Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: California Rural Indian Health Board, Inc., and the Blue Lake
Rancheria, Appellants,
- v. -
Indian Health Service, Appellee.
DATE: June 23, 1993 Docket No. C-93-013Decision No. CR273
RECOMMENDED DECISION
By letters dated August 20, 1992 and September 17, 1992, the California Area
Office of Appellee, Indian
Health Service (IHS), declined a proposal for a contract submitted by Appellants,
the Blue Lake Rancheria
(Blue Lake) and California Rural Indian Health Board, Inc. (CRIHB), to provide
health care services to
members of Blue Lake. Blue Lake and CRIHB requested a hearing, and the case
was assigned to me for a
hearing and a recommended decision. I conducted a hearing in Sacramento, California,
on February 17
and 18, 1993. 1/ The parties submitted posthearing briefs and reply briefs.
I have carefully considered the evidence of record, the parties' arguments,
and the applicable law. I
conclude that the contract declination was lawful. Therefore, I recommend that
the declination be
sustained.
ISSUE
The issue in this case is whether IHS lawfully declined Blue Lake and CRIHB's contract proposal.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Blue Lake is a federally-recognized Indian tribe. Tr. at 290. 2/
2. Blue Lake has 34 members. Tr. at 235.
3. CRIHB is a tribal organization whose mission is to assist California Indian
tribes in obtaining health
care. Tr. at 556 - 57.
4. Trinity Rural Indian Health Project, Inc. (TRIHP), operates a federally-funded
medical and dental clinic
that provides health care to Indians. Stipulation at paragraphs 3 - 6, 7, 10;
see Tribe Ex. 3.
5. The TRIHP clinic is located in Weaverville, California. Tribe Ex. 3, p. 1.
6. Weaverville, California, is approximately 90 miles from Blue Lake. Tr. at 207.
7. On June 19, 1992, Blue Lake and CRIHB submitted a proposal to IHS to contract
for the provision of
health services to the members of Blue Lake. IHS Ex. 1.
8. Under the proposal, health services would be provided by TRIHP (designated
in the proposal as "Trinity
Rural Indian Health Services, Weaverville, California," or "TRIHS").
IHS Ex. 1, p. 5.
9. As of June 19, 1992, IHS and CRIHB had a contract to administer a comprehensive
health care program
for eligible Indians, which included members of Blue Lake. IHS Ex. 2, p. 1.
10. Pursuant to the contract in effect on June 19, 1992, CRIHB provided comprehensive
health care
services to the members of Blue Lake through a subcontract with United Indian
Health Service Inc.
(UIHS). IHS Ex. 2, p. 1.
11. The clinics operated by UIHS are located approximately 15 - 20 miles from
Blue Lake. IHS Ex. 2, p.
1; Tr. at 207.
12. Both TRIHP and UIHS have been approved by IHS to provide health services
to Indians. See
Findings 4, 10.
13. The health services which UIHS provides at its clinics include physicians'
services provided by three
board-certified family practitioners. Tr. at 453; see IHS Ex. 10, p. 1.
14. The health services which UIHS provides at its clinics include a full-time
dental clinic which offers a
full service dental program, including basic care, orthodontia, oral surgery,
and endodontics. IHS Ex. 10,
p.2; Tr. at 454 - 455.
15. The health services which UIHS provides at its clinics include mental health
services staffed by five
providers of care. Tr. at 455; see IHS Ex. 10, p. 2.
16. UIHS operates a separate substance abuse program, United Indian Lodge,
for the treatment of alcohol
and other substance abuse. IHS Ex. 10, p.3; Tr. at 455.
17. UIHS' staff includes two public health nurses who, among other things,
operate a diabetes program.
Tr. at 456.
18. UIHS operates specialty clinics, including an allergy clinic and a podiatry clinic. Tr. at 456 - 457.
19. UIHS provides vision services at its clinics, which include the services
of an ophthalmologist, two
optometrists, and an optician. IHS Ex. 10, p. 2.
20. The TRIHP clinic's primary full-time health care provider is a physician's
assistant. Tr. at 503; IHS
Ex. 2, p. 1.
21. In California, a physician's assistant is a health care provider who is
licensed to provide health care
under the supervision of a physician. Tr. at 504.
22. Patients who visit the TRIHP clinic, and who, in the judgment of the staff
physician assistant, need to
see a physician are referred to physicians who practice in the vicinity of the
TRIHP clinic. Tr. at 518 - 519.
23. TRIHP facilitates visits to specialists for its patients by assisting patients
with their transportation to
the specialists' offices. Tr. at 520.
24. TRIHP does not provide its patients with an alcohol abuse treatment program. Tr. at 522.
25. TRIHP sometimes refers its patients who are in need of alcohol abuse treatment to UIHS. Tr. at 522.
26. Although the health care services provided by TRIHP meet IHS' criteria
for contracting entities who
provide health care, they are less comprehensive than are those that are provided
by UIHS. Tr. at 512;
Findings 13 - 25; see Finding 12.
27. Blue Lake and CRIHB submitted their contract proposal to IHS pursuant to
the Indian Self-
Determination Act (Act). 25 U.S.C. 450 et seq.
28. Under the Act, the Secretary of the Department of Health and Human Services
(Secretary) is directed
to enter into contracts ("self-determination contracts") with Indian
tribes, pursuant to tribal resolutions, to
provide health care services to eligible Indians. 25 U.S.C. 450f(a)(1).
29. Under the Act, the Secretary must approve a self-determination contract
with an Indian tribe to provide
health care unless she finds specifically that:
a. the service to be rendered to the Indian beneficiaries of the particular
program or function to be
contracted will not be satisfactory;
b. adequate protection of trust resources is not assured; or
c. the proposed project or function to be contracted for cannot be properly
completed or maintained by
the proposed contract.
25 U.S.C. 450f(a)(2).
30. By letters dated August 20, 1992 and September 17, 1992, IHS declined the
contract proposal of Blue
Lake and CRIHB. IHS Ex. 2 - 3.
