“It’s been a big problem,” said Jack Martone, a former top Labor Department official. “The Department of Labor is not well equipped to police” the conduct of employers and insurers.
Insurance for civilians working in war zones is required under a World War II-era law known as the Defense Base Act. Companies providing services to the U.S. government must secure a special type of workers’ compensation coverage for their employees, both American and foreign.
The insurance covers all injuries and deaths, whether caused by workplace accidents or roadside bombs. Companies bill the cost to U.S. taxpayers as part of their government contracts.
For decades, this system was overseen by a handful of federal bureaucrats who processed a few hundred claims a year. That changed when the U.S. went to war in Afghanistan in 2001 and later in Iraq.
In both conflicts, the U.S. military has relied on civilian workers to a greater extent than ever before — to cook meals, clean latrines, deliver fuel and translate for troops, among many other tasks. There are more civilians than uniformed soldiers in the two war zones, and more than 1,400 contract workers have died.
Despite this large-scale mobilization of civilians, the Labor Department did not increase staff or budget to handle Defense Base Act claims and was quickly swamped.
The department stationed no one in Iraq or any other country to help injured foreigners file claims. Nor did it make a serious effort to ensure that companies posted information about workers’ rights, as required by law.
“I see a complete absence of claims or payments for foreigners,” said Joshua Gillelan, a former Labor Department attorney who now represents injured contract workers. “They are never going to be enforced.”
Thousands of companies have worked under U.S. contracts in Iraq, but since the war began in 2003, the department has fined only one, a small security subcontractor, for not reporting worker injuries, according to Labor Department figures.
Similarly, the department has not prosecuted any companies for failing to buy war-zone insurance, although the Times-ProPublica investigation identified at least five cases in which military contractors did not provide coverage for employees.
The department does not even attempt to communicate with injured Iraqis or Afghans for fear that a letter from the U.S. might imperil their lives. Instead, the department asks employers to forward Labor Department mail informing workers of their rights.
“It’s the biggest fiasco. Almost all of it is returned,” Richard Robilotti, a department official who oversees many of the claims, told a recent conference.
Labor Department officials said cultural barriers and war-zone dangers have prevented them from reaching out to injured foreigners.
“There is no mechanism for the Department of Labor to stand around in Baghdad and drum up claims,” said Shelby Hallmark, who oversees the department’s Defense Base Act program. Officials try “to get the word out down through their chains of subcontractors on how this works. Is it perfect? No, I wouldn’t say it is.”
Insurers defended their performance. American International Group Inc., the insurance giant that received a huge taxpayer bailout last year after suffering heavy losses in the derivatives market, is the largest provider of workers’ compensation coverage in Iraq.
In a statement, the company said it conscientiously fulfilled its obligations to workers injured in the war zone and took “numerous extraordinary measures under very difficult circumstances to locate and pay claimants or their beneficiaries.”
AIG opened an office in Dubai, United Arab Emirates, to handle claims and translated Labor Department guidelines into Arabic, Turkish and other languages. In some cases, AIG has hired insurance research companies to track down widows and injured workers.
CNA Financial Corp. has the second-largest number of claims in Iraq and Afghanistan. The insurer said it “routinely pays claims made by foreigners” and “is not aware of a problem with regard to foreign workers.”
Incident Rates Differ
KBR Inc. is the largest employer of contract workers in Iraq, with about 16,000, most of them U.S. citizens, according to a July 2007 Pentagon census.
The Houston engineering and construction firm reported more than 700 serious injuries or deaths in the first six months of 2007 — almost five incidents for every 100 workers.