Proposed changes to workers’ compensation insurance for military contractors could save taxpayers a bundle

“There is absolutely no reason American taxpayers should be lining the pockets of private insurance companies.”

That’s the opinion of Representative Elijah Cummings, a Maryland Democrat who is seeking change to current laws for the insuring of civilian military contractors working here in the States and abroad. Cummings is the ranking member of the House Committee on Oversight and Government Reform who introduced legislation early last month for a change in workers’ compensation insurance for those contractors. Currently, civilian military contractors are insured against workplace injuries under a controversial private system; under the new legislation, the private system would be replaced with one backed by the U.S. federal government.

The proposal by Rep. Cummings would revise provisions in the Defense Base Act, which requires military contractors to provide workers’ compensation for not only American employees, but foreign employees, as well. Incidentally, many foreign employees of military contractors have no idea that they are owed benefits when they are injured or killed on the job, much less how to claim them.

At this time, contractors purchase coverage from private insurance companies, but contractors injured in Iraq and Afghanistan many times have to go toe-to-toe with these large insurers to get the medical treatment and disability payments to which they’re entitled.

Another problem with the current system is the high cost to taxpayers, since the premiums for workers’ comp policies are typically built into military contracts…which are, in turn, paid for with your tax dollars. According to an Army audit, some premiums are “unreasonably high and excessive”; in addition, congressional investigations have found that insurers have earned hundreds of millions of dollars in profits from premiums.

Under the new proposal, the U.S. government would pay benefits directly to injured contractors or their survivors. In introducing this plan, Rep. Cummings cited a 2009 Pentagon study which estimated that a federal workers’ comp program could save taxpayers in the neighborhood of $250 million per year. The Pentagon’s report predicted that insurance companies would likely oppose any moves to alter the Defense Base Act’s workers’ comp requirements. This seems likely, as AIG –the most common warzone insurance provider– was recently hit with court-ordered payouts that amounted to millions of dollars in several states; as a result they’re probably looking to preserve any and all revenue streams available to them.

The Department of Labor oversees the Defense Base Act’s implementation; it’s been speculated that the agency hasn’t been adequately prepared to deal with the growth in claims that accompany the unexpectedly large numbers of contractors installed in Iraq and Afghanistan.

If you are a Georgia resident who has been injured while working under contract overseas and don’t feel like you’re being given your due, contact us. We are well-versed in workers’ compensation laws and are ready to advocate for you.

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