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.

Raymond Biagini and Alejandro L. Sarria of Covington & Burling LLP represented two of the named contractor-defendants at both the trial and appellate levels.

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Photo of Raymond Biagini Raymond Biagini

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:

“Contractor on the Battlefield” tort litigation;
the Exxon Valdez litigation;
the Cell Phone Radiation Hazards lawsuits;
the “Fen-Phen”…

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:

“Contractor on the Battlefield” tort litigation;
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.

Ray is 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.

Ray also has an extensive product liability prevention practice, counseling companies on mechanisms for reducing their tort exposure for products and services sold to government and commercial entities. He is significantly involved in counseling companies selling “homeland security” products and services, such as chemical/biological detection devices, perimeter security systems, biometric identity products, and airport security systems. Ray conceptualized and authored key provisions of the SAFETY Act, a new federal statute that is part of the Homeland Security Act of 2002. The SAFETY Act protects companies from tort lawsuits arising out of the sale of homeland security products and services. 

Ray has represented some of the world’s largest aerospace, defense and pharmaceutical companies, including Kellogg Brown & Root, Lockheed Martin, BAE SYSTEMS, Boeing, Textron, SAIC, Teledyne, Eon Labs, Unisys, and Philips Electronics. He is a frequent public speaker on risk mitigation techniques.

Photo of Susan B. Cassidy Susan B. Cassidy

Susan Cassidy co-chairs Covington’s Aerospace and Defense Industry Group, and has been advising government contractors for more than 35 years on the requirements imposed on companies contracting with the U.S. Government.

Susan’s practice focuses on the intersection of cybersecurity, national security, and supply…

Susan Cassidy co-chairs Covington’s Aerospace and Defense Industry Group, and has been advising government contractors for more than 35 years on the requirements imposed on companies contracting with the U.S. Government.

Susan’s practice focuses on the intersection of cybersecurity, national security, and supply chain risk management for companies that sell products and services to the U.S. Government. Susan advises contractors at all phases of the procurement cycle, and regularly:

advises clients on compliance obligations imposed by the FAR, DFARS, and other agency regulatory requirements;
leads internal and government False Claims Act (FCA) investigations addressing allegations of violations of government cybersecurity, national security, supply chain, quality, and MIL-SPEC requirements; and
advises clients who have suffered a cyber breach where U.S. government information may have been impacted.

In her work with global, national, and start-up contractors, Susan advises companies on all aspects of government supply chain issues including:

Government cybersecurity requirements, including the Cybersecurity Maturity Model Certification (CMMC), DFARS 252.204-7012, FedRAMP, controlled unclassified information (CUI), and NIST SP 800-171 requirements;
Evolving sourcing issues such as Section 889, counterfeit part requirements, Section 5949 semiconductor product and service restrictions, and limitations on sourcing a variety of products from China; and
Federal Acquisition Security Council (FASC) regulations and product exclusions.

 

Susan previously served as senior in-house counsel for two major defense contractors (Northrop Grumman Corporation and Motorola Incorporated) and is Chambers rated in both Government Contracts and Government Contracts Cybersecurity. Chambers USA has quoted sources stating that “Susan’s in-house experience coupled with her deep understanding of the regulatory requirements is the perfect balance to navigate legal and commercial matters.”

Susan is a former Public Contract Law Procurement Division Co-Chair, former Co-Chair and current Vice-Chair of the ABA PCL Cybersecurity, Privacy and Emerging Technology Committee.

Susan’s pro-bono work extends to assisting veterans in a variety of matters, as well as providing advice to elderly clients on their wills and other end-of-life planning documents.