A Brief Defense Base Act Benefits Summary
As we look forward to another year, we wanted to provide our clients a quick summary of the Defense Base Act and the benefits available under the Act if they are injured. Like many of our other newsletters, we use examples in this summary that are only meant to show how claims and benefits are handled generally, and are not intended to demonstrate a particular result. Each and every claim is different, and you should speak to your attorneys if you have any specific questions about your own claim.
Defense Base Act Coverage
When civilian employees are hired by Employers to fulfill a contract entered into with the U.S. government overseas, falling under the provisions of the Defense Base Act, those employees are afforded certain benefits if they are injured while working. Benefits under the Defense Base Act are available if an injury occurs in the course of employment or, if not actually working at the time of the injury, if the injury occurs in a Zone of Special Danger (such as a war zone or remote location) or in the course of Reasonable Recreation. Since the Defense Base Act is a form of federal workers’ compensation insurance provided by an insurance company to Employers, an evaluation of each claim is made by the insurance carrier and the Department of Labor. Once each claim is evaluated, a decision is made to provide or deny benefits under the Act.
The following are terms used in the Defense Base Act (and many other workers’ compensation laws) that you may see from time to time. Certain benefits are available only for certain types – or classes – of injuries. The U.S. Department of Labor typically determines the classification of an injury. Remember, each claim and its surrounding circumstances are evaluated individually and will impact the classification and therefore the benefits paid.
Key Definitions
Average Weekly Wage (AWW)
The Average Weekly Wage forms the basis for the calculation of an injured employee’s Compensation Rate. This is usually determined by averaging his or her wages over the substantial part of the 52 weeks before the injury in the same or similar employment. Wage statements and tax records will be requested in order to support the earnings of the injured worker over the
prior 52 weeks. If only a portion of a year was worked before an injury, the Department of Labor may “blend” the overseas wages with the pre-deployment wages. If an injured worker worked in the United States earning $30,000.00 a year, and was hired to work overseas earning $100,000.00 a year, but was injured with first month overseas, the AWW will most likely be based on the four weeks of overseas earnings with 48 weeks of domestic earnings. This “blended” approach usually results in a much lower AWW.
Compensation Rate (CR)
The Compensation Rate is 66 2/3% of the AWW on the date of accident or injury, subject to a maximum compensation rate that changes each October 1st (start of the fiscal year). Currently, the maximum weekly compensation rate for accidents occurring between October 1, 2015 and September 30, 2016 is $1,406.00. Remember – your date of accident determines your maximum compensation rate for your claim.
Maximum Compensation Rate
The Maximum Compensation Rate is determined by the U.S. Department of Labor each year effective October 1st, and is equivalent to 200% of the National Average Weekly Wage, as determined by government statistical surveys. The maximum compensation rate for is published by the Department of Labor and is available at http://www.dol.gov/owcp/dlhwc/NAWWinfo.htm.
Minimum Compensation Rate
The minimum compensation rate provision of the Longshore and Harbor Workers’ Compensation Act is not applicable to the Defense Base Act, but is applicable to other extensions of the Longshore and Harbor Workers’ Compensation Act (such as the Non-Appropriated Funds Instrumentalities Act).
Benefit Structure
The Defense Base Act may provide the following types of benefits to employees whose deaths, injuries or occupational illnesses arise out of, and in the course of their employment:
- Medical Services and Supplies;
- Temporary Total Disability;
- Temporary Partial Disability;
- Permanent Partial Disability;
- Permanent Total Disability;
- Death Benefits; and
- Vocational Rehabilitation.
Medical Services and Supplies
The Employer’s DBA insurance company is responsible for the medical, surgical, and other attendance or treatment, nurse and hospital service, medicine, crutches, and apparatus as the nature of the injury or the process of recovery may reasonably require. Physical rehabilitation services are included if necessary. The responsibility to provide medical care continues for as long as the nature of the injury requires (unless the employee agrees to settle his or her rights to future medical care). The responsibility to provide medical care is not limited in amount either annually or in aggregate. The insurer is, however, only required to pay charges for medical services that are reasonable in amount (usual and customary in the community where the services are rendered) and necessary to the treatment of the injury. The injured employee is not required to meet any deductible or co-payment; the full cost of reasonable and necessary treatment, etc., is the insurer’s responsibility.
