In modern warfare, military contractors play a large and vital role in support of the United States military. Based upon the greater presence of contractors, the War Hazards Compensation Act (“WHCA”) has become an important vehicle for insurance companies to secure reimbursement of amounts paid on account of “war-risk hazard” injuries.
Since 1942, the WHCA has provided a compensation and reimbursement system whereby the United States government essentially self-insures the losses occasioned to employees working abroad, under contracts entered into by the United States. The WHCA applies to foreign local nationals (e.g., Iraqi or Afghanis), third country nationals (e.g., South Africans or Fijians), as well as citizens of the United States. The main requirement of the WHCA is that a “war-risk hazard,” as defined by the United States Code, caused the employee’s injury.
A war-risk hazard includes any hazard arising from (1) the discharge of any missile, or the use of any weapon or explosive by a hostile force or person or in combating an attack or even an imagined attack by a hostile force or person or in combating an attack or even an imagined attack by a hostile force or person; (2) an action of a hostile force or person, including rebellion or insurrection against the United States or its allies; (3) the discharge or explosion of munitions intended for use in connection with a war or armed conflict with a hostile force or person; (4) the collision of vessels in convoy or in operation of vessels or aircraft without running lights or without other customary peacetime aids to navigation; or (5) the operation of vessels or aircraft in a zone of hostilities or engaged in war activities. 42 U.S.C. § 1711.
In most instances, following a war-risk hazard incident, an injured employee’s claim falls within the jurisdiction of the Defense Base Act, an extension of the Longshore and Harbor Workers’ Compensation Act (“LHWCA”). Indemnity and medical benefits are paid in accordance with Sections 7 and 8 of the LHWCA. Death benefits are paid in accordance with Section 9 of the LHWCA. Following conclusion of the Defense Base Act portion of the claim, the insurance carrier may request reimbursement from the Department of Labor, Division of Federal Employees’ Compensation under the jurisdiction of the WHCA.
Reimbursement is a document intense process which must be started immediately after an injury or death. Like a typical LHWCA scenario, incident reports and medical records must be obtained. The difference, however, is that the documents collected for a WHCA claim must also demonstrate that a “war-risk hazard” took place and that “hostile forces or persons” caused the “hazard” which led to an employee’s injury or death.
Pursuant to the United States Code, an insurance company can expect reimbursement for all indemnity and medical expenses, as well as reimbursement for attorneys fees, court and litigation costs, witness and expert expenses, examinations, autopsies, and any expenses reasonably incurred in determining liability under the Defense Base Act. Further, an insurance carrier may also collect unallocated claims expenses totaling 15% of the sum of the indemnity and medical benefits paid.