Journalism in the Public Interest

Questions for Hearing on Denial of Benefits to Civilian Contractors Injured in Iraq and Afghanistan

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Tomorrow, lawmakers on the Domestic Policy panel of the House Oversight and Government Reform Committee will hold a hearing on civilian contract workers injured in Iraq and Afghanistan. The hearing follows a joint investigation by ProPublica, ABC News, and the Los Angeles Times, which found that AIG and other insurance carriers were routinely denying claims by injured civilians for medical care and disability benefits under a federally financed workers' compensation program. Rep. Dennis Kucinich, D-Ohio, and Sen. Bernie Sanders, I-Vt., who is making a special appearance in the House, will lead the questioning. The players include injured contractors, insurance company executives and one lonely official from the Labor Department, which oversees the program.

When we researched the story, we found all sorts of things wrong with the program, which was created by a law written in the 1940s called the Defense Base Act. Back then, civilian contractors were a small part of the war effort. Nowadays, there are more contractors in Iraq than soldiers. Congress could fix many of the program's shortcomings by updating the law to reflect the reality of modern-day war, which relies on layer after layer of civilian contract workers hired from across the globe to support troops. Among the topics that could be addressed:

Lack of Oversight from the Labor Department

The Labor Department oversees the program, even though the Defense Department writes most overseas contracts. The result is that nobody is responsible for the overall system. For instance, every company with a federal contract is supposed to have insurance for its overseas employees. But we found several that didn't—a potential violation of the law. The problem? The Labor Department and the Defense Department don't appear to talk. Nor has the Labor Department shown much interest in sending scofflaws over to the Justice Department for prosecution.

Question: What is the Labor Department doing to enforce the provisions of the Defense Base Act? Why haven't any cases been referred to the Justice Department? What kind of communication exists between the Pentagon and the Labor Department?

Protracted Wrangling by Carriers and Civilian Contractors

Tim Newman, an injured contractor whom we wrote about in April 2009, is scheduled to testify at the House hearing Current law requires that an insurance carrier deliver payment on a claim within 14 days. But in a war zone, carriers have found it tough to answer even simple questions needed to process a claim, such as the nature of the injury or where it occurred. The result is that carriers routinely file denial notices, which stop the clock and give them time to investigate. But after that denial is filed, there's no timeline to finish the investigation. Nor does the Labor Department have the power to move things along. So guys with no legs or psychological trauma spend months, sometimes years waiting for treatment. And taxpayers have already paid the premiums.

Question: What will get things moving faster with less acrimony? Why not create a pay-without-prejudice system, as some states have, where carriers pay first, and then pursue damages from people who make false claims? Why not allow contractors suffering from post-traumatic stress disorder access to Veterans Affairs clinics and hospitals? Do we really want psychiatrically fragile people from war zones fighting for basic medical treatment?

What Are We Paying For?

In the U.S., state insurance commissioners can examine in detail how premiums are set for workers' compensation programs. Not so with the federal government. The regulation of insurance carriers is left to the states. In very real terms, that means the federal government is buying insurance in Iraq and Afghanistan with no oversight. So far, taxpayers have paid more than $1.5 billion in premiums. But the carriers have paid only about $900 million in benefits. An Army audit called the premiums on one massive contract "unreasonably high and excessive." What's more, the federal government reimburses the carriers for any care or benefits provided to civilians that are injured in combat. But nobody seems to have any idea how much that will cost.

Question: Why are profit margins so high on these policies? How much is the government going to pay carriers for contractors injured in combat?

Finally, the big picture question: Why are private insurers even involved? Why doesn't the government insure contract workers? Wouldn't it save money in the long run?

Marcie Hascall Clark

June 17, 2009, 10:18 a.m.

Your overly kind to the Department of Labor.
They could be imposing fines and fees on the insurance companies for a myriad of reasons.
Further the Department of Labor Claims Examiners sometimes appear to be more supportive of the insurance companies than they do the injured contractors, thats if you even have one.
The Department of Labor is supposed to be following the medical care of these injured contractors.  Could these huge breaches in medical care possibly be happening if the DoL were doing their job?
Then we have the Deparment of Labor Administrative Law Judges legislating from the bench.
Check out the DBA X Files, the facts cannot be denied

Discredited Doctors are allowed to testify in front of these judges and the judges agree with these paid for diagnoses in direct conflict with the diagnoses of the claimants own qualified doctors. 

There are claimants lawyers who send their clients to these doctors on behalf of the insurance companies with full knowledge that they do not have to travel from as far as five states away to do so.  Are these lawyers working in their clients best interest?

The U.S. Dept. of Labor, Chief, Branch of Policy, Regulations and Procedures, DOL/ESA/OWCP/DLHWC was previously the assistant to AIG and CNA’s defense attorney.  Does that reflect in her policy decisions?

So many broken people physically, mentally, and financially.  Lost homes, lost families.

What a huge waste of taxpayer money being misdirected into the hands of AIG, CNA, the “others” and their ruthless attorneys.

Fix this Congress, please.

More on these topics at

I second the comments above.  Our families are kicked down so low to where we can’t fight no more.  We fight with eachother because we can’t fight with the courts. 

These companies treat our lives like a cat and mouse game.  We are the mouse.  They play with us until we are close to death.  With no fight left.  To where we have no fight left.  Then offer us the lowest amount of money to make the contractor go away.  Knowing that it isn’t enough for the contractor to live off of after the bills are paid and you try to replace half of what you have lost.  Like your car, house, furniture, childrens college funds or paying of medical bills they still refuse to pay.  This isn’t even to mention that after all is said and done, we can’t even get Health insurance for our injured contractor.

No one is there to help out our families.  No one is there to watch out for my kids.  Now we are here trying to pick up the pieces and trying to keep our marriage together with what little we have left.  The love holds us together but the pain of everything else has been pulling us apart.  For this the families get nothing.  So where is the justice in that.  So yes I am mad I am fed up I am pissed off.  I think that it is about time someone stand up for us.  It is about time someone stop letting them stand behind the threat of big money.  Take care of the people who have truely taken care of you.  Former soldiers, contractors and their families.

Barry Schmittou

June 17, 2009, 3:09 p.m.

They should also be asked why the insurance companies are being allowed to violate laws and destroy thousands of lives every year in Workers’ Comp and disability cases in the U.S., but the DOJ and elected officials will do nothing.

Please go to to see how one of the most wealhy insurance companies in the world ignored lesions and plaque on the brain of MS patient Jacquelyn Addis; they also ignored a foot that patient Joanne Vick broke in 5 places after she developed a severe diabetic condition after child birth.

You’ll also see how injured workers in Texas killed their selves because they could not get treated for very serious work injuries.

I feel strongly that if our government leaders allow insurance companies to openly violate laws and destroy the lives of dead and injured war contractors (and injured workers and disabled people) then our government leaders are very evil.

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