subject to the ISDEAA and the ISDEAA’s informal conference appeal procedures are therefore not available to resolve CHEF disputes. AR at IHS000299; AR at IHS000300-IHS000301.


33

Even if Plaintiff’s proposed “Final Offer” amendment were not expressly precluded by

the CHEF statute, this proposed amendment triggered two of the ISDEAA’s declination criteria

and was properly rejected under 25 U.S.C. § 458aaa-6(c)(1)(A). Accordingly, this Court should

enter judgment for Defendants on Plaintiff’s First, Second, and Sixth Causes of Action.

III. Even if Plaintiff’s Claims Were Not Statutorily Barred, Plaintiff’s Proposals Violate the ACA

Even if the Court were to determine that Plaintiff’s Phase One Claims are not statutorily

barred, those claims still fail as a matter of law. Characterizing it as an amendment to their CHS

Program under the ISDEAA, see Compl. ¶ 81, Plaintiff seeks to add a provision to the parties’

Compact that permits Plaintiff’s Supplemental Program to provide provisional coverage pending

confirmation that certain CHS services would be eligible for CHEF reimbursement and prohibits

treatment of Plaintiff’s Supplemental Program as an alternate resource for purposes of CHS

eligibility. See AR at IHS000110-IHS000111, IHS000382. However, this proposed amendment

to the Compact violates the “payer of last resort” provision in section 2901(b) of the ACA and

cannot become a legally enforceable part of the parties’ Compact. Similarly, Plaintiff’s breach

of contract and breach of ISDEAA claims in its Third and Fifth Causes of Action seek approval

of Plaintiff’s coordination of benefits process—which cannot be permitted because the process

would shift payment burdens to the limited federal CHEF appropriations from Plaintiff’s

Supplemental Program in violation of the ACA’s “payer of last resort” provision and the

regulatory “payor of last resort” rule. Accordingly, this Court should enter judgment for

Defendants on Plaintiff’s Phase One Claims.


34

A. Section 2901(b) of the ACA contains a payer of last resort provision that applies to services provided under a CHS program.

When Congress enacted section 2901(b) of the ACA, it enacted a “payer of last resort”

provision that applies to all services provided by health programs operated by the IHS or through

an ISDEAA compact, including services provided to CHS beneficiaries. This “payer of last

resort” provision provides:

Health programs operated by the Indian Health Service, Indian tribes, tribal organizations, and Urban Indian organizations . . . shall be the payer of last resort for services provided by [IHS], tribes, or organizations to individuals eligible for services through such programs, notwithstanding any Federal, State, or local law to the contrary.

25 U.S.C. § 1623(b).17

The ACA’s statutory “payer of last resort” provision is consistent with the existing

regulatory scheme which makes IHS the payor of last resort for services provided through its

programs. CHS is available as a residual resource for health care services, and IHS only assumes

liability for health care services under CHS programs after all alternate resources have been

considered. 42 C.F.R. § 136.61. Under IHS’ “payor of last resort” regulation:

(a) The Indian Health Service is the payor of last resort for persons defined as eligible for contract health services under these regulations, notwithstanding any State or local law or regulation to the contrary.

(b) Accordingly, the Indian Health Service will not be responsible for or authorize payment for contract health services to the extent that:

17 25 U.S.C. § 1603 defines an “Indian health program” as: “(A) any health program administered directly by the [IHS]; (B) any tribal health program; and (C) any Indian tribe or tribal organization to which the Secretary provides funding pursuant to [25 U.S.C. § 47, commonly known as the ‘Buy Indian Act’].”

Section 1603 defines a “tribal health program” as “an Indian tribe or tribal organization that operates any health program, service, function, activity, or facility funded, in whole or part, by the [IHS] through, or provided for in, a contract or compact with the [IHS] under the [ISDEAA].”


35

(1) The Indian is eligible for alternate resources as defined in paragraph (c), or

(2) The Indian would be eligible for alternate resources if he or she were to apply for them, or

(3) The Indian would be eligible for alternate resources under State or local law or regulation but for the Indian’s eligibility for contract health services, or other health services, from the Indian Health Service, or Indian Health Service funded programs.

(c) “Alternate resources” means health care resources other than those of the Indian Health Service. Such resources include health care providers and institutions, and health care programs for the payment of health services including but not limited to programs under title XVIII and XIX of the Social Security Act (i.e. Medicare, Medicaid), State or local health care programs and private insurance.

42 C.F.R. § 136.61.

This required use of alternate resources was intended to “maximize[] the health care

services that can be provided with limited resources.” 43 Fed. Reg. 34,650, 34,652–53 (Aug. 4,

1978); see also Compl. ¶ 14. In order to prevent alternate resources from shifting payment

burdens to the federal budget, the “payor of last resort” regulations explicitly provide that IHS

will not be responsible for or authorize payment for CHS to the extent that “[t]he Indian would

be eligible for alternate resources under State or local law or regulation but for the Indian’s

eligibility for [CHS], or other health services, from the [IHS], or [IHS] funded programs.” 42

C.F.R. § 136.61(b)(3) (emphasis added).

