Defense Base Act Compensation Blog

The Modern Day DBA Casualty

Injured abroad, neglected at home

Posted by defensebaseactcomp on December 17, 2009

The Labor Department has failed to crack down on one of the agency’s fastest growing and most expensive programs–a system designed to ensure medical care for civilian workers injured in war zones.

By T. Christian Miller
T. Christian Miller is a senior reporter for ProPublica, an independent, nonprofit newsroom. For more information, including background documents and other information, go here.

This story was co-published with Salon [1].

WASHINGTON–In her first public address after taking office, Labor Secretary Hilda Solis promised to increase enforcement of laws designed to protect workers.

“You can rest assured that there is a new sheriff in town,” she told union members at a gathering in Miami Beach shortly after her confirmation in February.

Ten months later, Solis’ Labor Department has failed to crack down on one of the agency’s fastest growing and most expensive programs–a system designed to ensure medical care for civilian workers injured in war zones.

The department is responsible for overseeing a workers compensation system in which insurance carriers provide coverage to civilians working on overseas federal contracts. Such policies are funded by taxpayers.

But the department has failed to pursue sanctions against corporations accused of ignoring federal requirements to purchase such insurance, according to a ProPublica review of court cases, federal records and interviews with worker advocates.

The department has also taken no action in cases where insurance carriers allegedly provided false or misleading information to the federal government to terminate medical benefits for injured civilians–another potential crime under the law, known as the Defense Base Act [2].

The lack of enforcement has allowed carriers and contract companies to abuse the system by avoiding or blocking payments, forcing contractors to spend months and sometimes years battling carriers in court for benefits, claimants and their attorneys said.

“No one has ever been prosecuted for anything,” said Dennis Nalick, a veteran claimant’s attorney. “It’s like having a bank robber who gets caught, apologizes and then is let go.”

The department’s internal regulations call the detection of fraud and abuse the “highest priority” for officials overseeing the insurance program. Labor Department “personnel are responsible for reporting actual or suspected fraud or abuse, through appropriate channels to the Department of Labor,” the department’s procedural manual states.

But the ProPublica examination shows that the department has rarely deployed the tools available under the law to crack down on fraud and abuse–a record that extends back through Democratic and Republican administrations. Labor officials can recommend cases for prosecution to the Justice Department–but have only done so once in the past two decades, according to Labor officials.

They can directly levy civil penalties, but have done so sparingly. As of June, Labor officials have imposed fines in only about 50 of more than 36,000 cases processed by the two largest insurance carriers, according to an internal Congressional memo [3] obtained by ProPublica.

Rep. Dennis Kucinich, D-Ohio and Sen. Bernie Sanders, I-Vt.
Rep. Dennis Kucinich, D-Ohio and Sen. Bernie Sanders, I-Vt.

In private conversations, Labor officials have told Congressional staff that they are not an enforcement agency, despite the agency’s internal regulations and federal laws.

One Labor official told Congressional investigators the agency was “at best a score keeper, not a referee,” according to Rep. Dennis Kucinich, D-Ohio, who conducted a hearing into the program earlier this year. (The hearing came after a joint investigation by ProPublica, ABC News and the Los Angeles Times [4], which found that civilian contractors had routinely been denied basic medical care.) Foreign-born civilian contractors often had received no benefits at all, despite law requiring the delivery of payments within 14 days of an injury, the investigation found.

Sen. Bernie Sanders, I-Vt., said Labor officials have the power to enforce the law, but have ignored their responsibilities.

“Under the last administration, there was virtually no oversight,” said Sanders, who serves on the Senate’s Health, Education and Labor Committee. “Obviously, this whole thing has been a fiasco.”

In a statement, the Labor Department said it had recently imposed a series of fines on corporations that failed to report worker injuries as required by law.

The department indicated that it had fined Blackwater, the private security company now known as Xe, $11,000 for failing to report a worker injury for more than two years. KBR, Armor Group and insurance carriers AIG and CNA have also been fined in recent months.

“We are taking a stronger approach with respect to penalizing the failure to meet the requirements of the law and regulations,” said Shelby Hallmark, the senior Labor official overseeing the program. “We’re upping the ante.”

