The ranking member of the House Committee on Oversight and Government Reform introduced legislation today that would shore up workers' compensation insurance for civilian military contractors, replacing a controversial private system with one backed by the federal government.
The proposal by Rep. Elijah Cummings, D-Md., would revise provisions in the Defense Base Act, which requires military contractors to provide workers' compensation for American and foreign employees.
Currently, contractors purchase coverage from insurance companies, but as ProPublica reported in 2009, contractors injured in Iraq and Afghanistan often have had to battle with private insurers to obtain medical treatments and disability payments. Many foreign contractors have been entirely left in the dark about the benefits they were owed.
The current system also imposes hefty costs on taxpayers, as the premiums for workers' comp policies are generally built into military contracts. An Army audit concluded that some premiums were "unreasonably high and excessive" and congressional investigations have found that insurers have earned hundreds of millions in profits from them.
In introducing his proposal — under which the government would pay benefits directly to injured contractors or their survivors — Cummings cited a 2009 Pentagon study which estimated that a federal workers' comp program could save taxpayers $250 million a year.
"There is absolutely no reason American taxpayers should be lining the pockets of private insurance companies," he said in a statement.
The Pentagon's report said insurance companies would probably oppose any attempt to alter the Defense Base Act's workers' comp requirements. As of now, AIG, the dominant warzone insurance provider, has not responded to our request for comment on Cummings' bill.
A spokesman for the Department of Labor, which oversees the Defense Base Act's implementation, said they were not yet ready to comment on the proposal.
ProPublica's investigation found that the agency had not expanded its operation to sufficiently cope with the influx of claims that came with unprecedented numbers of contractors in Iraq and Afghanistan.
