timothy carr seward hobbs, straus, dean & walker, llp th … · timothy carr seward hobbs,...

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TIMOTHY CARR SEWARD Hobbs, Straus, Dean & Walker, LLP 400 Capitol Mall, 11th Floor Sacramento, CA 95814 Phone: (916) 442-9444 California State Bar # 179904 GEOFFREY D. STROMMER (pro hac vice) Oregon State Bar #93110 EDMUND CLAY GOODMAN (pro hac vice) Oregon State Bar #89250 Hobbs, Straus, Dean & Walker, LLP 806 S.W. Broadway, Suite 900 Portland, OR 97205 Phone: (503) 242-1745 Attorneys for the Susanville Indian Rancheria

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

SUSANVILLE INDIAN RANCHERIA, ) Plaintiff ) ) vs. ) ) MIKE LEAVITT, et al., ) Defendants. ) ) ) ) ) ) )

CASE NO. 2:07-cv-259-GEB-DAD PLAINTIFF’S REPLY TO DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION Hearing time: 2:00 P.M. Hearing date: February 26, 2007 Courtroom: No. 10 (13th Floor) Judge: Garland E. Burrell

Cover Page

Case 2:07-cv-00259-GEB-DAD Document 23 Filed 02/22/2007 of 22

Plaintiff’s Reply to Defendants’ Opposition To Plaintiff’s Motion for Preliminary Injunction i

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TABLE OF CONTENTS

Introduction…………………………………………………………………………………1 I. Tribe’s Right to “Immediate Injunctive Relief”………………………………………….1

II. The Tribe is Entitled to Injunctive Relief to Protect its Rights Under Title V………….3

a. Defendants’ Proposal Does Not Negate the Need for nor the Court’s Authority to Order Execution of the Tribe’s Title V Compact and FA………………………………………………………….3 b. The Tribe will be Harmed if Deprived of its Right to a Title V Compact and FA While Summary Judgment is Pending…………………………………………………………………………6

III. The Tribe is Likely to Succeed on the Merits………………………………………….8

a. Distinctions Between Title I and Title V of ISDEAA…………………………8

b. The Title V Compacting Process Provides Enhanced Protection for Tribes………………………………………………………………9 c. Defendants’ Reliance on Title V Rejection Criterion Fails to Meet Applicable Legal Standards………………………………………..10 d. ISDEAA Contains No Prohibition Against Tribes Charging Co-pays…………………………………………………………………13

Conclusion…………………………………………………………………………………..16


Plaintiff’s Reply to Defendants’ Opposition To Plaintiff’s Motion for Preliminary Injunction ii

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TABLE OF AUTHORITIES

Case Law Atchison, Topeka and Santa Fe Ry. v. Lennen, 640 F.2d 255, 259-61 (10th Cir.1981))……………………………………………………………………………...2 BedRoc Ltd., LLC v. U.S., 541 U.S. 176, 183 (2004)………………………………...14

Beisler v. C.I.R., 814 F.2d 1304, 1307 (9 Cir. 1987)………………………………..14 th

Brown v. Gardner, 513 U.S. 115, 117-18 (1994)…………………………………….13, 14, 16

Burlington N. R.R. Co. v. Bair, 957 F.2d 599, 601 (8th Cir.1992)……………………2

Christensen v. Harris County, 529 U.S. 576,587 (2000)…………………………….15

Crownpoint Institution of Technology v. Gale Norton, Civ. No. 04-531 JP/DJS, Findings of Fact and Conclusions of Law (Appendix A to brief)...…………………..2 De la Fuente v. F.D.I.C., 332 F.3d 1208, 1219 (9th Cir. 2003).....................................8, 12

Fortis, Inc. v. U.S., 420 F.Supp.2d 166, 181 (S.D.N.Y., 2004)………………………13

Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307-08 (1961)…………………………14

Lincoln v. Vigil, 508 U.S. 182, 198-199 (1993)...........................................................12

Lorillard v. Pons, 434 U.S. 575, 580-83 (1978)……………………………………..15, 16

Nizhoni Smiles v. IHS, DAB No. CR450, Docket No. C96-029 (Dec. 19, 1996)……15

Northwest Envt'l Defense Center v. Bonneville Power Admin., -- F.3d --, 2007 WL 163102, *14 (9th Cir. 2007)………………………………………………………8 Shoshone-Bannock Tribe of the Fort Hall Reservation v. Shalala, 988 F. Supp. 1306, 1313-1318 (D. Or. 1997)………………………………………………………10 Trailer Train Co. v. State Bd. of Equalization, 697 F.2d 860, 869 (9th Cir. 1983)…...2

U.S. v. LSL Biotechnologies, 379 F.3d 672, 679 (9 Cir. 2004)……………………..14 th

U.S. v. Estate Preservation Services, 38 F.Supp.2d 846, 850 (E.D. Cal. 1998)……...2

