UPMC lawsuit challenges affirmative action rules

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A court fight between UPMC and the U.S. Department of Labor has become a national test of affirmative action rules, drawing attention from business groups and, this week, advocacy and labor organizations that fear it will gut a key diversity program.

UPMC has maintained, for nine years, that auditors from the Department of Labor Office of Federal Contract Compliance Programs, or OFCCP, had no cause to check the personnel records of three hospitals for compliance with rules that apply to federal contractors and subcontractors.

The hospital system has lost that argument at every level, but now is asking the U.S. Circuit Court of Appeals for the District of Columbia to reverse lower courts. To business groups, that's a sensible response to a creeping federal bureaucracy. To civil rights and labor groups, though, UPMC's position goes too far.

"These really crucial protections that have been in place for decades, and the approach to enforcing them that's been in place for decades, that's what's really at stake," said Fatima Goss Graves, vice president for education and employment for the National Women's Law Center, one of the groups that filed friend of the court briefs Monday. "This is a case that a lot of people will be watching because it will have real implications."

The other organizations are the NAACP Legal Defense and Educational Fund, National Partnership for Women & Families and Service Employees International Union.

"These filings by the SEIU and other special interest groups blatantly misrepresent the issues in the OFCCP matter as well as UPMC's position in that litigation," wrote UPMC spokeswoman Gloria Kreps in an email response.

The dispute started in 2004, according to court filings, when OFCCP auditors sought to review affirmative action plans and inspect personnel records at UPMC Braddock, UPMC Southside and UPMC McKeesport. The McKeesport hospital is the only one of the three that is still open.

The office contended that the hospitals were federal subcontractors subject to affirmative action rules because UPMC Health Plan had a contract to provide HMO services to federal employees and sent them to those three facilities, resulting in $3.5 million in federal payments from 2003 to 2006.

UPMC disputed that, arguing that the hospitals are providing personal services to the federal employees, and accusing the federal agency of "attempting to expand its regulatory jurisdiction."

"OFCCP has claimed that it can treat three particular UPMC facilities as 'subcontractors' under a federal contract awarded to the UPMC Health Plan when the underlying documents and regulations specifically show that they were not subcontractors," said Ms. Kreps. "UPMC entities that are federal contractors or subcontractors fully comply with OFCCP requirements."

In court filings, UPMC attorneys argue that hospitals in similar situations have not, for 25 years, been subjected to the obligations that come with a federal contract.

Hospitals, the attorneys continued, "are subject to overlapping layers of anti-discrimination laws that prohibit employment discrimination on the basis of race, color, religion, national origin, and sex." The Department of Labor's "affirmative action scheme," though, "is onerous, complex, and expensive."

Ms. Kreps added that UPMC "embraces all local, state and federal anti-discrimination requirements," and "supports and promotes equal employment opportunity, human dignity, and diversity."

The U.S. Chamber of Commerce, Hospital & Healthsystem Association of Pennsylvania and two other business groups backed UPMC, claiming in a brief that "hospitals are already overburdened with administrative obligations that result in large part from regulation by dozens of federal, state, and local entities."

Ms. Graves noted that the advocacy organizations are not accusing UPMC of violating any civil rights laws.

The National Women's Law Center, though, did indicate in its Monday brief that "discrimination in the health care workforce remains pervasive," so the federal government has a "vital interest in having its health care contracts support a health care workforce that is free from discrimination."

The even larger concern, Ms. Graves said, was UPMC's argument that the Department of Labor's affirmative action efforts rely improperly on an executive order issued in 1965 by President Lyndon Johnson. If UPMC defeats that executive order, she said, "That would have real implications and would be a huge setback."

A circuit court decision overturning the executive order -- which Ms. Graves deemed unlikely -- could eliminate the Department of Labor's affirmative action enforcement power over not just hospitals, but all federal contractors, she said.

Rich Lord: rlord@post-gazette.com or 412-263-1542. Twitter: @richelord.

Rich Lord: rlord@post-gazette.com or 412-263-1542. Twitter: @richelord. First Published December 31, 2013 12:12 PM

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