31. IHS advised Blue Lake and CRIHB that it was declining the proposal because
the distance of travel for
Blue Lake members to the TRIHP clinic, as compared to the distance of travel
for Blue Lake members to
the UIHS clinics, the difficult accessibility of the TRIHP clinic, and the less
comprehensive health care
services provided by the TRIHP clinic as opposed to those provided by the UIHS
clinics, would cause the
services provided by TRIHP to be unsatisfactory to Blue Lake members. IHS Ex.
2, p. 1 - 2; IHS Ex. 3, p.
2 - 3.
32. In any case where the Secretary declines to enter into a self-determination
contract, the Secretary must
provide the tribal organization which proposed to enter into the contract with:
a. a written statement, setting forth her objections to the proposed self-determination contract;
b. assistance to overcome the objections to the proposed self-determination contract; and
c. a hearing on the record, and an opportunity to appeal the Secretary's objections
to the proposed self-
determination contract, under such rules and regulations as the Secretary may
promulgate.
25 U.S.C. 450f(b).
33. In this case, IHS (as the Secretary's delegate) has the burden of proving,
by a preponderance of the
evidence, that the decision to decline the Blue Lake and CRIHB contract proposal
satisfies one of the
statutory grounds for declining a self-determination contract proposal. 5 U.S.C.
554(a), 556; see 25
U.S.C. 450f(a)(2), (b); 42 C.F.R. 36.208(a)(3).
34. As used in the Act, the term "the service to be rendered to the Indian
beneficiaries of the particular
program or function to be contracted will not be satisfactory" means that
the services which are proposed
to be contracted for cannot be provided in a practicable manner consistent with
the objectives of the
proposed self-determination contract, or with the Secretary's obligation to
provide health care to eligible
Indians. 25 U.S.C. 450f(a)(2).
35. The services which Blue Lake and CRIHB proposed to contract for included
providing, via a
subcontract with TRIHP, direct patient care for the treatment and prevention
of acute and chronic illness
and/or injuries. IHS Ex. 1, p. 12.
36. The services which Blue Lake and CRIHB proposed to contract for included
providing, via a
subcontract with TRIHP, preventive care and care for acute and chronic conditions.
The elements of the
proposal included providing services for prenatal care, child and adult immunizations,
health promotion,
disease prevention, and supervision of chronic diseases such as diabetes, hypertension,
and arthritis. IHS
Ex. 1, p. 12.
37. Frequent monitoring of a patient's condition by trained medical personnel
may be an important
element of the treatment of chronic illnesses such as diabetes and hypertension,
and in the early detection
and treatment of diseases such as cancer. Tr. at 360 - 369; see IHS Ex. 28.
38. Patients who live substantial distances from their health care providers
are less likely to seek routine or
regular treatment from those providers than are patients who live close to their
providers, due to the
inconvenience created by the need for lengthy travel to obtain health care.
Tr. at 340 - 342.
39. In this case, the substantial distance (approximately 90 miles) that Blue
Lake members would have to
travel in order to obtain care at the TRIHP clinic could serve as a barrier
to their seeking routine or regular
treatment for chronic illnesses such as diabetes and hypertension, and early
detection and treatment of
diseases such as cancer. Tr. at 375 - 376, Findings 37, 38.
40. Patients who must seek care from more than one provider in different locations
in order to receive
treatment for medical conditions are less likely to seek routine or regular
treatment for their conditions, and
to comply with prescribed treatment, than are patients who obtain care from
one provider at a single
location. Tr. at 348.
41. In this case, TRIHP's practice of referring patients to specialists at
locations other than the TRIHP
clinic could serve as a barrier to Blue Lake members seeking care for their
medical conditions and
complying with prescribed treatment. Tr. at 376 - 377, 401 - 402; Finding 40.
42. Other clinics (UIHS) located in closer proximity to Blue Lake than TRIHP
provide more
comprehensive health care than does TRIHP. Findings 5, 6, 11, 26.
43. It would not be practicable or consistent with the Secretary's obligation
to provide health care to
eligible Indians to provide health care to Blue Lake members at the TRIHP clinic,
given the barriers to
treatment which would result from having TRIHP as the subcontractor, and given
further that UIHS can
provide care without such barriers. Tr. at 401 - 402; Findings 37 - 42.
44. IHS proved by a preponderance of the evidence that the services to be provided
pursuant to the Blue
Lake and CRIHB contract proposal would not be satisfactory. Findings 34 - 43.
45. The deficiencies in the Blue Lake and CRIHB contract proposal which were
identified by IHS could
not be rectified with technical assistance.
46. IHS did not contravene its duty to provide Blue Lake and CRIHB with technical
assistance to rectify
the deficiencies in the Blue Lake and CRIHB contract proposal. See Finding 32.
47. IHS lawfully declined the Blue Lake and CRIHB contract proposal.
ANALYSIS
The parties do not dispute the central facts of this case. Blue Lake is a federally-recognized
Indian tribe of
34 members. CRIHB is a tribal organization which assists California Indians
in obtaining health care. On
June 19, 1992, Blue Lake and CRIHB applied to IHS for a contract to provide
health care to Blue Lake
members. The elements of the proposal included treatment for both acute and
chronic medical conditions.
They included preventive and ongoing treatment for conditions such as diabetes,
hypertension, and
arthritis. Blue Lake and CRIHB proposed that the health services to be delivered
under the contract would
be provided by a subcontract with TRIHP, which operates a clinic in Weaverville,
California,
approximately 90 miles from Blue Lake. TRIHP had previously subcontracted under
IHS contracts to
provide health services for California Indians, although not for Blue Lake's
members. There is no
allegation that TRIHP has been deficient in providing such services.
Prior to June 19, 1992, Blue Lake's members were provided health care through
an IHS contract with
CRIHB and a subcontract with UIHS, which operates clinics about 15 - 20 miles
from Blue Lake. UIHS
offers a broader and more comprehensive range of health services than does TRIHP.
