On April 25, 2012, the Office of Federal Contract Compliance Programs (OFCCP) presented a short webinar on “The Status of Pending Compliance Evaluations of Entities that Participate in Tricare Networks” to provide additional information on the agency’s position regarding jurisdiction over health care providers.

First, the agency confirmed that it continues to take the position that it has jurisdiction over TRICARE participants notwithstanding language in the 2012 National Defense Authorization Act] that was intended by Congress to establish a contrary result.  The OFCCP is currently seeking vindication of its position in the case it brought against Florida Hospital of Orlando in 2008, which is now pending before the Department of Labor’s Administrative Review Board. The OFCCP did not, however, explain the basis for its position in the Florida Hospital case and declined to answer questions about the issue.

Second, the agency confirmed that all previously scheduled audits of health care providers for which the sole basis of claimed jurisdiction is TRICARE will remain on hold pending resolution of the Florida Hospital case. The OFCCP further stated that if its jurisdiction is ultimately affirmed, these audits will be resumed at that time and contractors will then be required to provide the affirmative action plans and data that were requested in the original scheduling letters. The OFCCP stated that providers whose audits are on hold will be receiving letters shortly confirming their status. Since it is possible that it may be years before there is a final decision on jurisdiction, health care systems may be required to defend audits in 2013 or 2014 (or even later) that were initially scheduled four or five years earlier, without any intervening agency activity. Therefore, hospitals with audits on hold should consult legal counsel regarding their record retention obligations as well as ways to control the risks associated with such drawn-out audits.   

The OFCCP also stated during the webinar that providers with pending but inactive audits for which the agency believes it has a non-TRICARE basis for jurisdiction will also be receiving letters notifying them that their audits will resume now. Such providers will be given 30 days in which to respond to these new letters and will be required to produce the affirmative action plans and data that were requested by the original scheduling letters.

Finally, the agency indicated that it was rescinding, effective April 25, 2102, its prior Directive No. 293 in which it had first indicated, among other things, that it might have jurisdiction over participants in Medicare Parts C and D. Although this Directive represents the only basis upon which the OFCCP has ever asserted jurisdiction over Medicare Parts C and D participants, agency officials indicated that rescission of the Directive does not mean that the OFCCP has abandoned the claim of jurisdiction. Instead, the agency stated, it will now review such arrangements on a case-by-case basis and assertions of jurisdiction will depend on the “specific terms of the contract or subcontract.” However, the agency offered no examples of when participation in Parts C or D would support a finding of federal contractor status.