Pit River Health Service, Inc., CR No. 333 (1994)

$05:Civil Money Penalty

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: Pit River Health Service, Inc., Appellant,
- v. -
Indian Health Service, Appellee, and Susanville Indian Rancheria, and Modoc Indian Health Project, Intervenors.

DATE: September 12, 1994

Docket No. C-94-303
Decision No. CR333

RECOMMENDED DECISION

On January 31, 1994, the Indian Health Service (IHS) notified
Appellant that IHS was in part declining Appellant's proposal to
renew its contract with IHS pursuant to the Indian Self
Determination Act (ISDA), 25 U.S.C. 450 et seq. 1/ IHS told
Appellant that it was declining the proposal because the proposed
project or function to be contracted for could not be properly
completed or maintained as proposed. IHS cited 25 U.S.C.
450f(a)(2)(C) as authority for its decision to decline the
proposal. IHS advised Appellant that the specific reason for the
declination was that those individuals residing outside of
Appellant's current service area are currently included in the
funding provided to other tribal programs. IHS explained to
Appellant that it could not fund two or more different contractors
to provide the same services at the same time.

Appellant requested a hearing and the case was assigned to me for
a hearing and a recommended decision. On April 21, 1994, the
Susanville Indian Rancheria and Modoc Indian Health Project
(Intervenors) filed a motion to intervene in the case, alleging
that they had property interests which might be affected by the
decision of the case. Appellant opposed the motion. IHS did not
oppose the motion. I granted Intervenors' motion. However, I
limited Intervenors' participation in the case to the filing of
briefs and exhibits.

Both IHS and Appellant moved for summary disposition of the case.
Neither party requested an in-person hearing. 2/ Appellant, IHS,
and Intervenors filed briefs and exhibits. No one objected to the
admission into evidence of any exhibits. I admit all of the
exhibits into evidence. 3/ I base my recommended decision in this
case on the exhibits, applicable law, and the arguments of the
parties and intervenors. For the reasons which I discuss below, I
conclude that IHS lawfully declined Appellant's contract proposal.

I. Issues, recommended decisions, and findings of fact and
conclusions of law

There are two central issues in this case. These are whether IHS
lawfully declined to enter into a contract with Appellant to
provide health care services to: (1) unaffiliated Indians who
reside in Appellant's ancestral territory, and (2) members of the
Pit River Tribe who reside in southern Oregon. Below, I set forth
my recommended decisions as to these issues and the findings of
fact and conclusions of law which support them. After each finding
or conclusion, I list the page or pages of this recommended
decision at which I discuss the law and evidence which supports the
finding or conclusion.

A. Recommended decision and findings of factand conclusions
of law concerning IHS' declination of Appellant's proposal to
provide health care services to unaffiliated Indians who reside in
Appellant's ancestral territory

IHS lawfully declined to enter into a contract with Appellant to
provide health care services to unaffiliated Indians who reside
within the Pit River Tribe's ancestral territory. I base this
recommended decision on the following findings and conclusions:

1. IHS may not enter into a contract pursuant to ISDA
where to do so would necessarily require IHS to modify unilaterally
the terms of other contracts entered into by IHS pursuant to ISDA,
including the funding for those contracts. Pages 12 - 20.

2. IHS never promised Appellant or the Pit River Tribe
that it would enter into a contract with Appellant to provide
health care services to the unaffiliated Indians who reside within
the Pit River Tribe's ancestral territory. Pages 8 - 11.

3. IHS is not estopped from declining to enter into a
contract pursuant to ISDA where the consequence of the estoppel
would be to require IHS to modify unilaterally the terms of other
contracts entered into by IHS pursuant to ISDA, including the
funding for those contracts. Pages 21 - 22.

4. Appellant's contention that other contractors
continue to provide health care services to members of the Pit
River Tribe who reside within the Tribe's ancestral territory is
not an issue raised by this declination appeal. Pages 12 and 25.

5. Appellant waived the statutory requirement that IHS
accept or decline Appellant's proposal to provide health care
services within 60 days of its receipt by IHS. Pages 22 - 24.

6. Even if Appellant did not waive the statutory
deadline for acceptance or declination of its proposal, IHS is not
required to accept Appellant's proposal by virtue of its failure to
decline it timely. The statutory deadline for acceptance or
declination of a proposal does not operate to force IHS to accept
a proposal where to do so would require IHS to modify other
contracts unilaterally, in violation of ISDA. Pages 24 - 25.

B. Recommended decision and findings of factand conclusions
of law concerning IHS' declination of Appellant's proposal to
provide contract health care services to members of the Pit River
Tribe who reside in southern Oregon

IHS lawfully declined to enter into a contract with Appellant for
Appellant to provide health care services to members of the Pit
River Tribe who reside in southern Oregon. I base this recommended
decision on the following findings and conclusions:

7. Appellant's proposal to provide health care services
to members of the Tribe who reside in southern Oregon lacked
information which IHS needed to make an informed decision to accept
or decline the proposal. Under the circumstances, IHS had not
choice but to decline it. Pages 11 - 12, 25 - 27.

8. Appellant may not cure fundamental defects in its
proposal by providing evidence which arguably cures the defects at
an administrative appeal of the declination. Pages 27 - 28.

9. IHS is not obligated to provide technical assistance
to a party proposing to contract for health care services where the
proposal is so lacking in necessary information as to make it
impossible for IHS to evaluate it meaningfully pursuant to the
criteria in ISDA. Pages 28 - 29.

10. Even if Appellant had provided IHS with facts
necessary to identify the population which Appellant intended to
serve under its proposal, IHS would have been justified in
declining the proposal pursuant to regulations which govern
contract health services. Pages 29 - 30.

II. Material facts

A. Background

Appellant is authorized by the Pit River Tribe, a federally
recognized Indian tribe, to contract with IHS pursuant to ISDA to
provide health care services to members of the Pit River Tribe and
to other eligible Indians. 4/ Appellant and the Pit River Tribe
have sought to contract with IHS to provide health care services to
all members of the Tribe and all unaffiliated Indians who reside
within the Tribe's ancestral territory. IHS Ex. 20, page 3. 5/

The Pit River Tribe's ancestral territory is part of the lands
described as the Tribe's territory in Article II of the Tribe's
constitution. IHS Ex. 14, page 1. The Tribe's constitution
describes the Tribe's territory as including lands owned by the
Tribe. Id. The constitution describes the territory to include
also lands which were found to comprise the Tribe's ancestral
territory in a 1959 decision by the Indian Claims Commission. Id.;
Pitt River Indians of California v. United States, Docket No. 347
(July 29, 1959); IHS Ex. 2. The ancestral territory includes
portions of Lassen, Modoc, Shasta, and Siskiyou Counties in
California. Much of the ancestral territory is no longer owned by
the Pit River Tribe, but has been acquired by the United States.
IHS Ex. 2, page 35. 6/

Portions of the Tribe's ancestral territory overlap or encompass
service areas which have been contracted for between IHS and tribal
organizations other than Appellant. These other entities include
Intervenors. IHS Exs. 3 - 5; Int. Ex. 1, page 2; Int. Exs. 4 - 7.
Contracts between IHS and Intervenors have become mature. IHS Exs.
3 - 4; 25 U.S.C. 450(h). As a consequence, these contracts are
for indefinite terms and have reduced reporting requirements. 25
U.S.C. 450e(2) and 450j(c)(1)(B). The contracts between IHS
and Intervenors authorize Intervenors to provide contract health
care services to eligible Indians (including unaffiliated Indians)
who reside within their service areas. Int. Ex. 1, page 2. Thus,
Intervenors have contracted with IHS to provide health care to
unaffiliated Indians who reside within the Pit River Tribe's
ancestral territory.

