Defense Base act lawyer

The Last Responsible Employer/Carrier Rule Under the Defense Base Act: The Art of Corporate Finger Pointing, Denial & Passing the Buck.

 
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In the old days of Defense Base Act insurance sales, there were only three major players with very limited competition. The big three insurance companies, namely AIG, CNA, and ACE, paved the way into the Defense Base Act realm, and set early case law concerning emerging issues in Defense Base Act litigation. Since then, the market for Defense Base Act insurance has expanded, resulting in new Carriers and third party administrators boosting quarterly profits. These include Zurich American, Allied World National Assurance Company, Broadspire Services, Liberty Mutual Insurance Company, STARR Indemnity, and Gallagher Bassett.

With the emergence of new Defense Base Act carriers, came new challenges in underwriting risks inclusive of “old” liability through judicial expansion of the doctrine known as the last responsible employer and carrier rule. New carriers such as STARR Indemnity and Allied World National Assurance Company must now underwrite coverage for both new risks, and old risks inherited under newly issued policies to Employers who have changed insurance companies seeking lower premiums.

The classic fact pattern regarding the last responsible carrier goes as follows. Mr. Jones is a Protective Security Specialist in Iraq with Employer X, who purchased Defense Base Act insurance coverage through Original Insurance Company. In January 2015, Mr. Jones injures his shoulder, and is sent home to for further medical treatment by on base medics. Upon repatriation, the Original Insurance Carrier baselessly denies his claim knowing that the insured Employer X intends to change insurance carriers. After experiencing the financial hardships of a denied claim, and baseless denial of simple medical treatment, Mr. Jones is forced to return to overseas work in order to support his family in June 2015. In May 2015, Employer X changed Defense Base Act insurance companies to New Insurance Company. After returning to heavy duty work overseas, Mr. Jones’ condition worsens, and his pain becomes significantly worse causing him to again return stateside to treat. New Insurance Company says the Original Insurance Company is liable, and denies his claim. The Original Insurance Company says the New Insurance Company is liable, and denies his claim. Mr. Jones finds himself the middle of two multi-billion-dollar insurance carriers who both profited off the sale of multimillion dollar Defense Base Act insurance policies, and pitched their comprehensive and responsive adjuster services to obtain the sale. However, when it really matters, neither insurance carrier wants to make good on their promises. Who is liable?

 
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The short answer is that the New Insurance Company is liable for the entire disability no matter how zealously they defend against the claim.

The law governing the last responsible employer/carrier under the Defense Base Act is as follows: 

[I]f the disability resulted from the natural progression of a prior injury and would have occurred notwithstanding the subsequent injury, then the prior injury is compensable and accordingly, the prior employer is responsible.  If, on the other hand,  the subsequent injury aggravated, accelerated or combined with claimant’s prior injury, thus resulting in claimant’s disability, then the subsequent injury is the compensable injury, and the subsequent employer is responsible.

Constructors, Inc. v. Dir., Office of Workers’ Comp. Programs, 950 F.2d 621, 624 (9th Cir. 1991) (emphasis added; quoting Kelaita v. Dir., Office of Workers’ Comp. Programs, 799 F.2d 1308, 1311 (9th Cir. 1986)).  The last employer rule dictates that "the employer during the last employment in which the claimant was exposed to injurious stimuli . . . should be liable for the full amount of the award." Travelers Ins. Co. v. Cardillo, 225 F.2d 137, 145 (2d Cir. 1955).

This rule has been reiterated time and time again by the courts in numerous other decisions, See Cordero, 580 F.2d at 1336; Ronne, 932 F.2d at 840; Picinich, 914 F.2d at 1319; Lustig v. U.S. Dep't of Labor, 881 F.2d 593, 596 (9th Cir. 1989); Todd Shipyards Corp. v. Black, 717 F.2d 1280, 1284 (9th Cir. 1983); Lopez v. Stevedoring Servs. of Am., 39 BRBS 85 (2005) (later employer may be held liable even when the aggravating injury is not the primary factor in claimant’s resulting disability); Reposky v. International Transp. Services, 40 BRBS 65 (2006). Nonetheless, insurance defense attorneys routinely attempt to pervert the law to justify baseless claim denials. The rationale behind enacting the last responsible carrier rule is twofold. First, the courts have justified this rule due to the "administrative convenience" in avoiding lengthy liability apportionment. Second, courts have justified this rule based upon the fairness inherent in the likelihood that "all employers will be the last employer a proportionate share of the time." Cordero, 580 F.2d at 1336.

