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Coming home: Civilian contractor claims spike

military contractors

After 20 years of conflict, many U.S. soldiers and civilian contractors have returned home from Afghanistan and Iraq much different than when they first deployed. Psychological injuries are common in war zones, but a 2013 Rand Corp. study found that civilian contractors suffer at a much greater rate.

At the time of the study, 25% of private contractors showed post-traumatic stress disorder symptoms, compared with only 11% of service members, and experts say these numbers are understated.

“They’re sent to a war zone and then they’re subjected to these same experiences as trained soldiers, without the background, without the exposures and training that the soldiers have, and the consequences could be rather severe,” said Samuel Frankel, partner at Barnett,
Lerner, Karsen, Frankel & Castro PA in Fort Lauderdale, Florida. 

The firm represents injured workers and specializes in Defense Base Act claims — the workers compensation benefits for civilians working outside the United States on U.S. military bases.

“There’s nothing in any of these government contracts that mandates an employer properly train their contractors before exposing them to the hazards of wartime risk,” said David Barnett, founding and managing partner of the firm.

From September 2020 to September 2021, the number of workers comp claims filed by contractors topped 6,000 — equating to the total number of claims filed in the previous three years combined, according to
Mr. Frankel. 

The influx of claims has overwhelmed claims operations, creating issues with them being processed and paid by insurers.

“A lot of it involves validity — making sure the claims are valid — and just the sheer numbers,” Mr. Frankel said. “We’re talking about 20 years of wars … thousands and thousands of contractors from all over the world now have to be processed and funneled through the U.S. Department of Labor through the Defense Base Act, which at the end of the day only has about 40 judges.”

Validating the claims is a necessary first step because there are profound “consistencies” among them, causing suspicion among insurers and attorneys, Mr. Frankel said.

“Because of the commonality within a region, we have to make sure that it’s legitimate, and that it’s not being pursued just because others are pursuing.”

Eric Richardson, senior client services manager at Gallagher Bassett Services Inc., based in Carlsbad, California, said many of the claims are submitted without medical evidence.

“As the medical evidence does come in, it then has to be evaluated for the veracity of the conditions listed, and the credentials of the provider must also be verified,” he said. Often, a second opinion is required, which prolongs the claim and adds to costs.

“This process involves a significant amount of investigative work, especially when the workers are in foreign countries,” Mr. Richardson said.

Claims handlers at Gallagher Bassett use a network of investigative firms and field nurses who collect evidence, he said. 

Tending to the needs of contractor claimants, particularly for PTSD and other mental injury claims, the third-party administrator will also try to find care to assist workers with recovery and a return to a high quality of life.  

Verifying the claims has a financial incentive also because legitimate claims are typically reimbursable by the U.S. government under the War Hazards Compensation Act, Mr. Richardson said.

The COVID-19 pandemic has added to the delays. As doctors went virtual and court hearings were suspended, interference with medical treatment plans and the hearing process halted claims processing. 

Mr. Richardson expects another spike in claims to come in the next year, advising insurers to develop a contingency plan to handle the current backlog of claims as more roll in. 

“There are significant challenges for managing these claims across the globe,” he said, “including language barriers, currency exchange, medical treatment, injured claimant transport and obtaining medical records.”

In addition to training their own staff or working with a partner who specializes in Defense Base Act claims, insurers must be ready from a business continuity perspective by planning for spikes in volume and adjusting their processes. 

“Keeping track of the volume of people they have employed overseas; having risk consultants around to give the insureds advice on how to mitigate the risks, wherever they happen to be; having rosters of personnel that you can cross train on short notice — anything it takes to rapidly ramp up and deal with a spike is what you should be prepared to do,” Mr. Richardson said.






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