Posted In: Health Care
Compliance Checkup: Affirmative Action: Is your health care entity subject to affirmative action laws?
By Laura F. Fryan on August 27, 2019
Have you ever seen a section in a contract that reads something like this?
“[Your company] shall abide by the equal employment opportunity and affirmative action requirements set forth in 41 C.F.R. Part 60-1.4(a), 41 C.F.R. Part 60-250.5(a) and Part 60-300.5(a), and 41 C.F.R. Part 60-741.5(a).”
Watch out for this language! Your practice or facility may not be subject to affirmative action laws, so read on to understand whether you should accept this provision in an agreement or not.
The basics: All contractors and subcontractors of the federal government must comply with legal requirements regarding affirmative action and non-discrimination. A health care entity becomes a federal contractor when it performs services that are used by the federal government, either through a direct contract with a federal government agency or an indirect arrangement with another entity that has a federal contract.
How do I know if my health care entity falls under the jurisdiction of OFCCP?
In the past, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has aggressively argued that health care providers that participate in one of three federal health care programs — Medicare, TRICARE, and the Federal Employee Health Benefits Program — are federal subcontractors. There’s little concrete guidance on this complex issue, but here’s what we do know about common areas of concern:
- Grants — Grants are considered “federal financial assistance” and are distinguishable from contracts. Participating in a federal grant does not give OFCCP jurisdiction over a health care provider.
- Medicare/Medicaid — Medicare Parts A and B and Medicaid are also considered “federal financial assistance” and are not a basis for OFCCP jurisdiction. OFCCP has suggested that its jurisdiction may arise based on certain arrangements under Medicare Advantage (Part C) and Medicare Part D (Prescription Drug Coverage), but this has not been fully explained by OFCCP and, so far, there has been no litigation on this issue. OFCCP’s jurisdiction in connection with Medicare Parts C and D is questionable. Here’s the OFCCP’s official position:
“The provider agreements, pursuant to which hospitals and other health care providers receive reimbursement for services covered under Medicare Parts A and B, and the provider agreements that hospitals and other health care facilities have entered into with State Medicaid agencies, are not covered Government contracts under the laws enforced by OFCCP. Accordingly, a hospital or other health care provider is not covered under the laws enforced by OFCCP if its only relationship with the Federal government is as a participating provider under Medicare Parts A and B and Medicaid. Please note that a hospital or other health care provider may be a covered contractor because of other contractual arrangements, such as providing health care to active or retired military under a contract with the Department of Veterans’ Affairs or the Department of Defense. Likewise, a teaching hospital doing research for a university that has a contract with the Federal government may be covered.”
- TRICARE — OFCCP believes it has jurisdiction over health care providers that participate as TRICARE network providers. This was the subject of ongoing litigation against a Florida hospital, but in 2014, OFCCP dismissed this case and announced a five-year moratorium for affirmative action enforcement. This moratorium was set to end in 2019 but it has been extended until May 7, 2021.
- Certain HMOs — OFCCP also believes it has jurisdiction over health care providers that participate in Health Maintenance Organizations (HMOs) or other coordinated care programs in which federal civilian employees are beneficiaries through the Federal Employee Health Benefit Plan. So far, the courts have agreed with OFCCP on this issue, even when the hospital receives no notice of its affirmative action obligations.
- Other Typical Hospital Contracts — Health care providers can become covered by federal affirmative action rules when they provide services used by the Department of Veterans’ Affairs, Federal Bureau of Prisons, Department of Defense, Department of Health and Human Services, and the Centers for Medicare and Medicaid Services.
What if my health care entity does fall under the jurisdiction of OFCCP?
If your entity is a federal contractor or subcontractor, you must be sure to maintain affirmative action program compliance. Compliance also includes, but is not limited to, writing and maintaining an affirmative action program, requiring equal employment opportunity in employment processes, and including an equal opportunity clause in all job advertisements and contracts. For additional qualifications and requirements, please visit the U.S. Department of Labor Office of Federal Contract Compliance Programs website, at https://www.dol.gov/ofccp/ and ask your attorney to ensure your health care entity is in compliance.
If your entity is not subject to affirmative action requirements, make sure you don’t inadvertently agree to comply in any contract you may have with a federal contractor. If you have any doubts about your entity’s status, be sure to ask your Brouse attorney for assistance in evaluating whether you need to comply with affirmative action requirements.
This blog is intended to provide information generally and to identify general legal requirements. It is not intended as a form of, or as a substitute for legal advice. Such advice should always come from in-house or retained counsel. Moreover, if this Blog in any way seems to contradict advice of counsel, counsel's opinion should control over anything written herein. No attorney client relationship is created or implied by this Blog. © 2020 Brouse McDowell. All rights reserved.