Defense Base Act Coverage and the War Hazards Compensation Act

Defense Base Act

Defense Base Act coverage can apply in a range of overseas employment situations, and the details matter. The DBA also works alongside the War Hazards Compensation Act in certain circumstances involving war risk hazards. In the following article, Jack Martone reviews the key points employers need to know.

There are six grounds for coverage under the DBA:

• All employees working overseas for private employers at any military, air, or naval base acquired after January 1, 1940, by the United States from any foreign government,
• Upon any lands occupied or used by the United States for military or naval purposes in any Territory or possession outside the continental United States,
• Upon any public work in any Territory or possession outside the continental United States, if such employee is engaged in employment at such place under the contract of a contractor (including any subcontractor) with the United States,
• Under a contract entered into with the United States or any agency thereof for the purpose of engaging in public work, where such contract is to be performed outside the continental United States,
• Under a contract approved and financed by the United States or any agency thereof where such contract is to be performed outside the continental United States under the Mutual Security Act of 1954 (now the Foreign Assistance Act of 1961),
• Outside the continental United States by an American employer providing welfare or similar services for the benefit of the Armed Forces.
  
  

Things to know about DBA coverage:

• The DBA applies to all employees, not just to U.S. citizens.
• The DBA applies to foreign employers employing only third-country nationals.
• The language in a government contract does not determine if the DBA applies. If the government contracting officer makes a mistake and does not require DBA coverage, then it is the contractor/employer who faces the consequences of being uninsured.
• The DBA applies regardless of the length of the contract, whether just a few days, a year, or longer.
• There does not necessarily have to be a causal relationship between the employment of the injured worker and the injury, nor is it even necessary that the employee be engaged at the time of the injury in an activity of benefit to his employer. All that is required is that the “obligations and conditions” of employment create the “Zone of Special Danger” out of which the injury arose. This is sometimes inaccurately referred to as 24-hour coverage.

NOTE: While the coverage requirement is for contracts to be performed outside the continental United States, there have been occasions when injuries that occurred in the United States have been found to be covered by the DBA, where the injury occurred in the course and scope of employment while the claimant was performing duties that met an essential element of the contract, such as the flight attendant injured while traveling to meet a drug testing requirement (Cecilia R. Coon v. Omni Air International Incorporated and Starr Indemnity & Liability Company, BRB No. 18-0265, 03/29/2019).

NOTE: The U.S. Department of Labor may approve a waiver of DBA coverage under certain circumstances. 42 U.S.C. Section 1651(e) provides, “Upon the recommendation of the head of any department or other agency of the United States, the Secretary of Labor, in the exercise of his discretion, may waive the application of this section with respect to any contract, subcontract, or subordinate contract, work location under such contracts or classification of employees.”

The Department of Labor will not waive DBA coverage for U.S. citizens.

If you have or plan to have any employees working overseas, then you should become familiar with the provisions of the DBA.

War Hazards Compensation Act

While we’re at it, we may as well take another look at the War Hazards Compensation Act (42 U.S.C. 1701) (WHCA).

The WHCA was passed in December 1942 to supplement the DBA. The law reflects the national policy that losses from war risk injuries and deaths should be borne by the general public.

Who is covered by the WHCA?

The DBA is the primary workers’ compensation law covering employees working overseas on U.S. military bases or on government contracts. An employee covered by the DBA who is injured as a result of a war risk hazard will have a claim administered by the Division of Longshore and Harbor Workers’ Compensation in the U.S. Department of Labor under the DBA. The WHCA does not change this. The WHCA provides coverage in three instances:

• An employee covered under the DBA or the Nonappropriated Fund Instrumentalities Act (NAFIA) but whose injury is not compensable under the DBA or NAFIA has a direct claim under the WHCA (for example, an employee injured outside of the scope of employment). This also includes persons engaged by the U.S. for personal services outside of the U.S. This type of direct claim is rare, because DBA coverage is so broad.
• Detention claims for any employee covered under the above direct claim provision who is taken prisoner, hostage, or otherwise detained by a hostile force or person.
• Insurance carriers or self-insured employers may claim reimbursement for losses and expenses resulting from a war risk hazard. These reimbursements are paid from a fund established under the provisions of the Federal Employees' Compensation Act (FECA).
  
  

Section 104(a) Reimbursement Claims:

• Any employer, insurance carrier, or compensation fund that pays or is required to pay benefits to any person on account of injury or death of any person coming within the purview of this Act or Sections 1 – 4 of the DBA, and
• if the injury or death for which the benefits are paid arose from a war risk hazard, then,
• the employer, insurance carrier, or compensation fund is entitled to reimbursement for disability and death payments, funeral and burial expenses, medical expenses, and reasonable and necessary claims expenses incurred in processing claims.

What is a War Risk Hazard?

A “war risk hazard” is a hazard arising during a war in which the U.S. is engaged; during an armed conflict in which the U.S. is engaged, whether or not war has been declared; or during a war or armed conflict between military forces of any origin, occurring within any country in which a covered individual is serving.

The hazard may be from the discharge of a missile, including liquids or gas, or the use of any weapon, explosive or other noxious thing by a hostile force or person or in combating an attack or a perceived attack by a hostile force or person, or the action of a hostile force or person, including rebellion or insurrection against the U.S. or any of its allies.

The hazard may also be from the discharge or explosion of munitions intended for use in connection with a war or armed conflict with a hostile force or person, or collision of vessels in convoy or the operation of vessels or aircraft without running lights or other peacetime aids to navigation, or operation of vessels/aircraft in a zone of hostilities or engaged in war activities.

A hostile force/individual is a nation, a subject of a foreign nation, or any person serving a foreign nation engaged in a war against the U.S. or any of its allies, or engaged in armed conflict, whether or not war has been declared, against the U.S. or any of its allies, or engaged in a war or armed conflict between military forces of any origin in any country in which a person covered by the WHCA is serving.

NOTE: Eligible employees are covered by the WHCA at all times, except for employees who reside at or near the place of employment AND do not live there solely by virtue of the exigencies of the employment. These employees are covered only while in the actual performance of duty.

Claims for detention benefits are “direct” WHCA claims, but the initial step is to file a DBA claim with the appropriate Longshore district office. Upon investigation of the claim, the Longshore District Director will issue a formal denial if there is no evidence that the claimant is entitled to disability benefits. The claim for detention benefits can then be filed under the WHCA.

Reimbursement under the WHCA will not be provided to an insurance carrier in any case in which an additional premium for war risk hazard was charged.

The statutory definition of a war risk hazard does not specifically address terrorist attacks, but the Division of Federal Employees' Compensation has considered terrorist activity to be a war risk hazard under certain circumstances.

NOTE: I believe that there is some uncertainty as to the effect on the WHCA if a DBA waiver has been granted. I don’t believe that it has been tested, but I believe that in the opinion of the DOL a DBA waiver will also act as a waiver of any direct claims under the WHCA (rare) but not for reimbursement claims.

The WHCA supplements the DBA by providing for three types of claims:

• Direct WHCA claims by certain employees

• Detention claims

• Reimbursement claims by insurance carriers
  
  

Takeaway

The DBA and WHCA can involve broad coverage rules and fact-specific questions, particularly when employees are working overseas. Employers with operations or contracts outside the United States should understand when these laws may apply and make sure the proper coverage is in place before work begins.