Last week, a C-130 aircraft crashed in Afghanistan, killing 6 airmen and 5 civilian contractors. Multiple media outlets reported on the crash. For instance, the Los Angeles Times wrote that the crash occurred Friday at Jalalabad Airfield in Afghanistan. Although a spokesman for the Taliban claimed that militants shot the plane down, those claims remain uncorroborated.
This post addresses how a Defense Base Act proceeds when an aircraft accident occurs.
The Defense Base Act:
The Defense Base Act is a federal workers’ compensation system. It provides protection to contractors and subcontractors working overseas on a United States military base or working under a United States government contract. If a contractor is injured or killed, then the contractor or his loved ones may be entitled to benefits. As for the recent plane crash, any eligible surviving beneficiaries would be entitled to death benefits.
When something like this happens, the contractors’ employers file a Form LS-202. This form is the Notice that an employer files with the Department of Labor to let it know that an injury or death occurred. In response, the DOL will send a notice to the surviving beneficiaries that informs them of their rights under the Defense Base Act.
The surviving beneficiaries often file a Form LS-262, Claim for Death Benefits. The DOL needs to know the names and dates of birth of all beneficiaries. For instance, if a decedent is survived by a spouse and children, then the DOL needs to know the dates of birth for all of these people. Age has a direct impact on the value of a claim.
Calculating DBA Death Benefits:
One of the first tasks for DBA litigants is to determine the decedent’s average weekly wage, which controls the beneficiary’s compensation rate. A decedent’s average weekly wage is controlled by Section 10 of the Longshore and Harbor Workers’ Compensation Act. Section 10 provides the statutory requirements for determining a contractor’s average weekly wage. Essentially, the AWW is calculated in one of three ways:
- Section 10(a) applies when an employee worked 5 days per week for substantially the whole of the year prior to the injury.
- Section 10(b) applies when an employee worked 6 days per week for substantially the whole of the year prior to the injury.
- Section 10(c) applies when neither Section 10(a) or Section 10(b) will work. Section 10(c) requires a fair and reasonable determination of the employee’s annual earnings. The average weekly wages for most Defense Base Act contractors fall within the Section 10(c) calculation because most work 7 days per week.
Make no mistake that the AWW calculation is one of the most important aspects of any Defense Base Act case. This determination controls the overall value of the death benefits claim.
If the decedent was a high wage earner, then the death benefits compensation rate will be high, too. Congress inserted a cap in the Longshore Act which limits the amount of benefits owed. Each year, the maximum weekly amount owed for benefits is increased:
- For death benefits beginning after October 1, 2015, the maximum weekly compensation rate is $1,406.00.
- For death benefits beginning after October 1, 2014, the maximum weekly compensation rate is $1,377.02.
- For death benefits beginning after October 1, 2013, the maximum weekly compensation rate is $1,346.68.
- For death benefits beginning after October 1, 2012, the maximum weekly compensation rate is $1,325.18.
- For death benefits beginning after October 1, 2011, the maximum weekly compensation rate is $1,295.20.
What are Cost of Living Adjustments?
Each year, on October 1st, death benefits recipients are entitled to a weekly compensation rate increase. Section 10(f) of the Longshore Act provides that the increase is a percentage equal to the increase of the national average weekly wage. Then, Section 10(g) states that the COLA increase “shall be fixed at the nearest dollar.”
All of this means that each year of death benefits will be increased by a set percentage and then rounded to the closest dollar amount. Over the past five years, the NAWW percent increases have been:
- The percent increase for October 1, 2015 was 2.10%
- The percent increase for October 1, 2014 was 2.25%.
- The percent increase for October 1, 2013 was 1.62%.
- The percent increase for October 1, 2012 was 2.31%.
- The percent increase for October 1, 2011 was 3.05%.
Before moving on, compare these bullet points to the bullet points in the previous section. You will notice that the maximum compensation rate that went into effect on October 1, 2015 is 2.10% greater than the rate that went into effect on October 1, 2014. Also, the maximum compensation rate that went into effect on October 1, 2014 was 2.25% greater than the rate that went into effect on October 1, 2013. And so on…
Who Are Statutory Beneficiaries?
Before we can determine the amount of benefits owed as a result of a civilian contractor’s death, we must next determine the identity of the beneficiaries. Each type of beneficiary, which is usually determined by the familial relationship of the beneficiary to the contractor, is paid a specific percentage of the average weekly wage.
