The Case Of The Reluctant Subcontractors

In the U. S. District Court for the District of Columbia, a recent opinion was issued in which 3 hospitals wanted to avoid being labled as government subcontractors to avoid the Department of Labor's rules covering subcontractors.

The hospitals had contracts with UPMC Health Plan to provide medical services and supplies to individuals enrolled in its program. UPMC contracted with the U. S. Office of Personnel Management (OPM) to provide coverage for federal employees in the Federal Employees Health Benefits Program. Since the hospitals provided medical services to federal employees pursuant to their agreements with UPMC, the Department of Labor concluded that the hospitals qualified as subcontractors and were subject to certain statutory and regulatory requirements imposed on subcontractors.

Part of the judge's opinion stated that the "Provision of medical services and supplies was a critical component of the UPMC's contract. The contract depended on medical providers like the [hospitals] to offer medical services and supplies necessary for UPMC to meet its obligations under its contract with OPM." "Therefore, they qualify as subcontractors under the Secretary's regulations."

You can see the full opinion here.