Polsinelli - Health Care


April 2014


A Band-Aid at Best: OFCCP Offers Temporary and Limited Relief to TRICARE Providers







For more information about this e-Alert, please contact:


Erin D. Schilling





W. Terrence Kilroy




Health Care Practice Leaders:


Matthew J. Murer

Practice Area Chair




Jane E. Arnold

Practice Area Vice Chair




Colleen M. Faddick

Practice Area Vice Chair





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The Department of Labor's (DOL) Office of Federal Contract Compliance Programs (OFCCP) enforces laws imposing affirmative action and equal employment opportunity obligations on all federal contractors and subcontractors. For years, the OFCCP has attempted to assert jurisdiction over the health care industry.

In a recent letter to members of Congress, Secretary of Labor Thomas E. Perez announced that the OFCCP will issue a directive with a five year moratorium on its enforcement activities involving TRICARE medical providers and will close any open or scheduled compliance evaluations of those providers. Secretary Perez's announcement came in response to a bill introduced in Congress that would prevent the OFCCP from asserting jurisdiction over health care providers on the basis of federal health program participation. (H.R. 3633) On April 1, following Secretary Perez's announcement, the DOL Administrative Law Judge dismissed the OFCCP's complaint against Florida Hospital of Orlando, which was a high profile case that had been pending since 2010 in which the OFCCP asserted jurisdiction over the hospital on the basis of its TRICARE subcontracts.

Only Temporary Relief

Although this announcement offers temporary relief to health care providers whose sole basis for OFCCP jurisdiction is TRICARE, Secretary Perez's letter does not provide any indication that the OFCCP is relinquishing its claim of jurisdiction over the health care industry. Moreover, this announcement does not change the jurisdictional status of health care providers who hold other prime contracts with the government or subcontractors with non-TRICARE federal subcontracts.

The New Initiative

Under this new initiative, the OFCCP will:

  • Issue a directive establishing a five-year moratorium on enforcement activities involving TRICARE subcontractors;
  • Administratively close all open and scheduled compliance evaluations for TRICARE subcontractors;
  • Provide information and training to TRICARE subcontractors on affirmative action plans, recordkeeping, and applicant tracking systems;
  • Conduct webinars on the OFCCP's jurisdiction and federal contractor and subcontractor obligations; and
  • Convene listening sessions so that TRICARE providers may inform the OFCCP of the unique issues they face in complying with the requirements imposed on federal contractors and subcontractors.

The announcement specifically states the moratorium does not:

  • Cover TRICARE subcontractors' obligation to refrain from discrimination as complaints of discrimination will still be investigated.
  • Extend to 1) holders of other prime federal contracts or 2) holders of other covered subcontracts besides TRICARE subcontracts.

Issues Not Addressed

Secretary Perez's announcement does not address some important jurisdictional issues in the health care industry:

  • Whether the moratorium extends to health care providers that receive funding through Federal Employees Health Benefits Program (FEHBP). In OFCCP v. UPMC Braddock, the OFCCP brought an action alleging that health care providers who had an HMO contract to provide health care services to FEHBP participants were federal subcontractors subject to the OFCCP's jurisdiction. In UPMC Braddock v. Harris, the United States District Court for the District of Columbia upheld the OFCCP's jurisdiction over the hospital on the basis of the FEHBP HMO contract. The case is on appeal to the appeals court.
  • Whether the OFCCP will attempt to assert jurisdiction over health care providers receiving federal funding from Medicare Parts C and D. The OFCCP has taken the position that Medicare Parts A and B are federal financial assistance, not federal contracts giving the OFCCP jurisdiction. The OFCCP has indicated that Parts C and D, however, are potentially covered federal contracts and subcontracts.


While the moratorium is good news for many TRICARE providers, the OFCCP is not abandoning its position that TRICARE providers may be subcontractors subject to its jurisdiction. The OFCCP is also not abandoning its efforts to assert jurisdiction over the health care industry on the basis of other covered federal contracts and subcontracts. During the moratorium, the OFCCP will work with other government entities to clarify the status of health care providers participating in the TRICARE program and FEHBP.

For More Information

For questions on the contents of this alert, contact an attorney listed within this communication.













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*Law360, March 2014







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