UPMC Braddock v. Harris

• Decision Date: 30 March 2013
• Docket Number: Civil Action No. 09–1210 (PLF).
• Citation: 934 F.Supp.2d 238
• Parties: UPMC BRADDOCK, et al., Plaintiffs, v. Seth D. HARRIS, Acting Secretary, United States Department of Labor, et al., Defendants.
• Court: U.S. District Court — District of Columbia

934 F.Supp.2d 238

UPMC BRADDOCK, et al., Plaintiffs,

v.Seth D. HARRIS, Acting Secretary, United States Department of Labor, et al., Defendants.¹

Civil Action No. 09–1210 (PLF).

United States District Court, District of Columbia.

March 30, 2013.

Jeffrey W. Larroca, Eckert Seamans Cherin & Mellott, LLC, Washington, DC, John J. Myers, Ryan J. Siciliano, Eckert, Seamans, Cherin & Mellott, Pittsburgh, PA, for Plaintiffs.

Lily Sara Farel, U.S. Department of Justice, Washington, DC, for Defendants.

OPINION

PAUL L. FRIEDMAN, District Judge.

This is an action to review a final agency decision by the Department of Labor's Administrative Review Board under the Administrative Procedure Act, 5 U.S.C. § 701 et seq. Before the Court are cross-motions for summary judgment by the plaintiffs and the defendants, along with the plaintiffs' motion for leave to supplement the administrative record. Upon consideration of the parties' papers, the relevant legal authorities, and the entire record in this case, the Court will grant the defendants' motion for summary judgment, deny the plaintiffs' motion for summary judgment, and deny the plaintiffs' motion for leave to supplement the administrative record.²

I. BACKGROUND

A. Overview

The plaintiffs in this action are three hospitals affiliated with the University of Pittsburgh Medical Center: UPMC Braddock, UPMC McKeesport, and UPMC Southside (collectively, the “hospitals”). The hospitals have entered into contracts with a health maintenance organization, UPMC Health Plan, to provide medical services and supplies to individuals enrolled in its coverage program. The Health Plan, in turn, has contracted with the U.S. Office of Personnel Management (“OPM”) to provide coverage for federal employees who participate in the Federal Employees Health Benefits Program. Because the hospitals provide medical services to federal employees, among others, pursuant to their agreements with the UPMC Health Plan, which has contracted with OPM to provide coverage for those employees, a compliance and enforcement division of the Department of Labor has concluded that the hospitals qualify as government subcontractors and thus are subject to certain statutory and regulatory requirements involving equal opportunity efforts that are imposed on such subcontractors. The hospitals adamantly deny that they qualify as government subcontractors or that they are subject to the oversight of the Labor Department or the statutory and regulatory requirements it seeks to impose. Following administrative enforcement proceedings, the Department of Labor's Administrative Review Board (“ARB”) disagreed with the hospitals. It concluded that they are subcontractors and issued an order enjoining them from failing or refusing to comply with the equal opportunity provisions at issue here. The Court agrees with the ARB's conclusions and will uphold its decision.

B. Statutory and Regulatory Background

This dispute arises from an Executive Order and two laws and the regulations promulgated by the Secretary of Labor under their authority: Executive Order 11246, 30 Fed.Reg. 12319 (Sept. 24, 1965); Section 503 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 793 (“Rehabilitation Act”); and Section 402 of the Vietnam Era Veterans' Readjustment Assistance Act of 1974, 38 U.S.C. § 4212 (“VEVRAA”). The Executive Order and the statutes require that all applicable government contracts and subcontracts include specific clauses furthering the equal opportunity goals of federal law.

Specifically, Executive Order 11246, as amended by Executive Order 11375, 32 Fed.Reg. 14303 (Oct. 13, 1967), directs that all government agencies “shall include” clauses in their applicable government contracts specifying that “[t]he contractor will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin” and “will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex or national origin.” Exec. Order No. 11246 § 202(1). ³ The Executive Order further directs that the contractor “will include” these provisions “in every subcontract or purchase order unless exempted by rule, regulations, or orders of the Secretary of Labor.” Id. § 202(7). Each subcontractor, in addition to complying with the non-discrimination and affirmative action obligations set forth in these provisions, “will permit access to his books, records, and accounts by the contracting agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders” and “will furnish all information required by the Executor Order and by the rules, regulations, and orders of the Secretary of Labor.” Id. § 205. The Secretary is responsible for the administration of these provisions and is authorized to “adopt such rules and regulations and issue such orders as he deems necessary and appropriate to achieve the purposes thereof.” Id. § 201.