On September 1, 1988, Appellant and IHS entered into a contract to
provide health care services to members of the Pit River Tribe and
to unaffiliated Indians within the eastern one-third of Shasta
County, California. IHS Ex. 8, page 1. On September 27, 1991,
Appellant and IHS agreed to expand the scope of services of the
contract. IHS Ex. 13. The expanded scope of services included all
members of the Tribe who reside within the Tribe's ancestral
territory and also other eligible Indians within the community
around Bieber, California. IHS Ex. 13, page 1. The contract
modification did not authorize Appellant to provide contract health
care services to unaffiliated Indians residing in the Pit River
Tribe's ancestral territory.

B. Appellant's December 30, 1992 contract renewal proposal

On December 30, 1992, Appellant submitted a proposal to IHS to
renew its contract to provide health care services. IHS Ex. 20.
IHS received the proposal on January 3, 1993. Id. at 1. 7/ The
proposal sought to expand the scope of the health care services
provided by Appellant in two respects. First, Appellant sought to
contract to provide health care services to unaffiliated Indians
who reside in the Pit River Tribe's ancestral territory. Second,
Appellant sought to provide health care services to members of the
Tribe who reside in southern Oregon. Id. at 4.

Appellant did not state that its objective was to reduce the scope
of services provided by other contractors with service areas in
Appellant's ancestral territory. However, that would have been the
inevitable consequence of IHS accepting Appellant's proposal. As
I find above, there are other contractors, including Intervenors,
who have designated service areas within Appellant's ancestral
territory that provide contract health care services to
unaffiliated Indians who reside in those service areas. If IHS
agreed that all unaffiliated Indians residing in the Tribe's
ancestral territory would be served by Appellant, then,
necessarily, those unaffiliated Indians would no longer be served
by other contractors whose service areas are within the Tribe's
ancestral territory. That, in turn, would require IHS to reduce
the level of funding to the other contractors.

IHS did not accept or decline Appellant's proposal within 60 days
of its receipt of the proposal. IHS Motion for Summary Disposition
at 19. Appellant consented to several extensions of its contract
while it negotiated its proposal with IHS. IHS Exs. 21 - 28. The
last extension request was made by Appellant on December 23, 1993.
IHS Ex. 28. In that request, it agreed to extend the life of its
contract with IHS until January 31, 1994. Id.

During the period within which Appellant's contract was extended,
IHS attempted to negotiate the terms of Appellant's proposal with
Appellant. IHS Ex. 24. Negotiations were unsuccessful. On
January 31, 1994, IHS declined to accept that part of Appellant's
proposal which would allow Appellant to expand its contract
services to include unaffiliated Indians in the Pit River Tribe's
ancestral territory and members of the Tribe who reside in southern
Oregon. 8/

III. Appellant's additional allegations of fact

Appellant makes allegations as to the existence of facts in
addition to those facts which I find to be material to this case.
I find that some of these allegations are not substantiated.
Furthermore, at least some of these allegations address alleged
facts which, even if true, are not material to the outcome of this
case.

A. Appellant's allegation that IHS promised it that it would
be allowed to contract to provide health care services to
unaffiliated Indians in the Pit River Tribe's ancestral territory

Appellant alleges that IHS promised it that it would be permitted
to contract to provide health care services to unaffiliated Indians
who reside within the Tribe's ancestral territory. This allegation
is central to Appellant's argument that IHS is estopped from
declining the December 30, 1992 contract proposal. For reasons
which I explain in Part IV of this decision, I find that this
alleged fact, even if proven, is immaterial, because, as a matter
of law, IHS may not be estopped from declining Appellant's
proposal. However, I find also that Appellant did not prove its
point.

IHS never promised Appellant that it would contract with Appellant
to provide health care services to all unaffiliated Indians within
the Pit River Tribe's ancestral territory. At one time, IHS agreed
with Appellant and the Tribe that the provision of such services
was a legitimate goal of these parties and it agreed to work with
them to attain that goal. But that did not comprise a promise to
enter into a contract.

The centerpiece of Appellant's alleged proof that IHS promised to
enter into a contract with Appellant for the unaffiliated Indians
consists of a letter which the Deputy Director of the California
Area Office of IHS sent to the Pit River Tribe on June 21, 1988.
IHS Ex. 6. Appellant contends that the letter both explicitly and
implicitly promises that Appellant would receive a contract from
IHS to provide health care services to unaffiliated Indians in the
Tribe's ancestral territory. I find that the letter proves neither
an explicit nor an implied promise to enter into such a contract.

Appellant asserts that the alleged explicit promise is embodied in
the following statement:

The IHS has made the strong suggestion to you that the
current proposal continue its service area to . . . [Appellant's
then-designated service area] and reserve any statement about the
future service area for a formal letter more appropriately
addressed to . . . [the California Area Office Director]. A part
of this understanding is the agreement of IHS to work with the Pitt
River Nation to phase-in the tribe's original proposal over the
next three (3) years.

IHS Ex. 6, page 1 (emphasis added). I do not find the explicit
promise which Appellant alleges is in this statement. First, it
refers ambiguously to an "original proposal" which is not
described. 9/ More significant, the statement does not manifest a
commitment to accept that proposal, but only to "work with" the
Tribe to implement it over a three-year period.

IHS' hedged statement of support for the "original proposal" falls
short of a binding commitment to accept that proposal. The pledge
to "work with" the Pit River Tribe to attain its objective is too
ephemeral to be construed as the binding promise alleged by
Appellant. The phrase "work with" is an expression of general
support of the Tribe's objective of ultimately providing health
care services throughout its ancestral territory. Further, it
comprises at least a suggestion by IHS that it would help the Tribe
and Appellant attain this objective. However, the phrase suggests
also that IHS was uncertain that these objectives were feasible.

Moreover, it is apparent that Appellant and the Pit River Tribe
understood that IHS had not made a firm commitment to them of a
contract to provide health care services to the unaffiliated
Indians in the ancestral territory. In its June 21, 1988 proposal
to IHS, Appellant stated:

[I]t should not be interpreted from this application that the
Tribe is in any way moving away from their desire to establish
their ancestral lands as a service area. However, since the IHS is
not accustomed to dealing with ancestral boundaries, but rather
census tracts or counties, negotiations will continue until the
Tribes rights under all federal contracting legislation is
realized.

IHS Ex. 7, page 10 (emphasis added). This statement establishes
that Appellant and the Pit River Tribe were not operating on the
belief that IHS had assured them that Appellant would receive a
contract to provide services to all Indians in the Tribe's
ancestral territory. To the contrary, Appellant and the Tribe
envisioned future negotiations with IHS before this objective would
be attained.

Appellant asserts also that the alleged promise by IHS is implied
on the second page of the June 21, 1988 letter from IHS to the
Tribe. IHS Ex. 6, page 2. Appellant asserts that IHS'
acknowledgement that IHS must have a resolution of support from the
Tribe before IHS renews contracts with entities other than
Appellant to serve Modoc and Shasta Counties in California is an
admission that Appellant had the right to provide health care
services to unaffiliated Indians in those counties (which are part
of the Tribe's ancestral territory).

