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Hospitals were subcontractors subject to OFCCP jurisdiction

June 22nd, 2009  |  Cynthia L. Hackerott

>The Department of Labor’s Administrative Review Board (ARB) has recently held that three hospitals were federal subcontractors subject to the equal employment opportunity and affirmative action obligations enforced by the Office of Federal Contract Compliance Programs (OFCCP), rejecting the hospitals’ assertion that the ARB’s 2003 decision in OFCCP v Bridgeport Hospital (ARB Case No 00-034; CCH OFCCP FEDERAL CONTRACT COMPLIANCE MANUAL ¶21,603) required a contrary ruling. In OFCCP v UPMC Braddock (DOL ARB, No 08-048, May 29, 2009), the US Office of Personnel Management (OPM) had a contract with UPMC Health Plan to provide medical coverage to US government employees. In turn, each of the three hospitals had an agreement with UPMC Health Plan to provide medical products and services covered by UPMC Health Plan. 

In Bridgeport Hospital, the Blue Cross/Blue Shield Association (Blue Cross) entered into a contract with OPM to provide health insurance to federal employees; Blue Cross then entered into a contract with Blue Cross of Connecticut to provide health insurance for federal employees in Connecticut, thus making Blue Cross of Connecticut a federal subcontractor. Subsequently, Bridgeport Hospital entered into a contract with Blue Cross of Connecticut to provide medical services and supplies to members of Blue Cross of Connecticut for a one-year period. The ARB found that Bridgeport Hospital was not a subcontractor because Blue Cross’ contract with OPM did not require Blue Cross to provide its policy holders with medical care. 

Following Bridgeport Hospital, many experts thought that hospitals would not generally qualify as subcontractors subject to OFCCP jurisdiction (see e.g. “NELI experts Fox, Biermann discuss recent OFCCP developments” in CCH OFCCP FEDERAL CONTRACT COMPLIANCE MANUAL Newsletter, December 5, 2003). But, in UPMC Braddock, the ARB distinguished Bridgeport Hospital:

“Unlike Blue Cross, the UPMC [Health Plan] is more than an insurer,” the ARB stated, noting that the UPMC Health Plan is an HMO that contracts with individual physicians, medical groups, and hospitals to provide benefits including medical services and supplies and surgical and anesthesia services, emergency services, mental health and substance abuse services, prescription drug benefits, and dental benefits. “Unlike Bridgeport Hospital, [the hospitals in the present case] contracted to provide ‘a portion of the [the UPMC Health Plan's] obligation’ to provide medical services and supplies under its contract with OPM,” the ARB wrote. 

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