Zuber v. Allen, 396 U.S. 168, 185 (1969)……………………………………………15


Plaintiff’s Reply to Defendants’ Opposition To Plaintiff’s Motion for Preliminary Injunction iii

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Statutes 25 U.S.C. § 450f…………………………………………………………………….6, 9 25 U.S.C. § 450f note……………………………………………………………….11 25 U.S.C. § 450j……………………………………………………………………..6 25 U.S.C. § 450m-1…………………………………………………………………1, 6, 16 25 U.S.C. § 458aaa-4………………………………………………………………..6, 10-11 25 U.S.C. § 458aaa-5………………………………………………………………..6, 11-12 25 U.S.C. § 458aaa-6………………………………………………………………..4, 5, 6, 9, 10 25 U.S.C. § 458aaa-7………………………………………………………………..7 25 U.S.C. § 458aaa-10………………………………………………………………1 25 U.S.C. §§ 458aaa-11……………………………………………………………..13 25 U.S.C. § 458aaa-14………………………………………………………………13-16 31 U.S.C. § 3901 et seq………………………………………………………………7 Regulations

42 C.F.R. §§136.11, 12……………………………………………………………..12 42 C.F.R. § 137.60………………………………………………………………….6 42 C.F.R. § 137.65………………………………………………………………….6 42 C.F.R. §§ 137.75-77……………………………………………………………..7 42 C.F.R. § 137.136…………………………………………………………………4 42 C.F.R. § 137.140…………………………………………………………………9 42 C.F.R. § 137.185…………………………………………………………………6


Plaintiff’s Reply to Defendants’ Opposition To Plaintiff’s Motion for Preliminary Injunction iv

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Legislative History

H.R. Rep. No. 106-477……………………………………………………………....8, 9 Sen. Rep. No. 106-221……………………………………………………………….9 Pub.L. No. 106-260, 114 Stat. 711, 731 (2000)……………………………………...9 Hearing on S. 979 Before the Senate Comm. on Indian Affairs, 106th Congress, 1st Sess. (prepared statement of Michael Lincoln, Deputy Director, Indian Health Service)…11 Other Federal Rule of Evidence 408 ………………………………………………………7 Felix S. Cohen, Cohen's Handbook of Federal Indian Law, §22.02[3], at 1349-50 (2005 ed.)…………………………………………………………………………………...9


Plaintiff’s Reply to Defendants’ Opposition To Plaintiff’s Motion for Preliminary Injunction 1

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Introduction

Defendants’ opposition avoids the fundamental issue in this case: that by requiring the

Tribe, as a condition of obtaining its proposed Compact and Funding Agreement (FA), to accept

restrictions on the manner in which it operates its pharmacy program, Defendants have deprived

and continue to deprive the Tribe of rights guaranteed by Title V of ISDEAA. Their argument is

based entirely on an expressed willingness to stipulate to a continued extension of the Tribe’s

Title I Contract and Annual Funding Agreement (AFA), which does not address the harm to the

Tribe and which would render a nullity the ISDEAA provision that authorizes the Tribe to obtain

“immediate injunctive relief” in these circumstances. Under ISDEAA and the applicable case

law, the Court is empowered to order Defendants to execute the Tribe’s Title V agreements

(whose language is silent on the billing issue), so as to prevent Defendants from continuing to

hold the Tribe’s Title V rights in abeyance. Defendants’ assertion that their proposal negates the

Court’s authority to issue such preliminary relief is contrary to the ISDEAA’s statutory

framework, blurs the distinctions between Title I and Title V, and, despite Defendants’ argument

to the contrary, requires evaluation of the likelihood of success on the merits.

I. Tribe’s Right to “Immediate Injunctive Relief”

ISDEAA authorizes this Court to “order appropriate relief . . . against any action by an

officer of the United States or any agency thereof contrary to this subchapter or regulations

promulgated thereunder,” and specifically includes mandamus and “immediate injunctive relief.”

25 U.S.C. § 450m-1(a) (emphasis added) (made applicable to Title V by 25 U.S.C. § 458aaa-

10(a)). Mandamus and immediate injunctive relief are appropriate where, as here, Defendants

unlawfully seek to impose conditions on the Tribe’s exercise of its rights under Title V.



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As a matter of equity, when a statute expressly provides for such preliminary injunctive

relief, a plaintiff is entitled to such relief upon a showing that defendants seek to unlawfully

impose certain burdens in violation of the statute, with no further requirement to balance the

traditional equities. See, e.g., Trailer Train Co. v. State Bd. of Equalization, 697 F.2d 860, 869

(9 Cir. 1983) (issuing preliminary injunction against imposition of tax, and finding that “th [t]he

standard requirements for equitable relief need not be satisfied when an injunction is sought to

prevent the violation of a federal statute which specifically provides for injunctive relief”) (citing

Atchison, Topeka and Santa Fe Railway v. Lennen, 640 F.2d 255, 259-61 (10th Cir.1981)).