Section 9 of the Longshore and Harbor Workers’ Compensation Act defines the identity of beneficiaries as well as the percentage of the average weekly wage owed to each beneficiary. But, claimant’s must remember that there are classes of beneficiaries, some of which are preferred over others. If a preferred class of beneficiary exists, then a non-preferred class is typically excluded.
The following beneficiaries, listed in order of preferred class, may receive death benefits under the Defense Base Act:
- Surviving spouse (widow or widower) and child. The spouse is entitled to 50% of the decedent’s AWW. The surviving child is entitled to 16.6667% of the AWW. Together, the spouse and child are entitled to 66.6667% of the AWW, subject to the statutory maximum compensation rate established by the Division of Longshore and Harbor Workers’ Compensation.
- If there is a spouse but no child, or a child but no spouse, then that surviving family member is entitled to 50% of the decedent’s AWW.
- Dependent grandchildren and siblings may receive 20% (each) of the AWW. Any other “dependents,” as defined by Section 152 of the Tax Code may receive (20%) each of the AWW. Dependent parents or grandparents may receive 25% (each) of the AWW.
Dependency is determined at the time of the injury.
Widows or widowers who receive Section 9 death benefits must be aware that remarriage will extinguish their right to continued benefits. In the event a widow or widower remarries, they will receive a one-time lump sum payment equal to two years of benefits. Any benefits paid to children will increase to either 50% (in the case of one child) or 66.6667% (in the case of two or more children).
Funeral benefits are also available…but the amount is paltry. Following the death of an employee, the employer or its insurance carrier must pay up to $3,000 for funeral benefits. See 33 U.S.C. § 909(a).
War Hazards Compensation Act for Aircraft Mishaps:
At the same time the decedent’s family becomes entitled to Defense Base Act death benefits, the insurance carrier that pays those death benefits becomes entitled to War Hazards Compensation Act reimbursement. Consider the DBA and the WHCA to be sibling statutes. One statute requires benefits, the other entitles reimbursement of the benefits paid.
The U.S. government and military have yet to substantiate Taliban claims that it was responsible for the recent aircraft tragedy. For the WHCA, however, terrorist involvement does not matter. Aircraft mishaps are their own brand of WHCA event. Therefore, even if terrorists were not involved in the C-130’s crash, the WHCA still applies because of the “war-risk hazard” definition in the United States Code:
The term “war-risk hazard” means any hazard arising during a war in which the United States is engaged; during an armed conflict in which the United States 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 person covered by this Act is serving; from–
1. the discharge of any missile (including liquids and gas) or the use of any weapon, explosive, or other noxious thing by a hostile force or person or in combating an attack or an imagined attack by a hostile force or person; or
2. action of a hostile force or person, including rebellion or insurrection against the United States or any of its allies; or
3.the discharge or explosion of munitions intended for use in connection with a war or armed conflict with a hostile force or person as defined herein (except with respect to employees of a manufacturer, processor, or transporter of munitions during the manufacture, processing, or transporting thereof, or while stored on the premises of the manufacturer, processor, or transporter); or
4. the collision of vessels in convoy or the operation of vessels or aircraft without running lights or without other customary peacetime aids to navigation; or
5. the operation of vessels or aircraft in a zone of hostilities or engaged in war activities
See 42 U.S.C. § 1711.
Whereas a “hostile force or person” is identified in the first three categories of “war-risk hazard” occurrences, that term does not appear in connection with vessels or aircraft. A “hostile force or person” is not a requirement for reimbursement. All that is needed to secure WHCA reimbursement for an aircraft crash is a DBA injury caused by a mishap in “the operation of…aircraft in a zone of hostilities.” The key is whether the aircraft is in “operation.”
Resolving the Defense Base Act Claim Before the WHCA Claim:
Typically, DBA claims are resolved before the insurance carrier applies for reimbursement. Resolution happens in one of three ways: 1. Settlement; 2. Stipulations; 3. Court Order.
DBA settlements are controlled by Section 8(i) of the Longshore and Harbor Workers’ Compensation Act. Section 8(i) provides:
(i)(1) Whenever the parties to any claim for compensation under this Act, including survivor benefits, agree to a settlement, the deputy commissioner or administrative law judge shall approve the settlement within thirty days unless it is found to be inadequate or procured by duress. Such settlement may include future medical benefits if the parties so agree. No liability of any employer, carrier, or both for medical, disability, or death benefits shall be discharged unless the application for settlement is approved by the deputy commissioner or administrative law judge. If the parties to the settlement are represented by counsel, then agreements shall be deemed approved unless specifically disapproved within thirty days after submission for approval.
