May 02, 2012

OFCCP Rescinds Medical Providers Directive 293

The Office of Federal Contractor Compliance Programs (OFCCP) announced on April 25, 2012, that it rescinded Directive 293 that provided guidance for determining whether a health care provider or insurer fell within OFCCP’s jurisdiction as a contractor or subcontractor. OFCCP issued Directive 293 on December 16, 2010, and it asserted that OFCCP had jurisdiction over health care providers participating in TRICARE, MEDICARE, and the Federal Employee Health Benefits Plan (FEHBP).

Several DOL administrative decisions that we previously reported on provided the basis for Directive 293. In OFCCP v. UPMC Braddock (May 29, 2009), a case involving the FEHBP, the Department of Labor’s (DOL) Administrative Review Board (ARB) determined that the hospitals under review by the OFCCP were covered subcontractors. Each of the hospitals contracted with the University of Pittsburgh Medical Center (UPMC) to provide medical services to federal employees pursuant to a contract between UPMC and the Office of Personnel Management (OPM). The ARB determined that UPMC had contracted with OPM to provide medical services, not insurance, so its agreement with the other hospitals constituted a subcontract of the same obligations. Thus, the hospitals were subcontractors subject to OFCCP jurisdiction.

Similarly, in OFCCP v. Florida Hospital of Orlando (Oct. 18, 2010), an Administrative Law Judge held that the respondent hospital that participated in a health care provider network administered by Humana Military Healthcare Services, Inc. for TRICARE was a federal subcontractor subject to the OFCCP’s jurisdiction. The respondent hospital appealed the decision, and the case is currently pending before the DOL’s ARB.

As we previously reported, on December 31, 2011, Section 715 of the National Defense Authorization Act (NDAA) of Fiscal Year 2012 was signed into law. Section 715 states that network providers and providers of medical services under TRICARE are not subcontractors that are subject to the OFCCP’s jurisdiction. The new law was created in response to the OFCCP asserting jurisdiction over network providers and providers of medical services under TRICARE. In light of the enactment of the NDAA, the Florida Hospital of Orlando filed a motion to dismiss the case with the ARB.

According to the OFCCP, the recent enactment of Section 715 of the NDAA and related developments in the Florida Hospital of Orlando case warrant rescission of Directive 293 at this time. As a result of the rescission of the Directive, the OFCCP will put on hold, pending the outcome of OFCCP v. Florida Hospital of Orlando, scheduled compliance evaluations of entities over which OFCCP’s only basis for jurisdiction is their participation in TRICARE. OFCCP will issue letters announcing this decision to affected entities. However, OFCCP will move forward with scheduled evaluations of those entities that have other bases of OFCCP jurisdiction in addition to TRICARE.

If you have any questions about this issue, contact your labor and employment counsel at Smith, Gambrell & Russell, LLP.

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