Remember – the medical care must be related to the overseas injury, necessary to treat the injury, and the cost reasonable. Experimental, exotic, or non-government approved care (non-FDA approved) may not be authorized. Medical charges by your doctor higher than those charged in the community may be challenged. Also, any intervening accident or injury after your work-related injury (such as a car accident after you come home, or a slip and fall in the bathtub), may severe the need for medical care for your work-related injuries, and no further DBA benefits may be due. The Employer and its Carrier are only responsible to treat the injuries arising from your employment.
You get to pick one free choice treating physician. Once you do, any other physician or specialist is selected by the insurance company. Changes of doctors are only permitted by agreement of the insurance company, or permission of the Department of Labor.
In order to receive disability benefits (lost wage benefits), employees must be authorized off work by a treating doctor, and something must be provided in writing to the DBA insurance company. Therefore, it is extremely important your treating doctors regularly provide medical reports to the DBA insurance company with your current work status or physical restrictions.
There are four different categories of disabilities that are covered under the Defense Base Act (DBA): permanent total disability, temporary total disability, permanent partial disability, and temporary partial disability. Each of these classifications carries two important pieces of information: how long you are expected to be disabled, and the extent of your injury.
The “nature” of your disability covers the duration of time that you are expected to be disabled (the “temporary” or “permanent” classification). The “extent” of your disability, however, is slightly more complicated. The “extent” of your disability concerns the degree of the injury (“total” or “partial”), but also the degree to which you are able to successfully function (the ability to return to work with our without restrictions).
Temporary Total Disability (TTD)
If an employee is unable to work as a result of a compensable (work-related) injury or occupational illness, he is entitled to
Temporary Total Disability (TTD) benefits as partial replacement of wages lost. No TTD is payable for the first three days of total disability unless the total disability lasts more than 14 days. If total disability lasts longer than 14 days, the TTD benefit is paid from the first day of total disability (i.e., the three day “waiting period” is waived).
The Temporary Total Disability benefit continues as long as the disability is considered to be both “temporary” in nature and “total” in extent, and is generally paid every two weeks. This is usually the case where the injury is severe enough to take you out of work, but the doctor believes you require additional treatment before he can release you. The injured worker is still actively treating for his injuries, and has not reached maximum medical improvement (a point where he is as good as he is going to get medically). There is no maximum time period you can receive these benefits.
Temporary Total Disability benefits are generally paid at 66 2/3% of the injured employee’s Average Weekly Wage, subject to a maximum weekly amount based on the date of the accident.
Example:
Average Weekly Wage= $3,000.00
- Date of Accident: April 1, 2015
- Temporary Total Disability Benefit (compensation rate) = AWW x 66 2/3%
- $3,000.00 x 0.6667 = $2,000.01 compensation rate
- Maximum compensation rate for injuries occurring between October 1, 2015 and September 30, 2016 = $1,406.00.
- Injured worker entitled to $1,406.00 each week in TTD benefits. Payable indefinitely.
Temporary Partial Disability (TPD)
An injured employee is temporarily and partially disabled if he is unable to return to his usual and customary employment (the job he was doing at the time of the accident), but is able to return to other employment making less money as a result of his injuries. The injured worker is still actively treating for his injuries, and has not reached maximum medical improvement (a point where he is as good as he is going to get medically).
TPD benefits are paid at 66 2/3% of the difference between the average weekly wage before the injury and the employee’s wage-earning capacity after the injury in the same or another employment, subject to the maximum weekly rate. TPD benefits are payable for the duration of the temporary partial disability, but shall not exceed five years.
The TPD compensation rate is subject to modification on receipt of evidence of a change in earning capacity (an increase or decrease in wages, or a doctor placing new restrictions that prevent the employee from working).
Example:
AWW at time of injury= $1,500.00
- AWW at time of injury – Earnings after injury = difference x 66 2/3%
- Earnings after injury = $500.00
- Difference in earnings = $1,000.00
Weekly Temporary Partial Disability Benefit = $1,500.00 – $500.00 = $1,000.00 x 0.6667 = $666.67 TPD compensation rate. Payable for a maximum of five years.
