What is the Scope of a War Hazards Compensation Act Appeal?

When an insurance carrier believes that it was improperly denied reimbursement for a War Hazards Compensation Act (“WHCA”) claim or expense, what can it do?  It can appeal…but not to a court.  The appeal is “in-house” at the Division of Federal Employees Compensation (“DFEC”).  Essentially, the higher-ups in the same agency that denied the initial request for reimbursement will review the evidence and determine whether the denial was appropriate.  The regulatory authority for a WHCA appeal is at 20 C.F.R. § 61.102(d), which states:

The Office shall advise the carrier of the amount approved for reimbursement.  If the reimbursement request has been denied in whole or in part, the Office shall provide the carrier an explanation of the action taken and the reasons for the action.  A carrier within the United States may file objections with the Associate Director for Federal Employees’ Compensation to the disallowance or reduction of a claim within 60 days of the Office’s decision.  A carrier outside the United States has six months within which to file objections with the Associate Director.  The Office may consider objections filed beyond the time limits under unusual circumstances or when reasonable cause has been shown for the delay.  A determination by the Office is final.

Recently, I was asked about the scope of a WHCA appeal.  Are appeals available only when DFEC disapproves a claim for reimbursement–such as when DFEC determines that a particular injurious event was not a “war-risk hazard” and that the WHCA does not apply?  Or, can a carrier also appeal specific line-item deductions–like a deduction of a particular payment to a doctor or an expert?

I think the answer is clear: carriers can appeal any denial, even small line-item deductions.  The regulation allows an appeal when a “reimbursement request has been denied in whole or in part.”  Further, the regulation allows carriers to file objections to the “disallowance or reduction of a claim” for War Hazards Compensation Act reimbursement.

If appeals were only allowed for denials that focused on the applicability of the WHCA (i.e., denials of an entire reimbursement request), then there would not have been a need for the Secretary of Labor to promulgate a regulation referencing partially reduced reimbursement requests or reductions.  The fact that the Secretary included language addressing reductions and denials in part confirms that a WHCA appeal can be taken from specific line-item deductions.

Jumping from a Helicopter Can Be a War-Risk Hazard

A Defense Base Act claimant injured his ankle when he jumped a few inches from a helicopter to the ground below.  The injury occurred at Abu Ghraib prison when, in accordance with custom, the helicopter in which he was traveling “landed” at the prison by hovering a few inches above the ground.  As the helicopter hovered, the occupants exited the aircraft by jumping down to the gravel-covered ground below.  Once all occupants were removed, the helicopter took off again.  This “landing” procedure was commonplace at Abu Ghraib because of the threat of enemy fire.

The issue is whether Claimant’s ankle injury was caused by a ”war-risk hazard.”  The answer is, “Yes,” because the injured worker suffered injuries as a direct result of the operation of an aircraft engaged in war activities operating in a zone of hostility.

Under the War Hazards Compensation Act, a “war-risk hazard” includes “any hazard arising during a war in which the United States is engaged . . . from . . . (5) the operation of vessels or aircraft in a zone of hostilities or engaged in war activities.”  See 42 U.S.C. § 1711(b).  The operation of an aircraft involves (at least) take off, flight, and landing procedures.  Whether the aircraft in the hypothetical presented above had landed or hovered above the ground is immaterial.  The engine of the helicopter was not turned off and the rotary wings were moving just enough to not create any lift on the helicopter, which remained in operation during this “landing” procedure.  Further, this “landing” procedure occurred at Abu Ghraib prison which was located in a zone of hostility.  Because all the criteria of 42 U.S.C. § 1711(b)(5) were satisfied, the employer and carrier were entitled to reimbursement of the benefits paid for the injured worker’s Defense Base Act claim.

DFEC Requiring Claimant Statements in War Hazards Claims

In the past few weeks, I received two information requests from the Division of Federal Employees’ Compensation (“DFEC”) in connection with two Applications for Reimbursement submitted pursuant to the War Hazards Compensation Act ["WHCA"].  Specifically, DFEC asked for written statements or a deposition from an injured worker.  DFEC sends these types of requests often, and mostly in connection with cumulative exposure psychological disability claims.

Two regulations serve as the backdrop for this post: 20 C.F.R. § 61.101 and 20 C.F.R. § 61.102.  The first regulation, 20 C.F.R. § 61.101, describes the documents that shall be submitted (if available) with a reimbursement request.  The specific language at issue here is: “When filing an initial request for reimbursement under the Act, the carrier shall submit copies of all available documents related to the workers’ compensation case, including– . . . (2) Statements of the employee or employer . . . .”  See 20 C.F.R. § 61.101(c).

The next regulation at issue is 20 C.F.R. § 61.102(a).  This regulation states: “If [DFEC] finds that insufficient or inadequate information has been submitted with the claim, the carrier shall be asked to submit further information.  Failure to supply the requested information may result in disallowance of items not adequately supported as properly reimbursable.”

