Defense Base Act Workmans Compensation Coverage

Welcome to the Defense Base Act Compensation Blog

Defense Base Act Workmans Compensation insurance coverage is required for all  contractor employees working overseas under US Government contracts.  The Iraq and Afghanistan war zones are included.

DBA insurance coverage is “cost reimbursable” to the Contractor Company, meaning you the taxpayer are paying for the coverage.  When an employee is killed or injured in the war zone the insurance company is then reimbursed it’s expenses plus an administrative fee by the taxpayer under the War Hazards Act.  The expenses include the legal fees that the insurance pays it’s expensive DBA Defense  Attorneys to deny the injured contractor employee benefits.

All comments made here are soley the opinion of the person commenting and not necessarily the opinion of this blog.

CNA’s Claims Adjusters

We love the new position that our favorite CNA Claims Adjuster has gotten herself into but find it hard to believe that she went so far out on the limb without the full knowledge and  support of her superiors.  So many years of breaking lives and families with no supervison….

We don’t think so.

We smell a scapegoat.

Now another CNA  Billy Goat Gruff,  also a  favorite of the injured contractor and soon to be exposed,  signs off on what should be considered a fraudulent LS 208 that the scapegoat would have needed to file nine months ago, according to the DBA, when her attorney cut off payments to the injured contractor.  The document is fully loaded with false entries that would appear to be intended to falsely deny the injured payment.

The Department of Labor District Director forwards it to the claimant without as much as an explanation.

Does that mean that the Department of Labor thinks this is OK?  Did he read it, check the claimants file to see why he just received something so vital to the injured contractors life nine months after it was due?

Does he just not want to acknowledge how screwed up this is?

Scapegoat is not out there on the limb by herself.

This CYA episode could take a whole herd of sacrificial goats.

Required Reading for ALJ’s and Claimants Lawyers, Vicariously experienced traumas

Assessing Combat Exposure and Post-Traumatic Stress Disorder
in Troops and Estimating the Costs to Society

Implications from the RAND Invisible Wounds of War Study

http://www.rand.org/pubs/testimonies/2009/RAND_CT321.pdf

‘Major depression is often not considered a combat-related injury;

however, our analyses suggest that it is highly associated with

combat exposure and should be considered in the spectrum of

post-deployment mental health consequences.’

‘Assuming that the prevalence found in this study is representative of

the 1.64 million servicemembers who had been deployed for OEF/OIF

as of October 2007, we estimate that as of April 2008 approximately

303,000 OEF/OIF veterans were suffering from PTSD or major depression.

We also found that some specific groups, previously underrepresented in

studies — including the Reserve Components and those who have

left military service—may be at higher risk of suffering from

these conditions.

Vicariously experienced traumas (e.g., having a friend who was

seriously wounded or killed) were the most frequently reported.

About 10-15% of OEF/OIF veterans reported NO trauma exposures,

and about 15-20 percent reported exposure to just ONE event

(largely death or injury of a friend), so most (close to 75 percent)

reported multiple exposures

.Compare these findings to those of the ALJ’s who are giving these

cases to AIG and CNA    The DBA X Files

DoL Cracks Down on DBA Paperwork

In a promising new change of heart from the Department of Labor……

word is they are requiring the insurance companies to start handling paperwork properly.

Word also is that CNA’s claims adjuster is under particular scrutiny.

Let’s hope that those who have falsely denied medical and lost wages

by filing LS 207’s that say things like “deny all issues” to bomb blast victims

are made to pay in a way comparable to the losses incurred by the DBA

Casualties and their families.

……and  that those Department of Labor employees who allowed the LS 207’s

that said things like “deny all issues” to bomb blast victims to become the

acceptable standard,  no questions asked,   are removed from their positions.

Dear Rep Kucinich and the Domestic Policy Committee

This is a Posting by T Lee Marshall

He’d like you to add your questions to his as comments below

Dear Rep. Dennis Kucinich,

 Has AIG  any credibility left?

Open any newspaper and AIG jumps out at you in big, black letters.   Mention AIG and you get a look of disgust and a full understanding requiring nothing more said.  