Accord U.S. v. Estate Preservation Services, 38 F.Supp.2d 846, 850 (E.D. Cal. 1998) (issuing

preliminary injunction without balancing harms “[b]ecause [the statute in question] expressly

authorizes the issuance of an injunction, the traditional requirements for equitable relief need not

be satisfied”); aff’d 202 F.3d 1093, 1098 (9 Cir. 2000). th In ISDEAA, Congress has already

balanced the equities and determined that an injunction should issue if Defendants are attempting

to impose restrictions contrary to the Tribe’s statutory rights. See, e.g., Burlington N. R.R. Co. v.

Bair, 957 F.2d 599, 601 (8th Cir.1992) (“[I]t is not the role of the courts to balance the equities

between the parties” where Congress has already done so in applicable statute).

In an ISDEAA case involving Title I, the U.S. District Court for New Mexico expressly

held that where a tribal organization sought an injunction pursuant to 25 U.S.C. § 450m-1(a),

“[t]he specific mandamus relief authorized by ISDA relieves [the plaintiff tribal organization] of

proving the usual equitable elements including irreparable injury and absence of an adequate

remedy at law.” Crownpoint Institution of Technology v. Gale Norton, Civ. No. 04-531 JP/DJS,

Findings of Fact and Conclusions of Law (attached as Appendix A) at 26, ¶ 30.



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Thus, the Tribe is entitled to the immediate injunctive relief requested because it can

show a likelihood of prevailing on the merits. Defendants’ proposal, to the contrary, would

make ISDEAA’s “immediate injunctive relief” meaningless, since it would permit IHS to

continue its unlawful behavior – withholding the Title V rights and benefits to which the Tribe is

entitled for reasons not permitted under ISDEAA. Defendants seek to tip the balance of harms

analysis in their favor by incorrectly asserting that their proposal avoids any harm. However, in

this case, where the Tribe is likely to succeed in demonstrating that Defendants’ imposition of

conditions on the Tribe’s proposed language is contrary to ISDEAA, the statutory provision for

injunctive relief renders the irreparable harm analysis moot, and thus negates the foundation of

Defendants’ opposition.

II. The Tribe is Entitled to Injunctive Relief to Protect its Rights Under Title V

Defendants’ proposal to maintain the “status quo” is intertwined with their position on

the merits, which improperly blurs significant distinctions between ISDEAA’s Title I and Title

V. Under Title V, in the circumstances presented by this case, the Tribe is entitled to have the

Court order that the proposed Compact and FA go into effect. Defendants rely on what are

essentially ministerial provisions of Title V’s final offer process to delay providing the Tribe its

substantive right to a signed compact and FA containing the existing pharmacy services program

language, which is silent as to billing. Further, Defendants’ proposed interim relief will result in

ongoing harm by depriving the Tribe of rights and benefits under Title V that are not available

by merely continuing the Title I Contract and AFA.

a. Defendants’ Proposal Does Not Negate the Need for nor the Court’s Authority to Order Execution of the Tribe’s Title V Compact and FA

Defendants’ assertion that their “status quo” proposal negates the court’s authority to

issue the requested preliminary relief (as well as the need for such relief) is based on an



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impermissibly narrow reading of the Title V “final offer” process, and cites to regulations that

are inapposite.1 Under 25 U.S.C. §458aaa-6(b), where there is a dispute, the Tribe may make a

“final offer” to the Secretary. Here, there was a dispute, but with respect to the pharmacy

language it was not over any specific, severable language in the proposed Compact and FA. The

language concerning pharmacy services in the Compact and FA was substantially the same as the

language previously agreed to for such services in the Title I Contract and AFA, and such

language is silent about billing beneficiaries. Declaration of Jim Mackay, Exh. A (Feb. 8, 2007).

The language simply includes a pharmacy services program as part of the programs the Tribe can

continue to operate. Id. at 5.

In such circumstances, the statute does not require, as Defendants assert, that the Tribe

submit as part of its final offer the “severable portions of the proposed compact and funding

agreement.” See Defendants’ P.I. Opp. at 6.2 Rather, §458aaa-6(c)(1)(D) imposes a duty on the

Secretary to offer an option to the Tribe, upon rejecting the Tribe’s final offer, of entering into

the severable portions of the proposed Compact and FA consistent with Title V. Here, the

Secretary did not offer a severable portion for execution, but rather offered the Tribe the option

of either (1) including an overt statement that the Tribe would not be charging for pharmacy

services, or (2) deletion of all of the language describing pharmacy services from the FA

