The Defense Base Act’s Exclusive Workers Compensation Scheme for Overseas

Understanding the preemptive role of the Defense Base Act (‘‘DBA’’) is crucial for any federal government contractor performing overseas work for the U.S. military or federal departments or agencies. The DBA creates an exclusive workers compensation scheme providing disability and medical benefits and vocational rehabilitation to covered employees, and death benefits to eligible survivors of employees.

The DBA applies to employees of defense contractors working outside the U.S. whose injuries or death arise out of the course of their employment. It is the exclusive remedy for such employees against their employers. In other words, contractor employees may not pursue state tort law claims or state workers’ compensation claims against their employer for injuries covered by the DBA. Defendant employers can and should move to dismiss state law tort claims by employees or former employees based on the DBA exclusivity.

Background of the DBA.

The DBA, enacted in 1941, es- tablishes a uniform, nationwide, federally administered—and exclusive—workers’ compensation scheme for the benefit of all government contractor em- ployees who suffer ‘‘injury or death...under a contract ... performed outside the continental United States ... in connection with the national defense or with war ac- tivities.’’ 42 U.S.C. § § 1651(a), 1651(a)(4), 1651(b)(1). ‘‘Except as ... modified,’’ the DBA incorporates the provisions of the Longshore and Harbor Workers’ Com- pensation Act, (‘‘LHWCA’’), 33 U.S.C. § 901 et seq., ‘‘in respect to the injury or death of any employee’’ covered by the DBA. 42 U.S.C. § 1651(a); see O’Keeffe v. Pan Am. World Airways, Inc., 338 F.2d 319, 322 (5th Cir. 1964) (discussing the DBA’s independent purposes as well as its incorporation of the LHWCA compensation mechanism). The DBA’s purpose is reflected in its own language, which establishes a federally administered, predictable, no-fault, and exclusive workers’ compensa- tion scheme for military support contractor employees who are injured or killed overseas ‘‘in connection with the national defense or with war activities.’’ 42 U.S.C. § 1651(b)(1).

The unique objectives of the DBA are also reflected in the provisions of the War Hazards Compensation Act (‘‘WHCA’’). Under the WHCA, the United States is re- quired to reimburse employers and insurers for claims paid under the DBA in connection with an ‘‘injury [or death that] proximately results from a war-risk haz- ard.’’ 42 U.S.C. § 1701(a).

The WHCA supplements the DBA by providing for (1) reimbursement of employer/carrier payments in cases of overlapping coverage where the injury oc- curred within the scope of the employment and was caused by a war-risk hazard; (2) direct coverage to an employee when the DBA does not apply (i.e., when the incident occurred outside the scope of employment) but the employee was injured as a result of a war-risk haz- ard; and (3) coverage for capture and detention, in ad- dition to injury and death.

The DBA’s exclusivity-of-remedy provision, entitled ‘‘Liability as exclusive,’’ declares that [t]he liability of an employer ... under this chapter shall be exclusive and in place of all other liability of such employer ... to his employees (and their depen- dents) ... irrespective of the place where the contract or hire of any such employee may have been made or entered into.

42 U.S.C. § 1651(c). The DBA, like the LHWCA and other workers’ compensation schemes, was designed to strike a balance between employees and employers. See Morrison-Knudsen Constr. Co. v. Dir., Office of Workers’ Comp. Programs, 461 U.S. 624, 636 (1983). ‘‘Employers relinquished their defenses to tort actions in exchange for limited and predictable liability. Em- ployees accept the limited recovery because they re- ceive prompt relief without the expense, uncertainty, and delay that tort actions entail.’’ Id.; see also Potomac Elec. Power Co. v. Director, Office of Workers’ Comp. Programs, 449 U.S. 268, 282 n.24 (1980) (explaining that ‘‘[t]he compromise nature of workmen’s compen- sation legislation is well recognized’’).

Although the DBA establishes the exclusive, adminis- trative, compensation remedy for ‘‘the injury or death’’ of any covered employee, 42 U.S.C. § 1651(a), it does not define the term ‘‘injury.’’ As such, courts look to the LHWCA, which defines ‘‘injury’’ as accidental injury or death arising out of and in the course of employment ... and includes an injury caused by the willful act of a third person directed against an employee because of his employment. 33 U.S.C. § 902(2).

Responses to Plaintiffs’ Recent Attempts to Avoid DBA Exclusivity.

