The Defense Base Act does not apply to KBR? Be careful what you wish for April 14, 2008Posted by Aaron Walter in Uncategorized.
Tags: AIG, KBR, Tort
Part of their argument is that KBR should not be able to “hide behind” what has been described by many bloggers as the “archaic World War II-era law” protecting KBR from liability for injuries to their employees in Iraq. That law, of course, is the Defense Base Act (as an extension to the Longshore and Harbor Workers’ Compensation Act).
It has recently come to light that KBR was running a bit a tax scam on the United States. Some surmise that this means KBR is admitting they are not a US Corporation and are therefore not entitled to “hide behind” the Defense Base Act. Several bloggers appear to figuratively point their fingers and laugh at KBR for their arrogance in trying to both benefit from US law and foreign tax benefits.
I have no love for KBR. I have already been critical of their unique tax accounting. Additionally, I have been critical of AIG, the insurer in 90% of DBA cases. They overcharged contractors for DBA insurance, at least for the first couple years of the war. Those bills were passed directly to US taxpayers, who essentially pay these premiums for every contractor over in Iraq/Afghanistan.
But, back to the topic at hand – lets say KBR, now a foreign corporation, should be found unable to claim refuge from negligence based personal injury actions by its employees. (NOTE: Even under the DBA, KBR could be sued in a personal injury/tort action if the injury were due to intentional actions by KBR). This would mean that the Defense Base Act does not protect KBR. Yeah! Lets all cheer and rejoice!
But wait, lets consider what this means. KBR is the largest US Contractor in Iraq. 1,000+ US Contractors have been killed in action in Iraq and over 10,000 have been injured. Over 11,000 claims have been filed under the Defense Base Act, and a large portion of these have been involving KBR. If The DBA does not apply to KBR the thousands of injured or deceased employees and their families would no longer receive income benefits or medical treatment under the laws of the Defense Base Act. Compared with similar state systems of Workers’ Compensation, the Defense Base Act is quite favorable. This would be a catastrophic loss for thousands of people.
What would be gained? Tens, maybe hundreds of contractors could sue KBR directly alleging specific negligence on KBR’s part which caused their injuries. However, most injuries occuring overseas to contractors are not due to anyone’s negligence. They range from the kind of back injury you could get lifting something in your own backyard to a bullet wound from enemy fire. Thousands of common injuries would no longer be covered so that KBR could be opened up to personal liability in the few situations in which their actions were truly negligent.
In case some readers (possibly international readers) did not know, every state in the US has a Workers’ Compensation system. It is the exclusive remedy for injured employees to recieve compensation (cash or medical). In other words, except in RARE circumstances, you can’t sue your employer because you are hurt. Whether this is a good system for employees/employers I will leave for another day. The fact is – it is there.
If KBR was as reckless and possibly intentional in some of its actions, as media reports indicate, I hope and pray that those contractors and their families are capable of sueing KBR directly for damages in those cases. However, for those who simply cheer bad news for KBR, think about who the Defense Base Act and its Workers’ Compensation system helps before you root for its demise as some archaic WWII systems magically used to insulate KBR from suit. The DBA is as much there for the the individual contractors as it is for KBR.