UIHS offers
comprehensive medical care at its clinics, including the services of three board-certified
family
practitioners. It also operates a full-time dental clinic which provides basic
and specialized dental care
including oral surgery, an ophthalmology program, a mental health program, and
a substance abuse
treatment facility. By contrast, TRIHP is staffed principally by a physician's
assistant who is licensed in
California to provide medical care under the supervision of a physician. TRIHP
refers its patients to
physicians, including specialists, when the physician's assistant determines
that a higher level of care is
required than that which he can provide.
IHS declined the June 19, 1992 Blue Lake and CRIHB contract proposal. It concluded
that the services
proposed to be rendered to Blue Lake members would not be satisfactory. IHS
based its determination on
the finding that the distance between Blue Lake and the TRIHP clinic would discourage
Blue Lake
members from seeking treatment there. IHS found also that the relatively fragmented
care provided to
patients by TRIHP -- consisting of referral of patients to outside medical practitioners
when such care is
indicated -- might create an additional barrier to Blue Lake members obtaining
treatment at TRIHP. In
declining the proposal, IHS contrasted these findings with its conclusion that
UIHS offered Blue Lake
members treatment without the barriers to treatment which it found would exist
if TRIHP were the
subcontracting entity.
Blue Lake and CRIHB made their contract proposal pursuant to the Act, 25 U.S.C.
450 et seq. Section
450f of the Act directs the Secretary to enter into a contract, upon the request
of an Indian tribe or tribal
organization, to conduct and administer programs, including programs designed
to provide health care to
eligible Indians. 3/ The Secretary may decline to enter into a proposed contract
only upon grounds
enumerated in the Act. 25 U.S.C. 450f(a)(2). Among those enumerated grounds,
and the statutory basis
for declination relied upon by IHS which is at issue in this case, is that provided
by section 450f(a)(2)(A)
of the Act:
[T]he service to be rendered to the Indian beneficiaries of the particular
program or function to be
contracted will not be satisfactory; . . . .
The issue in this case, therefore, is whether IHS' declination of the Blue
Lake and CRIHB contract proposal
comports with the statutory basis for declination relied on by IHS.
1. IHS has the burden of proving by a preponderance of the evidence that the
declination was
lawful.
The Act requires, at 25 U.S.C. 450f(b)(3), that in the case of a contract proposal
declination, the Secretary
must offer the affected tribal organization a hearing on the record at which
the tribal organization may
appeal the grounds for declination. The Act is silent as to the parties' respective
burdens of proof in such a
hearing. I conclude that IHS has the burden of proving that its contract declination
is justified and that it
satisfies its burden of proof by showing that its declination is supported by
a preponderance of the
evidence.
The parties agree that IHS bears the burden of proof in a contract declination
hearing. IHS' regulations
repose the burden of proof on IHS in declination cases. 42 C.F.R. 36.208(a)(3).
IHS asserts that its
burden in a declination case is to prove by a preponderance of the evidence
that the declination comports
with a statutory criterion for declination. Blue Lake and CRIHB argue that IHS'
burden is greater than a
preponderance of the evidence. They assert that IHS' burden in a declination
case is to prove by clear and
convincing evidence that the declination is justified. Appellants' Posthearing
Reply Brief at 14.
This case involves a hearing on the record, which is governed by section 5
of the Administrative Procedure
Act (APA). It states that:
This section applies . . . in every case of adjudication required by statute
to be determined on the record
after opportunity for an agency hearing . . . .
5 U.S.C. 554(a); see 25 U.S.C. 450f(b)(3).
The standard of proof in APA-governed proceedings is preponderance of the evidence,
absent a
congressional declaration to the contrary. Steadman v. SEC, 101 S. Ct. 999,
1005 (1981). Thus, where a
statute does not enunciate a standard of proof, as is the case here, and where
hearings held pursuant to that
statute are APA-governed hearings, the party which is the proponent of a rule
or order (here, IHS) must
prove its case by a preponderance of the evidence.
Blue Lake and CRIHB, citing the Act's legislative history, asserts that the
Act enunciates a higher standard
of proof than preponderance of the evidence. The history cited by Blue Lake
and CRIHB consists of
language in the report of the Senate Indian Affairs Committee, which was issued
in conjunction with 1988
amendments to the Act. The committee stated that, in declination proceedings:
The burden of proof for declination is on the Secretary to clearly demonstrate
that a tribe is unable to
operate the proposed program or function.
S. Rep. No. 274, 100th Cong., 1st Sess. 24, reprinted in 1987 U.S.C.C.A.N. 2620, 2643.
I do not find the Act, when read with the APA, to be ambiguous as to the parties'
respective burdens of
proof. Therefore, it is unnecessary to consult the Act's legislative history
in order to decide how it is to be
applied. Johnson v. Carter, 983 F.2d 1316 (4th Cir. 1993). Furthermore, I do
not agree with Blue Lake
and CRIHB's suggestion that this excerpt from the Act's legislative history
signals congressional intent to
impose on IHS in declination proceedings a higher standard of proof than the
APA standard of
preponderance of the evidence.
The excerpt from the Act's legislative history relied on by Blue Lake and CRIHB
does not state or imply
that the standard of proof in hearings held pursuant to the Act is higher than
preponderance of the
evidence. A requirement that a fact be demonstrated clearly is not at all inconsistent
with the requirement
that a fact be proven by a preponderance of the evidence.
Furthermore, the legislative history makes it clear that Congress intended
that proceedings conducted
pursuant to the Act be conducted under standards embodied in the APA, including
the APA standard of
proof. The Senate Indian Affairs Committee report states, on the same page as
that which is relied on by
Blue Lake and CRIHB:
The intent of the Indian Self-Determination Act is to assure that a tribal
organization receives a hearing
`on the record' in accordance with the requirements of the Administrative Procedures
Act.
S. Rep. No. 274, 100th Cong., 1st Sess. 24, reprinted in 1987 U.S.C.C.A.N. 2620, 2643.
Blue Lake and CRIHB suggest also that a higher standard of proof than preponderance
of the evidence is
implicit in the Act itself, which articulates a congressional policy favoring
contracts with tribes. According
to Blue Lake and CRIHB, the Act creates a strong presumption in favor of self-determination
proposals.
Therefore, declinations of such proposals ought to be justified by a higher
level of proof than
preponderance of the evidence.
