39 F.Supp.3d 66
United States District Court,
District of Columbia.
Tuba City Regional Health Care Corporation, Plaintiff,
United States of America et al., Defendants.
Civil Action No.: 13639 (RC)
Signed April 25, 2014
*67 Geoffrey D. Strommer, Hobbs, Straus, Dean & Walker, LLP, Portland, OR, R. Gehl
Tucker, Hufford, Horstman, Mongini, Parnell & Tucker, Flagstaff, AZ, Jerry Charles
Straus, Caroline P. Mayhew, Hobbs, Straus, Dean & Walker, Washington, DC, for
Alexander Daniel Shoaibi, U.S. Attorney's Office, Washington, DC, for Defendants.
Re Document Nos.: 18, 24
DENYING DEFENDANTS' MOTION TO DISMISS; AND FINDING AS MOOT PLAINTIFF'S MOTION FOR
REFERRAL TO MAGISTRATE
RUDOLPH CONTRERAS, United States District Judge
Plaintiff brought this action pursuant to the Contract Disputes Act of 1978, 41
U.S.C. ss 7101-09 ("CDA"). The Government moved to dismiss for lack of subject
matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), arguing that
there was neither an actual nor a deemed final decision by the contracting officer
when the complaint was filed. For the reasons that follow, the Court will deny
the Government's motion.
II. FACTUAL AND PROCEDURAL BACKGROUND
The claims in this case arise from a long-standing dispute between the Indian
*68 Health Service ("IHS") and the tribal healthcare providers who contract and
compact with that agency to carry out its responsibility to provide health
services to American Indians and Alaska Natives. These providers enter into
contracts with the IHS pursuant to the Indian Self-Determination and Education
Assistance Act, 25 U.S.C. ss 450-58 ("ISDEAA"). The tribal healthcare providers
can receive two types of funding in these contracts. The first is the
"secretarial amount," which is the amount that the IHS would have otherwise
provided for the operation of the programs if they were run by the government.
See id. s 450j -1(a)(1). The IHS also covers "contract support costs," which
compensate for administrative and compliance costs. See id. s 450j1 (a)(2).
For many years, the IHS underpaid Tuba City Regional Health Care Corporation
("TCRHCC") and other tribal contractors for their contract support costs. See
Cherokee Nation of Okla. v. Leavitt, 543 U.S. 631, 636, 125 S.Ct. 1172, 161
L.Ed.2d 66 (2005). The Supreme Court held that the government's promises to pay
these costs were legally binding. See id. at 634, 125 S.Ct. 1172. More
recently, the Supreme Court held that legislative spending caps on aggregate
contract support costs limited the aggregate amount the IHS could pay, but any
contractor not paid in full could nonetheless recover damages from the Judgment
Fund, 31 U.S.C. s 1304, in contract claims. See Salazar v. Ramah Navajo Chapter,
--- U.S. ----, 132 S.Ct. 2181, 2193-94, 183 L.Ed.2d 186 (2012).
On September 17, 2012, TCRHCC sent a letter to IHS contracting officer Frank
Dayish detailing underpayments and damages for fiscal year 2006 and explaining the
theories on which those damages were premised. See Defs.' Mot. Dismiss Ex. 1,
ECF No. 18-2. On November 5, 2012, TCRHCC sent five more letters to Dayish,
detailing its claims for underpayment and damages for fiscal years 2007-2011.
See id. Each letter contained a signed certification as required by the CDA.
See id. The total dollar amount of the claims in each letter exceeded $100,000.
See id. Each letter contained a spreadsheet explaining TCRHCC's claims. See
Dayish responded to TCRHCC's September 17, 2012, letter on November 16, 2012.
