Active WHCA Bulletins

---

FECA BULLETIN NO. 24-06

September 30, 2024

Subject: Alternative Streamlined Process for Carrier Submission of Proposed Initial Decisions in Cases under the War Hazards Compensation Act (WHCA)

Purpose: To assist in timely issuing WHCA claim decisions, the Office of Workers’ Compensation Programs (OWCP) will permit insurance carriers to voluntarily submit proposed claim decisions that OWCP claims examiners (CE) may adopt and approve where all of the required legal elements of the claim have been satisfied.

Background: The WHCA affords coverage for the injury/death of an employee within the meaning of the Defense Base Act, if the injury or death proximately results from a war risk hazard as defined by the WHCA.

Under Section 104 of the WHCA, private insurance carriers or self-insured employers may seek reimbursement for payments made in conjunctions with a WHCA-covered injury. 20 CFR 61.100 states “The Office shall reimburse any carrier that pays benefits under the Defense Base Act or other applicable workers' compensation law due to the injury, disability or death of any person specified in Sec. 61.1(a), if the injury or death for which the benefits are paid arose from a war-risk hazard. The amount to be reimbursed includes disability and death payments, funeral and burial expenses, medical expenses, and the reasonable and necessary claims expense incurred in processing the request.”

The Office of Workers’ Compensation Programs, Division of Federal Employees’, Longshore, and Harbor Workers’ Compensation (DFELHWC), administers cases and claims under the WHCA. DFELHWC claims staff review claims and make determinations regarding whether a claimed injury is covered under the WHCA, and then whether any payments are reimbursable. If a claim is accepted, claims staff issue letters notifying the claimant, generally a private insurance carrier and their representatives, that DFELHWC has found an injury to be covered under the WHCA (for convenience, WHCA claimants for reimbursement will be referred to as carriers in the remainder of this bulletin). Then, claims staff issue a subsequent letter outlining which claimed payments are approved for reimbursement, and which are not approved. If a case is denied, claims staff issue formal decisions with appeal rights explaining that decision.

In examining how to make WHCA case processing more efficient, DFELHWC has developed a streamlined acceptance letter process, utilizing proposed acceptance decisions that will be drafted by carriers. These are documents similar to a legal brief setting forth the specific facts and application of law to those facts that the carrier believes warrants a favorable decision. They are presented to OWCP for consideration, and, where appropriate, may be adopted by OWCP as the basis for approving a claim.

Actions:

1. Upon initial submission of Form CA-278, Claim for Reimbursement of Benefit Payments and Claims Expense under the War Hazards Compensation Act, an insurance carrier may in its discretion submit a proposed acceptance decision together with the claim form.
2. If the carrier chooses to submit a proposed acceptance decision, it must be in the format as provided in the attachment to this Bulletin.
3. Upon receipt of a new Form CA-278 and properly formatted proposed acceptance decision, the CE will review the evidence submitted to verify the information in the proposed acceptance and ensure that all evidentiary requirements are met to approve the claim.
4. If the claim is approvable and the carrier’s proposed acceptance decision accurately reflects the facts and law of the claim, the CE may issue an approval letter adopting the proposed decision as the basis for the claim determination.
5. If the claim is approvable but the CE disagrees with all or part of the carrier’s reasoning in the proposed acceptance decision, the CE should modify the proposed acceptance decision to reflect the relevant facts and law more accurately or draft a new decision approving the claim.
6. If the claim is not approvable, the CE should develop the case per established protocols, developing the claim as needed or denying it if a denial is warranted.

Disposition: This Bulletin is to be retained until otherwise revised or incorporated into Part 4 of the FECA Procedure Manual.

 

NANCY J. GRISWOLD
Acting Director for
Division of Federal Employees’, Longshore and Harbor Workers’ Compensation

Distribution: Applicable DFELHWC FECA Program Staff and Stakeholders

Attachment: Sample Proposed Acceptance Decision

 

Attachment to FECA Bulletin 24-06: Sample Proposed Acceptance Decision

Carrier’s Proposed Decision

OWCP / Defense Base Act Case Number:
Carrier Reference Number:
Claimant:
Carrier:
Date of Injury:

 

This proposal is in reference to the above-captioned claim for reimbursement of benefits under Section 104 of the War Hazards Compensation Act (WHCA). We propose that the case be accepted for reimbursement. We propose that the evidence of file establishes that [the employee’s] injury/death was proximately caused by a war-risk hazard.

 

(Signature)

[Printed Name]

Carrier’s Representative

Date:

 

Attachment to FECA Bulletin 24-06: Sample Proposed Acceptance Decision

OWCP / Defense Base Act Case Number:
Carrier Reference Number:
Claimant:
Carrier:
Date of Injury:

• Incident(s) or exposure(s) accepted as a war-risk hazard (including dates or references, where appropriate):

---

• Claimed medical conditions or injuries accepted as related to accepted war-risk hazard incident(s) or exposure(s) (including dates or references, where appropriate):

---

REQUIREMENTS OF ENTITLEMENT:

The WHCA affords coverage for the injury/death of an employee within the meaning of the Defense Base Act (DBA) if the injury or death proximately results from a war-risk hazard.