An issue oftentimes raised by overly zealous defense attorneys attempting to avoid liability is whether the injury was the “natural progression” of the original injury, or whether the injury was worsened by continued employment. The legal standard developed over the past few decades has created an extremely low hurdle for a new carrier to be assigned full liability. This is particularly true in Defense Base Act claims whereby the nature of contractor’s overseas employment is almost always extremely physically and mentally demanding, and performed in harsh war zone conditions. 

An important distinction under this rule, is that it does not require that a later injury fundamentally alter a prior condition. Rather, “it is enough that it produces or contributes to a worsening of symptoms.”  Marinette Marine Corp. v. Office of Workers’ Comp. Programs, 431 F.3d 1032, 1035 (7th Cir. 2005).  In other words, it is not necessary to compare MRI’s or X-rays of a condition pre and post-coverage dates. Aside from the logistical nightmare of attempting to do so, it would be both medically and legally irrelevant. See, Avant v. Nat. Steel and Shipbuilding Co., et al., BRB No. 03-0414 (Mar. 8, 2004, unpub) (holding a doctor’s opinion that surgery would be required, regardless of the impact upon claimant’s condition of his later employer, is not dispositive.)

Simply put, all that is required to shift liability to the new insurance carrier is a mere worsening of symptoms. Daniel L. Oberts v. Alsalam Aircraft Company, BRB No. 05-0445, at 3, (holding that an ‘aggravation’ occurs when an increase in symptoms is linked to a claimant’s continued employment). The length of time an injured employee works under a new coverage period is irrelevant. Even where a claimant works for a subsequent employer for only one day, he can suffer a compensable aggravation.  Metro. Stevedore Co. v. Crescent Wharf & Warehouse Co., 339 F.3d 1102, 1106 (9th Cir. 2003) (noting that aggravations can be caused where work performed for an employer is “harmful” to the claimant’s condition and where such work causes “flare-ups” of pain), cert. denied, 543 U.S. 940 (2004); J.H. v. Dimensions Int’l, BRB No. 08-0689 (Apr. 16, 2009) (unpublished); Obert v. John T. Clark & Son of Maryland, 23 BRBS 157 (1990); Cairns v. Matson Terminals, Inc., 21 BRBS 252 (1988). (holding that the fact that symptoms could have developed anywhere fails to negate the fact that the employee’s symptoms developed while he was working for his employer). Finally, the occurrence of a specific injurious event is absolutely unnecessary to shift liability to a new insurance carrier, if it is demonstrated that conditions of employment caused the employee to become symptomatic. Delaware River Stevedores, Inc. v. Director, OWCP, 279 F.3d 233, 241, 35 BRBS 154, 160(CRT) (3d Cir. 2002); Director, OWCP v. Vessel Repair, Inc., 168 F.3d 190, 33 BRBS 65(CRT) (5th Cir. 1999);5 Wheatley v. Adler, 407 F.2d 307 (D.C. Cir. 1968); Darnell v. Bell Helicopter International, Inc., 16 BRBS 98 (1984), aff’d sub nom.; and Bell Helicopter International, Inc. v. Jacobs, 746 F.2d 1342, 17 BRBS 13(CRT) (8th Cir. 1984).

Claims involving multiple employers, and multiple Defense Base Act insurance carriers are oftentimes heavily litigated. Therefore, should you find yourself in the middle of a last responsible carrier claim, I recommend retaining competent counsel to help fight for what you’re entitled to under the Defense Base Act. To best determined whether your injuries fall within Defense Base Act coverage, contact Diamond Law Practice, PLLC today. We offer free claim consultation to help you recover all available benefits under the Defense Base Act. Please call (212) 220-7134, or email us at JDiamond@DiamondLawPractice.com today.

Pre-deployment Injuries Covered Under the Defense Base Act

 
 

One question military contractors frequently ask me is whether injuries occurring during stateside preparation for overseas deployment are covered under the Defense Base Act. The typical fact pattern goes as follows. A defense contractor accepts a lucrative contract as a Protective Security Specialist (“PSS”) to escort high profile diplomats through enemy territory in Afghanistan. As part of their pre-deployment training, the PSS travels to a stateside United States military base and sustains a serious injury immediately prior to their deployment. Would this injury be covered under the Defense Base Act? The short answer is yes.

