A recent decision by an Administrative Law Judge for the U.S. Department of Labor (DOL) makes it critical that health care providers determine whether they could be considered federal contractors or subcontractors and therefore must comply with federal affirmative action requirements.

In OFCCP v. Florida Hospital of Orlando, DOL OALJ, No. 2009-OFC-00002, ALJ Jeffrey Tureck held that Florida Hospital is a federal subcontractor, subject to Executive Order 11246, Section 503 of the Rehabilitation Act, and the Vietnam Era Veterans Readjustment Assistance Act.

The decision, dated October 18, 2010, centered on Florida Hospital’s contract with Humana Military Healthcare Services Inc. (HMHS). Florida Hospital contracted to provide health care services for beneficiaries under HMHS’s agreement with TRICARE, the U.S. Department of Defense’s worldwide health care program for active duty and retired military and their families. Under the agreement, Florida Hospital provided health care services directly to TRICARE beneficiaries.

When DOL’s Office of Federal Contract Compliance Programs (OFCCP) sought documentation of Florida Hospital’s affirmative action program, the hospital refused to furnish the information, asserting that it was not subject to OFCCP’s jurisdiction. OFCCP enforces affirmative action and equal employment opportunity obligations under Executive Order 11246, Section 503 of the Rehabilitation Act, and the Vietnam Era Veterans Readjustment Assistance Act.

ALJ Tureck, however, found that the hospital was a federal subcontractor, subject to OFCCP’s jurisdiction, because it contracted to perform part of   HMHS’s obligations under its TRICARE contract. Tureck relied on OFCCP v. UPMC Braddock, ARB Case No. 08-048, where three hospitals that had HMO contracts with the UPMC Health Plan to provide medical products and services to U.S. government employees were found to be federal subcontractors. Because the hospitals were performing a portion of HMHS’s obligation to provide medical services and were not simply providing medical insurance, c.f. OFCCP v. Bridgeport Hospital, ARB No. 00-034, they fell within the definition of a federal subcontractor.

The ALJ also rejected an argument by Florida Hospital that its relationship with the federal government in this instance was simply as a recipient of federal financial assistance (akin to Medicare), taking it outside OFCCP’s jurisdiction, which excludes entities whose relationship with the federal government consists only of the receipt of federal funds. But ALJ Tureck found that, unlike Medicare, TRICARE was not a federal financial assistance program but rather a program to provide actual medical services.

If you have any questions about this new development or your status as a federal contractor or subcontractor, please contact David S. Fryman, 215.864.8105 or fryman@ballardspahr.com, or any member of Ballard Spahr’s Labor and Employment Group.



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