1 Defendants assert that “Susanville’s confusion may stem from the Title V regulations that provide that if the Secretary fails to respond to a tribe’s final offer, then the final offer is accepted as a matter of law.” Defendants’ P.I. Opp. at 8. There is no “confusion” on the Tribe’s part – the Tribe’s position is based not on the regulation cited by Defendants (42 C.F.R. §137.136), but on the statutory framework itself and the Tribe’s rights thereunder. 2 Defendants’ reliance on purported longstanding agency practice asserted by Dennis Heffington in his Declaration is incorrect. As explained by the attorney for one of the tribes (“Riverside”) whose negotiation process Mr. Heffington discusses, the Riverside situation was very different from the circumstances here, and the “final offer” process is not necessarily the same in all circumstances. Declaration of Myra Munson, at ¶ 3 (February 22, 2007). Moreover, the Tribe did in fact use the process Mr. Heffington describes for one of the issues in dispute for which the process made sense. The Tribe did submit separately one of the issues that remained in dispute – Article II, Section 2 of the Compact relating to compact provisions superseding FA provisions. See Grim Letter, Exhibit D to Declaration of Jim Mackay (Feb. 8, 2007), at pp. 6-7.



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altogether. Either option held hostage the signing of the Tribe’s Title V Compact and FA unless

the Tribe gave in to IHS’ unlawful demands that the Tribe not charge co-pays.3

The requirement imposed on the Secretary here must be read in pari materia with the

entire § 458aaa-6. This section, first, requires that the Secretary’s rejection of the final offer

must include “a timely written notification to the Indian tribe that contains a specific finding that

clearly demonstrates, or that is supported by a controlling legal authority” that one of the four

permissible rejection criteria is present. 25 U.S.C. §458aaa-6(c)(1)(A) (emphasis added). The

Secretary’s rejection, as discussed below, fails to meet this statutory requirement. The

purportedly “severable” portion offered by the IHS is in fact a requirement that the Tribe add

new language that would expressly prohibit the Tribe from charging beneficiaries for pharmacy

services, or to delete the pharmacy provision altogether. In fact, if the Tribe had accepted either

of the options that the IHS offered, all the negative consequences to its pharmacy program that

the Tribe sought to avoid would have followed. The options were, thus, in effect false choices

that violate the statute. Title V does not require the Tribe to choose either of these false options,

and its refusal to do so does not allow the Secretary to circumvent the other substantive

requirements of this section. See 25 U.S.C. § 458aaa-6(c)(2) (describing procedure that must be

followed if Tribe chooses the severance option).

The severance option is in fact one of three options that the Tribe has under § 458aaa-

6(c)(1). The Tribe may also request an administrative hearing on the record with full discovery

and appeal rights, or the Tribe, in lieu of filing such an appeal, may “directly proceed to initiate

3 Defendants’ proposal for interim relief (continuation of the Title I Contract in its entirety) is in fact is not consistent with its argument here. If indeed the pharmacy services portion were severable, and Defendants’ proposal sought to protect the status quo, their offer should have involved executing the Compact and FA for all provisions except the pharmacy program, and continuing the pharmacy program alone under the Title I Contract and AFA. In fact, the Tribe made exactly this offer to the IHS on several occasions after the January 29 rejection letter was sent but IHS rejected the offer.



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an action in a Federal district court pursuant to section 450m-1(a) of this title.” 25 U.S.C.

§458aaa-6(c)(1)(C). §450m-1(a), of course, is the provision that permits the Tribe to obtain

“immediate injunctive relief.” What the Tribe’s request for injunctive relief seeks, and to which

it is entitled, is for this court to direct the IHS to sign the Compact and FA and, in doing so, to

prevent IHS from imposing a condition in the pharmacy program language (or requiring its

deletion in its entirety) for reasons contrary to law.

b. The Tribe will be Harmed if Deprived of its Right to a Title V Compact and FA While Summary Judgment is Pending

The Tribe will suffer more than monetary harm if forced to continue operating under an

amendment to the Title I Contract rather than under a Title V Compact, because Title V provides

a number of additional substantive legal rights and flexibility not available under Title I. Here

are some examples.

First, the Tribe would be deprived of its authority to redesign programs and reallocate

funds among programs without the administrative burden of Secretarial approval or review. See

25 U.S.C. § 458aaa-5(e); 42 C.F.R. § 137.185. Compare 25 U.S.C. §§450j(j), 450f (under Title

I, tribal redesign authority is conditioned on evaluation by the Secretary under statutory

declination criteria and procedures).

Second, the Tribe would be deprived of its Title V right to include statutorily mandated

grants – in addition to programs – in its funding agreement. See 25 U.S.C. § 458aaa-4(b)(2); 42

C.F.R. §§ 137.60; 137.65. Compare 25 U.S.C. § 450f(a) (no similar right). The addition of

grant money to funding agreements executed under Title V provides a tangible funding

advantage over operating under a Title I contract.

Third, the Tribe would be deprived of lost interest if the execution of the Title V

Compact and FA is delayed for at least two more months, because under the IHS’s proposed



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option of continuing piecemeal the Tribe’s Title I contract would only entitle the Tribe to be paid

a pro rata share of its program funds rather than the lump sum payment authorized under its

Compact and FA. 25 U.S.C. § 458aaa-7(a); 42 C.F.R. §§ 137.75-77.4

Finally, Defendants’ proposal could put the Tribe in the position of having to re-open

those provisions of the Compact and FA that were already agreed to in a lengthy, drawn out,

costly (to the Tribe) and difficult negotiation process that took the better part of a year to

conclude.

