On October 19, 2012, the Department of Labor’s Administrative Review Board (“ARB”) found in OFCCP v. Florida Hospital of Orlando that the OFCCP did not have jurisdiction over a federal contractor based solely on its participation in TRICARE. The ARB, however, left open whether other healthcare contractors participating in TRICARE would be subject to OFCCP’s jurisdiction.
TRICARE is a program sponsored by the Department of Defense (“DoD”) that pays for medical benefits for active and retired military personnel and their families. There are three prime contractors that administer the TRICARE program. These three contractors enter into subcontracts with hospitals and medical providers to provide medical care and supplies to TRICARE participants. Florida Hospital held a subcontract with one of the TRICARE prime contractors.
In August 2007, OFCCP scheduled Florida Hospital’s Orlando establishment for a compliance review. Florida Hospital refused to submit to OFCCP’s compliance review, asserting that it was not subject to OFCCP’s jurisdiction. OFCCP initiated enforcement proceedings arguing that Florida Hospital’s participation in TRICARE subjected it to OFCCP jurisdiction.
On October 18, 2010, an Administrative Law Judge (“ALJ”) found that Florida Hospital was a federal subcontractor because it assumed the performance of the TRICARE prime contractor’s obligation to the federal government. The ALJ also rejected Florida Hospital’s argument that TRICARE payments did not subject it to OFCCP’s jurisdiction because it was federal financial assistance. Florida Hospital appealed the decision to the ARB.
While the decision was pending appeal, on December 31, 2011, the National Defense Authorization Action for Fiscal Year 2012 (“NDAA”) was signed into law. The NDAA expressly stated that medical providers who participated in TRICARE were exempt from OFCCP’s jurisdiction.
The ARB reviewed the NDAA exemption and held that OFCCP lacked jurisdiction over Florida Hospital because it met the specific language in the NDAA exemption. The ARB, however, found that the exemption was narrow and would only exempt TRICARE contractors that require establishment and management of a network of providers. The ARB indicated that it would review OFCCP’s jurisdiction over other TRICARE subcontractors on a “case by case” basis.
Because the ARB has left open the possibility that some TRICARE subcontractors may be covered by OFCCP’s jurisdiction, healthcare contractors must closely scrutinize their participation in TRICARE to see if they are subject to OFCCP’s jurisdiction.