Nobody’s in charge

Passed in 1941, the Defense Base Act requires every company with an overseas U.S. contract to obtain health insurance for its workers.

But no single U.S. agency is fully in charge of implementing the program, which has exploded since the wars in Iraq and Afghanistan. More than 1,600 civilians have died and 37,000 have reported injuries.

In theory, the Labor Department is the lead agency. But Labor officials do not issue overseas contracts. That responsibility falls largely to the Pentagon and a handful of other federal agencies such as the State Department.

When the wars in Iraq and Afghanistan started, contracting officers with little experience in war zones began awarding bids to companies that lacked the required insurance.

The ProPublica review identified five companies that either did not purchase the required insurance, or which purchased the insurance, and then cancelled it. At least 33 employees have reported serious injuries while working for uninsured companies, according to Labor records.

One company, Strategic Security Solutions, Inc., failed to renew its insurance as recently as last year, according to court records. The company did not return calls for comment.

When companies fail to buy insurance, contractors’ medical care is put at risk.

Typical was the injury sustained by John Mancini, a contract specialist who found a job in Kuwait in 2004 with Procurement Services Associates, a small firm in Pleasanton, Calif., that did bookkeeping for larger contractors in Iraq.

John Mancini. Photo credit: Giulio Sciorio/GiulioSciorio.com
John Mancini. Photo credit: Giulio Sciorio/GiulioSciorio.com

Mancini was on his way home from work in Kuwait City in September 2004 when he was hit from behind by another SUV. Mancini smashed head-on into a concrete freeway barrier. The crash, at speeds of more than 75 miles per hour, totaled both cars. Mancini was left with severe back pain and difficulty walking.

Procurement Services had never purchased Defense Base Act insurance, court records show. Mancini was left to battle the company in Labor Department administrative courts to force them to pay his medical bills. Finally, after nearly two years of frustration and mounting pain, Mancini snapped.

On Oct. 6, 2006, Mancini barricaded himself inside his home outside of Phoenix and began calling 911 [5], making threats and bizarre demands, records show. When local police arrived, Mancini unleashed a barrage of gunfire. After a lengthy stand-off caught live on television, police managed to lure Mancini out of his home.

Mancini pleaded guilty but insane in summer 2007 to charges of endangering police officers and passersby. He was sentenced to 10 years in the Arizona mental hospital. (In August 2006, Mancini filed an affidavit at the request of this reporter as part of a Freedom of Information Act lawsuit to obtain records from the Labor Dept. on injured civilian contractors.) He now spends his days going to therapy and reading books, locked behind high walls.

“It was against everything that I stand for,” Mancini said in a jailhouse interview shortly before being sent to the hospital. “It’s not like I’m a crazed maniac. I don’t shoot at police.”

Mancini and his family believed the standoff would not have happened, had Mancini been able to get help earlier [6].

Mancini’s neck continues to bother him, and he is scheduled for surgery next year. Taxpayers will foot the bill, although the injury stems from his work accident, said his ex-wife, Susan Mancini. Mancini hopes to petition for an early release, but he has no home to return to. Earlier this year, his house burned down in a case of unsolved arson.

“You hear about veterans’ mental health all the time. These poor contractors end up with nothing,” said his ex-wife, Susan Mancini. “To me, that’s a crime.”

Scofflaws Run Free

In an interview at his company’s offices in Pleasanton, Dan Plute, the president of Procurement Services, acknowledged that his company had not purchased Defense Base Act insurance.

Plute said he was unfamiliar with the law since his firm had not worked overseas before Iraq. Procurement Services paid some of Mancini’s medical bills, but stopped after a doctor hired by the company found that Mancini was fit to return to work, Plute said.

Plute accused Mancini of exaggerating his injuries to get disability payments. He said the Defense Base Act program was biased against employers.

“I don’t think the judge realizes the misery that his decision put me, my family, my employees through,” he said.

And yet under the law, Plute could have been charged with a federal misdemeanor or a fine. But Labor officials did not pursue such charges–despite admonitions from one of the department’s own judicial officials.

At a Labor Department hearing just before Mancini snapped, Administrative Law Judge Russell Pulver warned Plute that failure to provide coverage can result in “criminal liability.”

