The Department of Defense announced a general freeze on travel and hiring that applies to both uniformed and civilian personnel. The announcement, which was made on March 11, 2020, is the D0D’s response to coronavirus. This announcement will no doubt have an affect on Defense Base Act contractors.
This post focuses on the affect that the DoD’s hiring freeze will have on the use of global labor market surveys in Defense Base Act claims.
“Disability” Under the Defense Base Act:
The Defense Base Act pays for disabilities. A “disability” is the “incapacity because of injury to earn the wages which the employee was receiving at the time of injury in the same or other employment.” 33 U.S.C. 902(10). Read that definition again. It is the inability to earn the same wages.
For purposes of this post, there are two types of disability to consider: total and partial. Total disability means that a contractor cannot perform the job the contractor had at the time of injury, and he cannot perform other suitable alternative employment. Partial disability means the contractor can perform some type of work, just not for the same wages that the contractor received working overseas. The “availability of suitable alternative employment distinguishes partial from total disability.” Louisiana Ins. Guar. Ass’n v. Abbott, 40 F.3d 122, 126 (5th Cir. 1994).
When a contractor cannot return to their overseas work, they are presumed to be totally disabled. The employer must rebut the presumption with evidence of suitable alternative employment. A labor market survey is the vehicle by which employers prove suitable alternative employment.
What Is “Suitable Alternative Employment”?
So what is suitable? According to the Fifth Circuit, suitable alternative employment is a job that the claimant can physically and mentally perform after his injury which takes into account the claimant’s age, background, employment history, job experience, intellectual capability, physical capability, and geographical community. New Orleans (Gulfwide) Stevedores v. Turner, 661 F.2d 1031 (5th Cir. Unit A Nov. 1981). The court must determine whether there is a reasonable likelihood that the claimant would be hired if he diligently sought the job. Id. at 1042-43. Employers bear the initial burden of demonstrating the existence of suitable alternative employment to rebut the total disability presumption. Id. at 1043.
Importantly, courts have also stated that suitable alternative employment should be established at the “critical times” there were jobs reasonably available. Id. at 1043. Suitable alternative employment needs to “be available during critical periods after an employee’s maximum health potential has been demonstrated.” P&M Crane Co. v. Hayes, 930 F.2d 424, 430 n.11 (5th Cir. 1991) (emphasis added); see also Avondale Shipyards, Inc. v. Guidry, 967 F.2d 1039 (5th Cir. 1992) (Jolly, J., concurring and dissenting) (reasoning that each hearing—initial, on modification, and on remand—could represent separate “critical times” after the claimant reaches MMI); see also Boh Bros. Constr. Co. v. Craft, 284 F. App’x 119, 122-23 (5th Cir. June 25, 2008) (finding that the lower court properly rejected a LMS based on incomplete information that failed to account for a doctor’s opinion after the issuance of a functional capacity evaluation).
The DoD’s Hiring Freeze:
The DoD’s memorandum dated March 11, 2020 address “Travel Restrictions for DOD Components in Response to Coronavirus Disease 2019.” It applies to civilian personnel. Heavy reference is made to the threat level classifications give to each country by the Centers for Disease Control and Prevention (“CDC”). Travel and hiring is restricted to both Level 2 and Level 3 countries.
The travel and hiring ban will last for 60 days–maybe more. Here are some memo highlights:
- “Effective March 13, 2020, all DoD uniformed personnel, civilian personnel and family members . . . will stop movement for the next 60 days.”
- “Additionally, until the travel restrictions prescribed above are lifted, DoD civilian personnel hiring actions for positions in Level 2 and Level 3 designated locations are postponed for non-essential civilian personnel who have not yet begun to travel.”
It is important to note that employers of overseas contractors are presently forwarding the DoD’s memorandum to its employees.
Identifying Level 2 and Level 3 Countries:
Most of European countries are Level 3 countries. That includes Austria, Belgium, China, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Iran, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, Netherlands, Norway, Poland, Portugal, San Marino, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland and Vatican City. Also, China, Iran, and South Korea are Level 3 countries.
Level 2 countries are a little harder to identify do to the lack of a specific list on the CDC website. Level 2 may include every country because COVID-19 is a global outbreak.
It is possible, however to research specific countries to find their CDC level. For example, Albania, Georgia, Hong Kong, Japan, Kuwait, Qatar, and the United Arab Emirates are all Level 2 countries. The DoD’s hiring freeze applies equally to Level 2 and Level 3 countries.
What Are Global Labor Market Surveys?
