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The D.C. Circuit’s Message to Injured Government Contractor Employees: ‘There’s an Exclusive Remedy For That’

Last week, in an important decision for contingency contractors supporting U.S. stability operations overseas, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) reaffirmed that the Defense Base Act (DBA) prescribes the exclusive remedies available to employees of government contractors who are injured while working abroad. In doing so, the D.C. Circuit sent injured contractor workers, turned would-be tort plaintiffs, a clear message: federal courts will dismiss tort lawsuits alleging that a DBA-covered government contractor wrongfully−or even intentionally−interfered with an employee’s receipt of DBA benefits.

Enacted in 1941, the DBA establishes a comprehensive workers’ compensation scheme for employees of government contractors who are killed or injured while providing services to the government outside the United States. See 42 U.S.C. § 1651 et seq. The DBA, which incorporates most of the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. § 901 et seq, includes a provision that makes contractors’ liability under the statute “exclusive”−that is, putative plaintiffs are barred from suing their employers for damages beyond the statutory compensation scheme established by Congress. See id. § 1651(c) (“The liability of an employer . . . shall be exclusive and in place of all other liability . . .”) (emphasis added).

Despite the Act’s broad exclusivity provision, in Brink v. Continental Insur. Co., an estimated class of 10,000 contractor employees who were injured in Iraq and Afghanistan brought a purported class-action lawsuit for $2 billion against dozens of government contractors, alleging that the contractors conspired with their respective insurance carriers to deny the workers DBA benefits. But a three-judge panel of the D.C. Circuit unanimously rejected plaintiffs-appellants’ claims and, in a 17-page opinion, made five key findings that will help government contractors defend similar lawsuits in the future.

Five Key Findings From the D.C. Circuit’s Decision in Brink v. Continental Insur. Co.:

First, the DBA’s exclusivity provision is broad and the Act’s administrative process, payment and penalty provisions are comprehensive. In response to plaintiff-appellants’ arguments, the panel emphasized that the DBA represents a “‘legislated compromise between the interests of employees and the concerns of employers.’” Slip Op. at 7 (internal citation omitted). “‘In return for the guarantee of compensation, the employees surrender common-law remedies against their employers for work-related injuries,’” while the employers gain “‘immunity from employee tort suits.’” Id. (internal citation omitted). Courts are not at liberty to disturb the “‘quid pro quo’” established by Congress. Id. (internal citation omitted).

Second, “[a]ll tort claims−including intentional tort claims−‘fall within the [DBA’s] exclusivity provision[],’” Slip Op. at 8 (internal citation omitted) (emphasis added), provided that such claims are dependent on the plaintiff’s entitlement to benefits. The court of appeals based this ruling primarily on Hall v. C&P Telephone Co., 809 F.2d 924, 926 (D.C. Cir. 1987), a case in which the D.C. Circuit refused to hear a tort suit for failure to pay statutory workers’ compensation benefits, even though the employer in that case was alleged to have acted “‘with an intent to injure’” the claimant. Slip Op. at 8 (internal citation omitted) (emphasis in original). The D.C. Circuit also joined the First, Fifth and Ninth Circuits in rejecting the reasoning of Martin v. Travelers Ins. Co., 497 F.2d 329 (1st Cir. 1975), a case upon which the plaintiff-appellants’ relied heavily to argue for an “intentional tort exception” to the DBA’s exclusivity provision. See id. at 9, n.1 (collecting cases). The panel explained that the DBA’s comprehensive penalty provisions provide remedies for “tortious injuries caused by contractors’ intentional actions,” and, therefore, the Act preempts intentional tort claims based on state law. Id. at 10 (citing 33 U.S.C. § 914(e), (f); §§ 921(d), 938; and § 931(c)).

Third, allegations that the penalties set forth in the DBA “‘are inadequate to fully compensate a worker who has been harmed by an employer’s refusal to pay when due,’” even if accurate, “‘require[] a political solution,’” not a legal solution. Id. at 10-11 (internal citation omitted).

Fourth, the DBA’s exclusive remedy provisions can displace claims brought under other federal laws and statutes, including allegations of misrepresentation, fraud or wrongful nonpayment made pursuant to the Racketeer Influenced and Corrupt Organizations (RICO) statute. In Brink, the panel held that the DBA’s exclusive remedy provisions “leave no room appellants’ RICO claims.” Slip Op. at 11-12.

Fifth, would-be plaintiffs must exhaust their administrative remedies under the DBA before they can file a lawsuit alleging that their employer discriminated against or wrongfully discharged them for filing, or attempting to file, a claim for benefits. Id. at 13-14 (discussing the administrative exhaustion requirements of 33 U.S.C. § 948a). The plaintiff-appellants in Brink did “not even attempt[] to comply with the statutory requirements,” and, consequently, their discrimination and wrongful termination claims were properly dismissed. Id.

Although the Brink decision is powerful precedent for government contractors who perform work overseas, contractors must remember that the DBA’s exclusivity provision will only apply if the contractor maintains a DBA insurance policy through an “authorized” insurance-provider, or if the contractor is authorized “as a self-insurer” by the Secretary of Labor. See 33 U.S.C. § 932(a)(1)-(2). To that end, government contractors should conduct periodic DBA-compliance reviews to ensure that their DBA insurance program is current, properly administered and adequately documented.

© 2017 Covington & Burling LLP

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About this Author

Alejandro L. Sarria, Covington Burling, government contracts lawer, DC Attorney
Associate

Alejandro L. Sarria is a senior associate in the firm’s Government Contracts practice group. He represents and advises clients in all aspects of government contracts law and specializes in litigating complex contract disputes against federal, state and local government agencies. Mr. Sarria also has defended private contractors in numerous high-profile tort cases in which he has successfully asserted the government contractor defense and other cutting-edge theories of derivative sovereign immunity.

Mr. Sarria counsels large and small businesses...

202 662 5426
Raymond B. Biagini, Covington Burling, Commercial Litigation, Mass Tort Lawyer
Partner

A distinguished counselor and litigator, Raymond Biagini has risen to national prominence in a number of high-profile tort cases, defending commercial and government contractors in: 

  • the Exxon Valdez litigation;

  • the Cell Phone Radiation Hazards lawsuits;

  • the "Fen-Phen" litigation;

  • the nationwide Repetitive Stress Injury suits;

  • claims arising out of "friendly fire" accidents during Operation Desert Storm; and

  • "war crimes" allegations filed against manufacturers of military weapons systems sold to Israel.

Mr. Biagini is also widely recognized for his expertise in defending “contractors on the battlefield” in tort litigation, and he has established ground-breaking legal principles at the federal appellate level which immunize defense contractors from tort liability arising out of combatant scenarios. 

202 662 5120
Susan B. Cassidy, Government Contracts Attorney, Covington Burling, Law Firm
Partner

Susan Cassidy is a partner in the firm’s Washington, DC office and a member of the Government Contracts Practice Group.  Ms. Cassidy works with clients to navigate successfully the complex rules and regulations that govern federal procurement.  Her practice includes both counseling and litigation components. 

Ms. Cassidy conducts internal investigations for government contractors and represents her clients before the Defense Contract Audit Agency (DCAA), Inspectors General (IG), and the Department of Justice with regard to those investigations.  She regularly counsels clients on...

202-662-5348