Procurement Services “has consistently shirked its responsibility to [Mancini] to furnish adequate and prompt medical treatment, apparently hoping that someone else will shoulder its responsibilities in this regard,” Pulver wrote. “I find this position untenable, if not outright reprehensible.”

Under the law, Labor officials are required to ask Justice Department prosecutors to pursue charges against company officials who fail to purchase insurance, a misdemeanor that can result in a year in federal prison.

But Justice has historically shown little interest in pursuing such low-level crimes. In a statement, the Labor Department said that since 2001, it had proposed one case to the Justice Department involving a contract company which failed to purchase the required insurance, but the case resolved before any action was taken.

The law “does not provide for fines or penalties except through criminal prosecution by the Department of Justice,” the Labor statement said. “That avenue is currently not available to us.”

Yet even when Labor officials have the power to impose penalties on companies for administrative infractions, such as failing to file timely paperwork, they rarely act, the review found.

Companies are supposed to file a notice with the Labor Department within 10 days of an employee’s injury. But in nearly 7,000 cases, the companies filed those notices more than a year after they had knowledge of the injury, according to an analysis of Labor Dept. records.

Yet the department has only fined only five companies since 2001 for failing to report injuries. “The current system…provides little incentive for enforcement,” the memo by Congressional investigators concluded.

In the U.S., at least the threat of punitive fines and possible criminal charges exists. For a corporation operating abroad, the Labor Dept. has no way to pursue scofflaws. And hundreds of companies contracted to work in Iraq are based overseas.

David Barnett, a Florida attorney who handles injured worker claims, has argued several cases in which foreign firms contracted with the U.S. government failed to purchase insurance. He said foreign companies face little incentive to cover workers since the Labor department does not pursue actions against them.

“If there are no repercussions to not having insurance coverage, why would you do it?” Barnett said. “It’s a huge problem.”

Falsehoods

The Labor Department has not done much better overseeing insurance carriers.

Under the Defense Base Act, it is illegal to intentionally falsify claims information. Violators face five years in prison or a $10,000 fine. Yet the government has rarely enforced the provision, according to interviews and federal records.

Insurance experts and claims attorneys said the lack of enforcement opens the door to abuse by insurance carriers. Civilian contractors have been forced to spend months, and sometimes years trying to get benefits restored after having payments cut on false grounds submitted by carriers, according to court records, injured workers and their attorneys.

Terry Marshall suffered back and hip injuries in May 2005 when he fell from the top of his truck while working for defense contractor KBR at a U.S. base in Iraq.

His hip shattered, he went through years of surgeries and rehabilitation. KBR’s workers compensation carrier, American International Group, faithfully paid Marshall’s medical bills and disability payments.

Then, this March, Marshall was surprised when AIG cut off his disability payments without warning. AIG told the Labor Dept. that Marshall had failed to attend a doctor’s appointment arranged by the firm [7].

The problem? AIG itself had cancelled the appointment, according to an email Marshall received from his case manager [8].

In an Feb. 2009 email, Terry Marshall is informed that AIG has canceled his medical appointment.
In an Feb. 2009 email, Terry Marshall is informed that AIG has canceled his medical appointment.
In this Mar. 24, 2009 Labor Dept. form, AIG cancels Terry Marshall's benefits, claiming that he had failed to attend the medical appointment, which they had canceled.
In this Mar. 24, 2009 Labor Dept. form, AIG cancels Terry Marshall’s benefits, claiming that he had failed to attend the medical appointment, which they had canceled.

Marshall appealed his case to the Labor Dept., which instructed AIG to reinstate his benefits. “There would appear to be no basis for the employer/carrier to have terminated” benefits, a Labor claims examiner wrote to AIG in April [9].

AIG simply ignored the notice, which carries no legal weight. Marshall is now in the final stages of negotiating a settlement agreement with the carrier.

AIG “can punch in anything it wants, and the Department of Labor accepts it,” said Marshall, 53, of Springville, UT. “I have to go in and prove that I’m innocent.”

AIG declined to respond to questions about individual cases. But the company denied making false statements. It noted that it had never been sanctioned by the Labor Department for such a violation.

