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Federal Court Decision Clarifies OFCCP Jurisdiction Over Health Care Providers

A Federal District Court has issued a much anticipated decision regarding the OFCCP's jurisdiction over health care providers, ruling that those providing health care services through HMOs to covered federal employees are covered "subcontractors."

In an opinion issued March 30, 2013, the U.S. District Court for the District of Columbia ruled in the case UPMC Braddock v. Seth Harris (Acting Secretary of Labor) that the three hospitals involved in the case were subcontractors within the meaning of the OFCCP's regulations by virtue of the contract that they had to provide health care services to an HMO, which in turn contracted with the Office of Personnel Management to provide health services to federal employees. The case reached the U.S. District Court on appeal from a decision rendered by the DOL's Administrative Review Board (ARB), which affirmed an earlier decision of an Administrative Law Judge, finding that such hospitals fell within the OFCCP's jurisdiction. 

The Court rejected the hospital's principle argument that the terms of their contract with the HMO specifically excluded them from compliance with affirmative action regulations.  The Court also rejected the hospital's argument that that because the HMO was merely an insurer (obligated to reimburse for health care services, but not actually provide them), the hospitals were not providing services necessary for the HMO to perform its contractual obligations or performing part of the contract with OPM.  In rejecting this second argument, the Court followed the ARB's rationale, which distinguished the role of an HMO in providing health care services, from the role of a fee for services insurer.  This distinction allowed the Court to reach a different concusion from that reached in the ARB's prior decision, OFCCP v. Bridgeport Hospital, ARB Case No. 00-034, Jan. 31, 2003.

This Opinion will likely embolden the OFCCP in its efforts to assert jurisdiction over health care providers, despite the recent blow to the OFCCP's assertion of jurisdiction over Tricare providers.  In the 2012 National Defense Authorization Act, Congress exempted Tricare providers from the regulatory responsibilities imposed on subcontractors.  However, given that many of those health care providers are also likely contractors under HMOs providing services to federal employees, the victory achieved by the 2012 National Defense Authorization Act will likely not enable such providers to avoid the OFCCP's reach. 

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