Permanent Partial Disability (PPD)
If an employee’s injury leaves him with a disability that is less than total (the worker has reached maximum medical improvement – a point where he is as good as he is going to get medically, and he can return to some form of employment), but is of a permanent nature (due to the injury, there are permanent work restrictions, i.e., no lifting over 20 pounds due to a back injury), he or she is entitled to benefits for Permanent Partial Disability (PPD).
Under the Defense Base Act Permanent Partial Disabilities are compensated in one of two ways:
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Scheduled (Loss or Loss of Use of a Limb) PPD
If the permanent partial disability results from the complete or partial loss, or loss of use of, a specific member of the body enumerated in Section 8 (c) of the Act, the PPD benefit is limited to the number of weeks applicable to
the specific body part, multiplied by the weekly compensation rate, subject to the weekly maximum compensation rate, multiplied by the percentage loss, or loss of use of, the member.
For example, an Impairment Rating of 25%, representing a loss of use of a leg due to a knee injury, would result in compensation for PPD as follows:
Average Weekly Wage: $1,500.00
- Permanent Impairment (Impairment Rating) = 25% of the left leg
- Total Loss of a Leg under Section 8 = 288 weeks of compensation
- Compensation rate = AWW x 66 2/3% = $1,000.00
- Calculation: $1,000 x 288 weeks x .25 = $72,000.00
Once this amount is paid out, the Carrier is not obligated, and the injured worker is not entitled, to any additional compensation benefits!
Examples of other body parts and scheduled limits (these numbers would be inserted into calculation above):
Loss of Arm entitles an injured worker to 312 weeks of compensation benefits once the worker is placed at maximum medical improvement (a point where he is as good as he is going to get medically).
Loss of Leg entitles an injured worker to 288 weeks of compensation benefits once the worker is placed at maximum medical improvement (a point where he is as good as he is going to get medically).
Loss of Hand entitles an injured worker to 244 weeks of compensation benefits once the worker is placed at maximum medical improvement (a point where he is as good as he is going to get medically).
Loss of Foot entitles an injured worker to 205 weeks of compensation benefits once the worker is placed at maximum medical improvement (a point where he is as good as he is going to get medically).
Loss of Eye entitles an injured worker to 160 weeks of compensation benefits once the worker is placed at maximum medical improvement (a point where he is as good as he is going to get medically).
Loss of Thumb entitles an injured worker to 75 weeks of compensation benefits once the worker is placed at maximum medical improvement (a point where he is as good as he is going to get medically).
Loss of hearing in one ear entitles an injured worker to 52 weeks of compensation benefits once the worker is placed at maximum medical improvement (a point where he is as good as he is going to get medically). This is the only “scheduled” injury that requires an Impairment Rating determined by the most recent American Medical Association Impairment Guide, as well as a substantiating audiogram.
Additional scheduled losses are listed in Section 8 of the Act.
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Un-Scheduled (Loss of Wage Earning Capacity) PPD
If the permanent partial disability results in an injury not delineated in the schedule mentioned above (such as injuries to the shoulders, hips, back, neck, internal organs, or psyche), compensation is based upon a loss of wage-earning capacity similar to that of the Temporary Partial Disability (TPD) benefit. The compensation shall be 66 2/3% percent of the difference between the average weekly wage of the employee before the injury and the employee’s earning capacity after the injury in the same or another employment.
In the case of un-scheduled Permanent Partial Disability, benefits continue for the duration of the disability without any time limit.
Example:
Earnings at time of injury= $1,500.00
- Earnings after injury = $500.00
- Difference in earnings = $1,000.00
- Earnings at time of injury minus Earnings after injury = difference x 66 2/3%
- Weekly Permanent Partial Disability Benefit = $1,500.00 – $500.00 = $1,000.00 x .6667 = $666.67
You will notice this is the same calculation as the TPD benefits. The difference is that PPD is due once a worker with a non-scheduled injury reaches maximum medical improvement (a point where he is as good as he is going to get medically), has a permanent work restriction, and has a loss of wage earning capacity (i.e., cannot earn as much as he was when he was injured).
