Employers in the healthcare industry may find that they no longer have affirmative action obligations as of 2012 as a result of the National Defense Authorization Act, signed into law on December 31, 2011.
TRICARE is the Department of Defense healthcare program for active duty and retired military personnel and their families. Prior to the National Defense Authorization Act, the Office of Federal Contract Compliance Programs (OFCCP) took the position that hospitals, pharmacies, and other healthcare providers providing care under TRICARE contracts had affirmative action obligations as “subcontractors” pursuant to Executive Order 11246, Section 503 of the Rehabilitation Act, and the Vietnam Era Veterans’ Readjustment Assistance Act. The National Defense Authorization Act expressly excludes hospitals, pharmacies, and other healthcare providers providing healthcare services to TRICARE participants from OFCCP jurisdiction, effectively overruling a 2010 Department of Labor decision holding that a hospital providing services under TRICARE was a federal subcontractor and related OFCCP guidance.
However, healthcare providers should not immediately abandon their federal affirmative action obligations without any other review of their contracts. It is possible that other contracts could subject them to affirmative action obligations (and OFCCP jurisdiction) as federal contractors or subcontractors, including those regarding contracts with the Veterans Administration, healthcare benefits for other federal workers, and receipt of Medicare Part C or D funds, which were not addressed by this legislation and which OFCCP has already asserted create affirmative action obligations.