U.S. Department of Labor Further Expands Jurisdiction over Hospitals and Healthcare Providers; TRICARE Agreements Impose Affirmative Action Obligations

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A recent U.S. Department of Labor Administrative Law Judge (ALJ) decision, OFCCP v. Florida Hospital of Orlando,1 expands the federal subcontractor affirmative action requirements to healthcare providers that provide medical services to TRICARE beneficiaries. These medical services are typically provided pursuant to a provider agreement with a company that administers healthcare provider networks for TRICARE. TRICARE is the U.S. Department of Defense's healthcare program for active and retired military members.

For years, hospitals and other healthcare providers (HCPs) operated with the understanding that, absent a clear contractual or subcontractual relationship with the federal government, they are not federal contractors or subcontractors subject to affirmative action requirements. Hospitals and HCPs relied on a 2003 decision in OFCCP v. Bridgeport Hospital,2 which was widely understood as insulating HCPs from the "subcontractor" status that can subject them to affirmative action requirements.

However, a May 2009 ruling in OFCCP v. UPMC Braddock,3 significantly altered the compliance landscape for hospitals and HCPs. In UPMC Braddock, the ALJ found that a hospital system's provider agreement with an HMO, which in turn had a federal contract to provide medical services to government employees, made the hospital system a federal subcontractor subject to affirmative action requirements.

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