Congress convenes a hearing.   Unfortunately, unless the committee has reviewed multiple case files, examined how the insurance company absolved themselves of liability, tracked the effects and examined how the chain of events intertwine and unfold, how can the right questions be asked?  And, if they do, what do they do with the answers? Can they separate the truth from the lies?  Can they ID and challenge bogus, PR, or self-defense testimony?

 

1. Why does the OALJ overlook criminal violations of the Longshore Act and the United States Code they find in conducting formal hearings? (Iraq and Afghanistan has been sending us back broken bodies for how many years now?) 

 

The insurance company terminates a war-injured’s life (disability compensation and medical treatment) using Federal Forms LS-207 and 208 based on allegations they list in Box 12 of the form. The insurance company’s termination results in medical and financial damage to the injured. They cannot work so they cannot pay their bills. The  family suffers. This suffering is based on allegations the insurance company is not required to substantiate prior to terminating life. The insurance company could charge a quadriplegic with running a marathon on free weekends, terminate his life and not worry about the DOL’s acceptance.

 If the war injured provides the DOL evidence showing the allegations the terminator listed in Box 12 were false, the form is not flagged for further investigation or sent to any other agency or office for action. It is buried in one man’s file amongst thousands of other files. The man-hours required to dig these phony forms out to see if any suspicious pattern emerges would be formidable. DOL’s claim examiners see this every day. Is this not tantamount to stumbling over a rape victim and saying nothing?

 

1. Suggestion: Randomly select LS-207 & 208 forms from a pile of those used by the insurance companies to terminate their liability to a war-injured. Ask the insurance company representative the Committee has called before them to explain. I would be surprised if the insurance rep was unable to drag up individual cases at will on his laptop. Second, look for patterns and then call the insurance claims adjusters before the Committee for questions.  Use their answers to form additional questions. For instance:

 

1. Did the termination of this war-injured’s medical treatment for X (months, years), lead to exacerbation of the injury? Did this delay increase the cost charged to the taxpayer?
2. Let’s examine the billing of Case xx-xxxx. Were the charges in Box 12 proven to be factual, legitimate?  How much money was charged back to the taxpayer for attorney fees and court costs?    How much money did the insurance company profit (or lose) from this case? Compare the cost of the legal action vs. the cost of the medical treatment controverted. Was the insurance company able to charge back more money to the taxpayer by sending the case to legal rather than covering the medical treatment of the injured?    
3. Let’s examine Case xx-xxxx. Who made the decision and what facts dictated the selected course of action? Was any additional information requested from the injured before the company denied his life?
4. What was the result of these terminations?  Did the case go all the way to a formal hearing? Was it settled before or after a formal hearing date was scheduled? Has any settlement included a “non-disclosure” stipulation? If yes, why would a case controverting benefits for a war-injured need a non-disclosure clause?

 

1. Does an increase in cases controverted and turned over to law firms have a corresponding increase in administrative fees billed to and paid by the taxpayer?

 

1. Examine the cases looking for a pattern of Forced Desperation & Settlement. Were the denied claimant forced into financial desperation by the IC’s termination of benefits? Were the reasons for controversion listed in Box 12 of the LS forms legitimate? Did the claimant agree to the IC’s offered settlement solely out of a driving need to feed his family? Did any representative of the IC, at any time, access the claimant’s credit reports? If yes, work up a timeline.

 

1. In cases grouped by similarities, were there any common threads? Claim adjuster? Lawyer? Law firm?

 

1. Case analysis: Are any of the claim’s adjusters assigned and reassigned on cases? (IC: Of course, to redistribute case loads to provide better service to the claimant. Really?) Do these reassignments cause a delay in the resolution of cases; delays in medical treatments or the reinstatement of benefits? Are the claimant’s receiving their benefits when these reassignments take place? Are those benefits controverted? Are the reassignments logistic or strategic?

 

1. IME analysis: Why send a claimant 102.8 miles from home to attend an Independent Evaluation when 17 qualified doctors are available within 20 miles of the claimant’s home? Why were these particular IMEs selected? Can they be truly considered “Independent” when the sole survival of their practice depends on working for and testifying for insurance company interests? Are these IMEs as up-to-date on procedures and diagnostics as are those 17/20 DOCs who actually cut into the human body?  Why is video-documenting the IME’s evaluation objected to by the IC? Documenting the evaluation would affirm that what the IME finds is what the IME writes in his report.