See 33 U.S.C. § 908(i).
If the claim is resolved by settlement, then the claimant or claimants receives a lump sum and the claim is over. No one can force a party to settle a Defense Base Act lawsuit; the parties must jointly and voluntarily agree to resolve their differences amicably.
As opposed to settlement, insurance carriers sometimes prefer to resolve death benefits claims via stipulations because of the WHCA’s direct payment provision. The same result can be reached via formal hearing because a court order often requires ongoing death benefits for beneficiaries. In other words, both stipulations and court orders produce the same result: ongoing benefits paid pursuant to court order.
The direct payment concept is simple: when certain criteria are met, the government will pay Defense Base Act benefits directly to the injured worker in the place of the carrier. Indeed, the carrier stops paying benefits altogether once the government takes over. Thus, the cheapest option for a carrier to resolve a death benefits claim can very well be direct payment. The good news for the DBA beneficiaries is that they receive the same amount of money; its just paid by a different entity.
The statutory authority for direct payment is found in 42 U.S.C. § 1704(a)(3), which states in pertinent part that “[t]he Secretary may, under such regulations as he shall prescribe, pay such benefits, as they accrue and in lieu of reimbursement, directly to any person entitled thereto . . . .” The regulation referred to by the statute is 20 C.F.R. § 61.105. Boiled down to its simplest form, the direct payment regulation for death benefits claims requires: (1) an order establishing the beneficiary’s right to benefits; (2) proof that the worker’s death was caused by a “war-risk hazard;”and (3) a “relatively fixed and known” compensation rate.
An employer’s and carrier’s application for reimbursement and direct payment is made to the Division of Federal Employees’ Compensation (“DFEC”). Once DFEC reviews the application and supporting documents, it will decide whether it will reimburse the carrier and accept the claim for direct payment. When a claim is accepted, DFEC sends a letter to the carrier notifying them of the day when benefits will shift to DFEC.
Once DFEC takes over, the carrier no longer pays benefits. The Defense Base Act claimant will deal directly with DFEC and not the employer or carrier. DFEC will ask the claimants to confirm their continuing beneficiary status if the claim is one for death benefits. The Defense Base Act claimant is required to comply with DFEC’s requests. Further, to my knowledge, DFEC does not enter into lump sum settlements with direct payment claimants.
Issues in Death Benefits Claims:
Although a death benefits claim resulting from a plane crash seems like it should be straightforward, there are always issues that can arise. Some of these issues include:
- Calculating the amount of death benefits owed to a high wage-earning decedent’s surviving spouse and child when the surviving spouse is not the child’s biological or adoptive parent. For more information about this quagmire, take a look at my prior post, “How Does DLHWC Divide Longshore Death Benefits Between Spouse and Child When the Maximum Compensation Rate Applies?”
- A surviving child’s right to benefits ends at the age of majority, or at 23 if the child is a full-time student. See 33 U.S.C. § 902(14). But what if the child has a developmental disorder that would render that child a lifelong dependent? In that case, benefits may not end at 18 or 23.
- A widow or widower should know that remarriage has an adverse effect on their right to benefits. Upon remarriage, the surviving spouse receives a lump sum payment for two years of benefits. Ongoing death benefits stop. See 33 U.S.C. § 909(b).
- And, of course, a huge issue is whether the surviving spouse qualifies as a “widow” or “widower.” A marriage certificate alone is not sufficient to prove that a surviving spouse is a “widow” or “widower.” A “conjugal nexus” is also required.
The newest aircraft tragedy out of Afghanistan should not be difficult to litigate. Yet, every case has its own set of facts. While the event that led to the injured workers’ deaths is clearly covered by the Defense Base Act, questions could still arise regarding the compensation available to the surviving beneficiaries. Still, though, the event is a horrible tragedy that will have lasting effects on the lives of the survivors.
Invitation: If you or someone you know is in need of assistance with their Defense Base Act claim, please contact Jon Robinson at (985) 246-3194, 844-DBA-COMP, or [email protected]
Attribution: Photo courtesy of Flickr user Carlos Menendez San Juan.