BRB: Claimant Lacks Basis to Challenge Transfer of Liability Pursuant to the WHCA

In a prior post, we discussed how an Administrative Law Judge (“ALJ”) determined that a Defense Base Act (“DBA”) claimant lacks standing to challenge the direct payment of medical benefits under the War Hazards Compensation Act (“WHCA”).  As of December 26, 2012, the Benefits Review Board (“BRB”) affirmed the ALJ’s decision.

In Cathey v. Service Employees International Inc., the employer and carrier voluntarily paid $340,000 in DBA benefits.  Then, the parties entered into a $300,000 settlement to resolve claimant’s entitlement to future indemnity benefits.  Future medical benefits were left open.  In response to an application for reimbursement submitted by the carrier, the Division of Federal Employees’ Compensation (“DFEC”) reimbursed the carrier for benefits previously paid and agreed to pay future medical benefits as they arose.  Aggrieved by this arrangement as it related to a potential new surgery, the claimant asked the district director to refer his claim to the Office of Administrative Law Judges, and the district director reluctantly complied.  As it turns out, the referral was fruitless.  The ALJ dismissed the claim on summary decision, finding that the employer and carrier were relieved of liability because DFEC agreed to pay medical benefits directly.

On appeal, the BRB affirmed the ALJ’s decision.  The claimant was not denied medical benefits.  He merely had to follow the proper procedures for securing those benefits.  But, “[i]f DFEC were to deny recommended treatment or surgery, claimant could request a hearing before the OALJ under the Act for a decision on the necessity, reasonableness, etc., of the requested treatment.”

Cathey v. Service Employees Int’l, Inc., BRB No. 12-0228, 2012 WL 6764254 (2012).

Note: The sentence quoted above requires a little more clarification than the BRB gave in its decision.  If DFEC denies recommended treatment and the claimant requests an ALJ hearing, the case will be transferred back to the employer and carrier for further adjudication.  What is not clear is whether the liability for payments during the pendency of the litigation is transferred too.  The applicable regulation states: “The Office may retransfer any case to a carrier either for the purpose of completion of adjudicatory processes or for continuation of payment of benefits.”  Based on this language, we guess that liability for continued payment will be coupled with whatever entity (government or employer and carrier) is administering or adjudicating the claim–but because of the use of the disjunctive “or,” a case-by-case analysis is required. At MBLB, we have also seen claims where the DFEC retained liability but asked for the employer and carrier to continue paying benefits.  This scenario typically arises when the employer and carrier is in a better position to pay benefits than DFEC.