In sum, defendants’ proposal to continue the Title I agreements does not mitigate the

potential harms to be suffered by the Tribe if the Compact and FA are not executed and

implemented.5 At the same time, the Defendants have demonstrated absolutely no prejudice or

harm that would occur to them if the Compact and FA are signed and made effective. In fact, the

Defendants’ proposal to continue the Title I agreements has the exact same affect for

Defendants, as both the Title I agreements and the proposed Title V Compact and FA are silent

as to whether the Tribe may bill beneficiaries. More to the point, however, is that the traditional

equities are not relevant where, as here, the Tribe is likely to succeed on the merits in

demonstrating that Defendants’ rejection violates the ISDEAA.

4 In this respect, Defendants incorrectly assert that “Susanville has the option of seeking the recovery of lost interest as an element of damages.” Defendants’ P.I. Opp. at 5. Presumably Defendants are referring to the Tribe’s right to collect lost interest pursuant to the Prompt Payment Act (“PPA”), 31 U.S.C. § 3901 et seq. However, the Tribe’s rights under the PPA would not accrue until the date the Compact and FA go into effect, because until that date the Tribe will not have the right to be paid 100% of its available funds. 5 We note that Defendants’ brief, in relaying statements made in compromise negotiations on the preliminary injunction motion (in apparent violation of Federal Rule of Evidence 408), misrepresented those negotiations. The Tribe did not flatly reject Defendants’ proposal to extend the entire Title I Contract and AFA as the Defendants state; rather, the Tribe’s attorney made a counterproposal that Defendants recognize and affirm the completed Title V Compact and FA, explaining in the process the various benefits and safeguards that this would provide to the Tribe and the lack of prejudice and harm that the Defendants would bear. Defendants’ rejection of the Tribe’s counterproposal indicated, as the Tribe’s attorneys feared, that IHS continues to entertain the possibility of reopening negotiations on the entire Compact and FA.



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III. The Tribe is Likely to Succeed on the Merits

Defendants’ proposed method for preserving the status quo begs the question of

likelihood of success on the merits, and that question is now squarely before the Court.

Defendants’ position on the merits has already been set forth in IHS’ response to the Tribe’s final

offer (attached as Exhibit D to Declaration of Jim Mackay, Feb. 8, 2007, hereafter “Grim

Letter”). It is appropriate for the Court to look at the Grim Letter for the description of

Defendants’ position on the merits, since the Court “can uphold an agency's decision only on the

basis of the reasoning in that decision.” De la Fuente v. F.D.I.C., 332 F.3d 1208, 1219 (9th Cir.

2003); accord Northwest Envt'l Defense Center v. Bonneville Power Admin., -- F.3d --, 2007 WL

163102, *14 (9th Cir. 2007) (agency is bound by reasoning in its administrative decision and may

not marshal “other reasons for its decision” before the court). The Grim Letter, as with

Defendants’ proposal for interim relief, inappropriately conflates the distinct provisions of Title I

and Title V of ISDEAA.

a. Distinctions Between Title I and Title V of ISDEAA

ISDEAA was originally enacted in 1974 to provide tribes a means by which to govern

themselves without overly burdensome federal oversight. Title I allows tribes to contract with

Interior and HHS to operate certain of those agencies' programs. However, years of practice

revealed that Title I lacked the flexibility needed for tribes to fully break away from the

cumbersome federal bureaucracy. See H.R. Rep. No. 106-477, at 63-64 (November 17, 1999),

reprinted in 4 U.S.C.A.A.N. 573, 596-597. Self-governance compacting (under Titles IV and V)

was therefore enacted to permit tribes to take direct control over federal programs and enable

them to "more efficiently and more innovatively" run those programs than they would be run

under federal control. H.R. Rep. No. 106-477, at 66 (November 17, 1999), reprinted in 2000



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U.S.C.A.A.N. 573, 600. Moreover, Congress intended for Title V to bolster the Congressional

policy of strengthening and promoting tribal governments because they will benefit from the

"flexibility inherent in the program that enables [tribes] to tailor the programs to local needs" and

thus provide direct accountability to their members. Sen. Rep. No. 106-221, at 3 (November 9,

1999). Congress’ intentions in Title V were summarized by Representative George Miller:

[Under Title I], [a]ll Indian tribes have a enjoyed similar but lesser right to contract and operate individual IHS programs and functions . . . [Title V] give[s] Indian tribes who meet certain criteria the right to take over the operation of IHS functions [thereby] remov[ing] needless and sometimes harmful layers of federal bureaucracy that dictate Indian affairs.