The first request I received from DFEC stated that reimbursement could not be issued until DFEC received “statements or the deposition from [Claimant] in which he describes the incidents he witnessed that he feels caused his PTSD.  Simply providing reports of incidents in Afghanistan is not adequate to determine if his condition is acceptable under the war hazard act.”

It should be noted that the underlying DBA claim involved in the first request had to be resolved by using the procedures described in OWCP Bulletin No. 05-01 for informal conferences and uncooperative claimants.  The Division of Longshore and Harbor Workers’ Compensation (“DLHWC”) properly noticed the informal conference and the claimant failed to appear.  Following the Bulletin faithfully, DLHWC issued a Memorandum of Informal Conference with the information available to it.  DFEC, however, felt that “the Longshore conference memo that is on file does not provide much information concerning this claim.”  Considering the fact that the claimant refused to appear at the informal conference, the lack of information is not surprising.  That is why an OWCP Bulletin No. 05-01 informal conference was used to resolve the claim.  The kicker to this request is that the “reports of incidents” mentioned in DFEC’s information request referred to reports from the employer, the military, and mental health professionals about the cause, nature, and extent of this specific injured worker’s psychiatric disability.

DFEC’s second information request didn’t ask for a deposition, but it did ask for a written statement.  According to the correspondence, DFEC ”requires” a “written statement from the employee as to what he experienced while at Camp [REDACTED] and Camp [REDACTED] that would qualify as a War Hazard exposure and his reaction to that exposure.”  DFEC recognized that while ”20 CFR Section 61.101(c) does indicate that the carrier must submit available documentation, section 20 CFR Section 61.102(a) also indicates if the office finds the information insufficient or inadequate the carrier shall be requested to submit further documentation.  The statement of exposure, which can be in a simple written statement, is part of the further documentation to support the claim.”  The underlying DBA claim in this instance was resolved with a Section 8(i) settlement agreement signed by the claimant.  Settlements that are read, edited, revised, and signed by a claimant who is in agreement with all statements and certifications made in the agreement are not regarded as ”written statements from the employee.”

So, based on the language used in the requests sent to me, DFEC can ask for a statement under either 20 C.F.R. § 61.101 or 20 C.F.R. § 61.102.  If the statement is not available under 20 C.F.R. § 61.101(c), DFEC takes the position that it can use 20 C.F.R. § 61.102  to delay–or even deny–the reimbursement because of the absence of the statement.  All that DFEC needs to delay or deny reimbursement is the feeling that “insufficient or inadequate documentation has been submitted,” no matter whether 20 C.F.R. § 61.101 has been satisfied.

DFEC also referenced the Benefits Review Board’s Armani decision, stating that “[a]n informal statement is not excluded” by Armani.  This is a peculiar position for DFEC to take considering the Director’s briefs in Armani.  In the “Director’s Response Brief Opposing Employer’s Motion for Reconsideration En Banc,” the Director had the following to say about claimant statements:

“[T]he regulation requires only that the employer ‘submit all available documents related to the workers’ compensation case, including . . . (2) Statements of the employee or employer.’  The regulation [20 C.F.R. § 61.101(c)] does not require a statement from the employee at all; it merely requires the employer to submit one if it is available.”

See Director’s Response Brief, at 7 (emphasis in original) (internal citation omitted).

It appears that there is a definite tension in regulatory interpretation.  DFEC wants written statements from the employee and delays or denies lawful reimbursements without them.  Yet, the Director says that the relevant WHCA regulation “does not require a statement from the employee at all.”   So, which position controls?  Should DFEC be given deference, or should the Director be given deference?  Should employers and carriers abide by the Director’s interpretation of the regulations or DFEC’s interpretation of the regulations?

Books for Longshore and DBA Practitioners

For all of the great information available online, I am still a fan of books.  These are some of the Longshore and DBA books that I keep on my shelves:

  1. My favorite DBA book is LexisNexis’s Defense Base Act and War Hazards Compensation Act Handbook.  Simply put, all DBA practitioners need this book.  Why?  Because it is the only one of its kind.  The DBA is a relatively new practice area when compared to the century-old history of the Longshore and Harbor Workers’ Compensation Act.  Having a specialized book that addresses DBA-specific concerns and the DBA’s interplay with the WHCA is important.  Best yet, the book includes articles from attorneys from both sides of the aisle.  The Defense Base Act and War Hazards Compensation Act Handbook is available here.
  2. Another great book is The Longshore Textbook from Lawyers & Judges Publishing Company, Inc.  Already in its Sixth Edition, this book addresses all things Longshore.  It is written in a way that makes it accessible for “attorneys, adjusters, physicians, vocational counselors, and insurance professionals.”  Moreover, Mouledoux Bland’s own Alan Brackett is a contributor.  The Longshore Textbook is available here.
  3. Although it is less Longshore-specific, Schoenbaum’s Admiralty & Maritime Law is a must-have.  The Longshore section is brief, but it is a good, quick, and helpful explanation of the Act.  Schoenbaum’s Admiralty & Maritime Law is available here.