Civilian contractor comp claims surge post-Afghanistan

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 Corporation Study found that civilian contractors suffer at a much greater rate.

At the time of the study, 25% of private contractors showed PTSD 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 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 P.A. 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 him to the hazards of wartime risk,” said David Barnett, founding and managing partner of the firm.

In the past year, the number of workers compensation claims filed by contractors amounted to that of the past three years combined: 6,000 claims from September 2020 to September 2021, according to Mr. Frankel.

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

“A lot of it involves validity, making sure the claims are valid, and a lot of it involves 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.”

“It’s just a tremendous volume which consequently results in processing delays in all the things they would normally expect an insurance company to do in a claim: Investigate, ensure everything’s valid, process and pay claims that are now backlogged,” Mr. Frankel said.

Validating the claims is a necessary first step since 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.”

The greater challenge with processing the mental injury claims is making sure there’s adequate medical documentation from someone with appropriate credentials, said Eric Richardson, senior client services manager at Gallagher Bassett Services Inc. based in Carlsbad, California.

“If someone’s being treated overseas, we have to take extra care to see what kind of credentials that overseas physician might have, have them address clarifying questions if needed, because they may not be operating under the same diagnostic criteria we would here,” Mr. Richardson said.

Often, a second opinion is required, which prolongs the claim and adds to costs, he said.

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.

“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,” Mr. Richardson offered.

“Anything it takes to rapidly ramp up and deal with a spike is what you should be prepared to do.”

This article was first published in Business Insurance.

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