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Posts Tagged ‘Rep Elijah E Cummings’

Cummings Introduces Legislation to Reform Defense Base Act Insurance Program

Posted by defensebaseactcomp on June 6, 2012

In addition to cost concerns, the current system has failed to ensure that all injured workers obtain health care services, disability payments, or death benefits they and their families deserve

“There is absolutely no reason American taxpayers should be lining the pockets of private insurance companies,” said Cummings.

“This bill would save billions of dollars while improving the ability of contractor employees who risk their lives in war zones to obtain the medical care and support they deserve.”

Committee on Government and Oversight Reform  June 6, 2012

Washington, DC (June 6, 2012) —Rep. Elijah E. Cummings, Ranking Member of the House Oversight and Government Reform Committee, introduced legislation today that would save taxpayers huge sums of money by transitioning the existing workers’ compensation insurance system for overseas government contractors away from private sector insurance companies to a federal self-insurance program.

“There is absolutely no reason American taxpayers should be lining the pockets of private insurance companies,” said Cummings. “This bill would save billions of dollars while improving the ability of contractor employees who risk their lives in war zones to obtain the medical care and support they deserve.”

According to a 2009 Pentagon study, Congress could save as much as $250 million a year by transitioning the existing Defense Base Act (DBA) insurance program to a government self-insurance program. The study found: “In the long run, the self-insurance alternative may have the greatest potential for minimizing DBA insurance costs, and it has several administrative and compliance advantages as well.”

Cummings’s legislation, H.R. 5891, The Defense Base Act Insurance Improvement Act of 2012, would direct the Departments of Defense and Labor to establish a self-insurance program in which the government would pay directly for medical benefits and disability benefits rather than utilizing private insurance companies.

The existing system has been a boondoggle for private insurance companies, who have reaped enormous profits under the program. According to an Oversight Committee investigation, insurance companies providing DBA insurance in Iraq and Afghanistan have made enormous underwriting profits that are significantly higher than those of traditional workers’ compensation insurers.

The current DBA system requires contractors to purchase workers’ compensation insurance for employees working overseas from private insurance carriers, and the contractors and insurance companies negotiate their own rates. Since the costs of the insurance premiums are often built into the price of the contract with the government, there is little incentive for contractors to limit insurance costs.

Cummings’s bill would set a six month deadline for the Departments of Defense and Labor to develop an implementation strategy to transition to a self-insurance program, and it would require the strategy to be executed within a year after the bill is enacted.

The legislation would also require the Departments of Defense and Labor to issue a report one year after the program is implemented to assess its effectiveness in terms of cost-savings and the delivery of benefits.

In addition to cost concerns, the current system has failed to ensure that all injured workers obtain health care services, disability payments, or death benefits they and their families deserve. An analysis by ProPublica found that private insurance companies had denied about 44% of serious injury claims and about 60% of claims by employees suffering psychological damage such as post-traumatic stress disorder.

At the request of Congressman Cummings, the Domestic Policy Subcommittee held a hearing in 2009 to evaluate these findings, which confirmed that the Defense Base Act is in desperate need of reform.

Posted in Civilian Contractors, Defense Base Act, Defense Base Act Insurance, Department of Labor, Dropping the DBA Ball, Political Watch, PTSD and TBI | Tagged: , , , , , , , , , , , , , , | 6 Comments »

Congressman Announces Plan to Reform US System to Care for Injured Civilian Contractors

Posted by defensebaseactcomp on September 9, 2009

by T. Christian Miller, ProPublica – September 9, 2009 5:20 pm EDT
Rep. Elijah Cummings (Mark Wilson/Getty Images)
Rep. Elijah Cummings (Mark Wilson/Getty Images)

Rep. Elijah Cummings, D-Md., said Wednesday that he will introduce legislation later this year to improve the delivery of medical care to civilian contractors injured while working with the military in Iraq and Afghanistan.

Cummings declined to provide details about his proposal but said he hoped it would reduce the $300 million a year paid by defense contractors to insurance companies.

“The system is broken, and the insurance companies have reaped the benefits,” said Cummings, who pushed for hearings [1] earlier this year after investigations [2] by ProPublica, ABC News and the Los Angeles Times found that insurance carriers routinely denied claims by injured contractors.

