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Hospitals and Health Care Providers: You May Be Targets of the U.S. Department of Labor

Office of Federal Contract Compliance Programs is notifying TRICARE network providers of reviews to determine their compliance with affirmative action requirements imposed on federal subcontractors.

The U.S. Department of Labor, Office of Federal Contract Compliance Programs (OFCCP), the federal agency tasked with enforcing the affirmative action requirements of Executive Order 11246 and related federal statutes, is issuing notices across the country to conduct compliance reviews of health care providers that are part of the TRICARE provider network.  TRICARE is the government program under which active duty and retired military service members and their dependents receive health care. 

In some instances, the OFCCP compliance review notices are the first received by the hospitals; in other cases, an initial notice was issued months or even years earlier and the hospital or other TRICARE network provider protested the OFCCP's jurisdiction, without further action by the OFCCP.  The OFCCP is now aggressively reasserting its position with new and dormant cases that TRICARE network providers are federal subcontractors subject to the affirmative action requirements of Executive Order 11246 and related statutes.

Are TRICARE network providers "federal subcontractors?"

The Status of TRICARE network providers as federal subcontractors is still not settled.

So, why is the OFCCP redirecting its focus on the 500,000 + TRICARE network providers across the nation?

Until now, with the exception of the test case filed by the Solicitor's Office in the Atlanta Region of the OFCCP before the Administrative Law Judge, the OFCCP has left dormant the pending investigations of TRICARE network providers protesting jurisdiction.  The OFCCP and TRICARE network providers are awaiting the decision from the Administrative Law Judge on the issue of whether a hospital, by entering into a "Hospital Agreement" with one of TRICARE's three regional contractors to provide medical services to TRICARE beneficiaries, is a federal subcontractor subject to the affirmative action requirements of Executive Order 11246 and related affirmative action statutes. 

Of the handful of cases involving the OFCCP's jurisdiction over subcontractors, only two subcontractor cases have involved hospitals: OFCCP v. Bridgeport Hospital, ARB No. 00-034, 2003 WL 244810 (Jan. 31, 2003) and OFCCP v UPMC Braddock, UPMC McKeesport & UPMC Southside, ARB Case No. 08-048, 2009 WL 1542298 (May 29, 2009).  Significantly, the Administrative Review Board found jurisdiction in Braddock but not in Bridgeport.

What are the options?

TRICARE network providers that receive OFCCP compliance review notices have the option to protest OFCCP jurisdiction, assuming they have no direct federal contracts.

Whether the OFCCP is first notifying the hospital or is reasserting its claim of jurisdiction, TRICARE network providers have options to consider before consenting to the jurisdiction of the OFCCP, and with that jurisdiction the potential for significant monetary penalties in the form of back wages, reinstatement and other remedies. 

Despite the OFCCP’s current practice of aggressively issuing notice of compliance reviews to TRICARE network providers, the issue of jurisdiction is not settled and hospitals may in good faith choose to protest jurisdiction.  Before agreeing to OFCCP jurisdiction, TRICARE network providers should carefully evaluate all the potential options and consequences.  To the extent a hospital has other direct federal contracts of $50,000 or more (e.g., with the Veterans Administration, Department of Federal Prisons), those hospitals have no basis to challenge OFCCP jurisdiction.


Four words: carefully consider your options.

© 2021 Bracewell LLPNational Law Review, Volume , Number 202

About this Author

Jim Kizziar, Employment law Attorney, Bracewell law firm in San Antonio TX

Jim Kizziar is a partner with Bracewell LLP in the firm's San Antonio, Texas, and Washington, D.C. offices. Practicing law since 1978, Mr. Kizziar represents and counsels owners of diverse business entities and management on all aspects of labor and employment law. His practice includes litigation before federal and state agencies and the courts and preventive counseling of management on issues such as discrimination, harassment, union organizing, and wage-hour issues.

Mr. Kizziar conducts employment law training for executives, managers, and...

Leslie Selig Byrd, labor, employment, attorney, Bracewell law firm

Leslie Selig Byrd has more than 30 years of experience exclusively representing employers in labor and employment issues and controversies.

Leslie represents national and local clients before state and federal agencies. She has been involved in hundreds of administrative investigations, as well as administrative proceedings before the NLRB and the U.S. Department of Labor, Wage & Hour Division, Office of Federal Contract Compliance Programs and OSHA. Leslie defends employers in federal and state employment law motion practice and litigation...