Tribal Nation Hospital Seeks Order Compelling Federal Agency to Renew Contract

Plaintiff Navajo Health Foundation-Sage Memorial Hospital, Inc. (Sage) has filed a lawsuit on Friday asking the District of New Mexico to compel the Indian Health Service (IHS) to act. The hospital wants to renew a contract it needs to continue providing healthcare services to 25,000 Navajo people, especially during the COVID-19 pandemic, and claims that the IHS has thus far refused to do so, unlawfully. The complaint seeks immediate injunctive relief, an order declaring the agency’s violation and awarding Sage a multi-year contract, reinstating its coverage under the Federal Torts Claims Act (FTCA), and restoring its ability to purchase prescription medications and other supplies from federal providers.

The plaintiff is a “private not-for-profit corporation that owns and operates a health care facility in Ganado, Arizona, serving approximately 25,000 Navajo people within the exterior boundaries of the Navajo Reservation.” The defendants are federal entities and their officials, including the U.S. Department of Health and Human Services and the area director of the Navajo Area Indian  Health Service.

In May, Sage reportedly submitted a contract proposal to IHS that included a draft of a 2021-2023 contract and accompanying filings. The proposed contract was nearly identical in scope and funding as the previous 2018-2020 contract. Yet, the filing contends, the IHS refused to renew it.

This autumn, “IHS engaged in a series of actions deliberately designed to undermine Sage’s relationship with the Navajo Nation,” the filing states. In substance, the plaintiff argues that according to previously decided cases and statutory obligations, IHS is required to “award a renewal contract that does not propose a ‘material and substantial change’ from the preceding contract.”

The complaint also notes that the Navajo Nation is suffering deeply from the COVID-19 pandemic, calling its effect “devastat[ing].” Sage asks the court to act and prevent it from losing $1.8 million in monthly operating costs, prevent Sage’s patients from being forced to obtain inferior health care at faraway locations, and protect Sage’s right to liability protection under FTCA, among other things.

The plaintiff is represented by Sonosky, Chambers, Sachse, Miller & Monkman, LLP.