A new study released today found that insurance carriers charge defense contractors far higher rates in war zones to cover routine injuries and accidents. That baffles congressional officials, who have noted that the government separately pays for all war-related injuries to civilian contractors. Why, they ask, should it cost significantly more to insure an employee in Iraq against a slip or fall then one in Tunisia?

“The industry report underscores the need for major reforms of a very expensive and broken system that ostensibly is designed to help private contract workers in places like Iraq and Afghanistan,” Sen. Bernie Saunders, I-Vt., said in a statement. “Insurance companies such as A.I.G. should not make unjustifiable profits by overcharging the U.S. government for basic workers compensation. During the June congressional oversight hearing, I pressed the Pentagon and the Department of Labor to make the necessary reforms so wounded workers get the support they deserve. The Pentagon has said that the recommendations will be on my desk next week and I will take a hard look at their ideas.”

The study by insurance broker Aon Corp. was an anonymous survey involving 18 defense contractors which purchase the specialized workers compensation policies required under a federal law known as the Defense Base Act [3]. Most of the firms said they were charged higher rates for workers compensation insurance in Iraq and Afghanistan than for comparable workers hired in other foreign countries.

In some cases, defense companies in Iraq and Afghanistan paid more than double for the insurance, which covers medical costs and disability benefits for injured civilians. One defense firm paid 18 percent of its payroll for insurance — meaning that the company had to spend $18,000 to purchase a single worker’s compensation policy for an employee making $100,000 a year.

The cost of such policies became controversial after 9/11, when rates skyrocketed as civilian contractors flooded into Iraq and Afghanistan. An arm of troubled insurance giant AIG, recently renamed Chartis, sold the bulk of the policies, turning an obscure and lightly regulated insurance line into a billion-dollar business.

Taxpayers ultimately pay for the insurance as part of the cost of federal contracts.

Congressional investigators and government auditors have accused AIG and other carriers of exploiting a market with limited competition to overcharge for the insurance, pointing to profit margins as high as 40 percent on some policies [4]. Insurance firms, however, have said that higher premiums reflect heightened risks of routine injury in Iraq and Afghanistan.

The Aon study found that AIG continued to control “significant” market share, but was facing increased competition from ACE Group and Zurich Financial Services Group. Aon concluded that “key factors” driving rates included things such as market competition, the type of work performed by employees and local conditions.

Charlie Skinner, the Aon managing director in charge of the market survey, noted that Iraq’s roads are in poor shape after six years of war, raising the possibility of more road accidents. The survey did not directly examine, however, whether underwriters factored in war hazards in determining policy rates. “You might need to talk to underwriters to drill into that. We don’t get inside their rating models,” Skinner said.

The study, the largest of its kind to date, mirrors earlier findings by the GAO and the House Committee on Oversight and Government Reform. It comes as the Defense Department prepares later this fall to release recommendations on ways to overhaul the system.

One option under consideration would replace private insurance with government insurance — a potential blow to Aon and other firms in the industry. Skinner said Aon had contributed “factual” material to the Defense Department, but he declined to say whether the firm had recommended a course of action.

“As in most insurance and risk management decisions, there’s often not a black and white answer,” he said.

Cummings said the new legislation would “create some cost containment and improve the care for the brave men and women assisting the military.”

Aon Defense Industry Report 2009

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Military Fails to Collect From AIG for Care to Injured Contractors

Posted by defensebaseactcomp on May 7, 2009

by T. Christian Miller, ProPublica – May 7, 2009

WASHINGTON—The Pentagon has failed to bill American Insurance Group and other major insurance carriers for millions of dollars in medical care provided to private contractors injured in Iraq and Afghanistan, according to a new federal report [1] (PDF).

The United States hired hundreds of thousands of civilians to work in the two war zones. When injured on the job, their medical care is supposed to be paid for by private insurance companies, primarily AIG.

The audit by the Pentagon’s Inspector General [1] concludes that the military frequently failed to demand reimbursement when it treated injured contractors and the increased costs burdened front-line hospitals, cutting into resources that would otherwise be used to care for injured soldiers.

