von Briesen Health Law Blog

Final Rules Implementing ADA Amendments Act Shift Focus From Definition of Disability to Employers’ Obligation to Accommodate

Employers must now follow the EEOC rules implementing the ADA Amendments Act because they have now been published in final form. The rules shift the focus of the ADA from whether an individual is disabled to whether an employer has discriminated or failed to reasonably accommodate an employee. The commentary to the rules estimates that 12 to 38 million people who were not covered by the ADA before will now be covered. There has been a notable increase in disability claims since the ADA Amendments Act was passed.

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Recent decisions by the Department of Justice have changed the standard under which the Office of Federal Contract Compliance Programs (“OFCCP”) exercises jurisdiction over hospitals and other providers in some circumstances.

Recent TRICARE Case
In the most recent case, a hospital’s agreement to provide services to veterans under the TRICARE program of the Department of Defense was found to make the hospital a federal subcontractor subject to affirmative action requirements and OFCCP jurisdiction. In an earlier case the Administrative Review Board (“ARB”) drew a distinction between hospital contracts with insurers, which do not create OFCCP jurisdiction, and hospital contracts with HMOs or other entities that provide medical services, which do create OFCCP jurisdiction. In the new case, the ARB found that the TRICARE program was not a contract to provide insurance but rather a contract to provide medical services, like an HMO. The key is that the hospital had “undertaken to perform a portion of the [prime contractor’s] obligations under the TRICARE contract.” OFCCP v. Florida Hospital of Orlando, Case No. 2009-OFC-00002 (Oct. 18, 2010).

What is the Law Now?
The recent cases make clear that the OFCCP is taking an aggressive approach to expand its jurisdiction over healthcare providers. However, there are still limits to OFCCP jurisdiction.

Grants and Federal Financial Assistance
Grants from the federal government are still not considered contracts that create affirmative action obligations or OFCCP jurisdiction. Several years ago, the OFCCP issued an internal directive confirming that receipt of Medicare reimbursement for services does not trigger affirmative action obligations or OFCCP jurisdiction. That has not changed.

Contracts With Health Insurance Providers (as opposed to HMOs)
As mentioned above, the OFCCP has previously ruled that healthcare providers’ contracts with insurance companies do not create OFCCP jurisdiction, even if the insurance company contracts to provide insurance to federal employees. Note that the OFCCP draws a distinction between insurance companies and HMOs.

TRICARE and HMOs that Serve Government Employees
While the decision involving an HMO serving government workers has been appealed, and the TRICARE case is likely to be appealed, the OFCCP’s current position stands. Healthcare providers that have contracts with TRICARE or with an HMO providing services to government employees are subject to affirmative action requirements and OFCCP jurisdiction. As the Department of Defense noted in the TRICARE case, affirmative action obligations and the prospect of an OFCCP audit are significant burdens that might discourage providers from contracting with TRICARE to provide services. Providers may determine that the most efficient response to the recent expansion of OFCCP jurisdiction is to end their relationships with TRICARE.

Incidental Relationships With Other Government Contractors
Healthcare providers’ contracts with other businesses that are federal contractors will not necessarily trigger affirmative action obligations and OFCCP jurisdiction. The recent cases expanding OFCCP jurisdiction focused heavily on the fact that the prime contractors’ obligations to the government required that they provide medical services, and the hospitals in question were providing those services. These cases do not provide a basis for OFCCP to assert jurisdiction over alleged subcontractors who are not performing any part of the prime contractor’s obligations to the government. For example, a hospital that provides occupational health services for a manufacturing company that contracts with the federal government to provide airplane parts is not performing any portion of that manufacturing company’s obligation to provide airplane parts. The prime contractor could provide airplane parts without the occupational health services of the hospital. The hospital, therefore, does not fit the definition of “subcontractor” and does not fall under the OFCCP’s jurisdiction.

Conclusion
Most healthcare providers previously lumped TRICARE and HMOs in with Medicare and insurance providers and believed all were outside the scope of contracts that create OFCCP jurisdiction. The recent cases change that. Healthcare providers that have agreements with HMOs serving government employees (not health insurance providers) or with TRICARE (valued over $50,000) will need to comply with affirmative action requirements and submit to OFCCP audits. Beyond that, however, these cases do not establish greater OFCCP jurisdiction.

As several of our clients have encountered, recently employees and their counsel have argued that a woman can choose to take her federal Family and Medical Leave Act (“FMLA”) leave and her Wisconsin FMLA leave consecutively. The situation most often presents itself when a woman requests time off during pregnancy, before the birth of a child, but wants to “save” her six weeks of Wisconsin FMLA leave to use upon the birth of her child. In one case in which von Briesen & Roper represented the employer, the Wisconsin Department of Workforce Development’s Equal Rights Division (“ERD”) advised an employee that she could “stack” her state and federal FMLA leave in this way. In fact, the ERD found probable cause to believe there had been a violation of the Wisconsin FMLA when an employer told an employee that her state and federal FMLA pregnancy leaves would run concurrently when taken in the 16 weeks before the birth of her child. Our client stood by its position that the federal and state FMLA laws run concurrently when the leave qualifies for protection under both laws and went to a hearing on the merits. Read more…

On October 7, 2009, Interim Final Rules were issued to implement certain sections of the Genetic Information Nondiscrimination Act (“GINA”). These rules prohibit (i) the use of genetic information for increasing the group premiums or contribution amounts based on genetic information; (ii) requesting an individual or family member to undergo genetic testing, except in limited circumstances; or (iii) requesting genetic information in connection with enrollment or for “underwriting purposes,” which includes offering benefits or rewards for completing a health risk assessment (“HRA”). Read more…

Wisconsin courts have frequently found that if any restrictive covenant within an agreement was unlawful, the entire agreement was unenforceable. However, on July 14, 2009, in Star Direct, Inc. v. Dal Pra, the Wisconsin Supreme Court issued a decision that could increase the enforceability of restrictive covenants in Wisconsin. The Court held that separate covenants within one agreement may be divisible and separately enforceable, even if one or more of the covenants are found to be unenforceable. Read more…

Effective July 24, 2009, both the federal and Wisconsin minimum wage for adult employees will increase to $7.25 per hour. The Wisconsin minimum wage for tipped employees will remain $2.33, and the Wisconsin minimum wage will remain $5.90 for employees under age 20 who are in their first 90 consecutive calendar days of employment with a particular employer. The federal minimum wages for tipped and youth employees are lower ($2.13 and $4.25, respectively), but Wisconsin employers are required to comply with Wisconsin’s higher minimum wage requirements for these groups.

The Wisconsin Legislature is currently considering a bill that would provide for yearly increases to the state minimum wage rate in connection with the cost of inflation. This bill, 2009 Senate Bill 1, was passed by the Wisconsin Senate on February 10, 2009 and it has been in front of the Assembly’s Committee on Labor since that time. We will provide further updates if this bill is passed.