At the center of Blue Lake and CRIHB's argument is their contention that Congress
intended that the
Secretary pay great deference to Indian tribes' decisions in selecting health
care providers with whom to
contract. Therefore, according to Blue Lake and CRIHB, the Act should be read
in a way which makes it
very difficult for the Secretary to justify declining a contract proposal. Blue
Lake and CRIHB argue that:
[I]n this case [Appellants] have the right to make their own health care decisions
and choose where to
receive their health care, . . . and that IHS acts in a `colonialistic' way
by telling Indians what they are
supposed to do, rather than working in partnership.
Appellants' Posthearing Brief at 18 (citations to the record omitted).
I agree with CRIHB and Blue Lake that the Act directs the Secretary to contract
with tribes in all but
enumerated circumstances. However, the preferences stated in the Act do not
rise to an entitlement in the
face of circumstances where facts justifying declination exist. Rather than
creating an absolute right of
tribes to contract, the Act balances a congressional policy in favor of self-determination
contracts against
the Secretary's continuing duty to provide health care to Indians and to assure
that their welfare is
protected. A preponderance of the evidence standard of proof in declination
cases is consistent with a
policy favoring self-determination contracts which requires the Secretary to
justify declinations of contract
proposals.
The Act does not require the Secretary to enter into contracts which are not
in the best interest of Indians.
What the Act does require is that contracts be approved unless they fall within
the statutory grounds for
declination. In other words, Congress has defined those circumstances in which
contracts may not be in
the best interest of Indians and has instructed the Secretary to approve proposals
unless they fall within the
defined circumstances. However, Congress has not expressed a policy that it
should be difficult for the
Secretary to justify declining to enter into contracts where facts exist which
show that proposals fall within
one of the statutory grounds for contract declination.
2. The reasons which IHS stated for declining the Blue Lake and CRIHB contract
proposal are
consistent with the Act and with implementing regulations.
a. The Act
Blue Lake and CRIHB observe that the statutory term "[T]he service to
be rendered to the Indian
beneficiaries of the particular program or function to be contracted will not
be satisfactory" was not defined
by Congress. Therefore, according to Blue Lake and CRIHB, the Secretary is obliged
to adopt regulations
defining the term before it can be relied on as justification for declining
a contract proposal. Blue Lake and
CRIHB argue further that the Secretary has not defined the term, either in regulations
or in published
policy statements. It follows, they assert, that IHS could not decline the June
19, 1992 contract proposal
based on the language of the Act. Blue Lake and CRIHB recognize that there is
a correlation between
distance and utilization of health care. They recognize also the "obvious
medical importance" of
comprehensive care. Appellants' Posthearing Reply Brief at 17. Nevertheless,
they argue that IHS could
not rely on these specific reasons to find the proposal to be unsatisfactory,
because these factors are not
established as a basis for declination in the Act, in regulations, or in policy
statements.
IHS responds to this argument by asserting that Congress intended contract
declination disputes to be
resolved on a case-by-case basis, through administrative hearings. Therefore,
according to IHS, the
hearing process substitutes for regulations and formal policy declarations.
Formal rulemaking is not a prerequisite to action by an administrative agency,
so long as that agency
proceeds in accordance with ascertainable standards and explains its reasoning
for applying those
standards. Patchogue Nursing Center v. Bowen, 797 F.2d 1137, 1143 (2d Cir. 1986);
Holmes v. New York
City Housing Authority, 398 F.2d 262, 265 (2d Cir. 1968). Agency action in conformity
with ascertainable
standards does not constitute unlawful uncontrolled exercise of discretion by
that agency. Id. 4/
I do not agree with Blue Lake and CRIHB's contention that IHS cannot apply
the statutory standard for
declination to this case, absent regulations or policies which refine the meaning
of the Act. The Act
contains ascertainable standards by which contract proposals can be evaluated.
The objective and neutral
criterion for declination contained in 25 U.S.C. 450f(a)(2)(A) does not require
further definition by the
Secretary in the form of regulations or policies, because it is in and of itself
an ascertainable standard for
declination which permits declination determinations to be made and appealed.
Congress did not define what it meant when it permitted the Secretary to decline
a contract proposal on the
ground that "[T]he service to be rendered to the Indian beneficiaries of
the particular program or function
to be contracted will not be satisfactory." 25 U.S.C. 450f(a)(2)(A). However,
the meaning of this part of
the Act is apparent, both from the language itself, and from its context within
the Act. This section directs
IHS to decline a contract proposal where IHS can demonstrate that the services
which are proposed to be
contracted for cannot be provided in a practicable manner consistent with the
objectives of the proposed
self-determination contract, or with the Secretary's obligation to provide health
care to eligible Indians.
A purpose of the Act is to enable Indian tribes and tribal organizations to
provide to their members services
which Congress had previously instructed the Secretary to provide to Indians.
The Act requires the
Secretary to execute contracts for such services where tribal organizations
make proposals that serve to
carry out functions and activities previously vested in the Secretary. Those
functions and activities have
always imposed a duty on the Secretary to dispense resources in a practicable
manner, consistent with the
best interests of the Indian beneficiaries of those resources. In contracting
for services, Indian tribes and
tribal organizations must be held to the same standards of accountability for
resources that the Secretary
would be held to had she dispensed those resources directly. The Act does not
give tribes carte blanche to
contract for services where they cannot provide those services in a practicable
manner, or where those
services will not be provided in a way which is consistent with those duties
and obligations vested
previously in the Secretary. In deciding whether to accept or decline a contract
proposal, the Secretary (or
her delegate, IHS) must balance the statutory right of Indian tribes to contract
for services against her
continuing duty to protect Indians' welfare by assuring that those services
are provided practicably and
effectively.
The declination standard embodied in 25 U.S.C. 450f(a)(2)(A) is an objective
and neutral standard. See
Environmental Defense Fund v. Ruckelshaus, 439 F.2d 584, 597 - 98 (D.C. Cir.