Whether The Injury Arose In The Course Of Employ- ment

The DBA covers injuries that arise out of or in the course of employment. In the key Supreme Court case on this issue, the Court explained that the definition of injury did not require ‘‘a causal relation between the na- ture of employment of the injured person and the acci- dent.’’ O’Leary v. Brown-Pacific-Maxon, 340 U.S. 504, 506-07 (1951). The Court further stated: ‘‘Nor is it nec- essary that the employee be engaged at the time of the injury in activity of benefit to his employer. All that is required is that the obligations or conditions of employ- ment create the zone of special danger out of which the injury arose.’’ Id. at 507 (internal quotation marks omit- ted).

Plaintiffs have argued in several cases that their inju- ries did not arise within the course and scope of their employment. This argument has been successful in some cases. For example, in Jones v. Halliburton, 791 F. Supp. 2d 567, 587 (S.D. Tex. 2011), the plaintiff was allegedly sexually attacked at night, while she was off- duty in her barracks room. The court held that the plaintiff’s alleged sexual assault was not within the course and scope of her employment because she was not on call while working for the defendant and her al- leged sexual assault occurred while she was off-duty. Id. at 583-88. The court further found that the require- ment that the plaintiff live in housing provided by the defendant and her limited recreational and social op- portunities failed to create a zone of special danger. Id. at 587.

In contrast, in Taylor v. Kellogg Brown & Root, Inc., No. H-10-2043, 2011 WL 2446429, at *5 (S.D. Tex. May 20, 2011), aff’d, 2011 WL 2412910 (S.D. Tex. June 15, 2011), the court held that the plaintiff, who was on duty, albeit in a break room, when she was assaulted, was acting within the course and scope of her employment and thus the DBA applied. The court also found that the plaintiff’s post in Afghanistan qualified as a location that created ‘‘ ‘a zone of special danger,’ ’’ which ‘‘link[ed] her injuries with her employment.’’ Id. (quot- ing O’Keeffe, 338 F.2d at 325).

As such, employer defendants can focus on certain arguments on the zone of special danger including: (1) the plaintiff’s obligations and conditions of employment create the zone of special danger out of which the al- leged injuries arose; (2) employment in locations like Iraq and Afghanistan qualify as locations that create a zone of special danger linked with the plaintiff’s inju- ries; and (3) the alleged injuries arose while plaintiff was on duty.

Whether The Employer Specifically Intended To In- jure The Plaintiff

In several cases, plaintiffs have argued that the de- fendant specifically intended to injure them, in an effort to avoid the DBA exclusivity. Plaintiffs have included al- legations such as battery and intentional infliction of emotional distress, and argued that such intentional conduct by the defendant falls outside of the DBA ex- clusivity.

While neither the DBA nor the LHWCA expressly sets forth a specific intent exception to the exclusive remedy provision, some courts have held that an em- ployee may sue his employer in tort where the employer harbored a purposeful, individualized intent to injure the employee. See, e.g., Johnson v. Odeco Oil & Gas Co., 679 F. Supp. 604, 606-07 (E.D. La. 1987) (‘‘Johnson I’’), aff’d 864 F.2d 40 (5th Cir. 1989) (‘‘Johnson II’’). In Fisher v. Halliburton, 667 F.3d 602, 620 (5th Cir. 2012), the court of appeals upheld the DBA exclusivity where the war-zone contractor employees alleged that the contractor knowingly placed them in harm’s way. The court found that ‘‘coverage of an injury under the DBA precludes an injured employee from recovering from his employer under a ‘substantially certain’ theory of intentional-tort liability.’’ It noted that it was not dealing with a situation where the employer assaulted the employee or conspired to inflict an assault on the employee. Id.

There are no published cases where the plaintiff has succeeded on the merits in arguing that an employer had a specific intent to harm the employee and thus the DBA exclusivity does not apply. This argument, how- ever, remains an issue for employers when moving to dismiss tort claims by employees or former employees based on the DBA. The best rebuttal to such an argu- ment by plaintiffs is that, unless the employer assaulted the employee or conspired to assault such employee, the DBA exclusivity applies.

Whether The Employer And Other Affiliated Entities Are The ‘‘Employer’’ For Purposes Of The DBA

The issue of whether the defendant employer and other affiliated entities are considered the ‘‘employer’’ for purposes of the DBA has been raised in several cases where the DBA has been at issue.

The overarching rebuttal by defendant employers is that, as a matter of law, all of the employer entities are entitled to the benefit of the DBA’s exclusivity provi- sion. The intent of the DBA is directly contradicted when an employee, who refers to himself as an em- ployee of the parent corporation during his employment and when seeking DBA benefits, then tries to circum- vent the DBA by arguing that the subsidiary to which he entered into an employment agreement with was his sole employer.

