DOL Rejects OFCCP Jurisdiction Over Florida Hospital Participating in Military Health Program

On October 19, 2012, the U.S. Department of Labor’s Administrative Review Board (“ARB”) dismissed a complaint brought by the OFCCP against the Florida Hospital of Orlando (“Florida Hospital”), a TRICARE provider. The ARB ruled that the Florida Hospital’s subcontract with Humana Military Healthcare Services is not a covered subcontract for purposes of the affirmative action and other compliance obligations imposed by OFCCP. OFCCP v. Florida Hospital of Orlando, ARB Case No. 11-011.

Almost four years ago, the OFCCP brought an enforcement action against Florida Hospital after it refused to cooperate with an OFCCP audit of its compliance with federal affirmative action laws. Florida Hospital argued that it was not a federal contractor or subcontractor subject to the OFCCP’s oversight. In October 2010, a DOL ALJ granted summary judgment to the OFCCP, and Florida Hospital appealed the ALJ’s decision to the ARB.

The ARB panel found in favor of Florida Hospital based on Section 715 of the December 2011 National Defense Authorization Act for Fiscal Year 2012 (“NDAA”). This provision states that TRICARE-managed care contracts that include the requirement to “establish, manage, or maintain” a provider network may “not be considered” to be contracts for the performance of health care services or supplies for determining whether such entities are subcontractors for the purposes of Federal Acquisition Regulations “or any other law.”

The ARB determined that because Florida Hospital’s agreement with Humana “involve[d] the provision of health care providers pursuant to a managed care prime contract between Tricare and HMHS that include[d] the requirement to maintain a network of providers,” the contract fit the regulatory exemption in the NDAA. A copy of the ARB’s decision can be found at http://www.oalj.dol.gov/PUBLIC/ARB/DECISIONS/ARB_DECISIONS/OFC/11_011.OFCP.HTM.

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