A "war-risk hazard" is a hazard arising during a war in which the United States is engaged; during an armed conflict in which the United States is engaged, whether or not war has been declared; or during a war or armed conflict between military forces of any origin, occurring within any country in which a covered individual is serving.

The hazard may be from:

1. The discharge of a missile, including liquids and gas, or the use of any weapon, explosive or other noxious thing by a hostile force or person or in combating an attack or a perceived attack by a hostile force or person;
2. Action of a hostile force or person, including rebellion or insurrection against the United States or any of its allies;
3. The discharge or explosion of munitions intended for use in connection with a war or armed conflict with a hostile force or person;
4. The collision of vessels in convoy or the operation of vessels or aircraft without running lights or without other customary peacetime aids to navigation; or
5. The operation of vessels or aircraft in a zone of hostilities or engaged in war activities.

42 U.S.C. § 1711. Some of the terms which appear within the definition of “war-risk hazard” are themselves defined in the same statutory provision. Id.

 

Attachment to FECA Bulletin 24-06: Sample Proposed Acceptance Decision

20 C.F.R. § 61.102 states that “the Office shall regard awards, decisions, and approved settlement agreements under the [DBA] or other applicable workers’ compensation law, that have become final, as establishing prima facie, the right of the beneficiary to the payment awarded or provided for.” Once an award, decision, or approved settlement agreement under the DBA has established the right of an employee to DBA benefits, for an employer or carrier to obtain reimbursement for the payment of those benefits, it must be shown that the injury for which payment was made was caused by a war-risk hazard. 20 C.F.R. § 61.100 states “The Office shall reimburse any carrier that pays benefits under the [DBA] or other applicable workers' compensation law due to the injury, disability or death of any person specified in § 61.1(a), if the injury or death for which the benefits are paid arose from a war-risk hazard. The amount to be reimbursed includes disability and death payments, funeral and burial expenses, medical expenses, and the reasonable and necessary claims expense incurred in processing the request.”

BASIS FOR DECISION:

In this case, the requirements have been met for establishing that [the employee’s] condition came within the purview of the DBA. Here, in accordance with a DBA [Compensation Order / Approved 8(i) Settlement Agreement / Memorandum of Informal Conference / etc.] dated [date], benefits have been paid by the carrier to the employee pursuant to the DBA.

Furthermore, the evidence establishes that the claim is reimbursable under the WHCA, as it “arose from a war-risk hazard.” 42 U.S.C. § 1704(a)(1). The factual evidence shows [the employee] was exposed to [cause of injury that constitutes a war-risk hazard] on [date(s)]. [This incident/these incidents] meet(s) the definition of a war-risk hazard because [it was/they were] due to [specific statutory war-risk hazard of the 5 above].

Moreover, the medical evidence shows that the incident on [date(s)] caused [the employee’s] [medical condition/injury]. Specifically, [brief discussion of a doctor’s opinion or opinions relating the condition to the incident]. [NOTE: in rare cases where the cause of an injury is so obvious that a doctor’s opinion isn’t necessary, for example, a bullet wound, this could say instead “From a medical perspective, it is self-evident that the injury for which compensation was paid (condition) was caused by the incident described above.”].

Therefore, it has been established that the employee’s injury was caused by a war-risk hazard and the claim is reimbursable.

Back to Top of FECA Bulletin No. 24-06

---

Back to Table of Contents

---

FECA BULLETIN NO. 18-03

Issue Date: June 6, 2018

---

Subject: Processing Claims for Emotional Conditions Due to Exposure under the War Hazards Compensation Act (WHCA).

Background: The WHCA supplements the Defense Base Act (42 U.S.C. 1651) (DBA), which is an extension of the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. 901 (et seq.). The WHCA completes the protection provided to Federal contractors' employees and certain other selected employees performing work outside the United States. All liability for injury, death and detention benefits under the WHCA is assumed by the Federal Government, and is paid from the Employees' Compensation Fund established by 5 U.S.C. 8147.

Under Section 104 of the WHCA, an insurance carrier, self-insured employer, or compensation fund may claim reimbursement from the Employees' Compensation Fund for benefits paid on cases approved under the DBA, if it can be shown that the covered DBA injury or death was due to a war-risk hazard. Where there is no compensation payable under the DBA, an employee or his or her survivors may file a claim directly under Section 101 of the WHCA. Section 101 of the WHCA also authorizes the payment of detention benefits for contractors' employees who are captured or detained by a hostile force.

In many instances, a request for reimbursement will be based on exposure to a war-risk hazard (whether cumulative, episodic, or from a single incident) that allegedly results in the development of a compensable DBA emotional condition. In such cases, the evidence of record must thoroughly be reviewed to determine: (1) whether the carrier has established that exposure to at least one war-risk hazard in some way contributed to the development of the emotional condition; and (2) whether that exposure occurred during the covered insurance period.

References: 42 U.S.C. 1701 et seq., issued December 2, 1942, and amended in 1943, 1946, 1953, 1958, 1959 and 1961. 20 C.F.R. Parts 61 and 62, published on February 8, 1988.

