Providing Health Services Under TRICARE No Longer Creates Affirmative Action Requirements for Health Care Employers

On December 31, 2011, President Obama signed the National Defense Authorization Act for Fiscal Year 2012. A conference report in this Act ends OFCCP's push to expand its jurisdiction by way of TRICARE contracts. The new Section 715 of the conference report states that TRICARE managed care support contracts will not be considered contracts to provide health care services such that these providers become subject to OFCCP jurisdiction.

TRICARE is the Department of Defense health care program for active duty and retired military and their families. Prior to the law, the OFCCP took the position that hospitals and other health care providers that provided health care services for TRICARE were subject to affirmative action obligations and were subject to OFCCP jurisdiction because they were "subcontractors" under federal law. This legislative action should prevent the OFCCP from continuing to invoke jurisdiction over health care employers on the basis of their being TRICARE network providers.

Over the past few years, OFCCP has expanded its jurisdiction over the health care industry by taking the position that all providers who provided health care services under TRICARE network contracts were subject to OFCCP jurisdiction. In OFCCP v. UPMC Braddock, ARB Case No. 08-048 May 29, 2009 and in OFCCP v. Florida Hospital of Orlando, Case No. 209-OFC-00002 the OFCCP successfully argued that affirmative action obligations exist when a hospital provides health care services pursuant to a TRICARE contract with an HMO. As a result, a hospital that merely provided health care services to TRICARE recipients was subject to affirmative action obligations as well as subject to OFCCP jurisdiction.

While TRICARE should no longer create the basis for affirmative action obligations or OFCCP jurisdiction, the OFCCP may find other ways to expand jurisdiction. Further, health care providers may become subject to OFCCP jurisdiction due to other federal contract or subcontract obligations. For that reason, health care employers should always review their contracts with counsel to determine if they will create new OFCCP compliance obligations.