Type: Law Bulletins
Date: 10/21/2010

Health Care Employers Beware: TRICARE May Subject You To Government Contractor Regulations

The Office of Federal Contract Compliance Programs (“OFCCP”) continues to snare unsuspecting hospitals and medical providers that it claims are federal government contractors and subcontractors.  On October 18, 2010, an administrative law judge determined that a Florida hospital that provided medical services to TRICARE beneficiaries was a federal subcontractor.  OFCCP v. Florida Hospital of Orlando, DOL OALJ No. 2009-OFC-00002.

The hospital participated in a health care provider network established by Humana Military Healthcare Services, Inc. (“HMHS”).  HMHS has a federal contract with TRICARE Management Activity, a Department of Defense Field Activity that administers TRICARE.  This contract requires HMHS to provide networks of health care providers to active duty and retired military service members and their families.  The Florida hospital, through its contract with HMHS, provided medical services to TRICARE beneficiaries.  The ALJ determined that by doing so, the hospital had undertaken to perform some of HMHS’s obligations under the TRICARE contract.  As such, it met the definition of a government subcontractor and was subject to the affirmative action obligations.

This latest decision, which is subject to appeal, continues OFCCP’s push to claim jurisdiction over hospitals and other medical service providers.  In 2009, the Department of Labor’s Administrative Review Board determined that a hospital providing health care services to an HMO that had a medical services contract with a federal agency was also a government contractor.  See Healthcare Providers and Other Companies May Unknowingly Be Government Subcontractors.

Many hospitals and health care providers, like those involved in these recent cases, are unaware that they may be considered federal subcontractors and have taken no steps to comply with the various affirmative action obligations under Executive Order 11246, Section 503 of the Rehabilitation Act, or the Vietnam Era Veterans’ Readjustment Assistance Act. 

This latest decision is a further warning to subcontractors, in particular health care providers, that the OFCCP is coming.  If an entity is dealing with the federal government either directly or indirectly as a subcontractor, it may be subject to the OFCCP’s regulations, regardless of whether its contract alerts it to its status as a federal contractor. 

Taft’s labor attorneys are available to assist health care providers or other potential government contractors assess their status and, if necessary, comply with the various government contractor obligations.

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