Purpose: To provide guidance to claims staff for developing and adjudicating reimbursement claims under the WHCA for emotional conditions due to exposure to a war-risk hazard.

Action:

1. Establishing Exposure to a War-Risk Hazard. Upon receipt of a WHCA reimbursement petition, where an emotional condition resulting from exposure to war-risk hazards is alleged, the claims examiner should first review the evidence of record to ascertain whether exposure to a war-risk hazard is established. Such evidence may include the injured worker's statements, medical reports, news accounts, government reports, witness statements, statements from the injured worker's superior and/or employing organization and any other submitted evidence documenting exposure to a war-risk hazard.
   
   The evidence need not be exact as to dates and times of the occurrence of the war-risk hazard(s); however, the documentation must provide sufficient specificity of the employee's potential exposure to a war-risk hazard such that it is reasonable to conclude that the employee was actually exposed to such war-risk hazard(s).
   
   Example: Documentation that would be sufficient to establish exposure to a war-risk hazard would include an instance where the evidence demonstrated that an injured worker traveled a 20-mile portion of Highway X several times a week during the course of her employment in 2004, and the injured worker stated that during that time she was exposed to an IED blast/explosion placed by a hostile force.
   
   When establishing exposure in or around a facility, base, encampment or other similar location/structure, the following guidelines may be followed:

   Where the documentation demonstrates that the employee in question was employed or working at a facility, etc., at the same time that such facility was subjected to the occurrence of one or more war-risk hazards, it is reasonable to conclude that the employee was personally exposed to such war-risk hazard, unless there is evidence to the contrary.

   Example 1: News accounts confirm that a particular camp underwent regular bombing during January-March of a given year and the individual in question was employed as a security guard at that camp during this same period. Exposure to a war risk hazard will be considered established.
   
   Example 2: Evidence establishes that the individual was employed in Afghanistan during Operation Enduring Freedom without specifying the individual's employment, specific location or the war risk hazard encountered. Exposure to a war risk hazard has not been established based on the mere presence of an individual in an area where military operations were conducted.
    
2. Medical Evidence. If the claims examiner determines that exposure to a war-risk hazard is established, the submitted medical evidence must next be assessed to determine whether it establishes that the emotional condition is causally connected to such war-risk hazard exposure and was not attributed exclusively to other factors of employment. The medical documentation need not provide details of a specific war-risk hazard exposure or include a lengthy analysis of causality. However, to establish a causal connection, the evidence must, at a minimum:
    
   • Provide some reference of exposure to at least one war-risk hazard in the course of employment; and
   • Establish that a war-risk hazard in some way contributed to the development of the emotional condition. There need not be detailed rationale; an affirmative statement as to causality is sufficient.
      
   Also note that medical evidence (particularly medical evidence with a close temporal relationship to the event(s)) may assist in confirming exposure to a war risk hazard.
   
   Example: Medical evidence from a physician that recounts a claimant's history of work at a camp that underwent regular bombings and indicates that the claimant's emotional condition is due to, or was aggravated by, this exposure would be sufficient to establish causal relationship.
    
3. Period of Coverage. The evidence must show that the war-risk hazard exposure that caused or contributed to the emotional condition occurred during a period in which the carrier has submitted valid evidence of insurance coverage.
    
4. Development. If the evidence initially submitted is insufficient to establish the criteria noted above, the claims examiner should proceed with appropriate development of the claim prior to rendering an adjudication decision.

Applicability: Appropriate National and District Office personnel.

Disposition: This bulletin is to be retained until the Procedure Manual is updated.

 

ANTONIO RIOS
Director for
Federal Employees' Compensation

Back to Top of FECA Bulletin No. 18-03

---

Back to Table of Contents

---

FECA BULLETIN NO. 15-01

Issue Date: October 14, 2014

---

Subject: Processing and sampling of medical expenses reimbursable under 42 U.S.C. § 1704(a) in cases accepted under the War Hazards Compensation Act (WHCA).

Background: Since 2003, OWCP has experienced significant growth in the number and dollar value of WHCA reimbursement petitions submitted by Defense Base Act (DBA) insurance carriers.

Historically, War Hazards claims staff have reviewed and formally adjudicated all claimed medical expenses contained in a WHCA petition regardless of dollar amount. Despite this rigorous and time-consuming examination process, the overwhelming majority of medical expense reimbursement requests are approved.

Due to rapid growth in the number and complexity of incoming WHCA petitions , it is necessary to amend procedures to expedite the reimbursement process while maintaining the ability to identify deficiencies and trends in medical expense reimbursement claims. Under these new procedures, five percent (5%) of all incoming War Hazards petitions will continue to have 100% of their medical expenses items reviewed. For the remaining 95% of petitions, a threshold for sampling is being implemented.

A dollar threshold amount will be employed as a means of filtering out lower value medical expense claims for the purpose of limited review. Those claimed medical expenses contained in a petition with dollar amounts below the threshold will be reviewed by statistical sampling whereas every claim with dollar amounts above the threshold will be subjected to individual review.

