OFCCP Scores Surprising Victory in its Continuing Battle for Jurisdiction Over Healthcare Providers Based on TRICARE Participation

On July 22, 2013, the Office of Federal Contract Compliance Programs (OFCCP) won a surprising victory before the Department of Labor’s (DOL) Administrative Review Board (ARB), breathing new life into the agency’s efforts to assert jurisdiction over healthcare providers.
For nearly five years, OFCCP has been tenaciously pursuing jurisdiction over healthcare providers based on the theory that providers participating in, and receiving more than $50,000 in reimbursement from, the Department of Defense’s (DOD) TRICARE program qualify as federal government subcontractors required to comply with the agency’s regulations.
In December 2011, when Congress passed legislation apparently designed to reject OFCCP’s position, the agency’s director, Patricia Shiu, responded that “this is not over yet,” and continued to pursue an action against Florida Hospital of Orlando arguing that the Congressional action had not divested the agency of its jurisdiction.
And in October 2012, after the ARB ruled in favor of Florida Hospital, OFCCP again refused to accept defeat. OFCCP filed a motion before the ARB asking it to reconsider its decision and stating in its brief that notwithstanding the ARB’s decision in Florida Hospital, OFCCP “intends to continue to schedule and attempt to review hospitals because they are TRICARE network providers.”
The ARB, in an extremely unusual move, granted OFCCP’s request for reconsideration and then issued a new opinion last week holding, by a three-to-two vote, that the 2011 legislation did not foreclose all of OFCCP’s arguments for jurisdiction. The case has now been remanded back to an administrative law judge (ALJ) for further proceedings.
Significant legal questions remain unanswered by this new decision, and years of additional litigation may still lie ahead for Florida Hospital and the OFCCP. It is not clear whether the agency will now resume aggressively scheduling TRICARE participants for audits or wait for a more final resolution. Given this uncertainty, prudent health care providers should be thinking carefully about their options now and deciding whether to challenge OFCCP jurisdiction or avoid litigation by either ending their participation in TRICARE or complying with OFCCP’s requirements. Continue reading about this development here.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.