“We do not make false statements to the federal government on (Defense Base Act) claims,” the company said in response to written questions. “Our claims personnel are held to the highest standard in handling claims ethically, professionally and fairly.”

Fred Busse
Fred Busse

If true, Fred Busse, 44, has a hard time understanding AIG’s handling of his claim. Earlier this year, AIG refused to provide Busse medical and disability payments for a neck injury he suffered while riding in a truck in Iraq in 2007 [10].

Busse “never reported this alleged injury to employer [11],” an AIG attorney told a Labor Department judge to explain why the company was denying the claim.

Yet Busse’s employer, KBR, had sent Busse to a doctor in Kuwait [12] to examine his neck, according to court records. And AIG had sent an investigator to Busse’s house, where Busse recounted his neck injury, records show [10].

Perhaps most puzzling of all, a Labor department judge explicitly noted Busse’s neck injury: Busse “injured his neck in an automobile accident [13],” the judge wrote in a decision involving a separate injury that Busse had suffered.

More than two years after hurting his neck–diagnosed [12] by KBR’s doctors, noted by AIG’s investigators [11] and litigated by a federal judge [14]– Busse finally won his case earlier this month. A Labor department judge ruled that AIG must pay [15] for Busse’s neck treatment and disability wages, records show. “No medical evidence disputes claimant suffered a neck injury during his employment in Iraq for employer,” Judge Clement Kennington wrote in his decision.

“They’re doing this to everybody,” Busse said. “They’re just trying to get rid of you is what they’re doing. Period. They’re trying to dismiss you.”

Gillelan, the former attorney for the Labor Department, said that Labor officials have a duty to report instances of fraud–when committed either by claimants or insurance carriers.

Over the years, however, staff has been cut back and successive Democratic and Republican administrations have emphasized “compliance assistance” over enforcement.

“They no longer have the personnel to be proactive,” Gillelan said. “They can’t even be reactive.”

Hallmark, the Labor official, said that today’s system depends heavily on checks and balances between workers and insurance carriers. Claimants’ attorneys and unions battle in court with insurance carriers, employers and their attorneys.

“This is an insurance-driven program. It presumes that the parties have access to the mechanisms for resolving disputes,” he said.

Hallmark acknowledged, however, that Iraq and Afghanistan lack the components which help protect worker rights. There are no unions for contract employees. Nor are there many attorneys who specialize in Defense Base Act cases.

“There are limits to what we can actually do in a foreign location that’s in the middle of a war,” Hallmark said.

Richard Philemon
Richard Philemon

Richard Philemon learned about the Labor department’s limits the hard way. He was driving a fuel truck for KBR in northern Iraq in October 2006 when he was hit by a roadside bomb. He jumped out of the burning truck, his face, chest and arms on fire.

“I looked like a Roman candle,” Philemon said. “I was surrounded by flames.”

After returning to the U.S. for initial treatment for his burns, Philemon flew back to the Philippines, his home. He repeatedly asked to be treated at Filipino medical centers. AIG adjusters told him he had to return to the U.S., but never paid for his flights, court records show.

After several trips to the U.S., Philemon decided to start treatment in the Philippines. In September 2007, he began seeing a rehabilitation specialist and a psychiatrist, who diagnosed him as suffering from post traumatic stress disorder, or PTSD. He also hired an attorney to force AIG to pay for his care in the Philippines.

Three months later, AIG cut off his disability and medical benefits. The company told the government that Philemon had “apparently abandoned medical care,” according to federal records–even though Philemon was seeing doctors regularly.

Philemon spent the next year living off money from relatives as he waited for his case to wind through the system. Finally, this February, a judge ordered AIG to pay Philemon’s disability, starting from the cut off date in December 2007.

“We put our lives in danger for our military. We supply them with water, food, ammunition, housing. And yet, we’re screwed,” said Philemon, an Air Force veteran. “I almost give my life for my country and I get treated like dirt?

“Something’s not right with that picture,” he said.