1971). It imposes on the
Secretary the duty to evaluate contract proposals by deciding whether the proposals
will accomplish
practicably the objectives of the proposed contracts in a manner consistent
with the Secretary's obligation
to provide health care to Indians. That is not uncontrolled discretion to decline
contract proposals. The
section cannot be read to permit IHS to second-guess tribal organizations in
order to decide whether their
members would be "satisfied" by the services proposed to be contracted
for. Nor can this section be read to
permit IHS officials to decide subjectively whether they personally like or
dislike the services which are
proposed to be contracted for. Either interpretation would give IHS uncontrolled
discretion to decline
contract proposals.
The reasons that IHS articulated for declining Blue Lake and CRIHB's June 19,
1992 proposal are
consistent with the declination criteria contained in 25 U.S.C. 450f(a)(2)(A)
and with the requirement that
IHS explain why the proposal did not conform to the standards contained in the
Act. IHS concluded that
the services proposed to be contracted for would not be satisfactory because
of problems related to the
distance Blue Lake members would have to travel to TRIHP to receive health care,
the accessibility of the
TRIHP clinic to Blue Lake members, and the relatively less comprehensive services
offered by TRIHP,
when compared with those offered by UIHS. IHS Ex. 2, p. 1 - 2; IHS Ex. 3, p.
2 - 3. These reasons relate
directly to the practicability of the Blue Lake and CRIHB contract proposal.
IHS explained adequately its
reasons for applying the standards contained in the Act in declining the Blue
Lake and CRIHB contract
proposal. Patchogue Nursing Center, 797 F. 2d at 1143. The reasons given by
IHS for declining the
proposal explain why IHS concluded that the services which were within the proposal's
scope -- including
treatment for acute and chronic conditions, and preventive care -- could not
be provided in a practicable
manner pursuant to the proposal.
b. Regulations
Blue Lake and CRIHB argue that the contract declination failed to comply with
regulations governing IHS
contract declinations and is therefore defective. They contend that the regulations
spell out limited grounds
for declining contracts. According to Blue Lake and CRIHB, accessibility of
services and lack of
comprehensiveness of services are not among the bases for declination identified
by the regulations and
cannot be relied on by IHS, even if they conform to a statutory ground for declination.
Blue Lake and
CRIHB base their argument on their interpretation of 42 C.F.R. 36.208, which
establishes criteria for IHS
evaluations of contract proposals. They contend that the regulation specifically
states the grounds IHS may
use to justify a declination and precludes IHS from relying on any grounds not
specifically stated.
Subpart (a)(1) of this regulation provides that IHS will evaluate a contract
proposal to determine if the
services proposed to be rendered will be satisfactory. This language essentially
tracks the language of 25
U.S.C. 450f(a)(2)(A). Subpart (b) of the regulation lists the factors which
IHS will consider in
determining whether a proposal is deficient under subpart (a). These factors
are: (1) equipment, buildings
and facilities; (2) bookkeeping and accounting procedures; (3) substantive knowledge
of the program to be
contracted; (4) community support; (5) adequacy of trained personnel; and (6)
other necessary components
of contract performance.
Factor (6) is the factor cited by IHS as the supporting factor under the regulation
for its determination to
decline the Blue Lake and CRIHB proposal, and none of the other factors are
at issue here. Blue Lake and
CRIHB observe that this factor itself contains four subdivisions. These are:
(i) The contractor's proposal must demonstrate the capacity to meet minimum
health program and
professional standards established by IHS . . .
(ii) The contractor's proposal will be evaluated to determine the contractor's
ability to meet the Uniform
Administrative Standards . . .
(iii) The ability of the contractor to carry out the contract in accordance
with IHS policy, the applicable
regulations of this part, and the Act.
(iv) No other components shall be prescribed as a basis for declination unless
such components are
added to the regulations in this subpart by revision or amendment of regulations.
Blue Lake and CRIHB assert that accessibility and lack of comprehensiveness
of services are not recited as
permissible grounds to decline a contract anywhere in subdivisions (i) through
(iii). They assert
furthermore, that subdivision (iv) precludes using any finding as a basis for
declination unless that finding
is stated specifically in the regulations. Therefore, according to Blue Lake
and CRIHB, the grounds relied
on by IHS for declining the contract proposal are invalid whatever their merits,
and cannot be relied on by
IHS.
Blue Lake and CRIHB read 42 C.F.R. 36.208 too narrowly. The regulation is broadly
worded to permit
IHS to decline a contract proposal for any reason which complies with standards
ascertainable in the Act.
It provides expressly that IHS may decline a contract proposal based on the
conclusion that the contractor
is unable to comply with the requirements of the Act. 42 C.F.R. 36.208(b)(6)(iii).
When that subsection
is read with 42 C.F.R. 36.208(a)(1), it is plain that the regulations contemplate
denials of proposals based
on IHS' conclusion that the proposals would not provide services which will
be satisfactory, in accordance
with 25 U.S.C. 450f(a)(2)(A).
It is true that the regulation does not spell out all of the reasons which
IHS might adduce for finding a
proposal to be deficient under the Act. The regulation does not recite as grounds
for declination of contract
proposals problems created by accessibility of health clinics or the comprehensiveness
of their services.
But that is not a bar to IHS citing reasons for declining a proposal which conform
to the standards
contained in the Act. As I find above, the Act itself contains ascertainable
standards by which contracts
may be evaluated, and there is no statutory requirement that the Secretary spell
out in regulations the
grounds for declination with any greater specificity than is provided by the
neutral principles for
declination stated in the Act. The regulation refers parties to the standards
contained in the Act and advises
them that their ability to comply with those standards will be evaluated in
determining whether to approve
or decline contract proposals.
The recitation in 42 C.F.R. 36.208(b)(6)(iv) that no other components shall
be prescribed as a basis for
declination unless such components are added to the regulation does not preclude
IHS from using the
rationale it relied on as a basis for declining Blue Lake and CRIHB's contract
proposal. As I hold above,
the regulation subsumes as declination standards the criteria contained in the
Act itself. Inasmuch as the
rationale relied on by IHS for declining the proposal comports with the criteria
contained in the Act, it does
not constitute an "other component" outside of the present regulation.