Want to add your own questions? Use the comment form. Don’t ask me your question(s), aim it for the Committee. I cannot guarantee the Committee will even read them, but I will guarantee they will know they are there. Hint: know the answer before asking the question, if possible.

 

***These pages faxed to Committee and posted here**

 

T. Lee Marshall “Streetgang”

KBR Convoy Bulk Fuel Truck Driver

LSA Anaconda, Balad, Iraq 2004-2005

AIGfelonies@exorealm.org  

Bullshit as Science- The Fake Bad Scale

Bullshit as Science: A Test for Malingerers

Paul Lees-Haley, PhD, is a psychologist who has come up with a 43 question test to separate the truly disabled from malingerers. Lees-Haley is either a genius or a pompous fraud right out of Mark Twain. Read on and decide for yourself. (This posting is based upon an article by David Armstrong in the Wall Street Journal, which limits access to subscribers.)

Lees-Haley studied the Minnesota Multiphasic Personality Inventory (MMPI), a standard tool for determining personality characteristics. He isolated 43 questions that he believes, taken together, clearly separate the truly disabled from malingerers and frauds. Lees-Haley’s brainchild, dubbed the “Fake Bad Scale” test, was developed in 1991 and is finding its way into courtrooms around the country. Lees-Haley is available to testify in person on behalf of insurance companies as an expert witness. He charges $3,500 to evaluate a claimant and $600 per hour for depositions and testimony. Worth every penny, I’m sure, if his testimony results in the denial of benefits to a claimant.

Testing the Test
Below you will find a sample of questions from the test, requiring a “True” or False” response. A “T” before the question indicates a “true” response is indicative of malingering. Likewise for “false.”
F My sex life is satisfactory.
T I have nightmares every few nights.
F I have very few headaches.
F I have few or no pains.
T I have more trouble concentrating than others seem to have.
T I feel tired a good deal of the time.
F I am not feeling much pressure or stress these days.

You don’t need a PhD in psychology to identify the ambiguity and unfairness in these questions, which are typical of the test as a whole. In the aftermath of an injury, someone might well feel stressed out, have difficulty concentrating, be tired much of the time and have frequent headaches. These responses do not necessarily indicate malingering. They can just as easily be valid indicators of post-traumatic response to injury. The “Fake Bad Scale” fails to account for anything that might have happened in the real world. Using this corrupt measure, every survivor of the 9/11 attacks would be deemed a “malingerer.”

Fortunately, the validity of the test has come under fire. A number of courts have thrown it out. That’s the good news. The bad news is that untold numbers of people who have answered these questions honestly have ended up being labeled (and libeled) as “malingerers.” Shame on the attorneys who rely on this phony science, and shame on the insurance carriers who retain them. And double shame to the originators of the MMPI, who have formally given their stamp of approval to this inept tool. To be sure, we all know that there are malingerers out there: but the “Fake Bad Scale” is no help whatsoever in singling them out.

Some good comments here too

Test for Fingering Malingerers Comes Under Fire

This is from last year but in light of current events we think it’s a good time to discuss the Fake Bad Scale and those who rely on it, like AIG and Dr Griffith   see more on Dr Griffith at the X Files

The Wall Street Journal Blog

Have you ever been accused of faking badly? Today, a WSJ front-pager looks at a psychology test, used increasingly by defendants in personal injury lawsuits, called the Fake Bad Scale. In hundreds of cases, says the story, expert witnesses have testified that the test provided evidence that plaintiffs were lying about their injuries. The test gained credibility recently after being endorsed by the Minnesota Multiphasic Personality Inventory.

But now psychologists and plaintiffs’ lawyers claim that the Fake Bad Scale identifies too many real victims as fakers, known as malingerers, people who exaggerate their symptons to win judgments in court. “Virtually everyone is a malingerer according to this scale,” says a leading critic, James Butcher, a retired University of Minnesota psychologist who has published research faulting the Fake Bad Scale. “This is great for insurance companies, but not great for people.”