Global labor market surveys are dubious documents designed to limit the value of a claim. Essentially, a vocational expert prepares a list of jobs. On that list, one-third of the jobs will identify potential jobs near the claimant’s home; one-third of the jobs will be in “non-war zones;” and one-third will be in war zones. Insurance carriers use the higher paying jobs to reduce a claimant’s compensation–usually in an attempt to starve a claimant into settlement.
This website includes multiple articles about the use of global labor market surveys. The heavy-handed use of global labor market surveys can be traced back to a Benefits Review Board case called Patterson v. Omniplex World Services, 36 BRBS 149 (2003). Patterson involved unique facts. The claimant had already returned to overseas work at the time the carrier prepared the labor market survey. Therefore, the carrier was allowed to rely on a labor market survey that considered jobs anywhere in the world.
Since Patterson, the Benefits Review Board has repeatedly said that Patterson was limited to the very special facts in that decision. For instance, in Knipp v. Service Employees International, the Board distinguished the facts of Mr. Knipp’s case, noting that Mr. Knipp had not looked for overseas jobs following his injury. Then, in Herfi v. Global Linguist Solutions, the Board again stated that the holding in Patterson was based on Patterson‘s unique facts. Herfi‘s fact pattern was dissimilar from Patterson.
The problem with Knipp and Herfi is that the decisions are unpublished.
Still, administrative law judges have almost universally rejected the use of global labor market surveys when the facts of a particular case did not match Patterson‘s unique facts. As Judge William Dorsey succinctly stated: “There is no duty to seek more overseas employment after recovering from an overseas injury. But if a claimant does pursue overseas work after reaching MMI, overseas jobs become relevant alternative employment.” See Brandon v. L-3 Communications, 2014-LDA-00761 (OALJ Nov. 18, 2015).
An Example of a Global Labor Market Survey:
Insurance carriers still commission global labor market surveys in nearly every single case. The surveys prompt a lot of litigation. Just consider the following real world factual scenario:
Claimant, a Kosovar, has PTSD following his Afghanistan employment. He has not returned to work in Afghanistan. In fact, he is still treating for PTSD.
Carrier hired a defense medical examiner, and the examiner confirmed the presence of PTSD. The examiner also stated that Claimant could return to work, but not in a war zone.
Carrier then hired a vocational expert. The vocational expert’s labor market survey identified four jobs. Two of the four jobs were in Kosovo. The jobs resulted in only a slight reduction in Claimant’s compensation rate.
The other two jobs in the global labor market survey were in different countries: United Arab Emirates and Hong Kong. The employer for each job is a large global military contractor. Carrier unilaterally reduced Claimant’s benefits based on the exaggerated earnings of the Hong Kong job. According to Carrier, Claimant’s new compensation rate is less than one-third of his initial compensation rate because of the Hong Kong job. This all occurred in the course of settlement negotiations. Carrier’s intentions are pretty clear: starve Claimant into a cheaper settlement.
The case has now been referred to the Office of Administrative Law Judges to litigate whether the Hong Kong and United Arab Emirates jobs qualify as suitable alternative employment. If not, then Claimant is totally disabled. If so, then Claimant is partially disabled. Second Circuit law will control the inquiry. The Second Circuit requires job opportunities to be “realistic.” Pietrunti v. Director, OWCP, 119 F3d 1035, 1041 (2d Cir. 1997). Jobs identified as alleged suitable alternative employment must include “positions that a claimant can ‘realistically compete for.'” Id. at 1042.
So, the question becomes: is a job in Hong Kong or U.A.E. “realistic” for a Kosovar actively participating in curative treatment for PTSD.
Along Came Coronavirus:
Coronavirus threw a new argument into the mix. Coronavirus caused the Department of Defense to freeze hiring at all Level 2 and Level 3 countries. The hiring freeze will last for at least 60 days. (Both Hong Kong and U.A.E. are Level 2 countries.)
So…what happens to all those global labor market surveys? Did the DoD’s hiring freeze just invalidate the jobs on a global labor market survey where the employer worked on a DoD contract? If so, were the jobs invalidated temporarily or permanently?
I think these questions–and a lot more–will be litigated in the near future. Personally, I never put much stock in heavy-handed global labor market surveys. Even before the travel restrictions associated with coronavirus, it was unrealistic to expect a claimant to travel to a different country for employment. Now, with the travel restrictions in place, it is specious to even suggest that a claimant could look for work on the global stage. And since an employer must demonstrate the existence of suitable alternative employment at critical times, my opinion is that global labor market surveys are not worth the paper they are written on. Instead of focusing on the global labor market, carriers should focus on suitable employment available near the claimant’s home–and even stateside jobs are problematic considering the present pro-quarantine climate.