This letter stated, "I anticipate that I will issue a final contracting officer's
decision by March 16, 2013." Defs.' Mot. Dismiss Ex. 2, ECF No. 18-3. On
January 2, 2013, Dayish responded to TCRHCC's November 5, 2012, letters with five
letters requesting certain additional information from TCRHCC in support of its
claims, including the contract support costs actually incurred by TCRHCC during
the relevant time period. Dayish's letters stated, "If you submit sufficient
information to issue a final decision on your claims as requested above, the IHS
anticipates that it will issue a final decision on the claims by May 3, 2013."
Defs.' Mot. Dismiss Exs. 3-7, ECF Nos. 18-4 to 18-8. On January 25, 2013, TCRHCC
responded to Dayish's request, taking the position that the requested information
and documents were not relevant. Under TCRHCC's interpretation of the ISDEAA,
"[t]he[ ] sums are not payable based on receipts and vouchers for 'actual'
expenditures; rather, they are due in advance so that TCRHCC has the funds to
provide the contracted services." Pl.'s Opp'n Ex. D, ECF No. 19-5.
On February 11, 2013, Dayish sent a letter to TCRHCC that purported to grant
himself a second extension of the deadline for issuing a final decision on the
fiscal year 2006 claim. See Defs.' Mot. Dismiss Ex. 8, ECF No. 18-9. The
letter stated: "The IHS anticipates that it will issue a final contracting
officer's decision by May *69 3, 2013." Id. This letter was sent to TCRHCC more
than 140 days after the claim was filed.
On April 26, 2013, Dayish sent another letter to TCRHCC. See Defs.' Mot.
Dismiss Ex. 9, ECF No. 18-10. In this letter, Dayish purported to grant himself
a third extension for the fiscal year 2006 claims, and a second extension for the
fiscal year 2007-2011 claims. See id. at 1. The letter again requested the
information and documents that TCRHCC had previously declined to submit. See id.
at 2. The letter also stated that Dayish again "anticipated" that the IHS would
make a decision by October 22, 2013. Id.
Before a decision was rendered, TCRHCC filed this action on May 3, 2013,
seeking monetary damages under the CDA. See Compl., ECF No. 1. The Government
has moved to dismiss the case for lack of jurisdiction, arguing that TCRHCC failed
to exhaust its administrative remedies.FN1 See generally Defs.' Mot. Dismiss, ECF
FN1. TCRHCC has filed a motion asking the Court to refer the Government's
motion to a magistrate judge, either to mediate the issues raised in the
Government's motion or for a report and recommendation. See generally
Pl.'s Mot. Ref. Mag., ECF No. 24. Because the Court resolves the
Government's motion to dismiss, TCRHCC's motion is moot.
A. Legal Standard
Federal courts are courts of limited jurisdiction, and the law presumes
that "a cause lies outside this limited jurisdiction...." Kokkonen v. Guardian
Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994);
see also Gen. Motors Corp. v. EPA, 363 F.3d 442, 448 (D.C.Cir.2004) ("As a court
of limited jurisdiction, we begin, and end, with an examination of our
jurisdiction."). It is a plaintiff's burden to establish by a preponderance of
the evidence that the court has subject matter jurisdiction. Lujan v. Defenders
of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).
Because subject matter jurisdiction focuses on a court's power to hear a
claim, the court must give the plaintiff's factual allegations closer scrutiny
than would be required for a Rule 12(b)(6) motion for failure to state a claim.
See Macharia v. United States, 334 F.3d 61, 64, 69 (D.C.Cir.2003); Grand Lodge of
Fraternal Order of Police v. Ashcroft, 185 F.Supp.2d 9, 13 (D.D.C.2001). Thus, a
court's analysis of subject matter jurisdiction is not confined to the allegations
contained in the complaint. Hohri v. United States, 782 F.2d 227, 241
(D.C.Cir.1986), vacated on other grounds, 482 U.S. 64, 107 S.Ct. 2246, 96 L.Ed.2d
51 (1987). Instead, "where necessary, the court may consider the complaint
supplemented by undisputed facts evidenced in the record, or the complaint
supplemented by undisputed facts plus the court's resolution of disputed facts."
Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C.Cir.1992) (citing
Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.1981)).
The CDA governs disputes arising out of ISDEAA contracts. See 25 U.S.C.
s 450m-1(d). For a court to have subject matter jurisdiction under the CDA, "the
contractor must submit a proper claim-a written demand that includes (1) adequate
notice of the basis and amount of a claim and (2) a request for a final decision."
M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1328 (Fed.Cir.2010).
Additionally, "[a] contracting officer's actual or deemed final decision is ... a
predicate for ... jurisdiction under the CDA." Claude E. Atkins Enters., Inc. *70
v. United States, 27 Fed.Cl. 142, 143 (1992). Because it is undisputed that
there has not been an actual final decision on TCRHCC's claims and that TCRHCC's
claims were properly certified, the question is whether there has been a deemed
final decision. See 41 U.S.C. s 7103(f)(5).
B. Deemed Denials
The CDA states: "A contracting officer shall, within sixty days of receipt
of a submitted certified claim over $100,000-(A) issue a decision; or (B) notify
the contractor of the time within which a decision will be issued." 41 U.S.C. s
7103(f)(2) (emphasis added). This provision allows a contracting officer, if
they wish, to pick their own deadline. Once picked, however, that deadline is
firm. "Failure by a contracting officer to issue a decision on a claim within the
required time period is deemed to be a decision by the contracting officer denying
the claim and authorizes an appeal or action on the claim...." Id. s 7103(f)(5).
Dayish stated that he "anticipated" that he would issue a final decision on
the fiscal year 2006 claims by March 16, 2013, and that he would issue a final
decision on the fiscal year 2007- 2012 claims by May 3, 2013. See Defs.' Mot.
Dismiss Exs. 2-3. Even assuming that these statements were firm enough to comply
with s 7103(f)(2),FN2 once the deadlines passed, the claims were constructively
denied under the plain language of the CDA, despite Dayish's attempts to further
extend the deadlines. See 41 U.S.C. s 7103(f)(5). Thus, TCRHCC was authorized
to appeal, and this Court has jurisdiction.
FN2. Dayish's statements may not comply with s 7103(f)(2) because Dayish did
not commit to issue final decisions by the specified dates. See Claude E.
Atkins, 27 Fed.Cl. at 145. His statements certainly constitute predictions
about when decisions will be issued, but they do not seem to constitute
commitments to issue decisions by the specified dates. See American
Heritage Dictionary of the English Language (5th ed. 2013) (defining the
word "anticipate" as meaning "[t]o see as a probable occurrence; expect").
However, the Court need not reach this issue here. If Dayish's language was
too vague, the claims would have been deemed denied as of November 17, 2012,
and January 5, 2013, respectively. If the officer's language was clear,
the claims would have been deemed denied as of March 16, 2013, and May 3,
2013, respectively. TCRHCC filed suit after all of these possible deadlines
The Government argues that its subsequent attempted extensions were
reasonable because the claims are complex. Defs.' Reply 7, ECF No. 20. But the
CDA provides no exception to the s 7103(f) timing requirements for complex claims.
If a claim is complex, the contracting officer can, within 60 days of receipt of
the claim, pick a deadline that gives him plenty of time to evaluate the claim.
See 41 U.S.C. s 7103(f)(3) ("The decision of a contracting officer on submitted
claims shall be issued within a reasonable time ... taking into account such
factors as the size and complexity of the claim."). Once that deadline passes,
however, the claim is deemed denied, no matter how complex it is. See id. s
7103(f)(5). The contractor can ignore any further attempts to extend the
deadline; FN3 the CDA "permits a contractor to treat the passage of the due date
*71 specified in the initial sixty days as a deemed decision even if the
contracting officer attempts to further extend the due date." Claude E. Atkins,
27 Fed.Cl. at 145.
FN3. The Government cites Reflectone, Inc. v. Dalton, 60 F.3d 1572
(Fed.Cir.1995) (en banc), for the proposition that a contracting officer can
delay issuing a final decision pending the receipt of further information.