The psychologist who created the test says that while individual items “can be made to seem like evidence for a flawed” measuring process, what’s important is the total score. He claims that criticism is being orchestrated by plaintiffs’ lawyers.

The Fake Bad Test recently figured in the case of Steven Thompson, a onetime truck driver in Iraq for a unit of Halliburton. He said he hadn’t been able to hold a job since returning to the U.S. due to post-traumatic stress disorder. His disability claim was denied by Halliburton’s insurer. Appealing to the U.S. Labor Department, Thompson testified that memories of attacks on his convoys, seeing dead bodies and smelling burning flesh led to nightmares and sleeping problems that left him too irritable and difficult to work with to hold a job.

A psychiatrist for the defense concluded Thompson was exaggerating his symptoms, and cited his score of 32 on the Fake Bad Scale. An admin judge denied Thompson’s claim, citing the test results.

Dr. Griffith won’t discuss the case but says the Fake Bad Scale is helpful in confirming fakers, who he estimates make up 40% of personal-injury plaintiffs. In seven similar prior cases, the same psychiatrist, working for the same insurers, found five of the claimants to be malingering. Asked about the high percentage of Iraq truck drivers he found to be faking, he said: “When you come back to the States, you suddenly discover if you are sick you can make more money than if you were working.”

Don’t stop here, click on the link and check out the comments too

Broad Agreement that Worker’s Comp Program for War Zone Workers Needs Fixing

News Analysis: Broad Agreement That Workers’ Comp Program for War-Zone Workers Needs Fixing

by T. Christian Miller – June 23, 2009 5:10 pm EDT         Original Story here

Daniel Brink, a South African, applied to Chicago-based insurer CNA for his medical benefits but said CNA declined some benefits owed to him. (Francine Orr/ Los Angeles Times)

Congressional hearings generally follow a script. Lawmakers publicly vent their outrage, administration officials offer plausible defenses, and the outcome is inconclusive. But last week’s airing of complaints about the government’s system for taking care of civilian workers injured or killed while on the job in Iraq and Afghanistan was notable for its unanimity.

Republicans and Democrats, Obama administration officials, private insurance companies and injured contractors all agreed that there are serious flaws in the Defense Base Act, [1] a 70-year-old law that requires federal contractors to purchase special workers’ compensation insurance for employees working in war zones.

The Labor Department, which oversees the system, acknowledged that it had failed to consistently provide for the needs of the injured. Insurance carriers complained that tight deadlines and paperwork requirements were outmoded for the complexities of a war zone. Injured civilians recounted long, painful battles to get prosthetic legs, prescription eyeglasses and other basic medical needs.

“We are trying to meet a complex, 21^st century challenge with a program from World War II,” Seth Harris [2], the Labor Department’s deputy secretary, told a panel of the House Committee on Oversight and Government Reform [3] on Thursday. “It simply isn’t up to the task.”

Harris took issue with lawmakers who suggested that the program could be fixed by adding resources or making administrative changes.

“The program is not designed for the circumstances we’re in,” Harris said. “The most productive thing we can do is to work with you to fundamentally change the program.”

And so the battle is turning to how, exactly, to remake the system. At the heart of the fight will be money—the billions of taxpayer dollars that now flow to AIG and a handful of other carriers that dominate the market.

The stakes are high. Tens of thousands of wounded men and women and the families of those killed depend on the system for medical care and income. And while none of the carriers rely heavily on the business from battlefield workers’ compensation, the policies are notably profitable. One company, Chicago-based CNA Financial Corp [4]., reported earning as much as a 50 percent profit on some policies.

This committee is adamant about making sure that the Department of Labor reforms its position on this matter to make sure that those who were insured receive the compensation they were entitled to,” said Rep. Dennis Kucinich, D-Ohio, the chair of the Domestic Policy panel, which held the hearing.

His Republican counterpart joined in: “In a program as vast as the Defense Base Act, there are going to be failings,” said Rep. Jim Jordan, the panel’s ranking minority member. “We are going to correct those failings.”

