The National Defense Authorization Act for Fiscal Year 2012 [pdf] puts an end to OFCCP’s effort to impose subcontractor status on retail pharmacies and health care providers serving TRICARE beneficiaries. The controversy had been brewing for some time. As we discussed in an earlier client alert, the October 2010 decision in OFCCP v. Florida Hospital, No. 2009-OFC-00002 (DOL Oct. 18, 2010) [pdf] concludes that a TRICARE network hospital is a subcontractor despite contract language indicating the federal government’s agreement to the contrary. Directive 293 expresses OFCCP’s intention to disregard party determinations of subcontractor status and to control the determination itself. Section 715 of the 2012 NDAA ends the uncertainty on this issue. Under the legislation, TRICARE network service providers and suppliers may not be considered subcontractors:

For the purpose of determining whether network providers under such provider network agreements are subcontractors for purposes of the Federal Acquisition Regulation or any other law, a TRICARE managed care support contract that includes the requirement to establish, manage, or maintain a network of providers may not be considered to be a contract for the performance of health care services or supplies on the basis of such requirement.

Husch Blackwell’s client alert on the new legislation is available here.


UPDATE: DOL later took the position that this statute did not limit the subcontractor status of TRICARE providers. In April 2014, DOL retreated from that position in response to Congressional oversight and imposed a five-year moratorium on enforcement actions against TRICARE hospitals and other providers. These developments are discussed in more detail in our April 4, 2014 article on Healthcare Law Insights.