Based on an assessment of current WHCA medical expense payment data, it was determined that $300 would be the most appropriate threshold amount. Under an analysis of this data, it can be reasonably projected that with a threshold of $300, War Hazards claims staff will still fully scrutinize 77% of the dollar amount of medical expense reimbursement claims while only reviewing 16% of the expense items

For those claimed medical expenses in a WHCA petition under the $300 threshold, and therefore subject to statistical sampling, one medical expense under $300 in each accepted petition will be randomly selected for full review. If any deficiencies are found in this randomly selected expense, all expenses in the corresponding petition will be reviewed. This additional sampling will minimize the risk of improper payments resulting from the amended procedure.

For additional quality control, OWCP will exclude 5% of all reimbursement petitions from these screening procedures, and those petitions will have 100% of the medical expense claims contained in the petition fully reviewed.

Purpose: To provide updated guidance for the processing and sampling of requests for reimbursement of medical expenses under the WHCA.

Reference: This bulletin supplements the information contained in the Federal Employees' Compensation Act (FECA) Procedure Manual (PM) 4-0300. Also see 42 U.S.C. § 1704(a), 20 C.F.R. §61.100(a) and CA 278.

Applicability: War Hazards claims staff and appropriate National Office personnel.

Action:

1. Claims staff should, absent any clear evidence to the contrary, deem as approved for reimbursement any submitted medical expense item up to and including $300 in accepted WHCA cases, except that;

a. Claims staff will exclude 5% of all incoming petitions from the above screening procedures, and for those petitions, staff will fully review 100% of the medical expense claimed.

b. For those petitions subject to the $300 threshold screening procedure, Claims staff will randomly select and review one medical expense item in the amount of $300 or less contained in the petition for which reimbursement is claimed.

2. Each selected medical expense item will be reviewed to determine:

a. Whether the expense was for necessary treatment of a medical condition causally related to an accepted condition under the WHCA; and

b. Whether the expense is an unreimbursable duplicate of an expense previously reimbursed.

3. If any deficiencies are found in the selected expense, all expenses in the corresponding WHCA petition will be reviewed regardless of dollar amount.

4. If any insurance carrier has three sampled petitions with significant deficiencies in a three month period, then 100% of its claims for all expense items will be fully reviewed until three months have passed with no noted deficiencies.

Disposition: This Bulletin should be retained until incorporated in the Federal (FECA) Procedure Manual or otherwise superseded.

 

Back to Top of FECA Bulletin No. 15-01

---

Back to Table of Contents

---

FECA BULLETIN NO. 13-01

Issue Date: January 29, 2013

---

Subject: Reimbursement of Unallocated Claims Expenses for Defense Base Act (DBA) settlements under the War Hazards Compensation Act (WHCA), and Allocating Payments in a DBA Settlement of Multiple Injuries for Purposes of Reimbursing only WHCA-Covered Injuries

Background: The DBA provides a workers' compensation system for workers injured or killed while performing work for government contractors outside the United States. 42 U.S.C. 1651(a). Employers and carriers (E/Cs) are liable to pay periodic compensation and medical benefits to an injured employee or death benefits to his/her survivors. The DBA, by incorporating most provisions of the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. 901-950 (LHWCA), also permits the parties to enter into a settlement of DBA liability under LHWCA section 8(i), 33 U.S.C. 908(i). Section 8(i) settlements must be approved by either an LHWCA District Director or ALJ. Settlements may be consummated before or after a decision and order on the claim. The approval of a settlement constitutes a compensation order making an award as provided under the terms of the settlement. Section 8(i) settlements may discharge the E/C from future liability only, or from liability for both past due and future benefits.

Where the DBA-covered injury or death results from a war risk hazard, the E/C may seek reimbursement for its payments under the War Hazards Compensation Act (WHCA), 42 U.S.C. 1704(a). The WHCA, administered by the Division of Federal Employees' Compensation (DFEC), provides a mechanism through which the United States reimburses an E/C for its payments under the DBA resulting from an injury or death caused by a "war risk hazard."

The WHCA also provides that a carrier seeking reimbursement may recover "reasonable and necessary" claims expenses. See 42 U.S.C. 1704(a). Under the WHCA's implementing regulations at 20 CFR Part 61, reasonable and necessary claims expenses are of two types, allocated and unallocated, incurred in connection with a case for which reimbursement is claimed. The regulations define "unallocated claims expenses" as costs that are incurred in processing a claim but cannot be specifically itemized or documented. 20CFR § 61.104(c). The regulations generally provide that "[a] carrier may receive reimbursement of unallocated claims expenses in the amount of 15% of the sum of the reimbursable payments" made under the DBA. See 20 CFR § 61.104(c).

References: 42 U.S.C. 1704; 20 CFR § 61.104

Purpose: To address the current practice under the WHCA of reimbursing carriers for unallocated claims expenses incurred in connection with DBA claims that are resolved by section 8(i) settlement.