Keep in mind the Carrier can calculate wage loss PPD benefits based on jobs it believes you can do within your restrictions, even if you never actually apply for or get a job! This is done using a vocational expert hired by the Carrier to evaluate you, your education and job skills, your medical records and restrictions, and a survey of the employment market in your area. If the Carrier can identify one job you could do, it may be able to reduce or stop compensation benefits based on that potential job. Your attorneys can fight this by taking your case to trial using your medical records and a vocational expert hired by your attorneys to refute the Carrier’s position.
Permanent Total Disability
If the injury leaves the employee permanently unable to engage in any gainful employment, he or she is entitled to benefits for Permanent Total Disability (PTD). PTD benefits are payable at the same rate as TTD benefits (66
2/3% of the pre-injury average weekly wage, subject to the maximum compensation rate in effect on the date of the injury). The PTD benefit is payable for the duration of the employee’s disability or for the remainder of his or her life. The PTD benefit is also subject to annual cost of living adjustments, which are determined by the US Department of Labor.
Example:
Average Weekly Wage= $1,500.00
- Permanent Total Disability Benefit = AWW x 66 2/3%
- Weekly Permanent Total Disability= $1,500.00 x .6667 = $1,000.00
- (Subject to the maximum compensation rate for the date of accident)
Keep in mind permanent and total disability requires medical evidence – your doctors have to state you can never work again, in any capacity. This is a very high burden to prove under the DBA; if you have a hobby – like cutting your own lawn or gardening – that could be something that earns money, then you can be gainfully employed, and you are notpermanently and totally disabled. Please do not confuse this class of benefit with something you may be entitled to through a short- or long-term disability plan, or even Social Security Disability Insurance. These are completely different systems, with completely different burdens of proof, and one does not have any binding influence on another.
Vocational Rehabilitation
In certain cases, where the nature of the injury is such that it will prevent the injured employee from returning to his pre-injury occupation, the employee may be entitled to assistance in vocational training and/or job placement. This is a service provided through the U.S. Department of Labor, free of charge to the injured worker, once an injured worker reaches maximum medical improvement.
DEATH BENEFITS
Benefits Payable to Spouse and Dependent Children
If the compensable injury or illness causes the death of the employee, certain persons are entitled to receive Death Benefits. If the deceased is survived by a widow or widower alone, he or she is entitled to receive 50% of the deceased employee’s pre-injury average weekly wage (subject to the maximum compensation rate in effect on the date of the accident) for the remainder of his or her lifetime, or until he or she remarries.
If the deceased is survived by a widow or widower, and one or more children, the widow or widower receives 50% of the average weekly wage, and an additional 16 2/3% is payable for the benefit of the children. Children are entitled to benefits until they are 18 years of age, or until age 23 if they continue in an accredited school as full-time students. Children with a mental or physical disability sufficient to render them dependent upon the deceased for support may continue to be entitled to benefits beyond the ages of 18 or 23.
In the absence of a widow or widower, and any dependent children, certain other dependent relatives of the deceased may, under certain circumstances, are entitled to receive benefits.
The total benefit per week for the family is subject to the maximum compensation rate in effect for the date of accident.
Example:
A 40 year old widow (Assuming that spouse does not remarry)
- Widow = 50% benefit
- Deceased’s Average Weekly Wage of $1,500.00 a week x 50% = $750.00
40 year old widow and 2 young children (Assuming that spouse does not remarry)
- Widow = 50% benefit
- Deceased’s Average Weekly Wage of $1,500.00 x 50% = $750.00
- Children = 16 2/3% benefit (REGARDLESS OF THE NUMBER OF CHILDREN)
- Deceased’s Average Weekly Wage of $1,500.00 x .1667 = $250.00
Total Death Benefits for Family = $1,000.00 (subject to the maximum compensation rate in effect for the date of accident that applies to the family)
You will see Death Benefits cannot exceed the compensation rate the injured worker would have received if he had lived; i.e., 66 2/3% of the AWW.
Funeral Expense
In the case of an employee who dies as a result of a compensable injury or occupational illness, an allowance of up to $3,000.00 is payable toward funeral expenses. Expenses must be substantiated with receipts or other documentation.
Conclusion
I know some of this information may be confusing, and you do not have to remember the details. This is simply an aid for you to become familiar with some of the terms of art that you may hear during the course of your claim. Please speak to any of our lawyers about your case, and we will be more than happy to guide you with the claim process.