As “alternate resources” include any health care resources other than those of the IHS,

tribal self-insurance programs and Plaintiff’s Supplemental Program qualify as alternate

resources which must be considered before IHS will assume liability under CHS programs.

Plaintiff’s CHS Program is a “health program” within the meaning of the ACA’s “payer of last

resort” provision, but Plaintiff’s Supplemental Program is not. 25 U.S.C. §§ 1603, 1623(b). The


36

ACA’s “payer of last resort” provision and IHS’ payor of last resort regulation thus do not make

Plaintiff’s Supplemental Program a payer of last resort, but they make Plaintiff’s CHS

Program—which is operated through an ISDEAA compact—secondary to Plaintiff’s

Supplemental Program for services provided to CHS beneficiaries.

Congress did not create an exception to the ACA’s “payer of last resort” provision for

tribal self-insurance programs. See Caremark, Inc. v. Goetz, 480 F.3d 779, 783 (6th Cir. 2007)

(concluding that a statute that identifies an entity as the payer of last resort is most naturally read

to mean that “all other available resources must be used before [the payer] pays for the medical

care of an individual enrolled in [the] program”). Plaintiff’s proposed amendment to the parties’

Compact seeks to shift payment burdens to the limited federal CHEF appropriations from an

alternate resource by prohibiting treatment of Plaintiff’s Supplemental Program as an alternate

resource for purposes of CHS eligibility.18 AR at IHS000110-IHS000111; see also AR at

IHS000382, IHS000489. Similarly, Plaintiff’s breach of contract and breach of ISDEAA claims

seek approval of Plaintiff’s coordination of benefits process. As such, even if Plaintiff’s

proposed contract remedies were not statutorily barred, their application would result in a

coordination of benefits provision that violates the ACA’s “payer of last resort” provision.

18 This prohibition would contradict certain language in Plaintiff’s Tribal Government Policies on Tribal Self-Insurance Plan Coordination, which allows Plaintiff to treat its Supplemental Program as an alternate resource under certain circumstances. See AR at IHS000488 (the policy will “provide for identification of health services for which [IHS] and [CHS] programs shall cover as the primary payer and those circumstances under which the Tribal Self-Insurance Program will be treated as an alternate resource or as a secondary payer”); AR at IHS000489 (Plaintiff’s CEO can make the Supplemental Program “primary” to the CHS program for services other than those enumerated in the policy for which the Supplemental Program “will always be secondary”).


37

Accordingly, this Court should grant Defendants’ motion for summary judgment and enter

judgment for Defendants on Plaintiff’s Phase One Claims.

B. IHS’ policy-based exception for tribal self-insurance is therefore invalid.

As Plaintiff notes, IHS previously determined, in sub-regulatory guidance, that certain

tribally-funded self-insured health plans would not be considered “alternate resources” under

IHS’ payor of last resort regulation.19 Compl. ¶ 17. This “narrow exception” to IHS’ “payor of

last resort” regulation and IHS policy that tribal self-insurance is an alternate resource to CHS

programs was an effort to be consistent with what IHS understood to be the then-existing

Congressional intent not to burden tribal resources. See AR at IHS000149 (citing Section 206(f)

of the IHCIA, 25 U.S.C. § 1621e(f)20).

The ACA’s “payer of last resort” provision makes CHS programs operated by the IHS or

through an ISDEAA compact the payor of last resort for all services provided to CHS

beneficiaries, without exception for tribal self-insurance plans. Plaintiff’s CHS Program, which

is operated through an ISDEAA compact, would thus be the payor of last resort for all services

provided to CHS beneficiaries, and Plaintiff’s Supplemental Program would always have 19 Plaintiff asserts, Compl.¶ 40-42, that IHS has not treated other tribes’ tribal self-insurance programs as an alternate resource. Although tribes could qualify for IHS’ narrow policy-based exception for tribal self-insurance prior to the enactment of the ACA, that policy-based exception is no longer valid, as discussed infra. 20 25 U.S.C. § 1621e pertains specifically to IHS’ right to bill for direct care services, which is not implicated here but which was cited as evidence of Congressional intent when IHS adopted its narrow policy-based exception for certain tribally-funded self-insured health plans from the payor of last resort regulation requirements in the IHM. In 25 U.S.C. § 1621e(f), Congress expressly prohibited IHS from billing a tribally funded self-insurance plan for direct care services provided at IHS facilities or clinics. This prohibition only applies to United States’ right of recovery under 25 U.S.C. § 1621e(a); it is not implicated in the present case because Plaintiff’s claims do not involve direct care services provided at IHS facilities or clinics, nor is Plaintiff being billed by the United States. Plaintiff’s CHS program is a payer for care provided to CHS beneficiaries, not a biller for services directly provided.


38

responsibility for payment of covered CHS claims before the CHS Program would have

responsibility. To the extent that the IHS’ program guidance or Plaintiff’s coordination of

benefits process provide otherwise, they conflict with the plain language of the ACA’s “payer of

last resort” provision.21 As a result, IHS’ policy-based exception in the IHM for certain tribally-

funded self-insured health plans has been invalidated, and the payor of last resort rule prohibiting

authorization of CHS for services when an individual is eligible for health care resources other

than those of the IHS stands without exceptions. See 42 C.F.R. § 136.61(c); 25 U.S.C.