Actions: In addition to providing a general rule for reimbursing unallocated claims expenses as described above, the regulations also grant authority to vary that calculation: "if this method of computing unallocated claims expenses [15% of total payments] would not result in reimbursement of reasonable and necessary claims expenses, the Office may, in its discretion, determine an amount that fairly represents the expenses incurred." 20 CFR § 61.104(c). Thus, while the regulations provide a general rule of thumb, ultimately the payment of unallocated costs should be a reasonable measure of unallocated expenses incurred. Under its terms, this regulation may be applied to either increase or decrease the amount of unallocated expenses that would otherwise be reimbursable under the general rule.

Under current practices, if the E/C requests reimbursement for unallocated expenses, the DFEC generally applies the 15% figure to the E/C's entire reimbursable payments, with the exception of an E/C's payment on a commuted award (see FECA Bulletin 12-01). Such an allotment is reasonable in cases where the E/C is merely seeking reimbursement for past expenses. However, where the E/C settles its future DBA liability, the practice of routinely calculating unallocated claims expenses as 15% of all of the carrier's payments merits modification, as it is not "reasonable." An E/C's payments under the terms of a settlement represent, at least in part, payment for future liability. The E/C should not have incurred any reasonable or necessary unallocated costs merely by settling such future liability (aside from the cost of putting together settlement documents). Yet, the current practice provides that in calculating unallocated claims expenses, all the payments are to be considered, including the payment in settlement of future liability.

The inclusion of those amounts in the calculation constitutes an unjustified payment to the E/C, because they are not reasonably related to the expenses in handling the DBA claim. Since the regulations grant considerable discretion in reimbursing unallocated costs, the DFEC will exercise this authority and use an alternative approach to calculating a reasonable and appropriate measure of unallocated costs subject to WHCA reimbursement in the case of DBA settlements. Accordingly, in circumstances where the E/C settles its future DBA liability and seeks reimbursement, the DFEC will reimburse unallocated costs equaling 15% of the payments it has made up until the time of settlement, together with those amounts paid in settlement of past due liability. The DFEC will exclude from the calculation payments that represent payment in settlement of future liability, as no unallocated costs will been reasonably incurred in the payment of these benefits.

A. Allocating between Payments for Past Due and Future Liability - Where an E/C has settled its DBA liability for a WHCA-covered injury, the calculation of unallocated claims expenses will now require that the E/C's reimbursable payments be identified as payments for either past due or future liability. Toward that end, settlements should first be divided between those entered into following the entry of an award, and those entered into in lieu of an award.

B. Settlement Following Entry of a DBA Award - Where an E/C enters into a settlement following the entry of a DBA award, it will be presumed that the E/C has paid all compensation due and owing up until entry of the settlement, as it is generally required to do under law. Therefore, where an E/C enters into a settlement following entry of a DBA award, amounts paid under the terms of the settlement will be presumed to be amounts paid in settlement of future liability and excluded from the unallocated cost calculation. It is the E/C's burden to demonstrate that any portion of post-award settlement payments were made in satisfaction of past due liability.

C. Settlement in Lieu of a DBA Award - Where an E/C enters into a settlement in lieu of an award, the E/C has the burden of demonstrating what portion, if any, of its payments are payment of past due compensation and thus included in the unallocated costs calculation (together with any payments made prior to settlement).

As an aid in making this allocation, the DFEC will give presumptive weight to the allocation of payments set forth in Form LS 208, "Notice of Final Payment or Suspension of Compensation Payments," which each E/C must file with the Division of Longshore and Harbor Workers Compensation (DLHWC) upon final payment of its DBA liability. The LS 208 requires an E/C to list all DBA payments it has made on account of disability or death together with all other payments, including payments made pursuant to a section 8(i) settlement. Those payments which the E/C records on the LS 208 as payment pursuant to a section 8(i) settlement will be presumed to be payments in settlement of future liability which will be excluded from the unallocated expenses calculation, unless the E/C reasonably demonstrates that a portion of its settlement payments were paid on past due liability.

D. Submission of Form LS 208 - Each E/C who seeks reimbursement for its payments on a DBA 8(i) settlement is required to submit with its reimbursement request the Form LS 208 which it previously filed with the DLWHC.

E. Preparation of Settlement Documents - An E/C will be reimbursed the sum of $1,000 for unallocated expenses incurred in putting together settlement documents. This will be in addition to the amount calculated for unallocated expenses based upon the portion of the settlement that has been established to be for payments of past due compensation.

F. Effective Date - Because the authority for exercising this discretion in reimbursing unallocated claims expenses already exists in the regulations, this approach to reimbursing an E/C its unallocated claims expenses in DBA settlement cases applies to all pending and future claims for reimbursement under the WHCA.

DBA Settlements Encompassing both WHCA Covered and Non-Covered Injuries

An E/C may enter into a single settlement of its DBA liability for multiple injuries. However, only those payments made in settlement of liability for injuries resulting from a war risk hazard are subject to potential reimbursement under the WHCA. Therefore, where a single DBA settlement satisfies an E/C's liability for both WHCA covered and non-covered injuries, an allocation between an E/C's payments for each type injury is also necessary.

