Recently, a handful of defense attorneys have demanded a claimant’s War Hazards Compensation Act deposition while the case is still at the Office of Workers’ Compensation Programs. The cases are in pay status because the claimants became disabled after a work-related injury. There are no issues in dispute. Yet, the defense attorneys demand live, in-person depositions (sometimes in a foreign country).
That begs the question: can an insurance carrier or its defense attorneys compel a claimant in a non-disputed case to participate in a deposition so that the carrier can get War Hazards Compensation Act facts?
The Deposition’s Purpose:
You may be wondering why an insurance carrier even wants a deposition in an undisputed claim. More likely than not, the desire is an offshoot of the mechanism of injury.
When a Defense Base Act injury and disability is caused by a “war-risk hazard,” then the insurance carrier is entitled to reimbursement of the amounts paid to satisfy its DBA obligations. The insurance carrier wants the claimant’s deposition so that it can iron out its War Hazards Compensation Act application for reimbursement.
What Exactly is the War Hazards Compensation Act:
The Defense Base Act is the workers compensation system that pays injured overseas contractors. If a claimant is injured and disabled, then benefits are owed.
Section 4 of the War Hazards Compensation Act permits reimbursement of the amounts paid by the carrier. But its not just reimbursement of benefits. The carrier’s expenses while litigating the claim are also reimbursed. Indeed, the government will reimburse the carrier for the amounts it paid for:
- Indemnity benefits (i.e., the weekly compensation owed to a disabled person);
- Medical benefits;
- Allocated claims expenses (including “reasonable attorneys’ fees, court and litigation costs, expenses of witnesses and expert testimony, examinations, autopsies and other items of expense that were reasonably incurred in determining liability . . . .”); and
- Unallocated claims expense (which is essentially a surcharge equal to 15% of the sum of indemnity and medical benefits).
Here’s the wild part. Suppose a carrier wrongfully denies a claim. Later, an administrative law judge ultimately concludes that the carrier should have paid benefits all along and awards those benefits to the disabled claimant. Well, the litigation costs associated with that wrongful denial are reimbursed, too. Some might ask whether this provides an incentive for defense attorneys to prolong litigation–what the Department of Labor has called “over zealous” litigation.
Who pays for this reimbursement of benefits and claims expenses? Taxpayers. Including taxpaying claimants. Including taxpaying claimants whose claims were wrongfully denied.
What Carriers Need for War Hazards Compensation Act Reimbursement:
The Code of Federal Regulations sets out the necessary documents to secure War Hazards Compensation Act reimbursement. Those documents include:
- Notice and claim forms (which typically include all filed LS forms and the CA-278);
- Statements of the employee or employer;
- Medical reports;
- Compensation orders; and
- Proof of liability (e.g., insurance policy).
In addition to this list, allocated claims expenses must also be supported with documentation. For example, if an insurance carrier wants its attorneys fees reimbursed, then the insurance carrier is required to submit unredacted copies of its fee invoices to the Department of Labor. The same is true for expert invoices, surveillance invoices, etc.
What’s not included in the list of documents needed for a War Hazards application? Depositions.
Can a Carrier Compel a Deposition at the OWCP Level in an Undisputed Claim in Order to Get War Hazards Compensation Act Information?
That brings me back to the question posed by this post: can a carrier compel a deposition at the OWCP level in an undisputed claim to get War Hazards Compensation Act facts? No. No, it cannot.
The case on point is a published 2012 decision from the Benefits Review Board. In Armani v. Global Linguist Solutions, the Board reasoned that the information sought by a carrier with respect to their War Hazards Compensation Act reimbursement is irrelevant to resolving the underlying Defense Base Act claim. An administrative law judge does not “have the authority to issue a subpoena . . . where [carrier] has stated that the deposition is needed solely to determine its entitlement to reimbursement under the WHCA . . . .” A claimant’s offer to provide a statement–as opposed to a deposition–should suffice for a carrier’s War Hazards Compensation Act application for reimbursement.
A claimant can voluntarily participate in this type of deposition even though a carrier cannot force the claimant to do so. No one can deny that a so-called “War Hazards depo” is incredibly useful to the insurance carrier. But, a claimant should think about a few things before volunteering for the deposition, such as:
- Have the parties already reached a settlement agreement?
- Has the carrier agreed to provide all relevant factual information requested by the claimant’s attorney, such as attack lists, travel logs, wage records, and the claimant’s personnel file?
- Will the carrier agree to limit the scope of the deposition to topics relevant to its reimbursement application?
- How will the deposition proceed? Telephone? Skype? Or live?
Lately, I have received some gruff e-mails from a couple of defense attorneys demanding live depositions in foreign countries for War Hazards Compensation Act claims. Back when I was a defense attorney, I worked on DBA and WHCA claims for nearly a decade. I have no idea how one particular insurance company has been convinced that live depositions are needed in order to secure War Hazards Compensation Act reimbursement. That has never been (and is not presently) a documentary requirement. Quite literally, no other insurance carriers want live depositions, likely because they realize it is a waste of time, money, and resources. Considering the Department of Labor’s position that it can deny portions of reimbursement requests on the grounds of overzealous litigation, I have to wonder whether the DOL will start asking why the carrier’s defense attorneys believed a live deposition in a foreign country costing tens of thousands of dollars–instead of a video-conferencing deposition using a free app like Skype–was necessary in an undisputed claim.
Finally, once a claim is referred from the Office of Workers’ Compensation Programs to the Office of Administrative Law Judges, a claimant’s deposition can be compelled. Usually, the parties simply agree to conduct the deposition just as they would any other claim. Depositions are discovery tools. But, referral usually takes place only when there is a legitimate issue in dispute. Simply wanting a deposition to round out an application for reimbursement (especially when a deposition is not necessary) does not warrant referral.