August 22, 2017

defense base act


Requirement for Insurance for Defense Base Act Employers


The six "gates" to the requirement for Defense Base Act Insurance are: 

  1. Public work on any defense base acquired from any foreign government; 
  2. Public work on lands occupied or used by the US for military purposes outside the continental US;
  3. Public work in any Territory or possession under a contract with the US;
  4. Public work outside the US not covered under (3);
  5. Contract outside the US approved and financed by the US; or
  6. Welfare or similar services outside the US for troops authorized by DOD.  


The provisions of the Longshore and Harbor Workers Compensation Act and its Regulations apply to the Defense Base Act.  Here are some of the applicable provisions:

  • 4(a) makes the employer liable for the benefits and obliged to secure the benefits
  • 32(a) (1) provides for insurance by an authorized carrier
  • 32(a) (2) provides for self-insurance
  • 5(a) Failure to secure payment allows employee either to collect compensation, or to sue employer for damages; the defenses of “fellow servant”, assumption of risk and contributory negligence are not available
  • 38(a) The corporation and its president, secretary and treasurer are severally liable for a fine of $10,000 and imprisonment for not more than one year.

The president, treasurer and secretary are also severally liable jointly with the company for the benefits during the period it fails to secure compensation.

  • Failure to report a claim carries a separate penalty of up to $11,000.
  • Failure to report a claim waives the time bar. 
  • Failure to controvert a claim requires 10% additional compensation for each amount unpaid.

The Employer may be in violation if:

  • Uninsured
  • Insured by an unauthorized carrier
  • Insured by an authorized carrier, but has no DBA endorsement
  • Operating under a waiver which is not effective

The Employer is responsible, not the broker or agent, the government contracting officer, the insurance company, the attorney, or the Department of Labor.

The Employer is also responsible for all subordinate contractors and subcontractors.


Consequences


There are both civil and criminal proceedings for which the company, its President, Treasurer and Secretary each needs separate representation – 8 lawyers in all.  The compensation case is now a $50m Lawsuit.

The contract was bid without the cost of DBA included.  The premiums must be paid without reimbursement and this may all be because of a subcontractor, or the subcontractor’s subcontractor.

BROKERS:  You are compensated for providing cover; you are at risk of an E & O claim if you do not.

Waivers


The Secretary of Labor, on the recommendation of the head of any department or agency in the exercise of her 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.

Waivers are routinely granted when submitted by the proper person in the proper form, subject to limits and conditions.  Waivers apply to Guam for all employees including US nationals.

Waivers do not apply to US Citizens, people hired in the US, and legal residents of the US.  Waivers do not apply unless waived employees will receive compensation under local laws providing for workers compensation for injuries, illness or death.

Each contractor must before commencing performance provide and maintain for all waived employees workers compensation insurance as required by the law of the place of the work with no exclusions e.g. for war hazards.

If there is no local workers compensation law, nationals are covered under DBA.  If a worker is NOT covered by another compensation act for any reason, employers face penalties and brokers face E & O claims.  If in doubt, buy protection



Most of the above information on Defense Base Act is taken from a presentation by John Chamberlain, Office of Workers Compensation Programs, Division of Longshore & Harbor Workers Compensation OWCP/DLHWC, U. S. Department of Labor at the OWCP DBA Conference in Oct-08.  We found the original presentation at http://www.dol.gov/owcp/dlhwc/DBAInsuranceandWaivers.pdf . 

We strongly recommend that anyone interested in Defense Base Act legal issues review the excellent DOL site:http://www.dol.gov/owcp/dlhwc/lsdba.htm and consider contacting the DOL directly.  You can find the name and phone number of the current OWCP Director, Longshore and Harbor Workers' Compensation in the “Contact Us” of the site. 

Contact Us today for more information about Defense Base Act or complete our quote form.