Surprise! You might be a federal contractor
Surprise! You might be a federal contractor
Prior to the ruling in OFCCP v. Florida Hospital of Orlando, DOL OALJ, No. 2009-OFC-00002, most hospitals did not worry about being a federal contractor and all the obligations that can trigger unless they were engaged in specific business with the federal government. Now, you might be a federal contractor and not even realize it.
Being a federal contractor is no small deal. As with most endeavors with the government, being a contractor requires keeping extensive data and statistics on your affirmative action efforts, says Monica M. Fanning, JD, a shareholder with the law firm of Polsinelli Shughart in Kansas City, MO. And to make matters worse, the Office of Federal Contract Compliance Programs (OFCCP) is now increasing its oversight of these requirements, she says.
"During the Bush administration, the OFCCP was so underfunded that it was rare that a federal contractor would be audited," Fanning says. "The information you had to collect was not submitted to anyone; you basically just put all the data together and put it on a shelf, then hoped you wouldn't get audited. Because the reports were onerous and expensive, federal contractors began to say there was no point in putting the reports together until they got an audit letter."
The Obama administration shifted priorities and increased the budget for federal contractor oversight by about 40%, Fanning says. The OFCCP has increased its staff of investigators by 50%, she says.
Among federal contractor clients at Fanning's firm, the number of audits by the OFCCP has gone from one in three years to 18 that she has handled in the past year and a half.
"The OFCCP went from being something that nobody worried about to now being extremely, extremely aggressive," she says. "We're finding that not only are they being aggressive with typical federal contractors those who knew in the past they were contractors but also with people who are just now realizing they have to follow these rules. They don't really care that you're new to this and may not even realize what you have to do."
An audit by the OFCCP is a big deal. The hospital receives an audit letter from the OFCCP saying it wants to see the provider's affirmative action plan. But the audit letter actually is more onerous than that. In addition to checking your affirmative action plan, the OFCCP can visit your site and study your I-9 employment eligibility verification forms, and even pay stubs for wage and hour issues.
"It opens you up to a lot of liability," Fanning says.
The potential consequences range from increased oversight by the government for a specified period to debarment, which means the provider is not eligible for a government contract of any type for a certain period of time or forever. It is not clear whether that could impact Medicare and Medicare participation, Fanning says, but many providers are worried enough about that possibility that they will comply with the contractor obligations for that reason alone.
Although there is some chance that the ruling could be overturned, Fanning says she wouldn't count on it. In the meantime, risk managers need to get to work, she says. The first thing to do is to determine if you have a contract with TRICARE, she says, and a great many hospitals do.
Even if you do not have a written contract with TRICARE, you may still be involved and be considered a federal contractor, Fanning says.
"There are many providers who are network providers with TRICARE but who do not have actual written contracts," she says. "In that case, you need to figure out your relationship to TRICARE. Many providers know they are somehow involved with TRICARE, but they've never had a reason to figure out the exact relationship. You need to figure it out now, so that you can see if it is enough to trigger your obligations."
Some providers with TRICARE contracts are deciding to risk the penalties and forego all the compliance documentation until they get audited, a move that may be pragmatic, but which could result in serious penalties, Fanning says. Other providers are taking the steps to comply as thoroughly as possible, because the TRICARE contracts are too valuable to give up, and they aren't willing to risk non-compliance.
"It's a balance between how much it is going to take to comply and be a federal contractor and how much you are getting under these contracts," Fanning says. "I've seen a hospital do the numbers and see that they're only getting $60,000 a year from the contract, so they decided it wasn't worth it. They let the contract go rather than comply with the contractor obligations."
Source
Monica M. Fanning, JD, Shareholder, Polsinelli Shughart, Kansas City, MO. Telephone: (816) 374-0563. E-mail: [email protected].
Prior to the ruling in OFCCP v. Florida Hospital of Orlando, DOL OALJ, No. 2009-OFC-00002, most hospitals did not worry about being a federal contractor and all the obligations that can trigger unless they were engaged in specific business with the federal government. Now, you might be a federal contractor and not even realize it.Subscribe Now for Access
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