The Rehabilitation Act requires that any government contract or subcontract in excess of $10,000 for the procurement of “personal property” or “nonpersonal services” for the United States “shall contain” a provision requiring that the contracting or subcontracting party “take affirmative action to employ and advance in employment qualified individuals with disabilities.” 29 U.S.C. § 793(a). The President is authorized to implement the provisions of this section by promulgating regulations, id., an authority that the President has delegated to the Secretary of Labor. See Exec. Order No. 11758, 39 Fed.Reg. 2075 (Jan. 15, 1974).

Finally, VEVRAA provides that any government contract or subcontract in excess of $100,000 for the procurement of “personal property” or “nonpersonal services” for the United States “shall contain” a provision requiring that the contracting or subcontracting party “take affirmative action to employ and advance in employment qualified covered veterans.” 38 U.S.C. § 4212(a)(1). The Secretary of Labor is authorized to promulgate regulations promoting the implementation of these requirements. Id. § 4212(a)(2).

Exercising the power conferred by statute and Executive Order, the Secretary of Labor has issued regulations under the authority of all three provisions. Two aspects of those regulations are relevant to the dispute in this case. First, the regulations state that the equal opportunity clauses described above, which are required to be included in every nonexempt government contract and subcontract, “shall be considered to be a part of every contract and subcontract required by the [statute or executive] order and the regulations in this part to include such a clause whether or not it is physically incorporated in such contracts and whether or not the contract between the agency and the contractor is written.” 41 C.F.R. § 60–1.4(e) (implementing Exec. Order No. 11246) (emphasis added); see41 C.F.R. § 60–741.5(e) (implementing Rehabilitation Act); 41 C.F.R. § 60–250.5(e) (implementing VEVRAA). In other words, the regulations provide that the equal opportunity clauses are deemed included in all qualifying contracts and subcontracts by operation of law, regardless of whether the contracting entities actually include the clause in their agreements.

Second, the regulations define certain key terms used in the Executive Order and statutes, including with the word “subcontract”:

Subcontract means any agreement or arrangement between a contractor and any person (in which the parties do not stand in the relationship of an employer and an employee):

(1) For the purchase, sale or use of personal property or nonpersonal services which, in whole or in part, is necessary to the performance of any one or more contracts; or

(2) Under which any portion of the contractor's obligation under any one or more contracts is performed, undertaken, or assumed.

41 C.F.R. § 60–1.3; see41 C.F.R. § 60–741.2( l ) (setting forth same definition); 41 C.F.R. § 60–250.2( l ) (same). A “subcontractor” is defined simply as “any person holding a subcontract” in the requisite monetary amount. 41 C.F.R. § 60–1.3; 41 C.F.R. § 60–741.2(m); 41 C.F.R. § 60–250.2(m). The regulations also provide guidance on the meaning of “nonpersonal services,” a term used in the first prong of the definition of “subcontract”:

The term “nonpersonal services” as used in this section includes, but is not limited to, the following services: Utilities, construction, transportation, research, insurance, and fund depository.

41 C.F.R. § 60–1.3.

The equal opportunity requirements of Executive Order 11246, the Rehabilitation Act, and VEVRAA are administered by the Office of Federal Contract Compliance Programs (“OFCCP”) within the Department of Labor. The Secretary's regulations impose certain obligations on contractors and subcontractors that are designed to allow OFCCP to ensure compliance with the laws' equal opportunity mandates, including reporting requirements, compliance evaluations, and on-site reviews. See41 C.F.R. §§ 60–1.7, 60–1.20, 60–250.60(a)(1), 60–250.60(a)(1)(ii), 60–741.60(a)(1), 60–741.44(h), 60–741.60(a)(1)(ii). Among these obligations is that contractors and subcontractors must permit “access to [their] records and site[s] of employment,” as set forth in a regulation which provides:

Each contractor shall permit access during normal business hours to its premises for the purpose of conducting on-site compliance evaluations and complaint investigations. Each contractor shall permit the inspecting and copying of such books and accounts and records, including computerized records, and other material as may be relevant to the matter under investigation and pertinent to compliance with the Order, and the rules and regulations promulgated pursuant thereto by the agency, or the Deputy Assistant Secretary.

41 C.F.R. § 60–1.43.

If OFCCP has reasonable cause to...