Multiple affiliated entities are regularly dismissed as the employer pursuant to the DBA. See, e.g., Schmidt v. Northrop Grumman Sys. Corp., No. 3:04-cv-042-JTC, 2005 U.S. Dist. LEXIS 24688, at *14 (N.D. Ga. Mar. 2, 2005); Ross v. DynCorp, 362 F. Supp. 2d 344 (D.D.C. 2005); Carr v. Lockheed Martin Technical Servs., Inc., No. Civ. SA-97-CA-1408-OG, 1999 WL 33290613 (W.D. Tex. Feb. 8, 1999). Courts also regularly dismiss mul- tiple affiliated entities as the employer in cases involv- ing the LHWCA and New York Workers Compensation Law. See, e.g., Claudio v. United States, 907 F. Supp. 581, 589 (E.D.N.Y. 1985); Carusone v. Three Ctrs. (Ol- roho) Assocs., 124 A.D.2d 317 (N.Y. App. Div. 3d Dept. 1986); Carinha v. Action Crane Corp., 58 A.D.2d 261 (N.Y. App. Div. 1st Dept. 1977); Shine v. Duncan Petro- leum Transp., Inc., 60 N.Y.2d 22 (N.Y. 1983). The ap- propriate analysis is elucidated in Claudio: Multiple de- fendants are entitled to the benefits of DBA exclusivity where they ‘‘worked in concert as a single entity, with interrelation of operations, common management, cen- tralized control of labor relations and common owner- ship.’’ 907 F. Supp. at 588.

The key argument for employers is that the parent company and its subsidiaries and affiliates acted as a ‘‘single entity’’—a single, integrated enterprise that ex- ecuted the contract and constitutes the plaintiff’s em- ployer for purposes of the DBA.

Additionally in Fisher v. Halliburton, 703 F. Supp. 2d 639, 662-65 (S.D. Tex. 2010), rev’d on other grounds, 529 F.3d 548 (5th Cir. 2008), the court found that mul- tiple employer entities were deemed the plaintiffs’ em- ployer under the DBA. Id. The court acknowledged the expansive reach of the LHWCA, which is incorporated by the DBA, and noted that ‘‘[t]he Fifth Circuit has rec- ognized there can be multiple ‘employers’ under the [LHWCA] and each company is, therefore, entitled to immunity under the Act.’’ Id. at 663.

The Fisher decision relies in large part on the Fifth Circuit’s decision in Oilfield Safety & Machine Special- ties, Inc. v. Harman Unlimited, Inc., 625 F.2d 1248 (5th Cir. 1980). See Fisher, 703 F. Supp. 2d at 664. In Oil- field Safety, the Fifth Circuit affirmed an Administrative Law Judge’s finding that two distinct entities were both the claimant’s employer for purposes of the LHWCA. 625 F.2d at 1255-56. The Fifth Circuit recognized that the LHWCA is interpreted expansively and rejected a narrower ‘‘right to control’’ test for determining whether an entity was the employee’s employer for pur- poses of the LHWCA. Id. at 1253-54. Instead, the Fifth Circuit applied the ‘‘relative nature of the work’’ test. Id. at 1254-56. While the Fisher court’s decision was re- versed by the Fifth Circuit, the ‘‘single entity’’ issue was not appealed and still remains good law.

Practice Tips for Contractors.

1. On the issue of ‘‘zone of special danger,’’ defen- dant employers should locate documents that show that the plaintiff has admitted that he or she was injured in the course of employment. In most cases, the plaintiffs will seek DBA benefits from the Department of Labor (‘‘DoL’’) and those proceedings often become conten- tious. During those proceedings, they will argue that their injuries stemmed from their work for the em- ployer. The DBA forms themselves are useful on this is- sue, as the questions address this scope of employment issue (e.g., LS-203 – ‘‘injured while doing regular work?’’). The pleadings, depositions, and hearing transcripts from plaintiffs’ DoL proceedings are also very helpful.
2. Regarding the specific intent issue, plaintiffs’ DBA documents in the DoL proceedings likely will show that the plaintiffs never mentioned any intent to harm by their employer.
3. When addressing the employer issue, the plaintiffs’ employment agreements and other personnel docu- ments also typically support dismissal under the DBA because the plaintiffs agree to be bound by the parent company’s policies and procedures. Employers can fur- ther solidify this defense by requiring that employees sign documents acknowledging that the DBA is their exclusive remedy for claims against the parent com- pany and any of its affiliates.

In many of these DBA cases, the plaintiffs concede in the parallel DoL proceedings that the parent company is their employer. The concessions are found in DBA forms, pleadings, depositions, and hearing transcripts. Those statements can be used in the litigation to show that the plaintiffs knew that the parent corporation was their employer and are now arguing that the subsidiary is their sole employer to avoid the DBA exclusivity.