But with Congress focused on intractable issues like the economy, health care reform and the wars in Afghanistan and Iraq, the question is whether lawmakers will have the stamina to enact changes this year.

Sen. Bernie Sanders, I-Vt., said they would.

“We’ve got to make sure that we’re not continuing to waste billions of dollars in taxpayer money,” said Sanders, who has taken a keen interest in the issue.

At this early stage, it appears that the battle lines will resemble in miniature those of the debate over the reformation of the U.S. health care system

Harris outlined several suggestions in his written testimony. Though the Labor Department has not officially endorsed any plan, Harris’ remarks seemed to favor some version of federalizing the program.

Under such a scenario, the government would provide insurance to war zone workers in the same way it insures federal workers: by self-insuring, rather than purchasing policies from private carriers. Such a proposal, Harris said, would save money by eliminating carriers’ profit mark up. It would also reduce the potential for disputes arising from claims, since carriers would no longer worry about maximizing earnings.

The hearing was prompted after investigations by ProPublica, the Los Angeles Times and ABC News found that private carriers had routinely denied requests for medical care [5] and disability benefits from injured workers.

Last weekend, the Los Angeles Times and ProPublica reported that foreign workers fared worse [6], with widows and children never receiving benefits, and injured workers settling claims for miniscule amounts while under pressure by insurance adjusters.

Putting the program in federal hands would, of course, take money out of other hands: the private insurance industry and the brokers who sell such policies. With AIG no longer able to lobby lawmakers because of its acceptance of taxpayer bailouts, expect to see CNA and the brokers leading the charge against any effort to put the business in the hands of the government.

Three players, in particular, would be most affected. AIG holds a near monopoly, with about 85 percent of the business. CNA and Bermuda-based ACE Group are the second-largest providers, each handling about 7 percent of claims in Iraq and Afghanistan.

AIG and CNA officials both had their own recommendations at the hearing—reflecting the two firms’ different business models.

Several U.S. agencies, including the State Department and the U.S. Agency for International Development, bid out insurance coverage, with the winning carrier providing a blanket policy for all agency contractors. CNA holds every such contract with the U.S. government. AIG did not even participate in the most recent bid for such work, conducted by the U.S. Army Corps of Engineers.

AIG, on the other hand, has focused on selling policies to individual firms, mostly those who contract with the Defense Department. CNA’s share of that market has actually declined over the years, according to George Fay, the company’s executive vice president for worldwide property and insurance claims.

Predictably, CNA urged the Obama administration to consider expanding the number of agencies that hold bidding competitions. “CNA is part of the solution, not the problems,” Fay said.

AIG has focused more on making changes to the existing system. The company called for lifting deadlines that require payments to be made in 14 days and more consistent rules on the amount of such payments.

“Inconsistency has converted what should be an efficient compensation system into an unpredictable, prolonged lottery,” a company statement said.

Aside from ideological debates over free market versus government, there are practical arguments on both sides. Placing the system under government control would address the issue of excessive profits earned by insurance carriers, but it remains unclear how the Labor Department would administer claims in far distant lands. AIG has offices around the world and a staff of interpreters. The Labor Department has nobody on the ground in the Philippines or Nepal.

Insurance industry officials have argued that issuing individual policies to contract companies creates an incentive for safer working conditions. The safer the workplace, the fewer accidents there are. And the fewer accidents, the lower the premiums. In the case of Defense Base Act policies, however, this incentive is diminished. Taxpayers are already billed for the premiums under contracts for, say, truck drivers or security guards. Those premiums make up a small percentage of the overall contract price.

One enormous player in the debate has yet to weigh in. The Defense Department, which pays more in premiums than any other agency, is scheduled to release recommendations for reforming the system later this summer.

Pentagon officials have so far not offered any hint of their findings. But the agency was instructed by Congress last year to examine all options, including the idea of federalizing the system.

When those recommendations arrive, the battle will begin in earnest.