I do not read this language as Appellant contends it must be read.
When read in context, it is apparent that IHS was not addressing
the question of service to unaffiliated Indians in the ancestral
territories, but was acknowledging that contractors serving Modoc
and Shasta Counties should not provide health care services to
members of the Tribe without a resolution of support from the
Tribe. This is apparent from IHS' statement on page two of the
letter:

We agree and understand that the term "unaffiliated" should
not be used to deny the identity of tribal members. We also agree
that the IHS will work to identify members of the tribe currently
served by the contacts in Trinity, Shasta, Lassen, and Modoc
counties, which the [Pit River] tribe claims as its ancestral
territory.

Id.

Appellant contends that IHS restated its alleged promise in other
documents generated after June 21, 1988. See IHS Exs. 10, 11, 17.
I find no language in these communications which states a promise
by IHS to contract with Appellant to provide services to
unaffiliated Indians in the Pit River Tribe's ancestral territory.

The communications between IHS, Appellant, and the Pit River Tribe
after June 21, 1988 do not suggest any commitment by IHS to
contract with Appellant to provide health care services to the
unaffiliated Indians in the Pit River Tribe's ancestral territory.
Rather than providing proof of an unequivocal promise by IHS, these
communications establish that the issue of service to the
unaffiliated Indians remained open and undecided.

It is apparent from these communications that the issue of service
to unaffiliated Indians in the ancestral territory remained
unresolved after June 21, 1988. The communications show that the
Tribe and Appellant were dissatisfied by IHS' failure to approve
expeditiously a contract with Appellant to provide health care
services in the Tribe's ancestral territory. As early as November
1988, Appellant and the Tribe complained to IHS that IHS was
unfairly denying Appellant the opportunity to provide such
services. IHS Ex. 9, pages 2, 4 - 5. Even after IHS and Appellant
had agreed to expand the scope of Appellant's services to include
members of the Tribe who reside in the ancestral territory,
Appellant and the Tribe continued to maintain that Appellant should
provide health care services to unaffiliated Indians in the Tribe's
ancestral territory. IHS Ex. 18, pages 2 - 3. In December 1991,
Appellant characterized the question of services to unaffiliated
Indians in the ancestral territory as being one of the "unresolved
issues" between Appellant and IHS. Id. at 2.

Appellant relies also on the declaration of Betty George, who was
chairperson of the Tribe from 1987 to 1989. App. Ex. 1. Her
declaration does not satisfy me that IHS promised to Appellant and
the Tribe that Appellant would receive a contract for the
unaffiliated Indians in the Tribe's ancestral territory.

Ms. George avers that, at a meeting held on May 27, 1988, a
representative of IHS promised explicitly that Appellant had a
right to contract to serve the Tribe's ancestral territory, and
that IHS would not renew other contracts in Shasta and Modoc
Counties without resolutions of support from the Tribe. App. Ex.
1, page 7. The "explicit promise" recited by Ms. George does not
necessarily embody a promise that Appellant would be permitted to
contract to serve unaffiliated Indians in the ancestral territory.
As I observe above, an issue which IHS focused on in its June 21,
1988 letter to the Tribe (which was signed by the individual to
whom Ms. George attributes the promise) was whether it was
appropriate for contractors besides Appellant to provide health
care services to members of the Tribe who reside in the Tribe's
ancestral territory. The promise described by Ms. George arguably
addresses that issue and not the issue of contract services to
unaffiliated Indians. Furthermore, I find that the best
characterization of IHS' representations to Appellant and the Tribe
is contained in the June 21, 1988 letter, which I have discussed
above. IHS Ex. 6

B. Appellant's contention that other contractors continue to
provide health care services to members of the Tribe who reside
within the Tribe's ancestral territory

Appellant contends that other contractors with service areas within
the Tribe's ancestral territory continue to provide health care
services to members of the Tribe who reside in the territory, for
which the contractors receive funds from IHS. Appellant's Motion
for Summary Disposition at 24, 30. It asserts that it is entitled
to a finding that, as a matter of law, IHS must adjust its funding
to these contractors to eliminate services to members of the Tribe
who allegedly are being served by these contracts.

Appellant has offered no evidence to substantiate the allegation
that members of the Tribe continue to be served under other
contracts. However, it is apparent that there is some overlap in
the services provided to members of the Tribe by Appellant and by
Intervenors. Intervenors' Brief at 32 - 34. In Part IV of this
decision, I conclude that Appellant's allegations are not properly
part of the declination appeal before me. Therefore, Appellant's
allegations concerning alleged services to members of the Tribe by
other contractors are not relevant to this case.

C. Appellant's contentions of fact about members of the Tribe
who reside in southern Oregon

In its December 30, 1992 proposal, Appellant made assertions
concerning the need for contract health services for members of the
Tribe who reside in southern Oregon. Appellant made these
assertions without any factual substantiation. 10/

In its proposal, Appellant asserts only:

[M]any Pit River Tribal members live in Oregon for various
reasons. The Tribal members living on the
Oregon side encounter difficulties in receiving adequate
health care.

IHS Ex. 20, pages 7 - 8. Appellant provides no facts in its
proposal to support its contention that "many" members of the Tribe
reside in Oregon. It does not describe the location of the Oregon
members. It provides no information concerning the proximity of
these alleged Oregon residents to Appellant's California
facilities, or the relative ease or difficulty of travel from
Oregon to these facilities. It provides no information to support
its allegation that members of the Tribe who reside in Oregon have
difficulty obtaining health care in Oregon, nor does it provide
information which would enable IHS to compare ease of accessibility
of health care services to members of the Tribe who reside in
Oregon with that which Appellant proposes to offer in California.
Finally, Appellant offers no information from which IHS might
compare the relative quality of services offered to members of the
Tribe who reside in Oregon with that which Appellant proposes to
offer in California.

Appellant now provides evidence to show that 18 members of the
Tribe reside in southern Oregon. App. Ex. 2, page 2. Appellant
asserts that these individuals reside about 30 miles from the
Tribe's reservation and about 10 miles north of the border of the
Tribe's ancestral territory. Id. Appellant alleges that they are
active in tribal affairs and make use of tribal health care
facilities in California. Id.

As I discuss at Part V of this decision, this information, had it
been supplied with the proposal or during the period when IHS and
Appellant were discussing the proposal, might have been relevant to
IHS' evaluation of the proposal. However, Appellant neither
provided this information to IHS with its application nor during
the ensuing negotiations. For reasons which I explain in Part V,
this information is not material to my consideration of the
propriety of IHS' declination of the part of Appellant's proposal
which relates to the southern Oregon Pit River members.

IV. IHS' declination of Appellant's proposal to provide health
care services to unaffiliated Indians who reside within the Pit
River Tribe's ancestral territory

IHS lawfully declined to accept Appellant's proposal to provide
contract health care services to the unaffiliated Indians who
reside in the Tribe's ancestral territory, because the proposed
project or function to be contracted for cannot be properly
completed or maintained as proposed. 25 U.S.C. 450f(a)(2)(C).
IHS could not have accepted Appellant's proposal without reducing
the scope of services and the funding that IHS had contracted to
provide to other contractors. That action by IHS would violate the
requirements of ISDA as they pertain to other contractors.

As I find above, there is no factual support for Appellant's
contention that IHS is estopped from declining its proposal. IHS
never made an unequivocal promise upon which Appellant would have
had a reason to rely. Furthermore, there is no evidence to show
that Appellant relied on this alleged promise to its detriment.
However, I find also that there is no basis to estop IHS from
declining Appellant's proposal, even assuming Appellant's
allegations about promises by IHS are true. IHS cannot be estopped
from declining a contract where the consequence would be to
interfere unlawfully with the terms of contracts between other
contractors and IHS.

