In the old days of Defense Base Act insurance sales, there were only three major players with very limited competition. The big three insurance companies, namely AIG, CNA, and ACE, paved the way into the Defense Base Act realm, and set early case law concerning emerging issues in Defense Base Act litigation. Since then, the market for Defense Base Act insurance has expanded, resulting in new Carriers and third party administrators boosting quarterly profits. These include Zurich American, Allied World National Assurance Company, Broadspire Services, Liberty Mutual Insurance Company, STARR Indemnity, and Gallagher Bassett.
With the emergence of new Defense Base Act carriers, came new challenges in underwriting risks inclusive of “old” liability through judicial expansion of the doctrine known as the last responsible employer and carrier rule. New carriers such as STARR Indemnity and Allied World National Assurance Company must now underwrite coverage for both new risks, and old risks inherited under newly issued policies to Employers who have changed insurance companies seeking lower premiums.
The classic fact pattern regarding the last responsible carrier goes as follows. Mr. Jones is a Protective Security Specialist in Iraq with Employer X, who purchased Defense Base Act insurance coverage through Original Insurance Company. In January 2015, Mr. Jones injures his shoulder, and is sent home to for further medical treatment by on base medics. Upon repatriation, the Original Insurance Carrier baselessly denies his claim knowing that the insured Employer X intends to change insurance carriers. After experiencing the financial hardships of a denied claim, and baseless denial of simple medical treatment, Mr. Jones is forced to return to overseas work in order to support his family in June 2015. In May 2015, Employer X changed Defense Base Act insurance companies to New Insurance Company. After returning to heavy duty work overseas, Mr. Jones’ condition worsens, and his pain becomes significantly worse causing him to again return stateside to treat. New Insurance Company says the Original Insurance Company is liable, and denies his claim. The Original Insurance Company says the New Insurance Company is liable, and denies his claim. Mr. Jones finds himself the middle of two multi-billion-dollar insurance carriers who both profited off the sale of multimillion dollar Defense Base Act insurance policies, and pitched their comprehensive and responsive adjuster services to obtain the sale. However, when it really matters, neither insurance carrier wants to make good on their promises. Who is liable?
The short answer is that the New Insurance Company is liable for the entire disability no matter how zealously they defend against the claim.
The law governing the last responsible employer/carrier under the Defense Base Act is as follows:
[I]f the disability resulted from the natural progression of a prior injury and would have occurred notwithstanding the subsequent injury, then the prior injury is compensable and accordingly, the prior employer is responsible. If, on the other hand, the subsequent injury aggravated, accelerated or combined with claimant’s prior injury, thus resulting in claimant’s disability, then the subsequent injury is the compensable injury, and the subsequent employer is responsible.
Constructors, Inc. v. Dir., Office of Workers’ Comp. Programs, 950 F.2d 621, 624 (9th Cir. 1991) (emphasis added; quoting Kelaita v. Dir., Office of Workers’ Comp. Programs, 799 F.2d 1308, 1311 (9th Cir. 1986)). The last employer rule dictates that "the employer during the last employment in which the claimant was exposed to injurious stimuli . . . should be liable for the full amount of the award." Travelers Ins. Co. v. Cardillo, 225 F.2d 137, 145 (2d Cir. 1955).
This rule has been reiterated time and time again by the courts in numerous other decisions, See Cordero, 580 F.2d at 1336; Ronne, 932 F.2d at 840; Picinich, 914 F.2d at 1319; Lustig v. U.S. Dep't of Labor, 881 F.2d 593, 596 (9th Cir. 1989); Todd Shipyards Corp. v. Black, 717 F.2d 1280, 1284 (9th Cir. 1983); Lopez v. Stevedoring Servs. of Am., 39 BRBS 85 (2005) (later employer may be held liable even when the aggravating injury is not the primary factor in claimant’s resulting disability); Reposky v. International Transp. Services, 40 BRBS 65 (2006). Nonetheless, insurance defense attorneys routinely attempt to pervert the law to justify baseless claim denials. The rationale behind enacting the last responsible carrier rule is twofold. First, the courts have justified this rule due to the "administrative convenience" in avoiding lengthy liability apportionment. Second, courts have justified this rule based upon the fairness inherent in the likelihood that "all employers will be the last employer a proportionate share of the time." Cordero, 580 F.2d at 1336.