The E/C, in meeting its burden of proving entitlement to WHCA reimbursement, must provide adequate documentation of a reasonable allocation between settlement payments for injuries that arise from a war risk hazard and those injuries that do not. Only the former payments will be subject to potential WHCA reimbursement. Failure to provide an adequate allocation of such payments will result in a denial of a reimbursement request for the settlement payments in their entirety

Applicability: All National Office staff and District Office claims personnel.

Disposition: This bulletin is to be retained until the FECA PM has been updated.

 

DOUGLAS C. FITZGERALD
Director for
Federal Employees' Compensation

Distribution: List No. 1 – FolioViews Groups A, B and D (Claims Examiners, All Supervisors, District Medical Advisors, Systems Managers, Technical Assistants, Rehabilitation Specialists, Staff Nurses and Fiscal)

Back to Top of FECA Bulletin No. 13-01

---

Back to Table of Contents

---

FECA BULLETIN NO. 12-01

Issue Date: December 27, 2011

---

Subject: Reimbursement of Unallocated Claims Expenses for Commuted Awards under the War Hazards Compensation Act

Background: The Defense Base Act (DBA) provides a workers' compensation system for workers injured or killed while performing work for government contractors outside the United States. Liable carriers under the DBA are generally required to pay periodic compensation benefits to the injured employee or to his/her survivors. However, the DBA provides that in cases involving non-citizens and non-residents of the United States and Canada, after the entry of a compensation order, the carrier may request the responsible Longshore District Director overseeing the DBA claim to commute the award of benefits, resulting in one lump-sum payment. Under the DBA, the District Director is required to act on such a request. It is a common practice of carriers to request commutation of a DBA award for these claimants residing overseas, obviating the time and expense of making periodic payments.

Where the DBA-covered injury or death results from a war risk hazard, the carrier may then seek reimbursement for its payments under the War Hazards Compensation Act (WHCA). The WHCA, administered by the Division of Federal Employees' Compensation (DFEC), provides a compensation system under which the United States reimburses a contractor or its insurance carrier liable under the DBA for the payment of benefits resulting from an injury or death caused by a "war risk hazard."

The WHCA also provides that an employer or its carrier seeking reimbursement may recover "reasonable and necessary" claims expenses. See 42 U.S.C. 1704(a)(3). Under the WHCA's implementing regulations at 20 CFR Part 61, reasonable and necessary claims expenses are divided into two types of expenses (allocated and unallocated) incurred in connection with a case for which reimbursement is claimed. The regulations define "unallocated claims expenses" as costs that are incurred in processing a claim but cannot be specifically itemized or documented. The regulations generally provide that "[a] carrier may receive reimbursement of unallocated claims expenses in the amount of to 15% of the sum of the reimbursable payments" made under the DBA. See 20 CFR 61.104(c).

References: 42 U.S.C. 1704; 20 CFR § 61.104

Purpose: To address the current practice of reimbursing carriers for unallocated claims expenses under the WHCA.

Actions:

In addition to providing a general "15%" rule for reimbursing unallocated claims expenses as described above, the regulations also provide authority to vary that calculation, providing that "if this method of computing unallocated claims expenses would not result in reimbursement of reasonable and necessary claims expenses, the Office may, in its discretion, determine an amount that fairly represents the expenses incurred." Thus, while the 15% payment provides a general rule of thumb, ultimately the payment of unallocated costs should be a reasonable measure of unallocated expenses incurred. Although this regulation could be applied in the context of increasing the amount of unallocated expenses, given the language of the provision, it is equally applicable to circumstances where unallocated expenses should be less.

Under current practices, if the carrier requests the 15% payment, the DFEC routinely pays this 15% allotment in virtually all reimbursement cases. This has been deemed reasonable in cases where the carrier (or self-insured employer) is merely seeking reimbursement for past periodic expenses. However, one subset of cases where the practice of routinely calculating unallocated claims expenses as 15% of the claimed reimbursement for benefits merits re-examination. In certain cases, the carrier commutes its future DBA liability and, therefore, the payments for which it seeks reimbursement will include both its past payments of periodic liability and the commuted payment for future DBA liability. Although it does not appear possible that the carrier will have incurred reasonable or necessary costs for these commuted benefits in any amount over and above what has already been documented and is reimbursable as an allocated expense, the current practice provides that the calculation of the unallocated claims expenses includes this commuted amount of future DBA payments.

In such instances, the payment of 15% of the commuted amount constitutes an unjustified payment to the carrier, since it is not reasonably related to the expenses in handling the DBA claim. Since the regulations grant considerable discretion in reimbursing unallocated costs, the DFEC will exercise this authority and use an alternative approach to calculating a reasonable and appropriate measure of unallocated costs in the case of the commuted award. In circumstances where the carrier has had the benefit commutated and seeks reimbursement, the DFEC will reimburse unallocated costs equaling 15% of the payments it has made up until the time the award is commuted. DFEC will exclude from the calculation the payment of the commuted amount that represents payment of future liability, as no unallocated costs have been incurred in the payment of these benefits.

Because the authority for exercising this discretion in reimbursing unallocated claims expenses already exists in the regulations, this approach to payment of unallocated claims expenses in cases with commuted awards by insurance carriers applies to all pending and future claims for reimbursement under the WHCA.

