ISSUE: Defense Base Act

I’d like to remind everyone about the Defense Base Act (DBA).  We last looked at it here in February, 2010, so it’s time for another review.

First, an update on claims reported under the DBA:  Between September 1, 2001 and September 30, 2012, there were 90,680 injuries reported, including 3,187 deaths.  For comparison, back in February 2010 the number of injuries reported was under 60,000, which included almost 2,000 deaths.      

The DBA (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 considered to be 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.

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 USO).

Things to know about DBA coverage:

  1. The DBA applies to all employees, not just to U.S. citizens.
  2. The DBA applies to foreign employers employing only third country nationals.
  3. The language in a government contract does not determine whether or not the DBA applies.  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.
  4. The DBA applies regardless of the length of the contract, whether just a few days, a year, or longer. 
  5. 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.  This is sometimes inaccurately referred to as 24 hour coverage.

If you have, or plan to have, any employees working overseas then you should be familiar with the provisions of the DBA.

While we’re at it, we may as well take another look at the War Hazards Compensation Act (42 U.S.C. 1701)(WHCA).

The WHCA was passed in December 1942 to supplement the DBA.  The law reflects the national policy that losses from war risk injuries and deaths should be borne by the general public.

Who is covered by the WHCA – 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 in the U.S. Department of Labor under the DBA.  The WHCA does not change this.  The WHCA provides coverage in three instances:

  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 (for example, an employee injured outside of the scope of employment).  This also includes persons engaged by the U.S. for personal services outside of the U.S.  This type of direct claim is rare, because DBA coverage is so broad.
  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 from a fund established under the provisions of the Federal Employees Compensation Act (FECA).

Section 104(a) Reimbursement Claims:

  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.

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. or 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.

NOTE:  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 has considered terrorist activity to be a war risk hazard under certain circumstances.

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.

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 CoveredThe 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.

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