Hospitals Providing Medical Services to Federal Employees Through an HMO are Covered Subcontractors Under OFCCP's Jurisdiction


For many years, health systems reasonably assumed that arrangements with a non-governmental entity to provide services or benefits to federal employees would not invoke the jurisdiction of the Office of Federal Contract Compliance Programs (OFCCP), and thus would not mandate federal equal employment and affirmative action obligations. This assumption particularly seemed rational where the subcontract expressly provided that the health system was not a federal contractor and because OFCCP's own March 2003 directive stated that health care providers having a relationship with Federal Employees Health Benefits Program (FEHBP) participants are not covered under OFCCP's programs based solely on that relationship. However, in a decision with immediate and far reaching implications for health systems across the nation, in May 2009, the Department of Labor's Administrative Review Board (ARB) held that three hospitals in Pittsburgh that received payments from an HMO in the course of providing medical services to U.S. government employees are covered federal subcontractors.1 OFCCP v. UPMC Braddock, 2007-OFC-1 (ARB May 29, 2009). Healthcare employers must now be aware that they may indeed have involuntarily become "federal contractors," and, as a result, may now be subject to a wide range of reporting, record keeping and other obligations.

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