CNA Damage Control

CNA must have paid handsomely for this Press Release disguised as a report on the hearing.

http://www.tradingmarkets.com/.site/news/Stock%20News/2383496/

But is the real damage control found here ? (also a press release)

http://finance.yahoo.com/news/CNA-Announces-New-Name-New-bw-2155844976.html?x=0&.v=1

 

A little background on CNA Financial

CNA Financial is the umbrella organization for a wide range of insurers, including Continental Casualty and Continental Assurance. The company is focused on its commercial coverage, with such offerings as workers’ compensation, general and professional liability, reinsurance, and other products for businesses and institutions. CNA also provides specialty insurance for doctors, lawyers, architects, and other professionals. Other offerings include annuity and pension products, as well as accident and health insurance. Although the firm has transferred its personal property/casualty coverage to Allstate, it continues to write policies and renew existing ones. Holding company Loews owns almost 90% of CNA.

Fallen Fathers, Civpol, Alumni Dyncorp

We are so blogged down with the fighting with CNA and AIG that we sometimes forget the employer of the fallen. Let me fill you in what Dyncorp did to me:

 

After being removed from the CNA building in Chicago, I stopped in Dubai on the way back from the USA. I went to the Dyncorp offices in Dubai and started telling them exactly what was happening to me and how CNA treated me in Chicago.

 

I was told by the HR manager that a program was being started by Dyncorp. This would take the form of an Alumni organization that would look at the injured and the families of those who died. Man  I was as happy as you can get. I was told that Tim Newman was involved in the setup of the organization.

 

On my arrival home, I received an invite to the launch of this project in Texas. My wife and I were  flown to the launch and were warmly received by a lot of people I recognized from Iraq.

We were asked to attend a memorial service theat Saturday evening.   I shook hands with the DynCorp Executive Vice-President Robert Rosenkranzand Genl.(ret) General Charles Mahan.  I was thanked  for the service of the South Africans In Iraqand that Civpol Program could not have functioned without our contributions.

 

After the function, Mike Warren of Dyncorp told me that I must attend a meeting the Monday at the Dyncorp HQ  in Houston.   My wife and I were received by Mike Warren, Steve Averyand a person from HR who’s name I don’t have. I was promised a position at Dyncorp as the CEAP(Civpol Employee Advocacy Program) Representative for South Africa.  We were about seven people in the meeting.  I filled in application papers with all my details.

 

My mission was to start up the CEAP office in my country and look after the injured and families of the fallen. I was further tasked to put planning forward for a memorial service for the South Africans of Dyncorp.  I was very excited. Mike Warren shipped a box load of Civpol shirts and goodies that had to give to the fallen families.

 

Needles to say the letter of appointment never arrived in South Africa. When I contacted Steve Avery, I was told that my position was approved and that they were waiting for paperwork from Dyncorp Dubai. I got the families all in a hype about the memorial service and nothing materialized.  I looked  like an idiot.

 

It cost me $3000 to setup an office.  I was never paid for any services that I rendered.

 

I was really screwed over twice.   First CNA does not pay all my medical debtsand then the company tells me I’m employed to help the fallen and then never pays you.  How sick can you get.  Do Dyncorp and Mike warren have no conscious.  I met T Christian Miller at this conference and even he new that Dyncorp was going to employ me.

 

No wonder Dyncorp are called” Dirty Tricks Incorporated“.

 

I dare Mike Warren or Dyncorp to respond to this allegation.

 

I also addressed my views with the Civpol Alumni with regards to my membership.  I was told that the South African families of the fallen do  not qualify for honorary membership because we are not Americans.   I worked as PSD on the Civpol Support function.

 

I now get told by only Americans that have been injured or killed in the line of duty qualify for a medal.  It is called the Defense of Freedom Medal.  None of the names of the South Africans who died  appear on the Civpol  Alumni memorial wall.

 

How can the slogan of this organization state, and I quote that text from the home page

“

The CIVPOL Alumni Association is a non-profit, international community-based organization founded in 2007 and is dedicated to providing the international law enforcement officer a forum to exchange information and maintain relationships fostered in difficult and challenging environments.

The Civilian Police Mission is one of the most challenging and honorable jobs that a Law Enforcement Official can participate in during their career. It is a goal of the Association to garner the recognition that those officials deserve, and to remember those who did not return from these missions.” 