H.R. Rep. No. 106-477, at 65-66 (November 17, 1999), reprinted in 2000 U.S.C.A.A.N. 573,

599-600 (emphasis added). By amending ISDEAA to create the self-governance program under

Title V, Congress sought to allow participating tribes the maximum flexibility possible to

conduct programs and services once provided by the IHS and to maximize tribal administration

and control of programs.

b. The Title V Compacting Process Provides Enhanced Protection for Tribes

A critical part of the new approach under Title V was the compacting process,

including a significant narrowing of the grounds that the Secretary could rely on to refuse to

compact with tribes. The criteria for rejecting a final offer under Title V at § 458aaa-6(c)(A) are

far different than the criteria for declining a contract proposal under Title I at § 450f(a)(2). Nor

are they interchangeable, as the Grim Letter suggests by its heavy reliance on an ALJ decision

that involved a Title I declination. Central to Title V is the requirement that the Secretary, when

he decides to reject a final offer, clearly demonstrate or otherwise provide “controlling legal

authority” that his decision is based on one of the four criteria set out in 25 U.S.C. § 458aaa-

6(c)(1)(A); accord 42 C.F.R. § 137.140. A decision based on any other criterion is not lawful



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under the statute. Further, when defending his decision in court, the Secretary bears the burden

of proof by “clear and convincing evidence” to establish the validity of asserting the specific

criterion asserted for rejecting the Tribe’s final offer, 25 U.S.C. § 458aaa-6(d), and his decision

is not entitled to any judicial deference. Shoshone-Bannock Tribe of the Fort Hall Reservation v.

Shalala, 988 F. Supp. 1306, 1313-1318(D. Or. 1997).

c. Defendants’ Reliance on Title V Rejection Criterion Fails to Meet Applicable Legal Standards

In the present case, Defendant Grim asserted the third enumerated criterion to reject the

Tribe’s proposed pharmacy services language: “The Indian tribe cannot carry out the program,

function, service or activity (or portion thereof) in a manner that would not result in significant

danger or risk to the public health.” 25 U.S.C. 458aaa-6(c)(1)(A)(iii). This is the only criterion

that allows the IHS to reject a final offer due to the “manner” in which a tribe will conduct the

program, which is the basis of the IHS’ objection to the Tribe’s pharmacy program. Defendants

thus have the burden of proving by clear and convincing evidence that permitting the Tribe to

charge a co-pay would “result in significant danger or risk to the public health.” Defendants

make no attempt to demonstrate such danger or risk. Rather, they point to other, inapplicable

statutory provisions to make the argument – unsupported by ISDEAA – that IHS may reject a

tribal program involving co-pays because the IHS cannot charge such co-pays.

The Grim Letter, for example, asserts (at p. 2) that §§ 458aaa-4(b)(1) and (2) require a

tribe to administer a program in the same manner that the IHS is authorized to administer the

program. Defendants’ reliance on these provisions is misplaced. Section 458aaa-4(b)(1)

authorizes tribes to plan, conduct, consolidate, administer and receive full tribal share funding for

programs operated by the IHS, “without regard to the agency or office of [IHS]” where such

programs are performed. This provision makes no reference to the manner in which the program



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is operated. Similarly, the words “administered by the DHHS through the IHS and all local . . .

functions so administered” in § 458aaa-4(b)(2) do not address the manner in which a program is

carried out by IHS, but are used to distinguish between (1) IHS programs and (2) programs of

other DHHS agencies “with respect to which Indian tribes or Indians are primary or significant

beneficiaries” but which Congress did not intend to include in Title V. Congress’ intent is

evident on this point because it simultaneously enacted a Title VI of the ISDEAA, along with

Title V, in the Tribal Self-Governance Amendments of 2000 (set out at 25 U.S.C. § 450f note).

See Pub.L. No. 106-260, 114 Stat. 711, 731 (2000); discussed in Felix S. Cohen, Cohen's

Handbook of Federal Indian Law, §22.02[3], at 1349-50 (2005 ed.). Title VI authorizes the

Department of Health and Human Services (DHHS) to conduct a study to determine the

feasibility of including programs administered by other DHHS agencies within the scope of the

tribal self-governance authority.6 The testimony from IHS witnesses before the Senate Indian

Affairs Committee corroborates that the intent of § 458aaa-4(b)(2) was to limit the programs that

tribes could compact to IHS programs, not the manner in which those programs were

administered.7 This section does not provide any authority for IHS to reject a tribal program

based on the manner in which the tribe plans to carry out the program.

In their Opposition to the Tribe’s Motion for Temporary Restraining Order (and at

oral argument on the TRO), Defendants also suggested that the language in 25 U.S.C. §

6 Title VI requires the Secretary to “conduct a study to determine the feasibility of a tribal self-governance demonstration project for appropriate programs, services, functions, and activities (or portions thereof) of the agency,” Pub. L. No. 106-260, § 602(a), 114 Stat. 711, 731 (2000), and defines the term “agency” to mean “any agency or other organizational unit of the Department of Health and Human Services, other than the Indian Health Service.” Id. at § 601(b)(1). 7 See Hearing on S. 979 Before the Senate Comm. on Indian Affairs, 106th Congress, 1st Sess., at 93-96 (prepared statement of Michael Lincoln, Deputy Director, Indian Health Service) (“Last year, Title VI was added to H.R. 1833 to address the Administration’s concerns about moving too quickly to include non-IHS PFSAs without first determining whether other Department of Health and Human Services (HHS) programs should be brought within the scope of this self-governance legislation”).



