What is The Status of OFCCP Jurisdiction Over Healthcare Providers?

In recent years, the U.S Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFCCP) has aggressively argued that healthcare providers that participate in one of three federal healthcare programs—Medicare, TRICARE, and the Federal Employee Health Benefits Program (FEHBP) —are federal subcontractors. With this goal in mind, OFCCP began to notice audits in early 2004 and engaged in protracted litigation with hospitals in Pennsylvania and Florida based on their FEHBP or TRICARE relationships. Faced with considerable opposition and hearings scheduled by the House Committee on Education and the Workforce, OFCCP issued Directive 2014-01, TRICARE Subcontractor Enforcement Activities on March 7, 2014; announced plans to close any open and scheduled compliance evaluations for TRICARE healthcare entities; and withdrew from pending litigation with the Florida and Pennsylvania hospitals. Effective immediately, the directive established a five-year moratorium on the enforcement of affirmative action obligations of healthcare entities deemed by OFCCP to be TRICARE subcontractors. The directive makes clear that those healthcare providers that participate in both TRICARE and FEHBP as subcontractors are covered by the moratorium but does not provide any guidance regarding those healthcare providers that only participate in FEHBP. The moratorium also covers any TRICARE participants that also participate in any Medicare program. 

Nonetheless, OFCCP has not conceded jurisdiction over healthcare providers that participate in TRICARE and FEHBP networks. OFCCP refers to TRICARE participants as “subcontractors” throughout the directive and the agency announced outreach efforts intended to train such contractors on their compliance obligations once the moratorium is lifted. Significantly, the moratorium does not apply to OFCCP complaints of discrimination against TRICARE participants. Thus, although the moratorium suspends audits and affirmative action plan preparation obligations, OFCCP regulations still impose significant record-keeping obligations on such contractors and allow OFCCP to access contractors’ workplaces for investigations.

In addition, there is considerable uncertainty as to whether OFCCP will attempt to assert jurisdiction based on reimbursement from Medicare Parts C and D. OFCCP’s current position is that a hospital or other healthcare provider is not covered under the laws enforced by OFCCP if its only relationship with the federal government is as a participating provider under Medicare Parts A and B and Medicaid. However, OFCCP has repeatedly raised the question as to whether reimbursement from Medicare Parts C and D would be treated as federal financial assistance (and thus excluded from OFCCP jurisdiction) or as a federal subcontract. The agency’s web page guidance on jurisdiction is silent as to Medicare Parts C and D, thus leaving open the possibility that OFCCP will assert jurisdiction on this basis.

Providers that participate in the three federal health care programs should proactively assess their current contractual relationships, understand their compliance obligations if the moratorium is lifted and OFCCP resumes asserting jurisdiction, be aware of the risks of noncompliance, and evaluate whether or not to continue participating in these programs.

A more detailed discussion of the status of OFCCP jurisdiction over health care providers and the implications for participants in TRICARE and FEHBP networks can be found in the February 2016 issue of the Journal of Health & Life Sciences Law, a publication of the American Health Lawyers Association.