I have mentioned before that, when I first analyze the facts of a Defense Base Act case, I consider whether the War Hazards Compensation Act applies. This post addresses a tangential question: what happens when a lawyer does not consider the War Hazards Compensation Act?
The Defense Base Act:
The Defense Base Act (or DBA for short) is a system of federal workers’ compensation that applies to many overseas contractors. When a contractor working on an overseas base or under a U.S.-funded contract is injured, that injury and the resulting disability may be covered by the DBA. If it is, then the injured worker is entitled to indemnity benefits, as well as reasonable and necessary medical benefits.
The War Hazards Compensation Act:
The War Hazards Compensation Act (or WHCA for short) is sort of a companion to the DBA. The only part of the WHCA that is important for this discussion is that part of the WHCA pertaining to reimbursement. See 42 U.S.C. 1704; see also 20 C.F.R. 61.101-61.105.
You see, when a contractor’s DBA injury was caused by a “war-risk hazard,” then the insurance company can apply for reimbursement for all of the DBA benefits it paid to the injured worker. All of the money paid to the injured worker, and all of the expenses incurred during the administration and adjudication of the claim, will be reimbursed by the U.S. government pursuant to the WHCA.
Through the WHCA, insurance carriers can save hundreds of thousands of dollars…sometimes on just one claim.
Considering the Effect of the WHCA:
All attorneys should consider the effect of the WHCA. Failure to do so can cost your client a lot.
For defense attorneys, the WHCA can offer their client a chance to reduce its ultimate liability. It the carrier considers each case on a long enough timeline, then they will consider the effect of the WHCA as well as the effect of an adverse DBA decision. Defense attorneys should consider whether it is better to take a DBA issue to trial and risk having an administrative law judge include language in the opinion that ruins their WHCA claim; or to resolve the claim amicably, with an eye towards controlling the WHCA reimbursement narrative. Further, defense attorneys need to know how to advise their insurance carrier client about the implications of the WHCA on each case. Maybe a case has multiple related medical conditions. Should stipulations or a settlement include ICD-9 codes for each injury? Yes…if at all possible. Or maybe a case has only a partial WHCA implication–meaning that there are both DBA-only and WHCA injuries. Should the carrier fight the WHCA injury just to end up liable for the DBA-only injuries? That doesn’t make too much sense.
For claimant attorneys, the WHCA could affect their client’s ultimate resolution. It is impossible to litigate a DBA claim with a WHCA component without keeping WHCA reimbursement in mind. The insurance carrier may want to refuse settlement in favor of the direct payment of future benefits. If that happens, the government pays the injured worker directly. But, the carrier nonetheless remains ultimately liable for any additional adjudication. Consequently, clients might become concerned about their medical benefits after the case is transferred to the government, or about the development of a secondary medical condition. Or, clients may have questions as to whether a lump sum can be reached after the carrier successfully transfers the case to the government for direct payment. These are questions that must be addressed early on in a case, not just when reimbursement is being sought.
Quite simply, failure to consider the implications of the WHCA on every DBA claim is a mistake that could lead to adverse financial consequences for clients. Accordingly, take the time to consider the WHCA implications. Doing so is worthwhile for everyone.
Photo courtesy of Flickr user Vic.