NASA Issues Final Rule Clarifying A Contractor’s Resonsibility to Obtain and Maintain Longshore and Defense Base Act Insurance

The Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) recently issued a Final Rule discussing a contractor’s responsibility to maintain Longshore and Defense Base Act coverage.  This link will take you to a PDF of the Final Rule, which is reprinted below:

Summary:

DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to clarify contractor and subcontractor responsibilities to obtain workers’ compensation insurance or to qualify as a self-insurer, and other requirements, under the terms of the Longshore and Harbor Workers’ Compensation Act (LHWCA) as extended by the Defense Base Act (DBA).

DATES:

Effective: July 1, 2014.

FOR FURTHER INFORMATION CONTACT:

Mr. Edward N. Chambers, Procurement Analyst, at 202-501-3221 for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755. Please cite FAC 2005-74, FAR Case 2012-016.

SUPPLEMENTARY INFORMATION:

I. Background

DoD, GSA, and NASA published a proposed rule in the Federal Register at 78 FR 17176 on March 20, 2013, to make the necessary regulatory revisions to revise the FAR to clarify contractor and subcontractor responsibilities to obtain workers’ compensation insurance or to qualify as a self-insurer, and other requirements, under the terms of the LHWCA, 33 U.S.C. 901, et seq., as extended by the DBA, 42 U.S.C. 1651, et seq. Three respondents submitted comments on the proposed rule.

II. Discussion and Analysis

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the comments in the development of the final rule. A discussion of the comments and the changes made to the rule as a result of those comments are provided as follows:

A. Summary of Significant Changes

This final rule includes one change to align the FAR with Department of Labor’s (DOL) regulations and implementation of section 30(a) of the LHWCA. This change involves deleting proposed paragraph (b) of FAR clause 52.228-3, which stated that the actions set forth under paragraphs (a)(2) through (a)(8) may be performed by the contractor’s agent or insurance carrier. The DOL’s regulations place the responsibility for reporting injuries on the employer, see 20 CFR 703.115. The removal of proposed FAR 52.228-3 paragraph (b) also promotes consistency with the statutory requirements.

B. Analysis of Public Comments

1. Support of the Proposed Rule

Comment: Two respondents expressed support for the rule.

Response: The public’s support for this rule is acknowledged.

2. Clarify Term “Days”

Comment: One respondent recommends that the ten-day reporting period within the report of injury requirements set forth in proposed FAR 52.228-3 paragraph (a)(2) should be revised to read “ten business days.” The respondent asserts this modification will clarify the reporting period.

Response: The intent of this rule is to alert contractors to their obligations under the LHWCA, rather than to alter those obligations. The respondent’s suggested revisions could result in altering a contractor’s obligations and therefore are beyond the scope of the FAR rule. The DOL’s regulation interprets the ten-day injury reporting period set forth in LHWCA section 30(a), 33 U.S.C. 930(a), as ten calendar days. See 20 CFR 702.201(a) (using unqualified term “days” to describe reporting period). Thus, adding “business” days would alter the intent of the law.

3. Inclusion of “Work-Related” Terminology

Comment: The respondent states that the terms injury and death should be modified by adding the phrase “work-related” before both. The respondent asserts that this modification will serve to clarify a contractor’s obligation.

Response: The Councils do not recommend adding the phrase “work-related” to the terms “injury” and “death.” The added phrase is not necessary as the LHWCA defines an injury in 33 U.S.C. 902(2) and the concept of work-relatedness is subsumed in the term “injury.” Moreover, the question whether a particular injury is work-related is often a difficult issue to resolve, and a contractor may not be able to decide whether a particular injury arose out of and in the course of employment within the meaning of the statute. By leaving the terms “injury” and “death” unqualified, contractors will be encouraged to err on the side of reporting any incident that may be work-related.

4. Inclusion of “Actual” Terminology

Comment: One respondent suggests that the provision should specify that the contractor’s “actual/constructive” knowledge of the injury triggers the reporting period. The respondent recommends this revision to further clarify a contractor’s obligation.

