TRICARE Moratorium on Affirmative Action Plans Extended for Health Care Employers

On Friday, May 18, 2018, the Office of Federal Contract Compliance Programs (OFCCP) issued a directive extending for another two years the moratorium on enforcing written affirmative action plan obligations against health care employers who participate in the TRICARE program. The directive extends the moratorium, which was set to expire early next year, until May 7, 2021.

The OFCCP’s campaign to impose and enforce written  affirmative action plan obligations via the cudgel of audits and threatened litigation against hospitals and clinics serving  military personnel and their families solely by virtue of their participation in TRICARE was among the most controversial actions of the agency during the Obama Administration. The moratorium extension—combined with a recent announcement that the OFCCP intends to issue a notice of proposed rulemaking on the subject—may signal an intention by the Trump OFCCP to restrict or abandon the exercise of jurisdiction over these health care providers.

By way of background, the OFCCP is the agency within the U.S. Department of Labor responsible for enforcing equal employment opportunity laws and written affirmative action plan requirements against companies that do business with the federal executive agencies, either as a covered prime-contractor or a sub-contractor.

During the Obama Administration, the OFCCP served as the agency that implemented and enforced most of the Administration’s desired workplace policies that did not have the votes in Congress to be passed as laws of general applicability. The OFCCP imposed these policies on companies as a condition of doing business with the Executive Branch. 

The TRICARE controversy arose from the OFCCP’s attempt to impose affirmative action obligations on health care providers, hospitals, and clinics that were not otherwise federal contractors or subcontractors simply by virtue of their participation in the TRICARE program. 

TRICARE is a health care program of the Department of Defense that provides civilian health benefits for military personnel and their dependents. A very large number of providers, hospitals, and clinics throughout the United States participate in this program. It has long been established that the receipt of Medicare and Medicaid reimbursements does not create a contract or sub-contract that subjects health care providers to the jurisdiction of the OFCCP and the affirmative action requirements of that agency. Health care providers that participated in TRICARE proceeded on the assumption that TRICARE reimbursements were treated like Medicare and Medicaid reimbursements, and many did not implement affirmative action plans if they did not otherwise have federal contracts or subcontracts that met the threshold requirements. 

In 2010, a federal administrative law judge held in a litigated case that health care providers that participated in the TRICARE program were subject to the written affirmative action plan requirements of the OFCCP. The OFCCP thereafter launched a nationwide targeting of TRICARE providers and issued notices of audits of their affirmative action plans (which often did not exist).

This tactic resulted in many providers entering into conciliation agreements and instituting affirmative action plans, rather than litigating the issue.  In 2012, Congress passed legislation that was intended to insulate TRICARE providers from this requirement, but due to allegedly inartfully drafted language, the OFCCP claimed the legislation was inapplicable to most providers, and persisted in affirmative action plan audits and litigation.

Amidst voiced criticism from some sectors of Congress, in 2014 the OFCCP announced a five-year moratorium on enforcement of affirmative action obligations as a result of TRICARE participation. As of this writing, the OFCCP has not officially altered its position. Unless Congress were to intervene (which it has not yet done) or the Trump Administration instructed the OFCCP to stand down, the moratorium was scheduled to end early next year, paving the way for a new vigorous audit enforcement campaign beginning in May 2019.

The May 18 directive extending the moratorium follows an announcement two weeks ago that the OFCCP intends to issue a  notice of proposed rulemaking on the TRICARE issue in early 2019. In announcing the President’s regulatory agenda for the coming year, the Office of Information and Regulatory Affairs of the Office of Management and Budget stated that the DOL/OFCCP would issue a Notice of Proposed Rulemaking that would revise specified affirmative action regulations “concerning the obligations of TRICARE or certain other healthcare providers as federal contractors and subcontractors. This proposed regulatory action would include limiting and otherwise altering the obligations of TRICARE and other healthcare providers covered by these authorities.” (emphasis supplied) 

Nyemaster Goode assists employers who are federal contractors and subcontractors in understanding and complying with their equal employment opportunity and affirmative action obligations, as well as the many workplace regulations imposed by the federal government. We also have represented clients in audits conducted by the OFCCP, including audits of healthcare providers triggered by their participation in the TRICARE program.  We will continue to monitor these significant developments.