I find also that IHS' failure to meet the 60-day time limit for
contract review established in ISDA does not require IHS to accept
Appellant's proposal. Appellant waived any rights it might have
been able to assert under the time limits for contract reviews set
forth in ISDA. Moreover, the circumstances of this case do not
comport with the circumstances under which Congress mandated a
60-day review period. Congress did not intend that IHS be bound by
the 60-day requirement where enforcement of the requirement would
result in unlawful interference with the terms of contracts between
other contractors and IHS.

Finally, it is not germane to this case that IHS allegedly
contracts with other entities to provide health care services to
members of the Tribe who reside in the Tribe's ancestral territory
. This case involves the issue of whether IHS properly declined
Appellant's proposal to provide health care services to
unaffiliated Indians who reside within the Tribe's ancestral
territory. IHS' alleged failure to abide by the terms of previous
agreements is simply not an issue to be resolved here.

A. The basis for the declination of Appellant's proposal

IHS declined Appellant's proposal to provide health care services
to unaffiliated Indians within the Pit River Tribe's ancestral
territory because the proposed project or function to be contracted
for cannot be properly completed or maintained as proposed. That
is one of the grounds provided by ISDA for declining a contract
proposal. 25 U.S.C. 450f(a)(2)(C).

IHS argues that it declined Appellant's proposal because the
proposal could not be implemented lawfully by IHS. Acceptance of
Appellant's proposal would mean that unaffiliated Indians served by
other contractors, including Intervenors, would no longer be served
by those contractors. IHS would have to reduce the funding
allocated to those contractors and reallocate it to Appellant, so
that Appellant could provide health care services to the
unaffiliated Indians. IHS argues that such action would violate
its statutory duty not to reduce funding to other contractors. 25
U.S.C. 450j-1(b)(2).

Intervenors support this argument. They argue, additionally, that
ISDA prohibits a unilateral modification of a contract by IHS. 25
U.S.C. 450m-1(b). Intervenors contend that any adjustment of
their contracts by IHS to reallocate scopes of service or funding,
in order to accommodate acceptance of Appellant's proposal, would
constitute an unlawful unilateral modification of their contracts
by IHS.

Appellant asserts that IHS abuses its discretion and violates its
duty of trust to Indian tribes by refusing to consider the merits
of Appellant's proposal. It argues, additionally, that IHS' basis
for declining its proposal constitutes a grant of veto authority to
other contractors, a delegation not contemplated by ISDA.
Appellant contends also that IHS' reliance on 25 U.S.C.
450j-1(b)(2) is improper, because that section addresses only the
question of reduction of contract funds serving a tribe. Appellant
argues that reduction of funds to other contractors in this case
would not be a reduction of funds serving a tribe, because the
funds withdrawn from the other contractors consist of monies which
are being paid by IHS for health care services for unaffiliated
Indians.

Appellant argues additionally that 25 U.S.C. 450j-1(b)(2)
prohibits only reductions in total funding by IHS of contractors
serving an Indian population. Therefore, according to Appellant,
IHS may reallocate funds among contractors serving a population
without violating this section. Finally, Appellant asserts that 25
U.S.C. 450j(c)(2) confers express authority on IHS to modify a
contract unilaterally or to reduce funding for a contract.
Appellant argues that the unambiguous language of this section
takes precedence over section 450m-1(b), which, according to
Appellant, is a "far less specific" section of ISDA. Appellant's
Reply to Intervenors' Response at 10.

Although an Indian tribe or tribal organization may have a
statutory right under some circumstances to contract to provide
health care services to its members, that right does not extend to
providing health care services to unaffiliated Indians. ISDA
confers no right on Appellant or the Pit River Tribe to contract
for health care services to unaffiliated Indians in the Tribe's
ancestral territory. At most, ISDA confers a qualified right on
Appellant and the Tribe to contract to provide health care services
to members of the Tribe. It provides only that a
"self-determination contract" means a contract "for the planning,
conduct and administration of programs or services which are
otherwise provided to Indian tribes and their members pursuant to
Federal law." 25 U.S.C. 450b(j).

ISDA does not confer on tribes or tribal organizations a statutory
right to provide health care services outside of their respective
communities. 25 U.S.C. 450b(l). Tribal communities are not
defined as coincident with ancestral territories. As is quite
evident in this case, the Pit River Tribe's ancestral territory is
at present home to Indian communities other than the Tribe.

Thus, neither Appellant nor the Pit River Tribe has a statutory
right to contract for the unaffiliated Indians within the Tribe's
ancestral territory. 11/ Nor does the fact that the unaffiliated
Indians who are the subject of Appellant's proposal reside within
the ancestral territory give Appellant a superior interest over
other entities to contract to provide health care services to these
Indians. Indeed, existing contracts between IHS and other entities
to provide health care services to the unaffiliated Indians in the
Tribe's ancestral territory are protected by law.

Appellant does not assert that it has a statutory right to provide
contract health care services to the unaffiliated Indians who
reside in the Tribe's ancestral territory. It argues, however,
that IHS should be required to evaluate the merits of its proposal
against the alternative of allowing Intervenors to continue
providing services to unaffiliated Indians pursuant to their
contracts. Appellant characterizes the Intervenors' contracts as
competing proposals.

This argument ignores the status of the Intervenors' contracts with
IHS. They are not proposals. Rather, they are contracts which
have been accepted and implemented by the parties. These contracts
enjoy specific statutory protections provided by ISDA against
unilateral modification of their terms by IHS.

ISDA protects contracts between IHS and Indian tribes or tribal
organizations from unilateral modifications by IHS or from funding
reductions, except in defined circumstances which are not
applicable here. ISDA specifically prohibits the Secretary (or her
delegate, IHS) from modifying a contract unilaterally. It states:

[T]he Secretary shall not revise or amend a
self-determination contract with a tribal organization without the
tribal organization's consent.

25 U.S.C. 450m-1(b). This is an unequivocal prohibition against
unilateral substantive changes in contracts by IHS. 12/ I do not
agree with Appellant's contention that this section is not
specific.

The modifications which IHS would have had to effect to its
contracts with entities serving the unaffiliated Indian population
of the Pit River Tribe's ancestral territory, in order to accept
Appellant's proposal, would affect substantively the operation and
funding of these contracts. There is nothing in this case to
suggest that the affected contractors would consent to such
modifications. Therefore, IHS could have accomplished the
modifications only by making them unilaterally, an action
prohibited by ISDA.

The Act specifically prohibits IHS from reducing funding for
contracts except in narrowly defined circumstances. 25 U.S.C.
450j-1(b)(2). 13/ The reductions which would result from
acceptance of Appellant's proposal do not fall within those
circumstances. Consequently, IHS cannot reduce funding for other
contractors -- the inevitable consequence of accepting Appellant's
proposal -- without violating ISDA.

Appellant contends that ISDA does not bar IHS from reducing funding
to contractors, including Intervenors, to the extent that the
reductions apply only to funds that had been authorized for
services to unaffiliated Indians. Appellant observes that 25
U.S.C. 450j-1(b)(2) is applicable expressly to
"self-determination" contracts issued by IHS pursuant to ISDA.
Appellant argues from the definition of "self-determination
contracts" contained in 25 U.S.C. 450b(j) that
self-determination contracts are for the benefit only of members of
tribes. According to Appellant, funding reductions which apply to
non-members of a tribe whose tribal organization receives a
self-determination contract from ISDA (unaffiliated Indians) are
not prohibited by 25 U.S.C. 450b(j).