Applicability: All National Office staff and District Office claims personnel.

Disposition: This bulletin is to be retained until the FECA PM has been updated.

DOUGLAS C. FITZGERALD
Director for Federal Employees' Compensation

Distribution: List No. 1 - FolioViews Groups A, B and D (Claims Examiners, All Supervisors, District Medical Advisors, Systems Managers, Technical Assistants, Rehabilitation Specialists, Staff Nurses and Fiscal)

Back to Top of FECA Bulletin No. 12-01

---

Back to Table of Contents

---

FECA BULLETIN NO. 03-07

Issue Date: May 12, 2003

---

Expiration Date: May 12, 2004

---

Subject: Development and Adjudication of Claims for War-Risk Hazard Cases

Background: The Federal Employees' Compensation Act (FECA) provides payment of compensation for disability or death of an employee resulting from an injury in the performance of duty. Section 8102(b) of the Act specifically extends coverage for injuries sustained by employees employed outside the continental United States or Alaska as a result of a "war-risk hazard." Terrorist activities will be considered a "war-risk hazard" if they are carried out by foreign groups (including terrorist groups) or foreign individuals targeting the United States or its allies. In view of various inquiries and concerns raised by other Federal agencies concerning terrorism, it is necessary to provide guidance and instruction to claims staff on handling claims that may arise under Section 8102 following a war-risk hazard.

A war-risk hazard is defined as a hazard arising during a war in which the United States is engaged; during an armed conflict in which the United States is engaged, whether or not war has been declared; or during a war or armed conflict between military forces of any origin, occurring within any country in which a covered individual is employed. The hazard may arise from any of the following: the discharge of a missile; action of a hostile force or person; the discharge or explosion of munitions; the collision of vessels in a convoy; or the operation of vessels or aircraft engaged in war activities. [See Section 8101(13) and FECA PM 4-0300.7c (1)–(5).] Section 8102(b)(2) of the Act provides that disability or death due to a war-risk hazard, or during or as a result of capture, detention, or other restraint by a hostile force or individual, sustained by an employee who is employed outside the continental United States or in Alaska constitutes a personal injury sustained while in the performance of duty. This applies whether or not the employee was engaged in the course of employment when the injury or death occurred or when he or she was taken hostage by the hostile force or individual.

A hostile force or individual means a nation, subject of a foreign nation or individual serving a foreign nation who is engaged in war or armed conflict as defined by the FECA.

Under section 8102 (b), an employee who resides in the vicinity of his employment who is not living there solely due to the exigencies of his employment is only covered while in the course of his employment. For example, local hires are covered only while in performance of duty. Also, Section 8102(b) does not apply to an employee who is a prisoner of war or a protected individual under the Geneva Conventions of 1949.

It should also be noted that Federal employees abroad are not covered around the clock under all situations. Federal employees abroad who are in travel status or on a special mission are covered for activities reasonably incidental to their employment (e.g., eating, sleeping, and transportation). Federal employees who are abroad may also be covered under other doctrines of workers' compensation law such as the zone of special danger, the bunkhouse rule, the proximity rule, the positional risk doctrine or the rescuers doctrine. In such situations, coverage would be extended on a basis other than Section 8102(b) where applicable to the facts of a given case.

References: Title 5 U.S.C. Sections 8102(b), 8101(13) defining war-risk hazard; 8101(14) defining hostile force or individual; 8101(15) defining allies and 8101(16) defining war activities and Federal (FECA) Procedure Manual Chapter 4-0300.7c (1)-(5). See also War Hazards Compensation Act, 42 U.S.C. 1701 et seq. using the same definition of war-risk hazard; regulations implementing the War Hazards Compensation Act at 20 CFR Part 61 and 62, and FECA Bulletin 91-14.

Purpose: To provide instructions and guidance to claims staff that are responsible for developing and adjudicating claims that arise under Section 8102(b) of the Act due to a war-risk hazard.

Applicability: All district office and National Office staff.

Responsibilities: Cases believed to fall under the provision of Section 8102(b) of the Act, i.e., war-risk hazard cases, should be jacketed, adjudicated and managed in the National Operations Office (District Office 25). Some cases may be forwarded to the servicing district office (DO) based on the claimant's home of record after adjudication. (See FECA PM 1-100.5 for case jurisdiction).

Action:

1. Claimant. A civilian employee or eligible dependent claiming compensation due to injury or death based on a potential war-risk hazard must provide sufficient information for OWCP to adjudicate the claim. A claimant may not necessarily identify a war-risk hazard as the basis of the claim and need not do so. Except for the issue of performance of duty, the evidence required is the same as in all other FECA claims.