In one example, the main military hospital in Afghanistan at Bagram Air Base reported that one-third of all patients treated by military doctors were civilian contractors. This created an overwhelming burden for staff dedicated to delivering emergency care to wounded soldiers, the report said.

The auditors found that no single Defense Department agency is responsible for keeping track of costs, despite regulations requiring contractors to reimburse the government when their employees are treated at military installations.

Read the entire story here

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Sit Rep April 23, 2009 The Defense Base Act and the Injured War Zone Contractor

Posted by defensebaseactcomp on April 23, 2009

Injured Contractors have been in the news again over the last week.

Injured Contractors were on Good Morning America and 20/20.

The LA Times and ProPublica published a story that the LA Times sat on for a year.

Representative Elijah E Cummings on Tuesday asked for another hearing by Congress, this time by the Domestic Policy Committee.  He is outraged at what he has just read about.

In the meantime the abuse of the Injured War Zone Contractor continues with no intervention.

AIG continues to get away with having claims hearings post poned to keep important information that would help other injured contractors  out of public record.

AIG gets away with not showing up for hearings.

CNA continues to deny Traumatic Brain Injury screening to bomb blast victims.

The Department of Labor OALJ is not assigning claims for hearings, at least not for the last three months.

The Department of Labor is AWOL.

DBA cases are lingering in the twilight zone for as long as six years while the injured contractors are denied medical benefits and financial compensation that the Defense Base Act put in place for them and the taxpayer already paid for.  They continue to have their credit ruined,  lose their homes, lose their families, lose their lives.

Injured Contractors and their families join forces to ensure their voices are heard.

They are not going away.

You can join them by using the contact information at

Posted in Civilian Contractors, Contractor Casualties and Missing, Injured Contractors, Uncategorized | Tagged: , , , , , , , , , , , , , , | Leave a Comment »

Cummings Requests Congressional Hearing on AIG denying claims and the Department of Labor’s non enforcement

Posted by defensebaseactcomp on April 22, 2009

Cummings Requests Congressional Hearing on AIG Denying Claims for Civilians Injured in Iraq, Afghanistan

Washington, DC—Today, Congressman Elijah E. Cummings (D-Md.), a senior member of the House Committee on Oversight and Government Reform, sent a letter (text below) to Domestic Policy Subcommittee Chairman Dennis J. Kucinich (D-Ohio) requesting a hearing to examine a recent investigation by the Los Angeles Times, ABC News, and ProPublica. According to the investigation, AIG and other insurance companies have been unnecessarily denying and prolonging serious health insurance claims of civilian contractors who were injured or killed while participating in U.S. combat activities in Iraq and Afghanistan.

“The men and women who sacrifice their lives to protect our nation on the battlefield should be able to return to their families without having to wage another battle here at home to receive the health care they are more than entitled to receive,” Congressman Cummings said. “I was absolutely disgusted to read about the atrocities that individuals are being forced to endure as they attempt to get treatment for the injuries they received while serving our country.”

Under the Defense Base Act (DBA), contractors and subcontractors are required to purchase for employees working overseas insurance that covers medical care and disability payments for on-the-job injuries, as well as death benefits to the families of employees who are killed on the job. The costs of the insurance are built into the price of the contract between the contractor and the federal government.

The Department of Labor is designated by the law to administer the requirements of the DBA but has been unable to do an adequate job do to underfunding and increased claim volume. Further, the Department of Defense has not adopted a single-contract process for retaining an insurer under DBA, allowing insurance companies to inflate premium costs.

“There are clearly serious deficiencies in the health coverage of civilian employees who have been injured while working overseas to keep us safe here at home—costing not only the men and women who are being refused coverage for the treatment they need, but also for the American taxpayers who are footing the bill for their coverage,” Congressman Cummings said. “It is important that the Congress investigate this issue and take appropriate action to fix these problems.”

Specifically, Congressman Cummings would like a hearing to examine the DBA insurance practices at AIG, which handles the bulk of these claims, as well as the Department of Labor’s inability to enforce the requirements of DBA and the Pentagon’s development and implementation of the strategy required under the a provision included in the 2009 Duncan Hunter Defense Authorization Act to minimize insurance costs for the DOD and contractors.