I do not agree with this interpretation, because it is based on an
artificial and unreasonably narrow reading of the law. It is true
that ISDA gives tribes only the right to contract for health care
services for their own members. However, the protections written
into ISDA to protect self-determination contracts against
unilateral modifications or funding reductions by IHS were intended
to protect existing contracts as they apply both to tribal members
and to unaffiliated Indians that are covered under those contracts.

In order to be eligible for services under a self-determination
contract, Indians must be members of a tribe, but not necessarily
of the tribe which receives the contract. In prohibiting funding
reductions, 25 U.S.C. 450j-1(b)(2) does not distinguish between
funds that are paid for members of the tribe contracting for
services, and funds that are paid for unaffiliated Indians who may
be covered by a contract. 14/

There is a sound policy reason for the statutory prohibitions
against unilateral funding reductions and contract modifications by
IHS. IHS could not reduce funding under a self-determination
contract based on deletion of unaffiliated Indians from the
contract's scope of services, without harming potentially the
delivery of services to Indians who remain covered by the contract.

The self-determination contracts which are in evidence in this case
do not treat members of the tribe which contracts with IHS as
classes of individuals who are segregable from the unaffiliated
Indians who are covered also by those contracts. Payments are made
by IHS for the eligible Indians who are covered by a contract,
whether or not they are members of the tribe receiving the
contract. For example, the contract executed between IHS and
Intervenor Susanville Indian Rancheria on December 30, 1988,
estimated the total Indian population to be served as 865
individuals. Int. Ex. 1, page 4. The contract did not break down
this population into Susanville Indian Rancheria members and
unaffiliated Indians. Nor were the services provided under the
contract allocated between members and unaffiliated Indians.

These contracts calculate the price of services based on total
Indian populations covered by the contracts. They assume
efficiencies and economies of scale in the delivery of services
based on the size of the populations they serve. Potentially, a
unilateral funding reduction by IHS to account for removal of
unaffiliated Indians from a contract's scope of services could
jeopardize the services offered to the individuals who remained
covered by the contract, because the services might not be
deliverable to a smaller population with the same cost efficiency
that such services may have been delivered to the population served
originally by the contract.

Appellant argues additionally that 25 U.S.C. 450j-1(b)(2)
assures only that total funding for self-determination contracts to
serve Indian populations shall not be reduced unilaterally by IHS.
From this, Appellant contends that IHS could reduce funding to any
contractors, including Intervenors, so long as IHS correspondingly
increases funding to Appellant to cover transfers of Indian
populations from Intervenors to Appellant.

I do not agree with Appellant's interpretation. The ISDA
specifically prohibits reduction of funding "under the terms of
self-determination contracts entered into pursuant to" ISDA. 25
U.S.C. 450j-1(a)(1) (incorporated by reference into section
450j-1(b)(2)). This language protects individual contracts, not
contracts as a class, from funding reductions by IHS.

Furthermore, I do not agree with Appellant's contention that 25
U.S.C. 450j(c)(2) permits IHS to reduce funding to a contract
unilaterally. This section permits changes to contracts to be
negotiated annually, to accommodate changed circumstances. I
conclude that the term "renegotiated" in this section must be used
consistent with its common and ordinary meaning. It connotes an
agreement between parties to change funding -- not a unilateral
change, as is asserted by Appellant -- and does not support
Appellant's contention that IHS may rely on this section to reduce
funding to a contractor unilaterally.

I do not find that IHS abused either its discretion or its trust
obligations by declining Appellant's proposal. IHS' discretion to
accept or decline a contract proposal does not include discretion
to ignore the requirements of ISDA. IHS' duty of trust does not
extend to Appellant or to the Pit River Tribe in isolation from
other Indian tribes or tribal organizations. ISDA was enacted as
much to protect contracts as it was enacted to enable Indian tribes
to provide services for their members. Here, IHS' statutory
obligation was to protect the contracts already issued by IHS to
other contractors.

Contracts are issued and contractors perform their duties
predicated on the understanding that contract conditions, once
accepted, are binding on the parties to the contracts. If IHS were
to accept Appellant's arguments, then, potentially, any contract
IHS issues would be vulnerable to reopening and modification based
on subsequent submission to IHS by competing entities of arguably
better proposals. 15/ Services offered by a contractor could be
jeopardized by such proposals. I find it difficult to envision how
contractors could operate effectively in such an environment.

Appellant's argument that IHS unfairly gives other tribes or tribal
organizations a veto over their proposals is misplaced. Although
Congress has not given tribes or tribal organizations a veto right
over contract proposals by other tribes or tribal organizations, it
has imposed on IHS a duty to not accept contracts where acceptance
would dictate substantive revisions to existing contracts. In
evaluating Appellant's proposal, IHS was not obligated to obtain
the approval of other tribes or tribal organizations that might be
affected indirectly by the proposal. 16/ However, IHS is obligated
by law to protect existing contracts.

The contracts between IHS and Intervenors are "mature," meaning
that they are of indefinite duration. 25 U.S.C. 450e(2).
Appellant contends that the mature status of these contracts should
not be an impediment to a unilateral reduction by IHS of the scope
of health care services provided by these contracts. I do not
agree with this contention. The Act plainly prohibits IHS from
modifying contracts unilaterally. The mature status of the
contracts between Intervenors and IHS means that the Intervenors
need not annually propose that these contracts be reapproved by
IHS. The scope of services provided under these contracts thus is
immune from unilateral modification by IHS and is not subject to
annual review and approval or declination by IHS.

B. Appellant's estoppel argument

There is no basis in fact for Appellant's estoppel argument.
However, I would not find that IHS was estopped from declining
Appellant's proposal even if I were to find that IHS had promised
to Appellant that it would be permitted to contract to provide
health care services to unaffiliated Indians in the Pit River
Tribe's ancestral territory and that Appellant relied on that
promise.

IHS may not be estopped from declining a proposal under ISDA where
the consequence would be to force IHS to take action that is
unlawful. Here, the consequence of estopping IHS from declining
Appellant's proposal would be to force IHS to modify contracts with
other contractors and to reduce the funds available to those
contractors. As I find in subpart A of this section, that would
violate specific prohibitions in ISDA, and would therefore be
unlawful. The United States Supreme Court

held in Utah Power & Light Co. v. United States, 243 U.S. 389, 408
- 409 (1917) that:

[T]he United States is neither bound nor estopped by the acts
of its officers or agents in entering into an arrangement or
agreement to do or cause to be done what the law does not sanction
or permit.

C. Appellant's timeliness argument

I conclude that Appellant waived the statutory requirement that IHS
act on Appellant's proposal within 60 days of its receipt by IHS.
However, IHS would not be required to accept this proposal even if
Appellant had not waived the statutory requirement. 17/

ISDA provides that, unless IHS declines a contract proposal within
60 days of its receipt, for one of three specified reasons, then it
must approve that proposal within 90 days of its receipt. 25
U.S.C. 450(a)(2). 18/ In this case, IHS received Appellant's
proposal on January 3, 1993. It declined it on January 31, 1994.

The purpose of the 60-day review requirement is to ensure that IHS
not resort to inaction on a proposal as an alternative to accepting
or declining that proposal. As a corollary, the 60-day review
requirement assures an applicant for a contract that, at some point
in time, it will have a right to seek administrative appeal should
IHS determine to decline that applicant's proposal. S. Rep. No.
274, 100th Cong., 2d Sess. 24 (1988), reprinted in 1988
U.S.C.C.A.N. 2620, 2643.

