TriCare Network Contracts Create Affirmative Action Obligations for Health Care Providers

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The Office of Federal Contracts Compliance (OFCCP) has made no secret of its desire to impose affirmative action obligations on hospitals. It moved quite a bit closer to this goal last month by winning a case against a hospital that had signed a TriCare network contract. In OFCCP v. Florida Hospital of Orlando, the hospital challenged OFCCP’s jurisdiction over it, and the Administrative Law Judge ruled in OFCCP’s favor. While this case dealt with a hospital in Florida, hospitals here in North Carolina can expect to see OFCCP issuing Notices of Audit to facilities in North Carolina, because the Florida case is strong precedent supporting OFCCP’s jurisdiction over hospitals that contract to provide TriCare network services.

OFCCP is the federal government agency charged with enforcing Executive Order 11246, Section 503 of the Rehabilitation Act, and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA). Companies that have a contract or subcontract of $10,000 or more with a federal executive agency, such as the Department of Defense, are subject to the OFCCP’s regulations. TriCare is a Department of Defense program that provides worldwide health care for active duty and retired military personnel and their families. Humana Military Healthcare Services, Inc. is the direct contractor with the Department of Defense for administration of the program. Humana’s contract provides that it “shall provide a managed, stable, high-quality network, or networks, of individual and institutional health care providers.” Humana subcontracts with hospitals and doctors to provide network services for TriCare beneficiaries.

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