Spreading Democracy & Justice For All

What as load of Bull.  Please look at the site www.civpol-alumni.org

 

The one logo they use is “I am my brothers keeper no matter how far away”.  The major sponsor of this organization is Dyncorp. That says it all……

 You are more than welcome to place this on any site you want to. I have the same attitude as CNA and Dyncorp…… I dont’ care…….

 

Daniel Brink

www.southafricancontractorsiniraq.com

e-mail: dbasouthafrica@yahoo.com

Risk Transfer Without Risk

As always Jon Copplelman at Workmans Comp Insider puts it in words like no one else

“Something cruel, heartless and cynical took place in the back rooms of carriers with responsibility for civilian claims. If you like Edgar Alan Poe, you’ll love the claims files of AIG and CNA.”

Risk Transfer Without Risk

The Defense Base Act (DBA) was enacted in 1941, to cover the injuries to civilian employees – primarily a few hundred engineers – during the second world war. The act might have worked then, but it certainly is not working now, nearly 70 years later. As we have blogged in the past, the DBA is a boondoggle, generating huge profits for a small number of insurance carriers and routinely devastating both the civilian workers wounded or killed in war zones and their families. There are over 10,000 claims filed each year: the medical only claims are usually paid; the indemnity claims are dissected, inspected, detected, and ultimately, rejected. A handful of insurers (AIG, CNA among others) are making big bucks at the expense of the wounded and the dead.
NOTE: As bad as the situation is for U.S. citizens wounded and killed in Iraq, it is far worse for foreign nationals.

The Domestic Policy Subcommittee of the House Oversight and Government Reform Committee held a hearing last week on the DBA. The title of the hearing betrays an (understandable) prejudice: “After Injury, the Battle Begins: Evaluating Workers’ Compensation for Civilian Contractors in War Zones.” The hearing focused on the handling of workers’ compensation insurance for federal contractors working overseas, specifically on the inordinate delays in compensation running parallel to the enormous profits for insurers. Among those testifying were Deputy Labor Secretary Seth Harris; Timothy Newman, Kevin Smith and John Woodson, former civilian contractors in Iraq; Kristian Moor, president of AIU Holdings, Inc., a division of AIG; George Fay, executive vice president for Worldwide P&C Claims, CNA Financial; and Gary Pitts of Pitts and Mills Attorneys at-Law.

Kristian Moore defended AIG’s decisions and motives, pointing the finger at a lack of Labor Department oversight and a system overtaxed with cases. “We are doing everything we can do,” suggested Charles Schader, senior vice president and chief claims officer for AIU Holdings. Yeah, everything you can do to make money.

At the conclusion of the hearing, Dennis Kucinich (D-Ohio) warned AIG executives that he plans to demand copies of internal memos and documents that will link claims denials to the company’s profits. Most of us do not get terribly excited by the prospect of reading claim files, but these will undoubtedly provide some compelling reading. While I doubt that the subcommittee will find a direct, written link between denials and profits, the rationale for the individual claim denials – in the face of compelling evidence of compensability – should prove riveting. Was it incompetence or was it greed? Something cruel, heartless and cynical took place in the back rooms of carriers with responsibility for civilian claims. If you like Edgar Alan Poe, you’ll love the claims files of AIG and CNA.

Risky Job, Risky Work
Seth Harris, the new deputy secretary at the U.S. Department of Labor, is in charge of this mess for the government. He’s been on the job for 3½ weeks. Congratulations on the new job, Seth! (You might want to keep your resume circulating.) Seth has been working less than a month, but he has already figured out that the system is in need of fundamental change.

The work of insurers usually involves risk transfer. Under the perverse incentives of the DBA, the risk is absorbed by taxpayers, the pain falls on civilian workers and their families, and the profits – running from 37 to 50 percent of premiums – are pocketed by the carriers. Risk without transfer. It’s amazing that AIG can generate this level of profit in one division and still only trade at $1.40 a share. I guess that they have been looking for risk in all the wrong places.

Editors note:  CNA Financial just changed it’s name to CNA Select Risk

http://finance.yahoo.com/news/CNA-Announces-New-Name-New-bw-2155844976.html?x=0&.v=1