The Text of the Letter:
April 21, 2009
The Honorable Dennis J. Kucinich
Chairman, Subcommittee on Domestic Policy
Oversight and Government Reform Committee
2445 Rayburn House Office Building
Dear Chairman Kucinich:
The Los Angeles Times, in conjunction with ABC News and ProPublica, reported on Friday, April 17, 2009, that the health insurance claims of civilian contractors who participated in military operations in Iraq and Afghanistan have been denied with unsettling frequency.[1] I write to request that the Domestic Policy Subcommittee of the Committee on Oversight and Government Reform hold a hearing to examine the issues detailed in the Los Angeles Times, ABC News,and ProPublica investigation.
Per the Defense Base Act (DBA), 42 U.S.C. 1651-1654, contractors and subcontractors are required to purchase workers’ compensation insurance for employees working overseas. The insurance purchased must cover medical care and disability payments for workers injured in the performance of job duties; it must also provide death benefits for the families of employees killed on the job. The costs of insurance premiums paid by the contracting firms are then built into the price of the contract between the contractor and the Federal Government.
Right now, there are more than 31,000 current and continuing civilian injury claims, as well as more than 1,400 claims for death benefits. The American International Group, Inc. (AIG) and other insurers have received some $1.5 billion in premium payments, while paying out $900 million in compensation and expenses. According to the article, AIG is the primary insurer retained by contracting firms, handling some 90 percent of civilian claims filed in the war zones in 2007.
The article goes on to describe the difficulty that claimants have encountered in receiving benefits for medical care and disability payments, as well as the challenges faced by the families of those killed in receiving death benefits. From prosthetic limbs to treatment for Post Traumatic Stress Disorder, the claimants have faced a “reject first and investigate later” mentality from the insurers.[2] In order to receive their legally mandated compensation, claimants often have to resort to mediation or litigation.
The Department of Labor (DOL) is the administrator of the DBA by statute. However, the article notes that because of underfunding and increasing claim volume, DOL has been unable to adequately enforce that: (1) contractors provide the mandatory coverage required under the DBA; and (2) insurers process the claims fairly and consistently.
Not only have claims been denied unfairly, but the contractors and insurers are able to operate with relative impunity. The Department of Defense (DOD), unlike the State Department and the Agency for International Development, has not adopted a competitive single-contract process for retaining an insurer under the DBA. Therefore, insurers are free to demand their own premium costs from contractors, with the taxpayers ultimately footing the bill. Further, in a September 28, 2007 report, the U.S. Army Audit Agency found AIG premiums to be “unreasonably high.”
As you are aware, the full committee on Oversight and Government Reform held a hearing on the DBA on May 15, 2008. The hearing examined taxpayer costs under the DBA, as well as the Pentagon’s failure to put appropriate controls on the program. As a result, the Duncan Hunter National Defense Authorization Act for FY2009 (P.L. 110-417) included a provision requiring the DOD to adopt an acquisition strategy that minimizes insurance costs for both the DOD and for contractors. The strategy was to include a competitive marketplace for the selection of insurers.
Despite our efforts to include the above constraints on the 2009 Defense authorization, the status quo remains. Regrettably, those most in need of assistance – the civilian employees injured while assisting our military – continue to face unnecessary delay and harm.
While AIG is not the only insurer providing this coverage, that firm handles the bulk of the claims. Over the last few months, AIG has engaged in a pattern of deception and reckless behavior with respect to taxpayer funds, and I am deeply disturbed that the firm may be withholding any payments contractually due to civilian contractors injured in Iraq or the families of civilian contractors killed in Iraq.
As mentioned at the outset of this letter, I am requesting a hearing of the Domestic Policy Subcommittee that could potentially examine the DBA insurance practices at AIG, DOL’s inability to enforce the requirements of the DBA, and the Pentagon’s development and implementation of the strategy required under the 2009 National Defense Authorization Act.
I thank you for your continued hard work to address the needs of all Americans, and I look forward to hearing from you.
Elijah E. Cummings
Member of Congress

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