National Defense Authorization Act Precludes OFCCP Jurisdiction Over TRICARE Provider

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

The U.S. Department of Labor’s Administrative Review Board has found that the Office of Federal Contract Compliance Programs (OFCCP) lacks jurisdiction over Florida Hospital of Orlando, a TRICARE health services provider, based on the 2011 National Defense Authorization Act (NDAA). OFCCP v. Florida Hospital of Orlando (FHO), DOL ARB, No. 11-011 (October 19, 2012).

In FHO, an administrative law judge ruled that the hospital was a federal subcontractor subject to OFCCP jurisdiction because of its participation in a health care provider network established by Humana Military Healthcare Services Inc. (HMHS). HMHS has a federal contract with the Department of Defense’s TRICARE health care program, which covers active duty soldiers, retired military employees, and their families. The judge ruled that, through its agreement with HMHS, FHO provides medical services to TRICARE beneficiaries and is thus performing a portion of HMHS’s obligations under HMHS’s TRICARE contract. 

While the case was on appeal, however, Congress included in the NDAA for Fiscal Year 2012 a section exempting certain TRICARE network providers from being considered federal subcontractors under the affirmative action laws. In light of this new and specific exemption, FHO moved to dismiss the OFCCP’s complaint on the basis that it is not a federal subcontractor under the NDAA. 

In its October 19 decision, the Board dismissed OFCCP’s complaint against FHO, holding that FHO’s agreement with HMHS is not a subcontract under the NDAA and that OFCCP does not have jurisdiction over the hospital. The Board ruled that it could retroactively apply the NDAA to this case because it does not increase any party’s liability, impair any rights, or impose new duties.

The OFCCP has not yet announced whether it plans to appeal the Board’s ruling but, for now, this decision is a big win for the health care community that has been inundated with OFCCP audits premised on TRICARE jurisdiction. Note, however, that the ruling in this case does not exempt all hospital and health care provider contractors from OFCCP’s jurisdiction. The NDAA has no exemption for any provider arrangement other than TRICARE. In addition, health care providers that enter into contracts or subcontracts with federal agencies (such as the Veterans Administration) in an amount exceeding $10,000 are clearly covered by the federal affirmative action laws and subject to OFCCP’s jurisdiction. 

Additional Information

Should you have further questions about pending or new OFCCP audits that appear to be premised on TRICARE or other provider arrangements, contact the Ogletree Deakins attorney with whom you regularly work or any member of the firm’s Affirmative Action/OFCCP Compliance Practice Group.

Note: This article was published in the October 24, 2012 issue of the Federal Contracting eAuthority.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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