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Court finds three hospitals to be federal subcontractors

April 4, 2013

A federal trial court in Washington, DC, on March 30 found three hospitals affiliated with the University of Pittsburgh Medical Center to be government subcontractors obligated to comply with federal affirmative action mandates administered by the Office of Federal Contract Compliance Programs of the Department of Labor. Upholding a previous determination made by the DOL’s Administrative Review Board, the court specifically rejected the hospitals’ argument that they were not federal subcontractors because their agreements with the UPMC Health Plan, which contracted with the federal Office of Personnel Management to provide coverage for federal employees, expressly stated that a provider of medical services is not a "subcontractor." "The Secretary of Labor, not OPM, has been given the authority to administer the statutes and Executive Order [establishing affirmative action obligations for federal contracts] and to issue regulations implementing them," the court said."In light of this apportioning of authority, OPM and the Health Plan have no power to limit the[ir] scope … by contractually agreeing to a narrower definition of ‘subcontractor’ than the Secretary has adopted."The court also rejected several other arguments advanced by the hospitals to support their contention that they were not federal subcontractors, including that supplying medical care is not "nonpersonal services" that fall within the subcontractor definition; the hospitals’ arrangement with the Health Plan is not necessary to the performance of the primary contract nor a "partial performance or undertaking" of that because the Health Plan promised only to insure the federal employees and not to provide them with medical care; and the hospitals never consented to be bound by the affirmative action requirements because their agreements did not explicitly indicate that the hospitals would become government subcontractors by accepting them.For more information on the case UPMC Braddock v. Harris, Acting Secretary, United States Department of Labor, click here