New DOL Rule Frees TRICARE Providers from OFCCP Audits and Enforcement

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On July 2, 2020, the Department of Labor (DOL) published a final rule, which clarifies that its Office of Federal Contract Compliance Programs (OFCCP) lacks authority over certain medical providers who contract with TRICARE. While there has been a moratorium on OFCCP enforcement for TRICARE providers since 2014, the potential for future OFCCP audits and related litigation loomed large. This rule relieves healthcare providers who solely contract with the federal government through TRICARE from future OFCCP audits and enforcement.

OFCCP enforces Executive Order 11246 (EO 11246), Section 503 of the Rehabilitation Act of 1973 (Section 503), and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA). These require that federal contractors and subcontractors practice affirmative action and nondiscrimination.

DOL’s new rule removes TRICARE providers from OFCCP’s authority, thereby exempting TRICARE providers from complying with EO 11246, Section 503, and VEVRAA. The OFCCP provides two bases for the change:

  1. Lack of OFCCP Authority: The rule explains that OFCCP lacks authority to regulate healthcare providers solely because they participate in TRICARE.

  2. National Interest Exemption: The rule establishes a national interest exemption for TRICARE providers, which provides an alternative basis for releasing them from OFCCP compliance requirements.

“This deregulatory action aims to improve access to medical care for veterans and their families, increase cost savings for TRICARE providers and allocate the agency’s limited resources more efficiently,” said OFCCP Director Craig Leen in a recent release.

OFCCP retains authority over TRICARE providers that hold federal government contracts or subcontract for services under separate programs. Additionally, TRICARE providers are still subject to relevant federal, state, and local laws prohibiting discrimination and providing for equal employment opportunity.

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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