One question I am often asked is whether an employer and carrier should seek reimbursement pursuant to the War Hazards Compensation Act (“WHCA”), see 42 U.S.C. § 1704, or file an appeal with the Benefits Review Board, see 33 U.S.C. § 921. This question arises after an Administrative Law Judge (“ALJ”) finds the employer and carrier liable for benefits in a contested claim that involved alleged “war-risk hazards.”
My answer to this question is, “It depends.” In my opinion, when an ALJ issues a Decision and Order that concretely links a claimant’s injuries to “war-risk hazards,” reimbursement should be sought instead of an appeal.
The Code of Federal Regulations (“CFR”) requires employers and carriers to litigate a Defense Base Act (“DBA”) claim as if the WHCA did not apply. See 20 C.F.R. § 61.102. They are required to (1) take advantage of any assignment or subrogation rights due to the liability of a third party; (2) take “reasonable measures to contest, reduce, or terminate its liability…;” (3) make reasonable and adequate investigations into each claim; and (4) avoid delay that could increase DBA liability. Id. The reason for these requirements is simple: the Department of Labor (“DOL”) does not want DBA litigants to shift liability to the government simply because the WHCA may apply. To ensure this does not happen, the DOL requires reasonable DBA litigation. But what does “reasonable” mean?
OWCP Bulletin No. 12-01 attempts to define “reasonable” not by express definition, but instead by admonition. It states:
DFEC requires, before acceptance of any WHCA reimbursement claim, that the employer/carrier has made only reasonable and prudent efforts in presenting all meritorious defenses against a DBA claim without regard to whether the case is eligible for WHCA reimbursement. An employer/carrier’s inadequate or overly zealous representation in defending against a DBA claim may be grounds for denying all or some portion of a request for WHCA reimbursement.
Based on this language, “reasonable” seems to mean “not doing too much and not doing too little.” But is that instructive? An attorney’s zealous representation of his client is required by the Rules of Professional Conduct. Further, it seems that what is “zeal” to one person may be gauged as “excessive zeal” by another.
When determining the course of litigation, I prefer to err on the side of the CFR as opposed to the bulletins of administrative agencies. The Fifth Circuit clearly noted that interpretive bulletins “have no force of law and cannot provide the basis for a result contrary to either statute or regulation.” Salinas v. Rodriguez, 963 F.2d 791, 793 (5th Cir. 1992). The Third Circuit has the same belief, noting that “interpretive bulletins do not rise to the level of a regulation and do not have the effect of law.” Brooks v. Village of Ridgefield Park, 185 F.3d 130, 135 (3d Cir. 1999). If forced to choose between the litigation requirements in the CFR and the admonitions in OWCP Bulletin No. 12-01, an employer and carrier must choose the CFR.
But that does not mean that “reasonable” should be read out of 20 C.F.R. § 61.102. As such, it makes more sense in most cases–but certainly not all–to seek reimbursement following an adverse ALJ decision rather than filing an appeal. When the ALJ issued the Decision and Order, factual findings were made. If the factual findings link the injury to a “war-risk hazard,” then an employer and carrier should secure reimbursement. In many situations, WHCA reimbursement is the most economically advantageous course of action.
The decision, however, is always case-specific, which is why the answer to the appeal question is, “It depends.” To be sure, appealing a potential WHCA claim is not an unreasonable course of action–and it may be required. Sometimes an ALJ’s findings of fact are soft with respect to the involvement of “war-risk hazards.” Other times, there exists a fear that the administrators of the WHCA will disagree with the ALJ, thus jeopardizing reimbursement. And because the time it takes to seek reimbursement is longer than the delays allowed for an appeal–thirty days, 33 U.S.C. § 921(a)–choosing reimbursement more or less forecloses the possibility of appeal if the Division of Federal Employees’ Compensation determines that the WHCA does not apply. In these claims, an appeal may be the most “reasonable measures to contest, reduce, or terminate…liability.” See 20 C.F.R. § 61.102.
Accordingly, the most advantageous course of action–reimbursement or appeal after an adverse ALJ Decision–should be an economic decision made with due consideration to the facts of the case and the strength of the Decision and Order. In most situations reimbursement will win out over appeal.