Write to T. Christian Miller at T.Christian.Miller@propublica.org

10 Responses to “Injured abroad, neglected at home”

  1. Bill Carlisle,Jr. said

    I was injured twice in Iraq while working for KBR, hauling things in convoys, fuel, mail, bulldozers, water, etc.. My disability was stopped and now I will lose everything. I have no family, wife, children, or relatives. On “Food Stamps”, The VFW where I live have agreed to pay my utilities, as they were about to be shut-off as I have no money to pay for anything. I am going to lose my car, my cell-phone service. GOD bless the V.A., the American Legion, and the VFW, if not for them and a good neighbor, I would already be homeless. I have applied for Social Security Disability too and that has been denied once already and finally I retained a lawyer for that. I drew disability until AIG found one of their doctors who said I could not work in Iraq, but I had no restrictions in the U.S., even though all the doctors they sent me to stated that I was in pain and one even mentioned that I was suffering from PTSD. I realize that the only way for them(AIG to reinstate my disability is for a judge to order them to pay. Why is it that we who were injured must lose everything while we wait – and AIG got their Bailout and bonus funds in a short period of time? Even the 5th ? AIG/CEO was granted a $7,000,000.00 bonus just to keep him from resigning like the previous 4 CEO’s. I bet if they had to endure what we have and are going through – they would act differently. We can’t go to Congress and get bailout funds to help us, but AIG can.
    They were declared “TOO BIG TO FAIL”, I guess we the injured are “TOO INSIGNIFICANT AND LITTLE TO SUCCEED”.
    I have started selling things out of my home just to have money to put gas in the car that will soon be taken away by the finance company.
    Why aren’t these types of stories printed in more state-wide newspapers? The Arkansas Democrat/Gazette won’t even talk with me about it, neither will any smaller papers.
    This is intentional infliction of mental stress and financial ruin, to me it should be criminal because they intentionally set out to cause these things with a favorable outcome on their parts, not ours. I realize it’s business – but for Gods sake – this is totally different. Not many people in the world that would go and do the things the drivers did in war zones, be subjected to the same combat situations as the military, and we were not allowed to carry a weapon of any kind. If we carried a knife – it could not be longer than so many inches otherwise KBR would fire us and send us home. Even the military escorts could not believe we went out-side-the-wire without any kind of weapons. Oh, I guess we could throw a bottle of water at the insurgents. $14.50 per hour on average (if that much) 12+ hours a day, 7 days a week, many times 18 to 24 or more hours on duty.

  2. jayhawk said

    they are all criminals that are ignored by the gov’t because they give so much money to the politicians. it will not change until some really get hurt…

  3. The DoL and the DBA
    cross posted from Salon

    Shelby Hallmark and Miranda Chiu like to blame their shortcomings on the fact the injuries happen overseas.

    “There are limits to what we can actually do in a foreign location that’s in the middle of a war,” Hallmark said. or

    “The problem that we see a lot is where injuries occur overseas the knee-jerk reaction is the insurance company says,

    ‘I can’t pay right now. I don’t have documentation,’ ” said Miranda Chiu,

    Labor’s director of policy for Defense Base Act claims.

    “They drop the ball.”

    Shelby Hallmark and Miranda Chiu’s jobs are right there in Washington DC and they cannot seem to get off their behinds and do them.

    DoL staff and judges do have plenty of time to attend conferences that are put on by the Insurance Companies Defense Attorneys and the DoL pays their way.

    Miranda Chiu even helped promote her ex boss’ (a defense attorney for AIG and CNA) book detailing how to “interpret” the DBA at a Department of Labor sponsored conference a year ago.

    Hilda Solis refuses to respond to our repeated requests to meet with us or acknowledge that injured contractors are not being provided the meager benefits afforded them under the Act.

    Clean your house Hilda Solis. Get rid of the biased dead weight if they cannot do their job. There are plenty of qualified people in need of work right now.

    If you can’t fire them go ahead and send them “overseas” where they seem to think their job is. A little blood and guts might spark some empathy.

    And for those of you who have problems with Mr. Mancini’s weight or with contractors in general:

    You should know that you, the taxpayer, paid the insurance premiums to AIG and CNA. In many circumstances you are also paying to pick up the pieces of the lives destroyed by them.