Response: DOL’s governing rules use the unqualified term “knowledge of an employee’s injury or death” when describing the event that triggers the reporting period. This FAR rule simply tracks that language.

5. Conflicts With Current Practice

Comment: One respondent states that FAR 52.228-3 paragraph (b), which allows the contractor’s agent or insurance carrier to submit the first report of injury referenced in paragraph (a)(2), is inconsistent with section 30(a) of the LHWCA, 33 U.S.C. 930(a), as extended by the DBA, and the DOL’s current practice. The respondent argues that it is inappropriate to redefine this statutory provision through a FAR clause. The respondent recommends the proposed paragraph (b) should be amended to conform to current practice both under the DBA and LHWCA.

Response: The Councils concur with the respondent. The intent of this FAR rule is to clarify and inform contractors of their obligations under the DBA and the DOL’s regulations, not to alter those requirements. Section 30(a) of the LHWCA, as implemented by the DOL’s regulations, places the responsibility for reporting injuries on the employer. See 20 CFR 703.115. Accordingly, the Councils are removing the proposed FAR 52.228-3 paragraph (b) to promote consistency with the statutes referenced above.

6. Contractors Should Provide Insurance

Comment: One respondent states that the contractors should have sufficient insurance to be able to pay compensation if an employee is injured.

Response: The Councils concur that the views of this respondent are in accord with the intent of the law, this FAR rule, and the existing FAR clause 52.228-3.

III. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

DoD, GSA, and NASA have prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows:

DoD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because this rule merely clarifies the existing prescriptions and clauses relating to contractor and subcontractor responsibilities to obtain workers’ compensation insurance or to qualify as a self-insurer, and other requirements, under the terms of the LHWCA as extended by the DBA, and implemented in DOL Regulations. No comments from small entities were submitted in reference to the Regulatory Flexibility Act request under the proposed rule.

The rule imposes no reporting, recordkeeping, or other information collection requirements. The rule does not duplicate, overlap, or conflict with any other Federal rules, and there are no known significant alternatives to the rule.

Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat. The FAR Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

The Zone of Special Danger Includes Grocery Shopping

In a new published Defense Base Act (“DBA”) claim, the Benefits Review Board further clarified the zone of special danger doctrine.  A widow filed a claim for death benefits after her husband was killed in Tbilisi, Georgia, while working for the employer.  The decedent’s job required that he work five days per week, and that he remain on-call for emergencies.  In addition to wages, the decedent received a monthly allotment for housing and utilities, as well as vouchers for a taxi service.  While riding in a taxi going to the grocery store, the decedent’s vehicle was struck head-on by another car, causing his death.

Death benefits are owed under the Longshore and Harbor Workers’ Compensation Act, as extended by the DBA, when the decedent died in the “course of employment.”  For Defense Base Act claims, the Supreme Court has held the “an employee may be within the course of employment, even if the injury did not occur within the space and time boundaries of work, so long as the ‘obligations or conditions of employment’ create a ‘zone of special danger’ out of which the injury arises.”  An injury is covered when the injury is “one of the risks of the employment, an incident of the service, foreseeable, if not foreseen.”  But, the zone does have boundaries, and workers might stray outside of the zone when the worker becomes “so thoroughly disconnected from the service of his employer that it would be entirely unreasonable to say that injuries suffered by him arose out of and in the course of his employment.”

Some of the more familiar zone of special danger cases include recreational events like drowning while swimming in a lake, see O’Keefe v. Smith, Hinchman and Grylls Associates, Inc., 380 U.S. 359 (1965), but not the application of a cosmetic chemical peel, see R.F. [Fear] v. CSA, Ltd., 43 BRBS 139 (2009)

Grocery shopping, the Board determined, is a foreseeable risk that falls within the zone of special danger.  The Board rejected employer’s argument that “only recreational/social activities or local risks can give rise to application of the ‘zone of special danger’ doctrine” because application of the doctrine is a question of foreseeability and reasonableness.  As for grocery shopping, the Board stated:

Indeed, it is entirely foreseeable that an employee will need to purchase groceries, and, given the taxi vouchers provided by employer, also entirely foreseeable that decedent would take a taxi to the grocery store.  The fact accident, thus, also was a foreseeable, “if not foreseen,” consequence of riding in a taxi in a place where the dangers of automobile travel were anticipated by employer.  Although employer attempted to mitigate the danger, employer has not cited any circumstances that could warrant a legal conclusion that decedent’s activity was not rooted in the conditions of his employment or was “thoroughly disconnected” from the service of employer.