Appellant's willing participation in a review process that exceeded
60 days constituted a waiver of the review limitation. Appellant
consented to an evaluation process that exceeded the 60-day period
provided by ISDA. By agreeing to repeated extensions of
Appellant's contract while IHS considered the proposal, and by
providing IHS with supplemental materials to assist IHS in
evaluating the proposal, Appellant signalled to IHS that it did not
intend to hold it to the 60-day review requirement. At any point
during the process, Appellant could have told IHS that it would not
consent to further delays in the review. Appellant had it in its
power at all times after the lapse of the 60 days to demand that
either IHS accept its proposal, or decline it and thereby afford
Appellant its rights to administrative review.

The evidence establishes that, during the interim between IHS'
receipt of the proposal and the date it declined it, Appellant
agreed several times to extend its previous contract with IHS so
that IHS could consider, and act on, the merits of the proposal.
The last extension request was made by Appellant on December 23,
1993, and covered the period through January 31, 1994. IHS Ex. 28.
IHS declined Appellant's proposal on the last day of the final
contract extension.

It is true that the first extension granted by Appellant was dated
March 10, 1993, five days after the expiration of the 60-day review
period. IHS Ex. 21. However, in granting the extension, Appellant
did not suggest that it intended to hold IHS to the 60-day
requirement. Id. Rather, it contemplated a period of negotiations
with IHS over its proposal. Id.

Some of Appellant's extension requests show plainly that it
understood that IHS required more than 60 days to evaluate
Appellant's proposal and that Appellant did not object to a
lengthier review process. For example, on May 20, 1993, Appellant
agreed to extend the contract until June 30, 1993. IHS Ex. 23. In
that request, Appellant stated that:

[W]e have been notified that key personnel from . . . [the IHS
California Area] office will not be available for our contract
negotiations. Please extend our . . . [contract] to June 30, 1993.
This should allow sufficient time to properly prepare for our
negotiations.

Id.

In a letter dated June 30, 1993, counsel for Appellant complained
about IHS' failure to complete its review and asserted that IHS had
not timely evaluated the proposal. IHS Ex. 24, page 2. In that
letter, counsel consented to "one more 30-day extension of . . .
[Appellant's] existing contract." Id. at 1. Counsel for Appellant
asserted that, if the remaining issues relevant to the proposal
could not be resolved during this extension period, then Appellant
"will have no choice but to seek to resolve these issues outside of
the contracting process." Id. at 2. Notwithstanding, Appellant
consented to additional extensions and negotiations. Appellant's
consent to additional extensions and negotiations shows that it
acquiesced in a review process that exceeded 60 days.

Appellant made evident its willingness to extend the review process
beyond 60 days by providing IHS with supplemental documents to
assist IHS in its evaluation of Appellant's proposal. On October
26, 1993, Appellant sent additional documents to IHS. In the
transmittal letter to IHS, Appellant argued that these documents
should be sufficient to satisfy IHS that its proposal is justified.
IHS Ex. 29, page 2. Appellant did not suggest that it was entitled
to have its proposal accepted by IHS because IHS had not declined
it within 60 days of its receipt by IHS.

Although I conclude that Appellant waived the 60-day review
requirement, I would not require that a contract be issued based on
Appellant's proposal even if I were to find that the review
requirement had not been waived. I do not find that Congress
intended the time limits it established for contract reviews to
operate to force IHS to accept contracts in contravention of ISDA.

What Appellant is demanding of IHS, by virtue of IHS' failure to
decline its proposal within the 60 day-review period, is that IHS
disrupt other lawful contracts in contravention of express
statutory prohibitions against such action. In effect, Appellant
is asserting it should be advantaged, and that other contractors
must pay the price, for IHS' failure to conduct a timely review of
Appellant's proposal. This is a result which Congress did not
contemplate and which would do violence to the congressional intent
that the rights of parties with contracts be protected under ISDA.

Congress did not intend that the statutory protections of existing
contracts fall in the face of failure by IHS to timely decline a
contract proposal. In this case, the right that Appellant may have
had to a timely disposition of its application must give way to the
statutory rights of other contractors. Otherwise, contractors'
rights under ISDA could be held hostage to delays by IHS in cases
involving IHS and other parties.

Although I base my conclusion on an analysis of congressional
intent, it is clear also that the equities in this case
preponderate in favor of those contractors, including Intervenors,
who have contracts with IHS to serve the unaffiliated Indians in
the Pit River Tribe's ancestral territory. Appellant has
demonstrated no harm in IHS' failure to complete its review within
60 days. That is made evident by Appellant's failure to assert
that the review be completed timely. By contrast, other
contractors who are innocent bystanders to the dispute between IHS
and Appellant would be harmed palpably if IHS were forced to accept
Appellant's proposal due to IHS' failure to act timely.

D. Appellant's assertion that other contractors continue to
provide health care services to members of the Pit River Tribe who
reside in the Tribe's ancestral territory

The issues encompassed by this case simply do not include the
question of whether other contractors continue to provide health
care services to members of the Pit River Tribe who reside in the
Tribe's ancestral territory. This issue was not subsumed by
Appellant's December 30, 1992 contract proposal or by IHS'
declination of that proposal. Therefore, the issue is not before
me as an issue which I may hear and decide.

I am not suggesting by this conclusion that Appellant is without
recourse if, in fact, IHS continues to contract with other
contractors to provide health care services to members of the Tribe
in contravention of the October 1991 contract modification between
Appellant and IHS. Neither am I suggesting that Appellant does
have a cause of action if its contention is, in fact, true. My
holding on this issue is limited to the conclusion that the issue
is not an aspect of the contract proposal or the declination which
is the subject of this case.

V. IHS' declination of Appellant's proposal to provide health care
services to members of the Pit River Tribe who reside in southern
Oregon

As I find at Part III C of this decision, Appellant's proposal to
provide health care services to members of the Tribe who reside in
southern Oregon provided no information to IHS about the identity
of these individuals, their residences, or their access to health
care services provided by IHS or by entities having contracts with
IHS. Appellant barely mentioned the issue of the members of the
Tribe who reside in southern Oregon in its appeal of the
declination. Appellant did not offer any facts concerning the
members of the Tribe who reside in southern Oregon until it
submitted its motion and brief in this case. App. Ex. 2.

Appellant did not devote serious attention to the proposal to
provide health care services to members of the Tribe who reside in
southern Oregon during the period when IHS was reviewing
Appellant's contract proposal. Appellant began to take this issue
seriously only with its submission of briefs and exhibits in this
case. None of the documents in evidence in this case which relate
to the proposal or to negotiations between IHS and Appellant
concerning that proposal, with the exception of the proposal
itself, even mention the proposal to provide health care services
to members of the Tribe who reside in southern Oregon. The issue
on which Appellant and the Tribe focused during the period after
Appellant submitted its December 30, 1992 proposal to IHS was the
status of unaffiliated Indians in the Tribe's ancestral territory.
The issue of contract health care services to members of the Tribe
who reside in southern Oregon became lost in the negotiations about
the issue of Appellant's proposed service to unaffiliated Indians
in the ancestral territory.

