Healthcare Providers’ Affirmative Action
Obligations Take Center Stage
HealtH Care law
Foulston sieFkin issue alert
A new decision by the federal Administrative Review Board (ARB) shines the
spotlight on healthcare providers’ obligations to comply with federal affirmative
action laws.
Health Care Providers as Government Contractors
Businesses that enter into contracts with the federal government or into
subcontracts with government contractors (we’ll call them all “contractors” for
simplicity) are subject to legal affirmative action employment requirements.
Contractors must, for example, maintain written affirmative action plans, comply
with special record-keeping and reporting rules, self-audit personnel actions,
post notices, and cooperate in government audits. Non-compliance can lead to
large back pay awards, hiring of previously rejected applicants, termination of
contracts, repayment of contract proceeds, and being barred from future contracts.
Many healthcare providers—often unknowingly—fall under the definition of
“government contractor” and thus are subject to affirmative action laws. For
example, entities that provide services pursuant to a contract with, or a subcontract
or arrangement that flows from, the Federal Employees Health Benefit Plan,
TRICARE, or Medicare Advantage Part C or Part D are covered, according to the
Office of Federal Contract Compliance Programs, the agency that enforces
affirmative action laws. (However, being a participating provider under Medicare
Parts A and B or Medicaid does not trigger affirmative action law coverage,
because those programs are considered to be federal financial assistance rather
than federal contracts.)
TRICARE Network Providers Get Reprieve
In an order released last week, the ARB reversed an administrative law judge’s
ruling that OFCCP has jurisdiction over a hospital that subcontracted as a
network provider of medical services to TRICARE beneficiaries. A divided ARB
concluded that Congress intended to exclude such “subcontracts” from the
definition of “government contract” by enacting language to that effect in the
2012 defense appropriations bill.
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This document has been prepared by Foulston Siefkin for informational purposes only and is not a legal opinion, does
not provide legal advice for any purpose, and neither creates nor constitutes evidence of an attorney-client relationship.
Boyd Byers
October 24, 2012
Charles McClellan
WICHITA • TOPEKA • OVERLAND PARK
WWW.FOULSTON.COM
by Boyd Byers & Charles McClellan
316.291.9716 316.291.9764
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While this ruling is welcome news, it is not a free pass for healthcare providers. First, it does not limit
OFCCP’s jurisdiction over providers who directly contract with TRICARE or who render services, directly
or indirectly, under other federal contracts. Second, the legislative exclusion the ARB relied on does not
extend beyond 2012, and it remains to be seen whether it will be renewed in the future. Third, the opinion
leaves many unanswered questions and may leave room for OFCCP to try to assert jurisdiction over
TRICARE network providers on alternative theories not decided by the ARB.
Bottom Line
Healthcare providers should assess not only whether they have direct contracts with federal programs and
agencies, but also whether they are a preferred provider under any government health care plan or have
any other arrangements to provide services or supplies for a federal contractor. If so, they should carefully
analyze the contract or arrangement and determine whether it subjects them to coverage under the
affirmative action laws. And, if they are covered, health care providers need to ensure that they are
complying with their affirmative action obligations.
For Further InFormatIon
If you have questions or want more information, you should contact your legal counsel to ensure compliance with the federal
affirmative action laws. If you do not have regular counsel, Foulston Siefkin LLP would welcome the opportunity to work with
you to specifically meet your business needs. Boyd Byers is available to help you navigate the affirmative action laws or for
general employment law counsel. Boyd can be reached at 316.291.9716 or [email protected]. If you are looking
for general health care counsel you may contact Scott Palecki at 316.291.9578 or [email protected]. For more
information on the firm, please visit our website at www.foulston.com.
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Established in 1919, Foulston Siefkin is the largest law firm in Kansas. With offices in Topeka, Overland Park, and Wichita, Foulston Siefkin provides a full range of legal
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Litigation, Construction, Creditors’ Rights & Bankruptcy, E-Commerce, Education & Public Entity, Elder Law, Emerging Small Business, Employee Benefits & ERISA,
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Organizations, Taxation, Water Rights, and Workers Compensation. This document has been prepared by Foulston Siefkin for informational purposes only and is not a legal
opinion, does not provide legal advice for any purpose, and neither creates nor constitutes evidence of an attorney-client relationship.