§ 1623(b).

C. Even if IHS’ exception for tribal self-insurance were not invalid, it would be inapplicable to Plaintiff’s self-insurance plan.

Even if IHS’ program guidance establishing a limited policy based exception for tribal

self-insurance did not directly conflict with the express language of section 2901(b) of the ACA,

this program guidance would still be inapplicable to Plaintiff’s Supplemental Program because

Plaintiff’s “exclusionary” clause does not prohibit payment if the individual is eligible for

CHS.22 Section 2-3.8(I) of the IHM provides that a health plan “must meet the definition of a

Tribal self-insurance plan, as defined in this chapter, and include an exclusionary clause

prohibiting payment if the patient is eligible for CHS” before a health plan is exempted from the

21 IHS’ sub-regulatory guidance contained in the IHM also does not establish program requirements; the “administrative instructions” found in the IHM are only “operating procedures to assist officers and employees in carrying out their responsibilities.” 42 C.F.R. § 136.3. 22 IHS is assuming, for purposes of this motion, that Plaintiff’s Supplemental Program otherwise meets the definition of a tribal self-insurance plan. IHS did not make a determination as to whether or how much of Plaintiff’s Supplemental Program is a tribally-funded self-insured health plan, as this determination was not required for the agency decisions that are at issue here. See supra note 9.


39

payor of last resort regulation requirements.23 AR at IHS000149. “Tribal self-insurance plans

without an exclusionary clause prohibiting payment to the IHS are considered to be an alternate

resource and are subject to the IHS’ Payor of Last Resort [regulations].” Id. (IHM,

§ 2-3.8(I)(1)).

Plaintiff’s “exclusionary” clause does not always prohibit payment if a patient is eligible

for CHS. Plaintiff has attempted to carve out an exception in its policy to shift the responsibility

for high cost cases—such as those that might be reimbursable from the CHEF—from the

Supplemental Program to the CHS Program. See AR at IHS000489. “The Tribe’s [coordination

of benefits] procedures do not allow the Supplemental Program to assume primary liability for

CHS care that is eligible for federal CHEF reimbursements.” Compl. ¶ 37. Indeed, care or

services that are eligible for coverage by a CHS program and which are eligible for

reimbursement under the CHEF are expressly excluded from the Supplemental Program’s

coverage. AR at IHS000382. This type of coordination does not meet the requirements of IHS’

narrow policy-based exception, because the Supplemental Program does not prohibit payment if

the patient is eligible for CHS; it only prohibits payment when the CHS claim is eligible for

reimbursement from the CHEF. Plaintiff has acknowledged this distinction, noting that “[t]he

Tribe could have treated each program as if they were wholly independent, excluding all member

care within contract health service priorities . . . ,” and “IHS would allow CHEF payments . . . if

23 IHS requires verification that a health plan meets these requirements through the submission of documentation describing “how and from what resources the plan is funded” and “[a] copy of the self-insurance policy, with [the] exclusionary clause clearly indicated.” AR at IHS000149 (IHM, § 2-3.8(I)(2)). “If a Tribal health plan refuses to submit requested documentation, the IHS will not consider the plan to be a Tribal self-insurance plan.” Id. (IHM, § 2-3.8(I)(3)). “Plans that are not self-insured are considered to be an alternative resource and the Payor of Last Resort guidance is to be followed.” Id.


40

the Tribe employed a broad exclusionary clause with no coordination between its self-insurance

and CHS programs[.]” AR at IHS000010-IHS000011; see also AR at IHS000121-IHS000122

(arguing that its coordination of care “maximizes the self-insurance program as an alternate

resource rather than a mere exclusionary program”).

Plaintiff’s proposed amendment to the Compact would not alter the conditional nature of

the Supplemental Program’s exclusionary clause. See AR at IHS000110-IHS000111. The

failure to prohibit payment for CHS eligible patients disqualifies Plaintiff’s Supplemental

Program from the IHS’ policy-based exception in the IHM for certain tribally-funded self-

insured health plans, even if such an exception still existed after Congress instituted the ACA’s

“payer of last resort” provision.

CONCLUSION

Based on the foregoing, Defendants respectfully request that the Court grant Defendants’

motion for summary judgment and enter judgment for Defendants on Plaintiff’s Phase One

Claims.


41

DATED: March 15, 2016 Respectfully submitted, BENJAMIN C. MIZER Principal Deputy Assistant Attorney General JOEL McELVAIN Assistant Branch Director

/s/ Elizabeth L. Kade ELIZABETH L. KADE (D.C. Bar No. 1009679)

Trial Counsel U.S. Department of Justice

Civil Division, Federal Programs Branch 20 Massachusetts Avenue, N.W. Washington, D.C. 20530 Telephone: (202) 616-8491 Facsimile: (202) 616-8470 E-mail: [email protected]

Counsel for Defendants


united states district court for the district of … › 2017 › 11 › 31-1-us-motion-for... ·...

Documents