That very same case warns against the possibility that the contracting
officer might "continually, indeed endlessly, seek information and prolong
negotiations without issuing an appealable decision ... thereby probably
delaying rather than accelerating any possible settlement." Id. at 1582.
The Court reads Reflectone as reiterating the requirements of s 7013(f):
The contracting officer can pick a deadline, but once picked, that deadline
is firm. See id. at 1582-83.
The Government argues that TCRHCC has not provided the documents that "it
needs to evaluate the claims being made and engage in settlement discussions."
Defs.' Reply 12. This would only be relevant if the Government were contesting
certification.FN4 The CDA provides no exception to the s 7103(f) timing
requirements for claims that the contracting officer later determines to be
insufficiently supported by documentation. See Orbas & Assocs. v. United States,
26 Cl.Ct. 647, 650 n. 3 (1992) ("Although the [contracting officer] may ask for
information to supplement a claim, in the absence of some understanding with the
plaintiff that it will defer filing a complaint, the [contracting officer] must
still comply with [s 7103(f)(2) ]."). If the contracting officer believes the
claims are unsupported at the time a final decision is required to be made, the
contractor may deny the claims. Alternatively, the contracting officer may
abstain from issuing a decision; when the deadline passes, the claim will be
deemed denied. In either case, the contractor may appeal; the contracting
officer does not have the power to let the claim languish in bureaucratic
FN4. The Government argues that even if TCRHCC formally complied with the
certification requirement of s 7103(b), the statute "reiterates the
contractor's obligation to provide accurate and complete supporting
data...." See Defs.' Resp. Ct. Order 2, ECF No. 28. The jurisdictional
requirement is not as stringent as the Government suggests-"[a]ll that is
required is that the contractor submit ... a clear and unequivocal statement
that gives the contracting officer adequate notice of the basis and amount
of the claim." Contract Cleaning Maintenance Inc. v. United States, 811
F.2d 586, 592 (Fed Cir.1987); accord Tunica-Biloxi Tribe of La. v. United
States, 577 F.Supp.2d 382, 410 (D.D.C.2010) ("The requirement that the
contractor provide notice of the amount of the claim means only that the
amount claimed must be stated in a manner which allows for reasonable
determination of the recovery available at the time the claim is presented
and/or decided by the contracting officer.").
The Government also argues that the purpose of the CDA is "to induce resolution
of more contract disputes by negotiation prior to litigation...." S.Rep. No.
95-1118, at 1 (1978), reprinted in 1978 U.S.C.C.A.N. 5235, 5235. But this is not
the only purpose of the statute-it is also supposed to "insure fair and equitable
treatment to contractors and government agencies." Id. Moreover, if the only
purpose of the statute were to ensure that contract disputes would be resolved
outside of court, s 7013(f) would have been omitted entirely; that would have
ensured that a contractor could never get into court to resolve a contract dispute
with the government without the government's acquiescence.
The Government's invocation of statutory purpose is particularly inapt in this
case. Both sides agree that the only way settlement can occur is if the
litigation proceeds; otherwise, the Government cannot pay judgments out of the
Judgment Fund. Pl.'s Opp'n Ex. A at 2, ECF No. 19-2 (containing a letter from the
IHS stating that "the Judgment Fund is authorized to pay only under certain
conditions, such as a settlement agreement between the parties ... after the Tribe
has appealed the decision of the Agency's awarding official ... to Federal
court"). Allowing the litigation to go forward is a prerequisite to any
For the foregoing reasons, the Court will deny the Government's motion to
dismiss*72 for lack of subject matter jurisdiction. An order consistent with
this Memorandum Opinion is separately and contemporaneously issued.