2. Employing Agency Responsibilities.

a. Employing agencies are required to report to OWCP any injury resulting in death or probable disability, and to submit any additional information requested by OWCP. The employing agency is also expected to provide evidence on its own behalf and aid the claimant in assembling and submitting evidence. Timely reporting of such cases is especially important, as evidence relating to war-risk hazards is best gathered contemporaneously. Employing agencies are encouraged to flag such cases for possible development of a war risk hazard.

b. Since coverage under Section 8102(b) of the Act extends the boundaries of performance of duty to include activities that routinely fall outside the scope of employment, OWCP must look to the employing agency to investigate the circumstances of an injury and provide information so that a decision can be made in a timely manner.

c. The employing agency has a responsibility to the claimant to investigate and provide evidence promptly, and respond in writing and/or by telephone to any inquiries from OWCP within the timeframe requested. All telephone communications with other parties should be documented and placed in the case record. Employing agencies are encouraged to communicate in writing and/or by telephone with OWCP when they have additional evidence from other sources (i.e., third parties) that is pertinent to the development and adjudication of the claim. Such additional evidence should be shared with OWCP in an expeditious manner.

3. OWCP's Responsibilities.

a. The Claims Examiner (CE) must advise the claimant, the employing agency and/or the representative, if any, in writing of the type of evidence necessary to establish the claim. If appropriate, the examiner may advise the claimant that OWCP is considering extending coverage under 8102(b).

b. Information pertinent to the adjudication of the claim may be in the possession of the claimant, employing agency, investigative source and/or other governmental agency. If the CE determines that a third party is the best source for the information needed to adjudicate the claim, the employing agency should be contacted in order to ascertain whether the employing agency already has the evidence needed. If the employing agency does not have the evidence needed they should be instructed to obtain the evidence from the third party and submit it to OWCP. If appropriate, the employing agency may copy OWCP on any written correspondence to a third party. Alternatively, the employing agency should notify OWCP that such inquiries have been undertaken so that OWCP is aware of the employing agency's ongoing efforts to obtain additional evidence. If the employing agency is contacted by telephone the CE must document the case file with an Auto CA-110 and/or written correspondence when appropriate. All telephone requests for evidence needed to establish the claim should be confirmed in writing with copies to the claimant and/or the representative, if any.

c. In order to gather the information needed to establish whether coverage under Section 8102(b) of the Act should be extended, and whether the circumstances surrounding the occurrence of the injury constitute a war-risk hazard, the CE may ask the claimant, the representative (if any) and/or the employing agency specific questions concerning incidents leading up to, surrounding and following the injury. The questions will be detailed and case specific. They may include questions similar to the following:

(1) Please identify the location where the incident occurred in proximity to any United States governmental presence in the region, such as the United States embassy or other governmental entities, including the nature and extent of any United States military presence or the military presence of any allies of the United States. Is there armed conflict between military forces of any origin going on in the area?

(2) Were any other employees or witnesses from your department present on the date of the incident? Were any other federal employees or other individuals such as dependents injured in the incident?

(3) Does the employing agency know whether the CIA, FBI, or the State Department has any information as to whether the incident was the work of a foreign terrorist group or individual? (The term "terrorist group" refers to an identifiable organization or cause which uses violence to achieve political goals, and is considered a "hostile force or persons engaged in armed conflict." A "war-risk hazard" may therefore be present.)

(4) What general or specific warnings, if any, were given prior to the incident or have been subsequently given to personnel serving in the region regarding terrorist threats? Have any other incidents occurred which would indicate that United States personnel and/or citizens in the area have been targeted by any terrorist or terrorist groups?

(5) Does the claimant or employing agency have information that the incident occurred as the result of a war or armed conflict between military forces, or in a region within the country where civilian personnel are serving? Please identify the presence of any known military conflict in that country.

(6) Does the employing agency or the agency charged with investigating the incident (i.e., local police, FBI, CIA, State Department) have information about individuals responsible for the attack? Does the investigating agency know if the attackers were members of or acting on behalf of an identifiable group that pursues its political goals through the use of violence; or that has taken up arms against the United States or against the government where the incident arose? (In such cases, coverage would be extended.)

d. Cases that potentially fall under the provisions of Section 8102(b) of the Act due to a war-risk hazard are sensitive in nature. Therefore, it may be necessary to send a second or third request to obtain the requested evidence. If after a second request, the employing agency fails to respond, a telephone call should be made immediately by the CE to obtain the status of the request for information and to learn the reasons that are causing the delay. If the employing agency fails to respond after the third request, the CE should advise district office management. District office management is responsible for contacting the National Office immediately for guidance on handling the claim.

e. No adverse decision should be made until the National Office has been consulted.

f. The CE is responsible for rendering a decision on each case as promptly as possible. It is essential that development and adjudication be expedited on cases involving a war-risk hazard. However, decisions in these cases should not be expedited at the expense of obtaining all relevant evidence from all appropriate sources. Compensation payments should also be made as expeditiously as possible.

Disposition: Retain until the indicated expiration date or until incorporated in the FECA Procedure Manual.

 

DEBORAH B. SANFORD
Director for
Federal Employees' Compensation

Distribution List: List No.1 Folioview Groups A and D (Claims Examiners, All Supervisors, District Medical Advisors, Systems Managers, Technical Assistants, Rehabilitation Specialists and Staff Nurses)

Back to Top of FECA Bulletin No. 03-07

---

Back to Table of Contents