Blue Lake and CRIHB argue also that the regulation, to the extent it enunciates
a basis for declining their
proposal, may be ultra vires the Act. They observe that the contract review
factors set forth in 42 C.F.R.
36.208(b)(6) are essentially identical to language originally in the Act, at
25 U.S.C. 450f, which was
deleted by Congress in 1988. They contend that this deletion mandated the Secretary
and IHS to cease
using the factors in 42 C.F.R. 36.208(b)(6) as criteria for reviewing contract
proposals.
It is unnecessary for me to decide Congress' intent in enacting the 1988 revisions
to the Act. The provision
of the regulation which is at issue here, 42 C.F.R. 36.208(b)(6)(iii), refers
parties to the criteria for
declination that are contained in the Act. Thus, it merely restates IHS' duty
to evaluate proposals pursuant
to whatever declination criteria are contained in the Act as of the time the
proposals are submitted to IHS.
Even if this section were null and void as Blue Lake and CRIHB contend, IHS'
statutory duty to evaluate
proposals pursuant to the Act would be unaffected. Moreover, Congress did not
delete from the Act the
subsection which directs the Secretary to decline contract proposals which are
intended to provide services
which will not be satisfactory. 5/
3. The reasons which IHS stated for declining the Blue Lake and CRIHB contract
proposal are
supported by the preponderance of the evidence.
IHS proved by a preponderance of the evidence that the distance between Blue
Lake and TRIHP's clinic,
coupled with the relatively fragmented treatment offered by TRIHP, serve to
create barriers to Blue Lake
members seeking treatment from TRIHP. These barriers to treatment are such as
to make impracticable the
rendering of services contemplated by the proposal and would be inconsistent
with the Secretary's duty to
assure that health care is provided to eligible Indians. IHS proved further
that the impracticability of the
Blue Lake and CRIHB proposal is particularly evident when the services offered
by TRIHP to Blue Lake
members are compared with the services offered by UIHS. The latter enterprise
offers more
comprehensive services than those offered by TRIHP and at a much closer distance
to Blue Lake's
members than the TRIHP clinic.
IHS offered the persuasive and essentially unrebutted testimony of a medical
expert, John S. Yao, M.D., to
support its rationale for declining the proposal. Dr. Yao is a board-certified
internist who currently serves
as the chief medical officer of IHS' California Area Office. Tr. at 336 - 38.
Dr. Yao testified that, in this
case, the distance between Blue Lake and TRIHP, approximately 90 miles, creates
a barrier to treatment.
This barrier is more evident in light of the fact that the distance between
the Blue Lake and UIHS clinics is
only 15 - 20 miles. Dr. Yao testified that it is a well-established tenet of
public health that the distance that
patients have to travel to receive medical care affects the frequency with which
they utilize that care. 6/
The barriers to treatment caused by distances between patients and their providers
may discourage patients
from seeking routine care for chronic conditions, or from seeking preventive
care. The dangers associated
with failure to seek care may include exacerbation of relatively asymptomatic
conditions, such as diabetes
and hypertension, or the untreated progression of conditions such as cancer,
which are treatable in their
early stages but which become less treatable and more dangerous to the lives
of patients as they progress.
Also, Dr. Yao testified persuasively that patients tend to be discouraged from
seeking care when their
treatment for a particular condition is fragmented -- that is, apportioned among
a number of providers -- as
opposed to being provided by a single provider who is qualified to treat all
aspects of the patients' medical
conditions. Dr. Yao contrasted TRIHP's practice of assigning patients to physicians
in the vicinity of
TRIHP, for aspects of their care which cannot be provided by TRIHP directly,
with the centralized, and, in
his opinion, more comprehensive services that are provided by UIHS. In Dr. Yao's
opinion, the relatively
fragmented care offered by TRIHP could pose barriers to Blue Lake members seeking
treatment from
TRIHP, especially when compared with the more centralized and, hence, more comprehensive
care offered
by UIHS. He summarized his concerns as follows:
My concern is very clear. There's two very compelling reasons why this is
unsatisfactory in my opinion
because of the unsatisfactory medical services that will be rendered to Blue
Lake Rancheria members,
relating to the access of care as a barrier . . . .
Like it or not, I think we have -- at least in my mind it's pretty clear that
all things being equal, that is a
barrier . . . .
Then the second thing is the comprehensive nature of the services . . .
Tr. at 402.
Dr. Yao concluded that having TRIHP as a subcontractor for Blue Lake members
seemed to be particularly
inappropriate in light of the proximity of UIHS' clinics to Blue Lake and the
relatively more
comprehensive services which UIHS offered, as compared with those offered by
TRIHP.
I find Dr. Yao's testimony provides ample justification for IHS' declination
of the Blue Lake and CRIHB
contract proposal. The preponderance of the evidence is that the Blue Lake and
CRIHB contract proposal
would not provide services in a satisfactory matter, because the services sought
to be provided would not
be provided in a practicable manner. Using TRIHP as a subcontractor would frustrate
the proposal's stated
objectives of providing care for acute and chronic conditions, in addition to
providing preventive care.
Furthermore, the proposal is inconsistent with the Secretary's obligation to
assure that Indians receive
health care, because it creates barriers to the delivery of health care services
and it is at cross purposes with
the stated objectives of the proposal.
Blue Lake and CRIHB respond to this evidence with several arguments. They point
to evidence showing
that IHS currently funds other self-determination contracts in California which
involve treatment facilities
that are located substantial distances from the Indians who are served by these
contracts. They point out
that, in some instances, these contracts establish service areas in which Indians
travel right past other IHS
clinics to go to the clinic designated by the contract to serve them. From this
evidence, they make two
contentions. First, they argue that the evidence vitiates Dr. Yao's concern
about the distance which Blue
Lake members would have to travel to receive services under the Blue Lake and
CRIHB proposal. Second,
they contend that IHS should not be permitted to decline a proposal if, in fact,
it has approved other
proposals which embody similar barriers to treatment to those identified by
IHS as existing in the Blue
Lake and CRIHB proposal.