Section 1(a)(4) of the Defense Base Act, 42 USC § 1651 et seq., states that coverage extends to:

Except as herein modified the provisions of the Longshoremen's and Harbor Workers' Compensation Act as amended, shall apply in respect to the injury or death of any employee engaged in any employment...Under a contract entered into with the United States or any executive department, independent establishment, or agency thereof (including any corporate instrumentality of the United States), or any subcontract, or subordinate contract with respect to such contract, where such contract is to be performed outside the continental United States and at places not within the areas described in subparagraphs (1), (2), and (3) of this subdivision. . .

The above provision infers that Defense Base Act coverage extends over a claim when the claimant's employment under the contract is to be performed outside the continental United States. Accordingly, if an employee sustains an injury while engaged in activities related to their employment duties while in the United States under a contract that is to be performed outside of the United, then that injury should fall within Defense Base Act coverage.  Examples of such stateside activities include stateside job training, conditioning, orientation, travel and employee processing.

One case which extends Defense Base Act coverage to certain stateside injuries is Phoenix Indemnity Co. v Willard, 130 F.Supp. 657 (D.C.N.Y. 1955).  In Phoenix, the injured employee applied for employment under contract to perform construction work for the United States Government in Libya. On December 15, 1951, after a pre-employment examination, a written contract of employment was signed engaging the employee as Chief Inspector-Driller in Tripoli, Libya. Under his contract, the employee was obligated to submit to 'physical examinations, vaccinations and inoculations as may be required by the contractor' and other processing such as obtaining a passport and security clearance.  

Though the employee’s duties were to be performed in Tripoli, Libya, his compensation began on the day he signed his employment contract. On December 18, 1951, the employee went to the Passport Division of the Department of State in New York City to get a typhoid vacination, obtain clearance, and to secure his necessary passport. The employee remained in New York City for dinner, and boarded a bus home to Hoboken, New Jersey.  After leaving the bus terminal in Hoboken, the employee slipped on a piece of ice and fell, fracturing his left leg.  

The court ultimately ruled that his injury fell within Defense Base Act coverage. The court held that even though during his preparatory period the employee had no specific work assignment, his processing was “an integral and indispensable part of his employment.” Specifically, the court held:

The Defense Base Act, 42 U.S.C.A. § 1651, prescribes compensation for an injury during transportation to or from the place of employment when the employer, as here, provides the transportation at its cost. In a sense Peretti's waiting in preparation for his trip overseas was so clearly bound up with it as to be reasonably considered as part of his transportation, just as a stopover en route might be. In any event, it was sufficiently related to his employment and so incidental to the necessary preparation for his overseas assignment as to make the injury sustained, under all the circumstances here disclosed, one arising out of and in the course of his employment. Id.

An additional case extending Defense Base Act coverage to stateside injuries is Employers' Mutual Liability Insurance Co. v McLellan, 304 F.Supp. 321 (D.C.N.Y. 1969). In McLellan, a flight engineer was killed on his employer's plane that crashed in Alaska en route to Okinawa. The flight was performed under contract with the government for services in the transportation of cargo to the United States defense establishment in Okinawa. The court held that the statutory definition of public work was sufficiently broad to have encompassed the contracted activities, and that Defense Base Act coverage extended even though the injury occurred in the United States:

The flight originated at Travis Air Force Base, California, and was destined for Kadena Air Force Base, Okinawa. However, death occurred in the United States when the plane crashed in Alaska. It is apparent that the contract was to be performed outside the continental United States within the meaning of the statute. While it may be that performance was to take place partially within the United States in that loading of the aircraft would necessarily take place here, the purpose of the contract was to transport supplies outside of the continental United States. The performance within the United States, while necessary, was incidental in contrast to the performance without the United States. In any event, the statute does not say that all aspects of performance under the contract have to occur outside of the continental United States. Plaintiffs have advanced no reason why Congress would have sought to exclude an accident occurring under the circumstances of the case at bar from the coverage of the Act. The statute should be read liberally in order to carry out its remedial purposes.

Id. See also, Alaska Airlines, Inc. v. O'Leary, 216 F. Supp. 540 (W.D.Wash.1963),

In conclusion, coverage under the Defense Base Act begins once a worker executes their employment contract, and commences preparation for deployment, training, travel, and transportation that relates to their job.

To best determined whether your injuries fall within Defense Base Act coverage, contact Diamond Law Practice, PLLC today. We can offer you a free claim consultation, and help you recover all available benefits under the Defense Base Act. Please call (212) 220-7134, or email us at JDiamond@DiamondLawPractice.com today.