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DOL Finds That OFCCP Does Not Have Jurisdiction Under “TRICARE”

Published by on November 15, 2012

On October 19, 2012, the Department of Labor Administrative Review Board (“ARB”) dismissed an Office of Federal Contract Compliance Programs (“OFCCP”) complaint against Florida Hospital of Orlando (“FHO”).  The ARB found that the OFCCP did not have jurisdiction.  More after the break. An Administrative Law Judge had previously issued a ruling in favor of OFCCP […]

On October 19, 2012, the Department of Labor Administrative Review Board (“ARB”) dismissed an Office of Federal Contract Compliance Programs (“OFCCP”) complaint against Florida Hospital of Orlando (“FHO”).  The ARB found that the OFCCP did not have jurisdiction.  More after the break.

An Administrative Law Judge had previously issued a ruling in favor of OFCCP that asserted that FHO was a federal subcontractor because of its participation in a TRICARE provider network (a Department of Defense health-care program for military members and their families).  The National Defense Authorization Act of 2012 (“NDAA”), however, specifically excludes TRICARE contracts from OFCCP jurisdiction.  After the NDAA was enacted in December 2011, the OFCCP issued Directive 301, rescinding Directive 293, its previous jurisdictional guidelines.

The ARB did not agree with the revised directive.  The October 19, 2012 ARB decision dismissed OFCCP’s complaint against FHO, holding that under the NDAA, FHO’s agreement with TRICARE provider Humana Military Healthcare Services is exempted from OFCCP jurisdiction.  Section 715 states that TRICARE-managed care contracts that include the requirement to “establish, manage, or maintain” a provider network may “not be considered” to be contracts for the performance of health care services or supplies for determining whether such entities are subcontractors for the purposes of Federal Acquisition Regulations “or any other law.”  The ARB determined that because Florida Hospital’s agreement with Humana “involve[d] the provision of health care providers pursuant to a managed care prime contract between Tricare and HMHS that include[d] the requirement to maintain a network of providers,” the contract fit the regulatory exemption in the NDAA.

This is a reminder that before responding to an OFCCP request, companies should review their contracts and business to ensure that OFCCP has a jurisdictional basis for conducting a compliance review.  Responding to a compliance review request can result in a waiver of a company’s defenses.  A copy of the ARB’s decision can be found here.

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