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The OFCCP and Hospitals – Five Things You Should Know

December 17, 2015

ofccp-lawA quiet battle has been going on between the Office of the Federal Contract Compliance Programs (“OFCCP”) and hospitals. Under the United States Department of Labor (“DOL”), the OFCCP enforces equal employment opportunity requirements for those doing business with the Federal Government.

Hospitals, of course, are subject to EEOC requirements, but should they also face OFCCP audits and possible penalties? This issue was litigated in Pennsylvania and in Florida without relief for hospitals. See, UPMC Braddock v. Solis and OFCCP v. Florida Hospital of Orlando.

In December of 2010, the Office of Federal Contract Compliance Programs (OFCCP) took the position that hospitals were subject to their jurisdiction as a result of contracts to provide care under TRICARE, the federal government’s healthcare program for active duty and retired military and their families.

Congress and President Obama gave hospitals some relief with the National Defense Authorization Act for Fiscal Year 2012. Section 715 of that law states that providers of medical service are specifically NOT subcontractors subject to OFCCP jurisdiction based solely on TRICARE participation.

However, this provision only addressed jurisdiction based on TRICARE participation. The law did not affect other bases for coverage, such as contracts with the Veterans Administration, the Department of Defense, or other federal agencies. The OFCCP, certainly, didn’t believe the issue was dead. In fact, OFCCP Director Shiu claimed publically that the NDAA provision was "likely to create confusion and will unfairly deny many workers the benefits and protections that our laws ensure."

Then, a proposed bill sought to broaden the protection against OFCCP jurisdiction by preventing the OFCCP from categorizing hospitals and other healthcare providers as contractors at all. Supporters of the bill argued that hospitals already face heavy compliance and regulation requirements, and the OFCCP compliance requirements would create additional burdens.

The Bill had broad backing, and its momentum increased, until two days before a scheduled hearing. At that point, the Secretary of Labor submitted a letter to the committee proposing that a legislative solution could be avoided in favor of an administrative solution – including a proposed five-year moratorium on enforcement actions, stopping any on-going compliance evaluations, education and technical assistance to subcontractors about OFCCP jurisdiction and sub-contractor obligations, etc. In other words, the Labor Department would suspend enforcement while they “educate” hospitals that they are, indeed, subject to enforcement and on how to comply. Clearly, the OFCCP was not exactly giving up the fight.

The letter was seen as a favorable step and one of the cosponsors of the Bill withdrew that co-sponsorship. So H.R. 3633 did not move forward. Too bad, as the Bill gave hope of resolving the matter.

Here’s what the DOL website currently states:

Is a hospital or other health care provider covered under the laws enforced by OFCCP as a result of the reimbursements it receives for medical care and services provided to Medicare or Medicaid patients?

The provider agreements, pursuant to which hospitals and other health care providers receive reimbursement for services covered under Medicare Parts A and B, and the provider agreements that hospitals and other health care facilities have entered into with State Medicaid agencies, are not covered Government contracts under the laws enforced by OFCCP.

Accordingly, a hospital or other health care provider is not covered under the laws enforced by OFCCP if its only relationship with the Federal government is as a participating provider under Medicare Parts A and B and Medicaid. Please note that a hospital or other health care provider may be a covered contractor because of other contractual arrangements, such as providing health care to active or retired military under a contract with the Department of Veterans' Affairs or the Department of Defense. Likewise, a teaching hospital doing research for a university that has a contract with the Federal government may be covered.


Summary and recommendations:

  1. It would appear that hospitals have failed in their effort to get completely out from under OFCCP jurisdiction. Between the failed litigation and the failure of support for H.R. 3633, it looks like hospitals will remain on the radar screen of the OFCCP.

  2. The basis for jurisdiction is still a bit unclear. The agency continues to assert that a number of contractual arrangements can make hospitals subject to OFCCP jurisdiction. They appear to be withholding any enforcement actions at present under the letter issued previously, but it is unclear as to how long that will last.

  3. An OFCCP audit can take up significant resources, and resultant penalties, can be expensive.

  4. Hospitals should still implement selection systems that comply with OFCCP rules. Many have the type of contractual relationships likely to give rise to jurisdiction. Also, this approach will place them in a good position with regard to EEOC compliance.

  5. It’s still the case that structure, standardization, consistency, documentation and using a comprehensive and well thought out selection “system” is your best bet.

This week’s blog is submitted by Maria Greco Danaher, Shareholder, Ogletree Deakins Law firm. Maria regularly represents and counsels companies in employment related matters. She specializes in representing management in labor relations and employment litigation, and in training, counseling, and advising human resource departments and corporate management on these topics. Ogletree Deakins is one of the nation’s largest labor and employment law firms. You can read more from Maria at her blog, Employment Law Matters

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Bryan Warren Bryan Warren was the former Director of Healthcare Solutions at PSI. He was responsible for developing and promoting tools and services designed specifically for the unique challenges faced by healthcare organizations.