ISSUES: War Hazards Compensation Act

Preface – following is an update on claims reported under the Defense Base Act as of 12/31/2010.  The approximately 19,000 injuries reported outside of Iraq and Afghanistan are spread all over the world in dozens of countries.

09/01/2001 – 12/31/2010 – 70,171 injuries reported (including 2,540 deaths)

            Iraq – 41,540 injuries reported (1,521 deaths)

            Afghanistan – 10,600 injuries reported (709 deaths)

We do not have a similar report available for claims under the War Hazards Compensation Act, because the U.S. Department of Labor does not publish such a report.

The War Hazards Compensation Act (42 U.S.C. 1701) (WHCA) was passed in December 1942 to supplement the Defense Base Act (DBA) (see blog dated February 8, 2010 for a discussion of the DBA).  The law reflects the national policy that losses from war risk injuries and deaths should be borne by the general public.  I will very briefly summarize the main provisions of the WHCA.  Anyone who would like more detailed information can email me at jack.martone@amequity.com.

Who Is Covered – The DBA is the primary workers’ compensation law covering employees working overseas on U.S. military bases or on government contracts. An employee covered by the DBA who is injured as a result of a war risk hazard will have a claim administered by the Division of Longshore and Harbor Workers’ Compensation under the DBA.  The WHCA does not change this.

The WHCA provides for three types of claims:

1. An employee covered under the DBA or the Nonappropriated Fund Instrumentalities Act (NAFIA) but whose injury is not compensable under the DBA or NAFIA has a direct claim under the WHCA, e.g., injured outside the scope of employment. This also includes persons engaged by the U.S. for personal services outside of the U.S.  In light of the broad coverage of the DBA under the Zone of Special Danger doctrine, this type of direct claim is rare.
2. Detention claims for any employee covered under the above direct claim provision who is taken prisoner, hostage or otherwise detained by a hostile force or person.
3. Insurance carriers or self-insured employers may claim reimbursement for losses and expenses resulting from a war risk hazard.  These reimbursements are paid under a fund established under the Federal Employees Compensation Act.

Section 104(a) Reimbursement Claims – This is the provision of most interest to insurance carriers.  It states: 

1. any employer, insurance carrier, or compensation fund that pays or is required to pay benefits to any person on account of injury or death of any person coming within the purview of this Act or sections 1 – 4 of the DBA, and,
2. if the injury or death for which the benefits are paid arose from a war risk hazard, then,
3. the employer, insurance carrier, or compensation fund is entitled to reimbursement for disability and death payments, funeral and burial expenses, medical expenses, and reasonable and necessary claims expenses incurred in processing claims.

A claim for reimbursement should consist of the following:

1. Form CA 278
2. Statements of the employer and employee
3. Medical reports
4. Proof of liability (such as an insurance policy)
5. Compensation Order
6. Insurer statement as to why its claim should be reimbursed as a war hazard
7. Itemization and proof of payments

These WHCA claims are filed with and administered by the Division of Federal Employees Compensation.

What Is a War Risk Hazard – A “war risk hazard” is a hazard arising during a war in which the U.S. is engaged; during an armed conflict in which the U.S. is engaged, whether or not war has been declared; or during a war or armed conflict between military forces of any origin, occurring within any country in which a covered individual is serving.

The hazard may be from the discharge of a missile, including liquids or gas, or the use of any weapon, explosive or other noxious thing by a hostile force or person or in combating an attack or a perceived attack by a hostile force or person, or the action of a hostile force or person, including rebellion or insurrection against the U.S. or any of its allies.

The hazard may also be from the discharge or explosion of munitions intended for use in connection with a war or armed conflict with a hostile force or person, or collision of vessels in convoy or the operation of vessels or aircraft without running lights or other peacetime aids to navigation, or operation of vessels/aircraft in a zone of hostilities or engaged in war activities.

A hostile force/individual is:  a nation, a subject of a foreign nation, or any person serving a foreign nation engaged in a war against the U.S. or any of its allies, or engaged in armed conflict, whether or not war has been declared, against the U.S. of any of its allies, or engaged in a war or armed conflict between military forces of any origin in any country in which a person covered by the WHCA is serving. 