  4. crazedchef said

    Yes, I wish more like this would come out. I cannot believe another Christmas has gone by and still I wait on medical and have not received a dime yet. I suffer daily. I suffer and I suffer, and I suffer, and I suffer and yet nothing will be given for my mental and physical anguish. Years of it. I am now probably going to be a cripple for life never able to use the degree which I earned through hard work. I will never be able to also do my other love…professional cooking. I will more than likely need both knees replaced before I am even 50. All of this because of AIG and their lawyers. For no reason…………………..just greed. Merry Christmas :-(

  5. Was just thinking the same thing.
    This is our seventh Christmas in the clutches of the DBA, the DoL, CNA, their ruthless claims “adjusters ” and lawyers.
    Our daughter was seven when her father was injured and now she’s fourteen. She’s spent half of her life in the shadow of uncertainty that is continually fed by all of the above.
    Her seventh Christmas of hearing “maybe next year”
    and it sounds more pathetic all the time

  6. Barry said

    The U.S Department of Labor and the U.S. Department of Justice are just as responsible for the destruction of the lives of injured and disabled workers as the insurance companies are !!

    The insurance companies are very aware they can turn the laws upside down, destroy entire families, and if the U.S. government takes any action it will be very insignificant in comparison to the heinous crimes being committed by the insurance companies !!

    No one can know the extreme destruction being caused unless you experience it yourself !! Humans with limbs blown off denied appropriate medical treatment,humans with TBI and PTSD being further traumatized by the insurance companies wild disregard for the law and human life, including an investigator for an AIG claim calling PTSD patient Mark Munro at 5 AM, asking his identity, and then hanging up before they identified who they were. The DOL and DOJ have done nothing significant about this.

    Efforts to make the U.S. Government leaders enforce laws against the corporations that give them so much money and gifts continues to seem futile, but we continue to try even though many of us are very handicapped physically and/or mentally.

    I believe the best thing we can do is get on our knees and pray that our leaders are deeply stricken with an awareness of the destruction they are causing, and somehow acquire enough conscience to stop the destruction. I also pray that God will be with all those whose lives and families have been and are being destroyed.

  7. [...] Comments Barry on Racketeering and Comp: When the Denial of an Injury is an InjuryBarry on Injured abroad, neglected at homeMarcie Hascall Clark on Injured abroad, neglected at homecrazedchef on Injured abroad, [...]

  8. Terry Steward said

    Why not sue AIG and its adjusters for everything you lose because of them?

  9. I was injured in Kandahar Air Base, Afghanistan in January of 2005. After working my 12 hour day building forms and pouring concrete in the rain all day, we were called out for another 6 1/2 hours (which we got paid for 5 1/2 hours) shoveling gravel into tents 21 feet by 32 feet.
    We had a “bobcat” right outside the door of the first tent. But, we weren’t allowed to use the equipment because we didn’t have “an operators card?” What the hell?! Were we supposed to be Union workers or something?

    We weren’t doing more work for the U.S. Army, we were saving the United Nations Intake Compound as it was being demolished by a severe storm. The wind was blowing 40 to 50 miles an hour and torrential rains were coming down.

    I worked doing anything I could, even though I couldn’t walk for two weeks. I drove a pickup truck around base delivering things to other crews. Then I was sent home for medical care.

    If I had only known the horrors to come, I’d have stayed and suffered. At least then I would have been able to pay my bills and take care of my family.

    As soon as I returned home I was denied by AIG. It literally took an act of Congress to open my case.
    I contacted my Representative, John Hostettler.
    He was great. Now I have a new Representative that won’t even answer me when I contact him, Brad Ellsworth.

    I’ve been home just over five years and I’m still fighting AIG.

    Yesterday, I received a reembursement for doctors visits that I paid forout of my own money in 2008. I’m still waiting for the reembursement for the medications I paid for myself.

    Do we have to form our own Army and march on these companies in order to receive justice?

    We already know that our government doesn’t give a damn about us contractors! We are treated like trash while we’re in the war zones then when we return wounded or injured, we’re treated like trash again.

    Does this seem just like serving in Viet Nam all over again to anyone else? Anyone else notice the similarities?

    I’ve just about had enough of these bastards screwing us contractors. Our government had better wake up and get control of their own laws.

    That’s MY opinion.

  10. [...] Injured Abroad Neglected at Home [...]

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