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Pentagon’s IG to Examine AIG Insurance Provided to Private Contractors in Iraq and Afghanistan

Posted by defensebaseactcomp on May 21, 2009

THANK YOU TO EVERYONE WHO HELPED MAKE THIS HAPPEN  !!

Pentagon’s IG to Examine AIG Insurance Provided to Private Contractors in Iraq and Afghanistan

by T. Christian Miller, ProPublica – May 21, 2009

The Defense Department’s inspector general [1] is preparing a possible audit to examine allegations that inadequate oversight by federal officials allowed AIG and other major carriers to deny medical benefits due civilian contractors in Iraq and Afghanistan.

The examination, undertaken in response to a request [2] (PDF) by Sen. Bernie Sanders [3] (I-VT), comes after a joint investigation [4] by the Los Angeles Times, ABC News and ProPublica found that AIG and other carriers denied nearly half of claims for serious injuries to contractors working overseas.

“We are currently examining the information provided in your correspondence,” wrote John R. Crane, the assistant inspector general, in a letter to Sanders earlier this month [5] (PDF). “We will provide you the results of that examination and our course of action in the matter as soon as possible.”

IG officials met with Senate staff last week to hammer out details of the proposed audit, according to people familiar with the matter. “We’re in the preliminary stages. It’s fact-finding stuff,” said an IG official, who requested anonymity to speak freely.

At issue is a federally mandated system that requires government contractors to purchase workers’ compensation insurance for overseas civilians. AIG [6] is the largest provider of such insurance, which is required under a World War II-era law known as the Defense Base Act [7]. Taxpayers pay premiums for the insurance, which is included in the price of federal contracts.

So far, AIG and three other carriers have earned more than $1.5 billion in premiums while paying out only about $900 million in benefits, according to a congressional report [8] (PDF) last year — a far higher profit margin than workers’ compensation programs in the United States. AIG declined to comment.

One of the problems with the system, the joint investigation found, is that no single agency is responsible for overseeing it. The Labor Department administers payments made to contractors, but the Defense Department pays most of the premiums.

This bifurcation actually makes the acting Defense Department inspector general, Gordon Heddell [9], especially well qualified to look into the matter. While awaiting Senate confirmation, he’s still doing his old job: inspector general for the Labor Department [10].

The IG’s office joins the Senate Health, Education, Labor and Pensions Committee [11] and a panel [12] of the House Committee on Government and Oversight Reform in looking into the overall program. Earlier this month, the IG issued a report [13] (PDF) that found that military medical facilities were failing to recoup millions of dollars in costs from AIG and other carriers for care provided to injured contractors. So far, more than 1,400 contractors have died in Iraq, and another 31,000 have been injured.

A Hill staffer who has followed the issue said several agencies have indicated that the system has serious flaws. The Government Accountabilty Office [14] (PDF) and the Congressional Research Service [15] (PDF) have criticized the system, which has gone largely unchanged since the 1940s. “Everybody says this is broken,” the staffer said. “We need major changes to fix this.”

3 Responses to “Pentagon’s IG to Examine AIG Insurance Provided to Private Contractors in Iraq and Afghanistan”

  1. daffodils said

    Suppose this is good news but why pick someone who did nothing about the X-files fiasco that happened on his watch? there were numerous news articles critical of DBA cases but he did nothing to fix it or did he try?

    Gordon Heddell [9], especially well qualified to look into the matter. While awaiting Senate confirmation, he’s still doing his old job: inspector general for the Labor Department [10].

  2. “One of the problems with the system, the joint investigation found, is that no single agency is responsible for overseeing it. The Labor Department administers payments made to contractors, but the Defense Department pays most of the premiums.”

    This statement is so bogus.

    Every aspect of the DBA falls under the Department of Labor.
    Paying the premiums hardly makes it a joint effort.

    Stop trying to let the DoL off the hook, this is their problem, they allowed it, and a whole lot of them need to be fired.

  3. Widow in California said

    It is the same old “Leaving a kid in a candy store” situation. The insurance companies have been given free run with the Defense Base Act insurance since there hasn’t been anyone there to “police” them. It doesn’t matter that they have intelligent people working for AIG or whoever, intelligence does not mean they have a conscious. Hitler, who ordered the murder of thousands innocent men, women and children wouldn’t look upon those torchured faces. The executives with these companies see us as nothing but numbers on a piece of paper. We are not “Just” numbers. We are a part of this great country that our Grandparents and Great Grandparents helped build and defend. We had more pride and we cherished our freedom in my Grandparents days. We are loosing our pride, and it is not because of our troops. It is because the American people see these atrocities being committed against their own people and our Government turns their back and ignores what is happening. They act like they can’t be bothered. In truth they have the power to step up and stop the crimes, and yes there are crimes being committed, against the people that voted for them. Is this the thanks we get for trusting in our Government to protect us? I feel like we are at the beginning of a huge “Implosion”. They put so much into protecting us against terrorists, which they should, but they are loosing sight of protecting us against the conmen and the opportunists that run these big companies. Companies that have been contracted by our Federal Government have been caught “taking advantage” and charging enormous amounts of money. How can anyone believe them when they go to court? They have been caught lying repeatedly. Reminds me of the story about the little boy that cried wolf. These are professional people that should be held to a strict code of ethics. It is not only those of us that are being wronged by these companies that have these feelings. The American people will not stand by forever and let this injustice take place. Hence attitude change. We are not out for a “quick buck”, we are trying to survive. We don’t go to expensive spa’s to help releave our stresses. We have to learn to deal with them the best we know how, in prayer and support from others in the same boat. When I found the wesite of American Contractors in Iraq I finally didn’t feel alone anymore. I would like to know how many families have been torn apart by a spouse working overseas. What is the divorce rate? Do they even know or care? People are coming home mentally unstable and putting whole families in harms way. What about the children of these broken homes? Do they not see this is a snowball effect for generations to come? If they would do the “right” thing and get these people the help they need and deserve that would prevent the spread of the inevitable. Somedays I look at my daughter and think, “She is going to be just fine.” Then something will trigger a painful memory and she will loose everything that she had gained. The anxiety, the anger, the pain from her fathers suicide. Do they know what it feels like to be the mother that can only stand by and watch as her child suffers from this emotional pain? Counselors, psychiatrists, drugs and drugs and more drugs can not mask it or take it away. There is no “Cure” for our situation. We have to learn to move on, just the two of us, where once there were three. Again, we are not just numbers on a piece of paper, we are people that just want to survive.

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