NOTES:

Eligible employees are covered by the WHCA at all times, except for employees who reside at or near the place of employment AND do not live there solely by virtue of the exigencies of the employment.  These employees are covered only while in the actual performance of duty.

Claims for detention benefits are “direct” WHCA claims, but the initial step is to file a DBA claim with the appropriate Longshore district office.  Upon investigation of the claim, the Longshore District Director will issue a formal denial if there is no evidence that the claimant is entitled to disability benefits.  The claim for detention benefits can then be filed under the WHCA.

Reimbursement under the WHCA will not be provided to an insurance carrier in any case in which an additional premium for war risk hazard was charged.

The statutory definition of a war risk hazard does not specifically address terrorist attacks, but the Division of Federal Employees Compensation considers terrorist activity as a war risk hazard.

Some reimbursement claims have been denied where injuries occurred but no actual explosions or gunshots occurred in the incident.  Just driving fast to avoid suspected trouble spots may not be enough to support a reimbursement claim.

WHCA regulations require a determination that DBA benefits are not payable before a direct WHCA claim may be filed.  The FEC regulations governing the administration of the WHCA can be found at 20 C.F.R. Parts 61 and 62.

In the event of the denial of any claim under the WHCA, the claimant may request review by the Director, Division of Federal Employees Compensation, within 60 days.  That’s it.  The decisions in allowing or denying any payment under the WHCA are final and conclusive on all questions of law and fact and are not subject to review by any other official of the U.S. or by any court by mandamus or otherwise.  Thus, there is no collection of published decisions, and individual administrative files are protected by the Privacy Act so there is very little available to legal research.

Summary – The WHCA supplements the DBA by providing for three types of claims:  direct WHCA claims by certain employees, detention claims, and reimbursement claims by insurance carriers. 

Compensation rates are provided by the Longshore Act but the substantive provisions governing WHCA direct claims are provided by the Federal Employees Compensation Act.

The Defense Base Act

The Defense Base Act (42 U.S.C. 1651) is a workers’ compensation law that extends the benefits of the Longshore and Harbor Workers’ Compensation Act to employees outside of the continental United States under certain circumstances  (under the DBA Alaska and Hawaii are part of the Continental U.S.).  It was passed in 1941, supplemented in 1942 by the War Hazards Compensation Act, and amended in 1953 and 1958 to broaden its coverage.

Since September 2001 there have been nearly 60,000 injuries reported under the DBA, including nearly 2,000 deaths.  There are a lot of civilian contractors working overseas on government contracts.

The DBA covers the following employment activities:

1. All employees working overseas for private employers on U.S. military bases or on any lands used by the U.S. for military purposes outside the continental U.S. in any Territory or possession;
2. All employees working on public works contracts with any U.S. Government agency outside the continental U.S.;
3. All employees working on contracts approved or funded by the U.S. Under the Foreign Assistance Act, generally providing for cash sale of military equipment, materials, or services to allies, if the contract is performed outside the continental U.S.;
4. All employees working for American employers providing welfare or similar services outside the U.S. for the benefit of the armed forces (such as the USA).

If you have employees working overseas then you should be thinking about the Defense Base Act.

 Coverage

 Here are the top ten things that you should know about DBA coverage:

1. The Defense Base Act is not a good name for this law.  It does not have to be about defense, and it does not have to be on a military base;
2. The DBA applies to all employees, not just to Americans;
3. The DBA applies to subcontractors just like prime contractors;
4. The DBA applies to foreign employers employing only third country nationals;
5. The language in a contract does not determine whether or not the DBA applies.  The statutory language determines the coverage.  If the government contracting officer makes a mistake and does not require DBA coverage, then it is the contractor/employer who faces the consequences of being uninsured;
6. The DBA may apply regardless of the length of the contract, whether just a few days, a year, or longer;
7. The DBA has no exclusion for corporate officers.  They are covered;
8. The DBA may apply even if an Iraqi ministry is administering the contract, the contractor is not an American company, and none of the employees is American;
9.  The U.S. Navy cannot waive the DBA just because they think that it costs too much;
10. The U.S. Department of Labor can waive the application of the DBA under certain circumstances.  One of the conditions for waiver is that the waived employees must be covered by the local workers’ compensation law.  Because there is no local workers’ compensation law in Iraq or Afghanistan, there is no effective waiver of the DBA in Iraq or Afghanistan;
11. The Longshore Act minimum rate does not apply under the DBA;
12. The reference point for whether a waiver applies is where the contract is to be performed, not the country of origin of the worker;
13. Section 1651(a)(1) of the DBA says, “…irrespective of the place injury or death occurs, and shall include any injury or death occurring to any such employee during transportation to or from the place of employment, where the U.S. or the employer provides the transportation or the cost thereof.”  You could have a DBA exposure within the continental U.S.;
14. The DBA, if it applies, is the worker’s exclusive remedy;
15. There does not necessarily have to be a causal relationship between the employment of the injured worker and the injury, nor is it even necessary that the employee be engaged at the time of the injury in an activity of benefit to his employer.  All that is required is that the “obligations and conditions” of employment create the “Zone of Special Danger” out of which the injury arose.

Longshore Act Question 16

Does the Longshore Act apply only to U.S. citizens?

It’s time to look at another of our Top Ten Longshore Act questions. Last time I had to decide whether to pick an easy one or a difficult one. Of course, I picked an easy one. But looking down the list, I see that there are some real challenges waiting to be addressed. It will not be easy to answer some of the questions in a coherent, but brief, manner.

But we are determined to complete the answers to all the questions on the list. As Cecil B. De Mille said (maybe) when he was told that his movie was getting too long: “What do you want me to do? Stop shooting and call it The Five Commandments”?

We are committed to completion.

So after all that, let’s look at another easy one.

Number 16 – Does the Longshore Act apply only to U.S. citizens?

Answer – No.

Section 902(3) of the Longshore and Harbor Workers’ Compensation Act defines an employee as “any person” who meets the status requirement for coverage. There is no citizenship or nationality reference.

Section 3(a) of the Act provides that the Act applies “upon the navigable waters of the United States”; but this situs provision does not require United States citizenship or residency.

There is a provision in the Nonappropriated Fund Instrumentalities Act that requires U.S. citizenship or permanent residency for NAFI employees outside the continental United States.

And there is a provision of the Defense Base Act that provides for commutation of compensation due and payable to aliens and nonnationals of the United States who are not residents of the United States or Canada. The definition of surviving dependent in the Defense Base Act also has a residency component.

But as far as the Longshore Act is concerned, an employee must meet the status and situs requirements for coverage, but there is no citizenship or residency requirement for coverage.

NOTE: Presumably this indicates that an illegal alien working in maritime employment upon the navigable waters of the United States is covered by the Longshore Act.

Longshore Act Question Number 9

We have a long way to go in our effort to cover each of the Top Ten Longshore Act questions. Last time we looked at Number 15 – Does the Longshore Act apply overseas? Now it’s time to look at another question.

Should we pick a difficult one or an easy one?

As Joe Garagiola once said while broadcasting a baseball game, “Oh well, half of one, six dozen of the other.”

Using this advice, I’ve decided to pick an easy one this time.

Number 9 – Does the Longshore Act apply in Guam? Does it apply in Puerto Rico? Does it apply in the Virgin Islands? Does it apply in the Commonwealth of the Northern Marianas (CNMI)?

Answer(s):

Does the Longshore Act apply in Guam? – YES
Does the Longshore Act apply in Puerto Rico? – NO
Does the Longshore Act apply in the (American) Virgin Islands? – YES
Does the Longshore Act apply in the CNMI? – YES

NOTE: But be careful. If the question is whether the Defense Base Act applies you may get a different answer.

Does the Defense Base Act apply in Guam? – NO Does the Defense Base Act apply in Puerto Rico? – YES