Federal Court Finds That Certain Healthcare Providers Are Covered By OFCCP’s Jurisdiction

On March 30, 2013, the U.S. District Court for the District of Columbia held that the Office of Federal Contract Compliance Programs (“OFCCP”) has jurisdiction over three University of Pittsburgh Medical Center hospitals (“UPMC”).  UPMC Braddock v. Harris, No. 09-1210 (D.D.C. Mar. 30, 2013).  As we previously reported, the Administrative Review Board (“ARB”) found that OFCCP did not have jurisdiction over UPMC based solely on its participation in TRICARE.  Despite the ARB’s decision, OFCCP appealed the decision to the U.S. District Court for the District of Columbia.

On review, the court held that UPMC qualified as federal subcontractors because they provided medical services to federal employees who are members of an HMO called the UPMC Health Plan. None of the hospitals under UPMC held a federal contract, but the HMO held a prime contract with the Office of Personnel Management (“OPM”).  UPMC argued that they were not be subject to OFCCP’s jurisdiction for a number of reasons, including that (1) the HMO’s contract with OPM explicitly excluded medical service providers from its definition of “subcontractor”; (2) UPMC did not qualify under OFFCP’s definition of “subcontract” because they provided personal services to patients; and (3) UPMC did not consent to OFCCP’s jurisdiction.

The court rejected each of these arguments.  First, the court rejected UPMC’s argument that the language in the HMO contract with OPM excluded the hospitals from coverage as subcontractors. The court held that the OFFCP’s definition of “subcontractor” controls, and that a contractor cannot escape OFCCP’s jurisdiction by contractually limiting the definition of “subcontractor.”  The court also rejected UPMC’s contention that they did not qualify as subcontractors because they did not provide “nonpersonal services,” concluding that “nonpersonal services” refers to the relationship between the subcontractor’s personnel and the federal contractor, not the nature of the services the subcontractor provides to those benefiting from its services.  Further, despite the fact that UPMC never consented to be bound by the OFCCP requirements and did not have notice of OFCCP jurisdiction, the court held that OFCCP had jurisdiction over UPMC.

The UPMC Braddock ruling has broad implications not only for healthcare providers, but for other contractors as well.  As this case illustrates, a contractor can be held responsible for compliance with OFCCP obligations, even if a contractual provision states otherwise or the employer has not expressly consented to OFCCP jurisdiction.  This case also reflects OFCCP’s policy of broadly construing its jurisdictional reach over subcontractors.  If taken to its logical conclusion, OFCCP’s position seems to be that if a subcontractor is receiving federal funds for a prime-contractor, then the subcontractor could be covered by OFCCP’s jurisdiction.

Although the definition of subcontractor puts some limitations on OFCCP’s coverage, the determination of who qualifies as subcontractors is not always clear.  Consequently, subcontractors should review their contracts to assess whether they are receiving federal funds.  If they are receiving such funds, contractors should contact legal counsel to determine whether they should be complying with OFCCP’s requirements.

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Filed under Department of Labor, OFCCP, TRICARE

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