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458aaa-5(e) supports their rejection. This section, which is the broad authorization for

tribes to redesign and consolidate compacted programs, states that a tribe’s redesign or

consolidation may not “have the effect of denying eligibility for services to population

groups otherwise eligible to be served under applicable Federal law.” Defendants

suggest that the Tribe’s co-pay policy in some manner is a denial of eligibility.

This argument should be rejected outright, because it was not part of the

reasoning included in the agency’s decision in the Grim Letter. De la Fuente, 332 F.3d at

1219. But Defendants’ reliance on this language fails on substantive grounds as well. A

co-pay policy is not an eligibility criterion. IHS suggests that the co-pay policy might

deny otherwise eligible individuals access (without providing any proof of such an

assertion); even if this were so, which it is not, the IHS’ own regulations make clear that

access is distinct from eligibility. See 42 C.F.R. §§136.11, 12; accord Lincoln v. Vigil,

508 U.S. 182, 198-199 (1993) (distinguishing between denial of access and of eligibility).

But most damning to IHS’ reliance on this language are the facts associated with

the program at issue here. The IHS provides the Tribe with no funds for this pharmacy

program and provides no pharmacy service in the Susanville area which eligible Indian

beneficiaries could access. As IHS’ counsel conceded during the TRO hearing, if the

Tribe did not provide this program, beneficiaries would have to purchase drugs elsewhere

at higher costs. IHS' argument is thus based on an illusion, since there is neither

infrastructure nor funding to provide such services in the manner that the Tribe has been

able to – in a full service, lower-cost, continuum of care health services environment. See

Marsland Decl., ¶6-9 (Feb. 7, 2007); Mackay Decl., ¶6-7 (Feb. 8, 2007).



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d. ISDEAA Contains No Prohibition Against Tribes Charging Co-pays

Ultimately, therefore, Defendants’ position rests on their assertion that the statutory

prohibition against IHS billing Indians (25 U.S.C. § 458aaa-14(c)) also prohibits tribes from so

billing. The plain language of this section, however, includes no such prohibition. Since their

case ultimately rests on attempting to add a prohibition where the statute has none, it must fail.

See, e.g., Brown v. Gardner, 513 U.S. 115, 117-18 (1994) (rejecting Veterans Administration’s

attempt to add a “fault” requirement to a liability statute “[d]espite the absence from the statutory

language of so much as a word about fault on the part of the VA”). As with the VA in Brown,

Defendants have asserted contradictory positions regarding §458aaa-14(c): they acknowledge –

as they must – that the plain language of this section contains no prohibition against tribes

charging beneficiaries, and yet also assert the untenable argument that this silence somehow

“unambiguously” supports their assertion. Grim Letter at p. 3; Defendants’ T.R.O. Opp. at p. 9;

17. Of course, the reason for such illogical contortions is that interpretation of any ambiguity in

ISDEAA – as with the statute at issue in Brown, see 513 U.S. at 117-18 – requires application of

a canon of construction that does not favor the agency. 25 U.S.C. §§ 458aaa-11(f) (“any

ambiguity shall be resolved in favor of the Indian tribe”).

Moreover, in attempting to rationalize the purportedly unambiguous nature of this

prohibition, Defendants have relied variously on several canons of statutory construction –

whose very purpose is to assist in interpreting ambiguous statutory language. See, e.g., Fortis,

Inc. v. U.S., 420 F.Supp.2d 166, 181 (S.D.N.Y., 2004) (noting that the reenactment doctrine – the

canon Defendants most heavily rely on here – “is best understood as a tool for interpreting a

statute and understanding its legislative history if the statute is otherwise ambiguous”).



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Moreover, even there were any ambiguity necessitating canons of statutory construction, those

canons undermine rather than support Defendants’ position.

First, Defendants’ interpretation violates the “preeminent canon of statutory

interpretation”: that courts should “’presume that [the] legislature says in a statute what it means

and means in a statute what it says there.’” BedRoc Ltd., LLC v. U.S., 541 U.S. 176, 183 (2004)

(citations omitted). Defendants’ interpretation attempts to rewrite § 458aaa-14(c) to add a

prohibition against tribes that is not found in the language Congress used. Agencies, however,

may not rewrite a statute so that it reads the way the agency believes Congress meant it to read.