I am not surprised that IHS failed to address meaningfully the
issue of service to members of the Tribe who reside in southern
Oregon, given Appellant's failure to treat that issue seriously.
The specific reason which IHS gives for declining Appellant's
contract proposal was that "those individuals residing outside of
. . . [Appellant's] current service area are currently included in
the funding provided to other tribal programs, and IHS cannot fund
two or more different contractors to provide the same services at
the same time." Based on the record of this case, this reason
appears applicable only to that part of the proposal which offers
to provide health care services to unaffiliated Indians in the
Tribe's ancestral territory.

Nothing of record concerning Appellant's proposal or the
negotiations which ensued suggests that IHS had information which
would enable it to determine that the members of the Tribe who
reside in southern Oregon either are or are not "currently included
in the funding provided to other tribal programs." (Appellant now
avers that they are not covered by such programs. App. Ex. 2,
pages 2 - 3.) There is certainly nothing in the record to suggest
that IHS based its declination of that aspect of Appellant's
proposal on the conclusion that members of the Tribe who reside in
southern Oregon are covered by other tribal programs.

Now, belatedly, Appellant makes assertions concerning the members
of the Tribe who reside in southern Oregon and the proposal to
provide contract health services to these individuals. Appellant
now contends for the first time that there are 18 affected
individuals residing in Oregon, within 30 miles of the Tribe's
reservation. App. Ex. 2. Appellant contends that these
individuals have close connections with the Tribe, participate in
tribal affairs, and even make use of Appellant's clinics to obtain
health care services. Id.

IHS contends that Appellant is barred by IHS contract regulations
and ISDA from contracting for health care services to members of
the Tribe who reside in southern Oregon. IHS Reply Brief at 13 -
16; see 42 C.F.R. 36.22, 36.23. This argument is based not on
Appellant's proposal, but on the facts offered by Appellant
subsequent to its appealing IHS' declination of that proposal. Id.

Although IHS did not express an explanation for its determination
to decline the proposal to provide health care services to members
of the Tribe who reside in southern Oregon, it had no choice but to
decline that proposal based on the application which it had to
review. It would not have been possible for IHS to make an
informed decision based on the information supplied to it by
Appellant.

ISDA does not specify what must be contained in a contract proposal
in order that IHS may review and either approve or decline the
proposal. However, ISDA implicitly requires that an organization
proposing to contract with IHS must provide it with sufficient
information about a proposal so that IHS may make an informed
determination as to whether the proposal should be accepted or
declined. IHS cannot be expected reasonably to make the
determination required by 25 U.S.C. 450f(a)(2) where a contract
proposal fails to contain information which even minimally
identifies the population which the proposing party seeks to serve.
That information was singularly absent from Appellant's proposal to
provide health care services to members of the Tribe who reside in
southern Oregon.

Neither ISDA nor applicable regulations suggest that the
administrative hearing process is designed to cure fundamental
defects in a proposal to contract. ISDA provides that, where IHS
determines to decline a contract proposal, it shall:

provide the tribal organization with a hearing on the record
and the opportunity for appeal on the objections raised, under the
such rules and regulations as the Secretary may promulgate.

25 U.S.C. 450f(b)(3). I read this section as allowing a party
that is dissatisfied with a contract declination the opportunity to
appeal that declination. ISDA contemplates that, in such a
hearing, a party may offer evidence to show that IHS' declination
is unlawful. A hearing under ISDA is not intended to substitute
for the fact finding and evaluation that occurs during review of a
contract proposal. ISDA does not suggest that a party may, in
effect, write its application on appeal.

The regulation governing hearings involving contract declinations
does not state or suggest that parties may use those hearings to
cure fundamental defects in their contract proposals. It assures
that these hearings will be conducted in accord with the
requirements of due process. Parties who appeal contract
declinations are entitled to: written notice of the issues;
representation by counsel; a written record of the hearing;
cross-examine witnesses who may be called; file written statements
prior to the hearing; and take depositions where appropriate. 42
C.F.R. 36.214(c)(1) - (6). The hearing regulation does not
address the question of what substantive issues may be addressed at
a hearing. The regulation does not provide a party with
substantive rights not contained in ISDA.

I do not view my role as adjudicator in appeals from contract
declinations as substituting my judgment for the review process
required by ISDA. ISDA properly allocates that role to IHS. My
role at this stage is to examine the review performed by IHS to
determine whether it was conducted lawfully. It would be
inappropriate for me now to permit Appellant to cure fundamental
defects in its application and, based on that, for me to perform
the evaluation and review which Appellant should have requested IHS
to perform based on a complete application. For that reason, the
evidence which Appellant now offers concerning members of the Tribe
who reside in southern Oregon is immaterial to this case. 19/

At the oral argument of this case, Appellant asserted that if, in
fact, its application was deficient, IHS should have provided it
with technical assistance to cure any deficiencies. 25 U.S.C.
450f(b)(2). It contended that IHS should have assisted it in
identifying the members of the Tribe who reside in southern Oregon.
I find this assertion to be, at the least, anomalous. Appellant
and the Tribe know who the Tribe's members are and where they
reside. That is made obvious by the fact that Appellant provided
more specific information in its brief about the members of the
Tribe who reside in southern Oregon.

I do not interpret 25 U.S.C. 450f(b)(2) as requiring IHS to
provide a tribe with technical assistance to cure defects to an
application which are so basic and fundamental as to render the
application defective on its face. This section requires IHS to
provide assistance to a tribal organization to overcome objections
that IHS may have to an application. 25 U.S.C. 450f(b)(2). But
that presumes that IHS has found problems with an application which
are, potentially, correctable. Where, as in this case, the
application is so devoid of information as to be fatally flawed,
there is no duty on IHS' part to resurrect the application through
technical assistance.

It is unnecessary for me to decide whether, as IHS argued,
Appellant's proposal to serve members of the Tribe who reside in
southern Oregon would be in violation of IHS regulations governing
contract health services. As I find here, the proposal to provide
such service is on its face defective, and not a serious proposal
by Appellant. IHS' arguments concerning whether contracting for
health care services to members of the Tribe who reside in southern
Oregon by Appellant would violate IHS regulations is not premised
on Appellant's proposal to provide such services, but on fact
allegations which Appellant made as part of its submission in this
case.

However, there appears to be substantial merit to IHS' argument.
IHS asserts that its regulations require that, in order for Indians
to be eligible to receive contract health care services, they must
reside within a contract health service delivery area (CHSDA) that
has been established by IHS and be able to demonstrate that they
maintain close economic and social ties to the local tribe or
tribes. It argues, additionally, that a tribe may not contract to
provide health care services for its members unless those members
are within a CHSDA that has been designated by IHS for that tribe.
IHS cites 42 C.F.R. 36.23(a)(1) - (2) and the Director's
decision in Kickapoo Tribe of Oklahoma v. Indian Health Service,
May 22, 1992, to support this argument. 20/

Essentially, IHS argues, alternatively, from the facts now alleged
by Appellant. It contends that if, as Appellant alleges, members
of the Tribe who reside in southern Oregon are not within a CHSDA,
then they are not eligible for contract health services. If that
is so, then Appellant may not contract to provide health care
services for them. Alternatively, if they are within a CHSDA, they
are not within a CHSDA that has been designated as a service area
for Appellant. Under that alternative, the Tribe would not
"benefit" from a contract to provide health care services to these
individuals within the meaning of ISDA. Kickapoo at 2.

