OFCCP Rescinds Medical Providers Directive

June 2012Articles Staying Well Within the Law

On April 25, 2012, the U.S. Department of Labor’s (DOL) Office of Federal Contractor Compliance Programs (OFCCP) announced that it has rescinded Policy Directive 293, which provided guidance for determining whether a health care provider or insurer falls within the OFCCP’s jurisdiction as a federal contractor or subcontractor. In particular, Directive No. 293 provided that healthcare entities that merely received reimbursement payments from TRICARE or otherwise participated in a TRICARE network were federal contractors or subcontractors and thus subject to its jurisdiction. The OFCCP maintained that such health care entities were required to comply with federal affirmative action rules and regulations such as preparing an Affirmative Action Plan and submitting to compliance evaluations and audits.

According to the DOL’s Office of the Solicitor, the recent enactment of the National Defense Authorization Act (NDAA) and the pending case of OFCCP v. Florida Hospital of Orlando, ALJ Case No 2009-OFC-0002 (October 18, 2010) warranted the rescission of Directive 293. In sum, Section 715 of the NDAA states that a TRICARE managed care support contract that includes the requirement to establish, manage or maintain a network of providers may not be considered a contract for the performance of health care service or supplies for the purpose of determining whether such network providers are subcontractors under the Federal Acquisition Regulation or any other law. Based on the enactment of Section 715 of the NDAA, Florida Hospital of Orlando moved to dismiss an OFCCP complaint that sought to assert jurisdiction over the hospital based on its participation in TRICARE.

As a result of these developments, the OFCCP has announced that it will be sending out letters in the coming weeks to health care providers or insurers who have pending compliance evaluations to notify them if the agency is still asserting a basis for jurisdiction other than TRICARE. If a health care provider or insurer receives this notification, it will have 30 days, from the date of receipt of the letter, to submit the Affirmative Action Plan requested in the OFCCP’s original scheduling letter.

Ultimately, this development should be good news for many health care providers and insurers as the OFCCP will no longer be seeking to assert jurisdiction over them merely based on their participation in or receipt of reimbursements from TRICARE. Hence, many healthcare entities and insurers will no longer be deemed federal contractors or subcontractors and thus will not be required to prepare Affirmative Action Plans, submit to compliance evaluations and audits or otherwise comply with federal affirmative action rules and regulations.