SECRETARY OF LABOR ANNOUNCES MORATORIUM FOR TRICARE PROVIDERS

The Secretary of Labor, Thomas Perez, announced a moratorium on enforcement of affirmative action obligations for TRICARE providers. In a letter to several members of the Committee on Education and the Workforce and the Subcommittee Workforce Protections, Perez documented that for five years OFCCP would “limit its enforcement activities,” including the administrative closure of all open or scheduled compliance evaluations of TRICARE subcontractors. In addition to this letter to the House, OFCCP will issue an official directive that establishes the moratorium. During this five-year period, OFCCP will do “extensive outreach” which includes providing technical assistance training, convening listening sessions, and conducting webinars on OFCCP’s legal authorities and jurisdiction. This letter comes in response to several years of resistance from TRICARE providers on OFCCP jurisdiction.

OFCCP has a history of maintaining that TRICARE reimbursement establishes coverage as a supply and service contract under Executive Order 11246, VEVRAA and Section 503. The 2010 case of OFCCP v. Florida Hospital of Orlando brought to question this assumption and resulted in a favorable ruling for OFCCP with the conclusion that Orlando Hospital is a federal “subcontractor” subject to OFCCP enforcement actions, as discussed in greater detail in a prior blog by DCI Consulting. Resulting from this ruling, all hospitals and other health care providers that (1) met the $50,000 and 50 employee minimum requirements for contractor status and (2) accepted TRICARE reimbursement, became subject to OFCCP jurisdiction. An appeal was filed by Florida Hospital and other related cases have followed, demonstrating the unwillingness for TRICARE providers to accept this determination of jurisdiction without further discussion.

TRICARE providers breathed a sigh of relief in 2012 when President Obama signed into law the National Defense Authorization Act (NDAA), including an exemption for them from coverage as federal contractors. OFCCP responded by rescinding Directive 293 on coverage of health care providers and insurers. Still, OFCCP pressed forward on the continuing case with Florida Hospital, arguing jurisdiction under their definition of a subcontractor as “Under which any portion of the contractor’s obligation under any one or more contracts is performed, undertaken or assumed” by a subcontracting party. Until the current moratorium, it remained unclear whether OFCCP would maintain jurisdiction in cases with TRICARE providers. Although the moratorium is a temporary solution, other actions are simultaneously being taken to more permanently address the issue, such as Rep. Tim Walberg’s efforts to pass H.R. 3633: Protecting Health Care Providers from Increased Administrative Burdens Act. Wahlberg is the Chairman of the Subcommittee Workforce Protection and a recipient of the letter from Perez.

As a reminder, the moratorium does not preclude TRICARE providers from affirmative action obligations if they also hold separate prime contracts or subcontracts that meet the thresholds for compliance. Additionally, any complaints of discrimination submitted to OFCCP will continue to be investigated.

By Jana Garman, M.A, and Amanda Shapiro, M.S., Consultants, DCI Consulting Group

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