IHS' interpretation of its regulations governing contract health
care services appears to be correct, based on the Director's
decision in Kickapoo. I conclude that Appellant would not have
demonstrated a basis to contract for health services to the members
of the Tribe who reside in southern Oregon, assuming its
application had provided the essential information. Had Appellant
provided IHS with sufficient information concerning the members of
the Tribe who reside in southern Oregon, then IHS would have been
obligated to decline the application to provide health care
services to those members on the statutory ground that the proposed
project or function to be contracted for cannot be properly
completed or maintained by the proposed contract. Id.; 25 U.S.C.
450f(b)(3).

Steven T. Kessel
Administrative Law Judge

1. Appellant's contract with IHS and other contracts executed
by IHS pursuant to ISDA are referred to at times in the exhibits in
evidence in this case as "Pub. L. No. 93-638 contracts."

2. Although the parties have styled their motions as motions
for summary disposition, they are in fact requesting that I issue
a recommended decision based on exhibits. A motion for summary
disposition is based on the absence of disputed material facts.
Here, there are facts in dispute which are arguably material. In
particular, the parties dispute whether IHS promised Appellant that
IHS would enter into a contract with Appellant to provide health
care services to all unaffiliated Indians who reside in the Pit
River Tribe's ancestral territory. The parties have opted to argue
their positions as to the fact issues based on exhibits. No party
has asserted that there exists a need in this case to provide
testimony at an in-person hearing. Therefore, I base my decision
on the exhibits which I have admitted into evidence. I use those
exhibits to resolve disputed issues of fact.

3. IHS submitted 31 exhibits which I admit into evidence as IHS
Ex. 1 - 31. Appellant submitted two declarations (Declaration of
Betty George and Declaration of Loomis Jackson). I have identified
the Betty George declaration as App. Ex. 1 and the Loomis Jackson
declaration as App. Ex. 2, and I admit them into evidence.
Intervenors submitted 22 exhibits, which I have identified as Int.
Ex. 1 - 22, and I admit them into evidence.

4. Appellant was known previously as the Pi-Ma-Pa Indian Health
Consortium, Inc. IHS Ex. 7, page 1. I use the term "Appellant" to
refer to Pit River Health Service, Inc. and to its predecessor.

The Pit River Tribe is referred to by various names in the
exhibits. These include the "Pitt River Indians of California,"
the "Pitt River Nation," and the "Pitt River Tribe." IHS Ex. 2,
page 1; IHS Ex. 6, page 1; IHS Ex. 7, page 1. I use the names "Pit
River Tribe" or "Tribe" to identify the Tribe throughout this
decision, except where I quote from documents which identify the
Tribe by another name.

5. An "unaffiliated Indian" is an individual who is eligible to
receive health care services from an entity that contracts with IHS
pursuant to ISDA. However, that individual is not a member of the
tribe or tribal organization which provides health care services to
him or her. As I shall discuss in greater detail below, the
unaffiliated Indians who reside in the Pit River Tribe's ancestral
territory and to whom Appellant seeks to provide health care
services are receiving health care services under other ISDA
contracts between IHS and other entities.

6. The purpose of the Indian Claims Commission decision was to
decide whether the Pit River Tribe was entitled to compensation for
the taking of its ancestral lands. IHS Ex. 2, page 1. The
decision did not direct a transfer of title to the ancestral lands
to the Pit River Tribe. Id.

7. The date stamp on the proposal which identifies its receipt
by IHS is illegible. IHS Ex. 20, page 1. However, no one disputed
IHS' assertion that it received the proposal on January 3, 1993.

8. The declination letter is ambiguous. On its face, it
suggests that IHS declined the renewal proposal in its entirety.
However, as is evident from IHS' recitation of the facts it
contends to be material, it declined only that aspect of the
proposal which sought to expand the contract services provided by
Appellant to unaffiliated Indians in the Pit River Tribe's
ancestral territory and members of the Tribe who reside in Oregon.
IHS Motion for Summary Disposition at 19.

9. However, on the same date, Appellant sent a contract
proposal to IHS which described three phases of proposed contract
services. IHS Ex. 7, pages 9 - 10. Phase III of that proposal
includes a statement of the Pit River Tribe's intent to establish
its ancestral territory as a contract service area. Id. at 10. It
is reasonable to infer from this exhibit that the Tribe's "original
proposal" included the objectives of eventually establishing its
ancestral territory as a contract service area and providing
contract health care services to unaffiliated Indians within the
ancestral territory.

10. As I discuss in Part V of this decision, a party making a
contract proposal to IHS has a burden to describe its proposed
services sufficiently so that IHS is able to make an informed
decision whether or not to accept the proposal. That plainly was
not done by Appellant in its December 31, 1992 proposal.

11. IHS was nonetheless obligated to evaluate Appellant's
proposal in good faith pursuant to the standards for review
established by ISDA. In this case, a good faith evaluation
consisted of determining that IHS could not accept the proposal
without violating ISDA.

12. IHS contract policy is consistent with this statutory
requirement. A 1989 IHS contract policy letter states:

[C]ontract[s] may not be modified unilaterally except that
modifications which only change a mailing address, correct a
typographical error, make similar nonsubstantive changes which do
not affect the contractual rights of the parties, or add funds up
to a previously authorized contract funding level may be made
unilaterally by the IHS Contracting Officer.

IHS Contract Policy Letter 89-4 (August 14, 1989) at 4; Int. Ex.
22, page 4.

13. These circumstances are the following:

(A) a reduction in appropriations from the previous fiscal
year for the program or function to be contracted;
(B) a directive in the statement of the managers
accompanying a conference report on an appropriation bill or
continuing resolution;
(C) a tribal authorization;
(D) a change in the amount of the pass-through funds needed
under a contract; or
(E) completion of a contracted project, activity, or program
. . . .

25 U.S.C. 450j-1(b)(2)(A) - (E).

14. Similarly, in protecting against unilateral contract
modifications by IHS, 25 U.S.C. 450m-1(b) does not distinguish
between prohibitions against modifications which apply to members
of tribes with contracts, and prohibitions against modifications
which apply to unaffiliated Indians covered by such contracts.

15. Indeed, another party could just as readily propose to
provide services to unaffiliated Indians covered under a contract
between IHS and Appellant as Appellant could propose to provide
services to unaffiliated Indians covered under contracts between
IHS and other contractors.

16. Had Appellant proposed to provide contract health care
services to members of another tribe in a service area which had
been assigned to that tribe, then Appellant would have had to
obtain a resolution of approval from that tribe. 25 U.S.C.
450b(l). In that sense, the other tribe would have had "veto"
authority over Appellant's proposal. However, Appellant did not
need a resolution of approval here, because it was seeking to
contract to provide health care services to unaffiliated Indians.

17. Appellant suggests that IHS regulations require that it act
on proposals for contracts within 30 days of their receipt by IHS.
See 42 C.F.R. 36.230(b). The 30-day time limit in this section
applies to proposals to make revisions or amendments to contracts.

18. The statutory bases for declination are:

(A) the service to be rendered to the Indian beneficiaries of
the particular program or function 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. 450(a)(2)(A) - (C).

19. At the oral argument of this case, IHS conceded that there
is no bar in ISDA or in the regulations to Appellant resubmitting
to IHS its proposal to provide health care services to southern
Oregon Pit River members. Presumably, if Appellant were to provide
sufficient information to permit IHS to evaluate the proposal, then
IHS would be in a position to either approve or decline the
proposal.

20. Regulations governing eligibility for contract health
services were last published in the Code of Federal Regulations in
1987. Congress imposed a moratorium on IHS regulations adopted
after 1987, and this moratorium remains in effect.