See, e.g., Brown, 513 U.S. at 117-18 (refusing to add a “fault” liability requirement where such

term is lacking in statute); accord U.S. v. LSL Biotechnologies, 379 F.3d 672, 679 (9 Cir. 2004)

(refusing to adopt government’s interpretation of the statute at issue because

th

“[w]e are not

willing to rewrite a statute under the pretense of interpreting it”).

Second, courts “should avoid an interpretation of a statute that renders any part of it

superfluous and does not give effect to all of the words used by Congress.” Beisler v. C.I.R., 814

F.2d 1304, 1307 (9 Cir. 1987). See also th Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307-08

(1961) (rejecting an interpretation of one subpart of statute where that interpretation would

render the immediately following subpart “a mere redundancy”). Defendants’ reading would

render the last clause of 25 U.S.C. § 458aaa-14(c) (“nor require any Indian tribe to do so”)

redundant, since under their interpretation the first clause alone would prohibit IHS from either

permitting or requiring tribes to charge for services. See Jarecki, 367 U.S. at 307 (“To borrow

the homely metaphor of Judge Aldrich in the First Circuit, ‘If there is a big hole in the fence for

the big cat, need there be a small hole for the small one?’”). The only reading that gives



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meaning to this clause is the plain meaning of the language used: that IHS alone is prohibited

from charging, and that as a corollary the IHS cannot require tribes to charge for services.

Third, Congress’ silence with regard to tribal billing should not be construed to mean that

Congress assumed that such a prohibition was understood. See Zuber v. Allen, 396 U.S. 168, 185

(1969) ("Legislative silence is a poor beacon to follow in discerning the proper statutory route");

Brown, 513 U.S. at 121 (“As we have recently made clear, congressional silence ‘lacks

persuasive significance’ ”) (citations omitted). If Congress did not specifically include language

to address this issue, such silence should not be imputed to mean something contrary or in

addition to the plain language of the statute.

Fourth, Defendants’ reliance on the doctrine of “longstanding agency practice” is

misplaced. IHS has not adopted any regulation regarding the language in the Title V

amendments, and their internal policy is therefore not entitled to deference. Christensen v.

Harris County, 529 U.S. 576,587 (2000). Defendants’ basis for this argument is an ALJ’s

decision in Nizhoni Smiles v. IHS, DAB No. CR450, Docket No. C96-029 (Dec. 19, 1996),

which interpreted language from a 1996 appropriations act in light of Title I, not the Title V

amendments at issue here. Moreover, Defendants attempt to use this doctrine to obtain Chevron-

type deference to the agency’s interpretation, deference expressly pre-empted by the statutorily-

mandated canon of construction.

Finally, the canon of construction upon which Defendants most heavily rely – the

“reenactment doctrine” set out in Lorillard v. Pons8 – is inapposite. This doctrine is applicable

only where Congress has re-enacted a statute “without change,” 434 U.S. at 580, which is not the

case here. Further, Defendants’ reliance on the reenactment doctrine is also incorrect because

8 434 U.S. 575, 580-83 (1978).



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the criteria for applying this presumption – evidence of Congressional awareness of the agency

interpretation it is purportedly adopting – are not present. See Lorillard, 434 U.S. at 580-81

(judicial interpretations underlying the issue were "well established" and "Congress exhibited

both a detailed knowledge of the [relevant] provisions and their judicial interpretation"); Brown,

513 U.S. at 121 (rejecting VA’s reenactment doctrine argument in significant part because "the

record of congressional discussion preceding reenactment makes no reference to the VA

regulation, and there is no other evidence to suggest that Congress was even aware of the VA's

interpretive position").

25 U.S.C. § 458aaa-14(c) does not contain the prohibition against tribal billing that

Defendants attempt to read into it. The plain language is clear, and Congress’ silence on the

question of tribal discretion to bill beneficiaries should not be read to include a hidden, unwritten

meaning that Defendants “believe” represents Congress’ true intent. See Defendants’ T.R.O.

Opp. at p. 8. Moreover, even if the language were ambiguous, the applicable canons of

construction would compel an interpretation recognizing the Tribe’s flexibility and discretion to

charge Indian beneficiaries for pharmacy services.

Conclusion

The Tribe is entitled to the “immediate injunctive relief” it seeks under §450m-1(a) of

ISDEAA. The Tribe is likely to succeed on the merits, and where the statute provides for

injunctive relief, such likelihood of success is grounds for granting the relief requested without a

further showing of the traditional equities. Defendants’ proposal for interim relief does not

protect the Tribe’s rights under Title V and would deprive the Tribe of the important benefits

Congress intended. Thus, the only means of preventing Defendants from continuing to hold the



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Tribe’s Title V rights in abeyance is an order requiring Defendants to execute and implement the

Tribe’s Title V Compact and FA.

Dated: February 22, 2007: /s/ Timothy Carr Seward TIMOTHY CARR SEWARD

Hobbs, Straus, Dean & Walker, LLP Attorneys for the Susanville Indian Rancheria


timothy carr seward hobbs, straus, dean & walker, llp th … · timothy carr seward hobbs,...

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