I am not persuaded that evidence showing that IHS funds other contracts involving
long travel distances for
treatment by eligible Indians (including contracts involving travel past other
clinics) rebuts the conclusion
that the Blue Lake and CRIHB proposal would not provide services in a satisfactory
manner. The issue in
this case is whether the Blue Lake and CRIHB proposal creates unacceptable barriers
to treatment, not
whether IHS has approved other contracts which create unacceptable barriers
to treatment. Therefore,
what IHS may have done or not done in other cases says nothing about the problems
which have been
established to be inherent in this proposal. In evaluating a proposal pursuant
to the Act, IHS must evaluate
that proposal on its own merits. If it declines a proposal, it must do so on
the merits of that proposal.
Furthermore, analysis of other contracts previously approved by IHS officials
may prove, at most, that IHS
officials may not always exercise perfect judgment in reviewing and approving
contract proposals. But
any judgment errors that IHS officials may make in reviewing contract proposals
do not derogate from
these officials' responsibility to review contract proposals pursuant to relevant
statutory criteria.
Otherwise, IHS would be held hostage to its errors and would be forced to approve
contracts which repeat
those errors. That would be inimical to the exercise of duties which the Act
reposes in the Secretary.
Blue Lake and CRIHB argue that IHS' declination at bottom reflects only a preference
for UIHS over
TRIHP. They assert that both entities' clinics have been approved as providers
by IHS. They note that
there is no contention in this case that TRIHP's services are inadequate. According
to Blue Lake and
CRIHB, IHS' stated reasons for declining the proposal are merely a rationalization
for IHS' preference of
UIHS. Therefore, according to Blue Lake and CRIHB, the declination amounts to
unsubstantiated second-
guessing of Blue Lake in violation of the Act.
I would agree with this argument if the evidence showed only that UIHS provides
more comprehensive
care than does TRIHP, or if the evidence showed only that TRIHP's clinic is
further away from Blue Lake
than are the UIHS clinics. If the evidence were limited to that, then IHS' declination
could be characterized
as a subjective preference for "better" care. But, in fact, the evidence
shows more than that. As is
established by Dr. Yao's testimony, the problems associated with TRIHP's selection
as a subcontractor
amount to objective barriers to treatment which jeopardize the attainment of
the health care goals stated in
the Blue Lake and CRIHB proposal. In this case, IHS' "preference"
for UIHS simply reflects the fact that
the treatment barriers which are associated with TRIHP, due to the locations
of Blue Lake and TRIHP, do
not exist with respect to UIHS.
Blue Lake and CRIHB contend additionally that Dr. Yao's testimony is flawed,
because it rests on
generalizations about how patients respond to barriers to treatment. Blue Lake
and CRIHB assert that IHS
made no effort to assess the individual needs and predilections of each of the
34 members of Blue Lake.
I do not find that IHS had a duty to survey the Blue Lake members in order
to determine whether Blue
Lake and CRIHB's proposal was satisfactory. Such an obligation is not reasonable
and is not implicit in
the declination criteria of the Act. IHS contracts with numerous tribes and
tribal organizations, many of
which have thousands of members. To require IHS to evaluate the needs of tribes'
members on an
individualized basis before deciding whether to approve or decline contract
proposals would be to saddle it
with an obligation with which it could never hope to comply. 7/
Blue Lake and CRIHB argue also that while TRIHP may refer its patients to outside
physicians for
treatment, when necessary, the working relationships which TRIHP has established
with physicians are
excellent and pose no meaningful problems for TRIHP's patients. It is undisputed
that TRIHP has
established excellent relations with local physicians and that IHS has not identified
problems with its
referrals. On the other hand, this does not derogate from Dr. Yao's opinion
that fragmented treatment
might discourage patients from seeking care or from continuing to obtain care
on a regular basis. The issue
is not whether TRIHP provides adequate care, which it plainly does, but whether
TRIHP's practice of
referring patients to outside providers might, when coupled with the long travel
distance from Blue Lake to
TRIHP, tend to discourage Blue Lake members from seeking care at TRIHP. On this
point, I find Dr.
Yao's testimony concerning the barriers created by TRIHP's choice as a subcontractor
to be persuasive.
The evidence in this case proves that, given the barriers to treatment which
would result from having
TRIHP as the subcontractor, and given further that UIHS can provide care without
such barriers, there is no
legitimate purpose for a contract in which TRIHP is the subcontractor. Thus,
IHS' declination is not based
simply on the barriers resulting from the proposed relationship with TRIHP,
but on the relative inadequacy
of TRIHP's services when compared with those offered by UIHS.
Finally, Blue Lake and CRIHB assert that any barriers to treatment which may
be created by TRIHP's
choice as a subcontractor to replace UIHS are essentially irrelevant, because
IHS will continue to pay for
the medical care of those Blue Lake members who might elect to patronize UIHS
rather than TRIHP.
Appellants' Posthearing Brief at 47 - 8. Thus, according to Blue Lake and CRIHB,
the choice of TRIHP as
subcontractor creates no meaningful barriers to treatment of Blue Lake members,
because those Blue Lake
members who are daunted by the distance to the TRIHP clinic or by the relatively
less comprehensive
services offered by TRIHP will opt to patronize UIHS or some other IHS-funded
clinic.
This argument does not derogate from IHS' conclusion that the services proposed
to be provided by TRIHP
will not be satisfactory. Indeed, Blue Lake and CRIHB's admission that some
Blue Lake members will
continue to patronize UIHS supports the conclusion that there may be barriers
to treatment of Blue Lake
members at TRIHP's clinic.
Furthermore, if this assertion were accepted as a premise for requiring that
the proposal be accepted, it
would serve to make meaningless the statutory criteria for IHS to decline contract
proposals. Under Blue
Lake and CRIHB's theory, they could propose to subcontract with any IHS-approved
clinic located
anywhere in the United States, and IHS would have no choice but to accept the
proposal. The services of
any clinic with which Blue Lake and CRIHB proposed to subcontract could never
be found to be
unsatisfactory by IHS, because UIHS would exist as an alternative to whatever
clinic with which Blue Lake
and CRIHB chose to contract.