An issue oftentimes raised by overly zealous defense attorneys attempting to avoid liability is whether the injury was the “natural progression” of the original injury, or whether the injury was worsened by continued employment. The legal standard developed over the past few decades has created an extremely low hurdle for a new carrier to be assigned full liability. This is particularly true in Defense Base Act claims whereby the nature of contractor’s overseas employment is almost always extremely physically and mentally demanding, and performed in harsh war zone conditions.
An important distinction under this rule, is that it does not require that a later injury fundamentally alter a prior condition. Rather, “it is enough that it produces or contributes to a worsening of symptoms.” Marinette Marine Corp. v. Office of Workers’ Comp. Programs, 431 F.3d 1032, 1035 (7th Cir. 2005). In other words, it is not necessary to compare MRI’s or X-rays of a condition pre and post-coverage dates. Aside from the logistical nightmare of attempting to do so, it would be both medically and legally irrelevant. See, Avant v. Nat. Steel and Shipbuilding Co., et al., BRB No. 03-0414 (Mar. 8, 2004, unpub) (holding a doctor’s opinion that surgery would be required, regardless of the impact upon claimant’s condition of his later employer, is not dispositive.)
Simply put, all that is required to shift liability to the new insurance carrier is a mere worsening of symptoms. Daniel L. Oberts v. Alsalam Aircraft Company, BRB No. 05-0445, at 3, (holding that an ‘aggravation’ occurs when an increase in symptoms is linked to a claimant’s continued employment). The length of time an injured employee works under a new coverage period is irrelevant. Even where a claimant works for a subsequent employer for only one day, he can suffer a compensable aggravation. Metro. Stevedore Co. v. Crescent Wharf & Warehouse Co., 339 F.3d 1102, 1106 (9th Cir. 2003) (noting that aggravations can be caused where work performed for an employer is “harmful” to the claimant’s condition and where such work causes “flare-ups” of pain), cert. denied, 543 U.S. 940 (2004); J.H. v. Dimensions Int’l, BRB No. 08-0689 (Apr. 16, 2009) (unpublished); Obert v. John T. Clark & Son of Maryland, 23 BRBS 157 (1990); Cairns v. Matson Terminals, Inc., 21 BRBS 252 (1988). (holding that the fact that symptoms could have developed anywhere fails to negate the fact that the employee’s symptoms developed while he was working for his employer). Finally, the occurrence of a specific injurious event is absolutely unnecessary to shift liability to a new insurance carrier, if it is demonstrated that conditions of employment caused the employee to become symptomatic. Delaware River Stevedores, Inc. v. Director, OWCP, 279 F.3d 233, 241, 35 BRBS 154, 160(CRT) (3d Cir. 2002); Director, OWCP v. Vessel Repair, Inc., 168 F.3d 190, 33 BRBS 65(CRT) (5th Cir. 1999);5 Wheatley v. Adler, 407 F.2d 307 (D.C. Cir. 1968); Darnell v. Bell Helicopter International, Inc., 16 BRBS 98 (1984), aff’d sub nom.; and Bell Helicopter International, Inc. v. Jacobs, 746 F.2d 1342, 17 BRBS 13(CRT) (8th Cir. 1984).
Claims involving multiple employers, and multiple Defense Base Act insurance carriers are oftentimes heavily litigated. Therefore, should you find yourself in the middle of a last responsible carrier claim, I recommend retaining competent counsel to help fight for what you’re entitled to under the Defense Base Act. To best determined whether your injuries fall within Defense Base Act coverage, contact Diamond Law Practice, PLLC today. We offer free claim consultation to help you recover all available benefits under the Defense Base Act. Please call (212) 220-7134, or email us at JDiamond@DiamondLawPractice.com today.