DiCecca v. Battelle Memorial Institute, — BRBS —-, BRB No. 13-0378 (2014).

Defense Base Act Contractor Denied Vaccine Act Compensation

Petitioner worked for Fluor as a military contractor.  On February 1, 2012, while employed by Fluor in Afghanistan, he received a flu vaccine and subsequently developed Guillain-Barre Syndrome. The flu vaccine was a Department of Defense requirement, and was distributed at a Fluor clinic at Bagram Airfield.  A few weeks after receiving the shot, Petitioner began to feel weakness and numbness in his extremities.  On March 5, 2012, he filed a claim for Defense Base Act (“DBA”) benefits.  A month and a half later, Petitioner filed a petition for compensation under the National Childhood Vaccine Injury Act of 1986 (“Vaccine Act”).

The United States Court of Federal Claims was tasked with determine whether Petitioner qualified for Vaccine Act compensation.  Petitioner argued that as a government contract worker stationed in Afghanistan, he was either a member of the Armed Forces or a federal employee.  Even though he filed a DBA claim, Petitioner would be prejudiced by the dismissal of his Vaccine Act petition because the Vaccine Act provides recovery for pain and suffering and for full wage loss, but the DBA does not.

Ultimately, the court determined that Petitioner was not entitled to Vaccine Act compensation for multiple reasons.  The Vaccine Act requires a petitioner to return to the United States within six months of receiving the vaccine unless that person is a member of the Armed Forces or a federal employee.  Here, Petitioner did not return to the U.S. within six months.  He lives in the Philippines. Plus, Petitioner is not a member of the Armed Forces or a federal employee, and the Vaccine Act does not broadly interpret “employee” to include federal contract employees.  Petitioner’s Vaccine Act claim was denied.

Griffin v. Secretary of Health and Human Servs., No. 13-280V, 2014 WL 1653427 (Fed. Cl. Apr. 4, 2014).

Note: There is a great discussion about agency principles in the court’s decision.

Military Contractors Are a Way of Life, Now and in the Future

How important are contractors to the Department of Defense?  Very.  Contractors are indispensable.  According to the Congressional Research Service (“CRS”), “the military is unable to effectively execute many operations, particularly those that are large-scale and long-term in nature, without extensive operational contract support.”

The May 2013 CRS report entitled Department of Defense’s Use of Contractors to Support Military Operations: Background, Analysis, and Issues for Congress is an enlightening report.  Although there are some portions of the report that I disagree with, the CRS did a good job explaining the importance of defense contractors:

DOD has long relied on contractors to support overseas military operations.  Post-Cold War defense budget reductions resulted in significant cuts to military logistics and other support capabilities, requiring DOD to hire contractors to “fill the gap.”  Recent operations in Iraq and Afghanistan, and before that in the Balkans, have reflected this increased reliance on contractors supporting U.S. troops–both in terms of the number of contractors and the type of work being performed.  According to DOD data, contractors, on average, represented just over half of the force in the Balkans, Afghanistan, and Iraq.

As of March 2013, there were approximately 108,000 DOD contractor personnel in Afghanistan representing 62% of the total force.  Of this total, there were nearly 18,000 private security contractors, compared to 65,700 U.S. troops.  Over the last six fiscal years, DOD obligations for contracts performed in the Iraq and Afghanistan areas of operation were approximately $160 billion and exceeded total contract obligations of any other U.S. federal agency.

The CRS report even includes a nifty table demonstrating the contractor-to-soldier percentage in the Balkans, Afghanistan, and Iraq.

So, does the Defense Base Act apply to these contractors?  In many cases, yes.  Barring a waiver–like the waiver that existed for contractors in Japan after the 2011 tsunami–the Defense Base Act may very well apply.