Congress would not have enacted declination criteria only to have them be read
in a way which makes
those criteria meaningless. IHS' policy of providing health care for eligible
Indians at any IHS-approved
facility they visit plainly inures to the benefit of individual Indians. But
that does not derogate from IHS'
statutory obligation to assure that contract proposals are evaluated on their
merits and that they make sense.
Here, the proposal of Blue Lake and CRIHB has been evaluated on its merits and
has been found to be
deficient. The fact that Blue Lake members may resort to extracurricular treatment
alternatives does not
remediate the proposal's deficiencies.
4. IHS did not breach its duty to provide Blue Lake and CRIHB with technical
assistance to cure
deficiencies in their contract proposal.
Blue Lake and CRIHB contend that IHS was obligated to provide them with technical
assistance to remedy
any deficiencies observed in their contract proposal, prior to declining the
proposal. They assert that IHS
failed to offer or provide such assistance. They contend that, consequently,
the declination is defective.
The Act provides that whenever the Secretary declines a proposal for a self-determination
contract, she
shall provide assistance to the tribal organization that submitted the proposal
in order to overcome her
stated objections. 25 U.S.C. 450f(b)(2). Implementing regulations impose on
IHS the duty to offer
technical assistance to overcome deficiencies in contract proposals. 42 C.F.R.
36.212(f).
There is no question that IHS did not offer technical assistance to Blue Lake
and CRIHB to resolve the
deficiencies in the proposal which IHS identified. However, I do not find that
this is a failure which
invalidates IHS' declination of the proposal. There is no technical assistance
which IHS could have offered
Blue Lake and CRIHB which would have overcome IHS' objections. The Act and regulations
do not
impose on IHS the duty to engage in exercises of futility.
No amount of technical assistance could reduce the distance or travel time
between Blue Lake and TRIHP.
Technical assistance would not overcome the fact that TRIHP is not organized
to provide the
comprehensive care that UIHS provides. Blue Lake and CRIHB assert that IHS should
have discussed
with them ways to facilitate transportation of Blue Lake members to TRIHP. But
lack of transportation to
TRIHP never was asserted by IHS to be a deficiency in the proposal. The issue
never has been the
availability of transportation to TRIHP, but rather, has always been the distance
that Blue Lake members
would have to travel to get to the TRIHP clinic and the time involved in the
trip. That problem would not
be overcome by increasing either the number of vehicles available to transport
Blue Lake members, or the
number of individuals who are available to drive Blue Lake members to TRIHP.
5. Blue Lake and TRIHP are not entitled to attorney fees under the Equal Access to Justice Act.
Blue Lake and TRIHP contend that they should be awarded attorney fees under
the Equal Access to Justice
Act (EAJA), 28 U.S.C. 2412. A necessary premise to an award of fees to a party
under EAJA is that it
prevail in a civil action against the Secretary. 28 U.S.C. 2412(d)(1)(A). Blue
Lake and CRIHB have not
prevailed in this case, inasmuch as I find IHS' declination of their proposal
to be lawful. Therefore, they
have demonstrated no basis to be awarded attorney fees under EAJA.
CONCLUSION
I conclude that IHS has shown by a preponderance of the evidence that its declination
of the June 19, 1992
contract proposal of Blue Lake and CRIHB was lawful under the Act. Therefore,
I recommend that the
declination be sustained.
___________________________
Steven T. Kessel
Administrative Law Judge
1. While IHS exchanged IHS Proposed Exhibit 37 prior to the hearing, it did
not offer this document
into evidence at the hearing. However, IHS did move to have this document admitted
into evidence when
it submitted its April 26, 1993 posthearing reply brief. Appellee's Posthearing
Reply Brief at 13. By letter
dated April 28, 1993, Blue Lake and CRIHB objected to IHS' belated motion to
offer this document into
evidence. Blue Lake and CRIHB contended that it "would be a gross injustice
to admit this document into
the record at this late date in the absence of any explanation by IHS for its
tardiness and only after the
Appellants have lost any opportunity to challenge it." Appellants' April
28, 1993 Objection at 2. I deny as
untimely IHS' request to have IHS Proposed Exhibit 37 admitted into evidence.
2. I cite to the exhibits of Blue Lake and CRIHB as "Tribe Ex. (number),
p. (page number)." I cite to
IHS' exhibits as "IHS Ex. (number), p. (page number)." I cite to the
parties' Stipulation of Facts as
"Stipulation at paragraph (number)." I cite to the Transcript as "Tr.
at (page)."
3. The Act applies specifically to the Secretaries of Health and Human Service
and Interior. 25 U.S.C.
450b(i).
4. IHS' contention that rulemaking is unnecessary here because Congress intended
disputes over
declination to be adjudicated on a case-by-case basis begs the question of whether
ascertainable standards
exist to govern IHS' declination determinations. Uncontrolled exercise of discretion
by an agency is
impermissible, whether it is exercised through administrative adjudication or
via some other process. What
is significant here is not that declination disputes are adjudicated, but that
they are adjudicated pursuant to
ascertainable standards existing in the Act.
5. Furthermore, it does not appear that I would have the authority to declare
the regulation to be ultra
vires the Act, in any event. My authority to hear and decide cases is delegated
by the Secretary. The
regulations which govern hearings under the Act do not confer authority on me
to declare the regulations to
be ultra vires the Act. 42 C.F.R. 36.208.
6. IHS introduced into evidence, over the objections of Blue Lake and CRIHB,
several medical journal
articles. See, e.g., IHS Ex. 19. I accepted these articles as evidence which
tended to corroborate, and,
hence, make credible Dr. Yao's expert opinion that distance and fragmentation
of care may pose barriers to
treatment. I did not accept the articles as direct evidence that the services
which Blue Lake and CRIHB
proposed to provide via a subcontract with TRIHP were unsatisfactory.
7. IHS must approve or decline a contract proposal within 60 days after its
receipt of the proposal. 42
C.F.R. 36.213. IHS hardly could be expected to perform the kind of individualized
review of Indians'
needs and predilictions, suggested by Blue Lake and CRIHB, within 60 days.