Back From Iraq, Injured War-Zone Workers Fight Insurance Giant AIG, Face Financial Ruin
Civilian contractors accuse insurer of continuing to 'delay and deny' claims.
March 18, 2010 — -- Civilian contractors who were injured or wounded while supporting American troops in Iraq continue to face long battles with insurance giant AIG for payment of their disability claims, despite Congressional inquiries and calls to reform the system that has handled tens of thousands of disability claims from employees of overseas contractors.
The injured workers, including some wounded by small-arms fire or IEDs during insurgent attacks, complain that AIG has continued to "delay and deny" their claims nearly a year after a joint investigation by ABC News, ProPublica, and the Los Angeles Times first exposed serious problems with AIG's handling of disability claims under a government-funded insurance system. An analysis found that AIG challenged nearly half of the claims involving the most serious injuries.
"They will spend whatever it takes, or do whatever it takes, to berate, belittle and humiliate us," said Bill Carlisle, an injured Arkansas man who drove trucks in Iraq for nearly two years.
The joint investigation last year exposed how AIG, which handles 90 percent of the contractor disability claims, engaged in a pattern of "delaying and denying" benefits to civilian workers injured in the war-zone, while it pampered executives with millions in bonuses and hundreds of thousands in spa retreats and private jets.
A ProPublica analysis of 30,000 claims found that AIG challenged 43 percent of the claims involving the most serious injuries. AIG contested more than half of the claims from contractors who said they were suffering from post-traumatic stress disorder, or PTSD.
"People like myself who went outside the wire, we went out there without a weapon, and we come back haunted by certain things, and then we have to have the added stress of AIG doing these things or not doing things – it's just horrible," said Carlisle.
Carlisle says he lives in constant pain from a severe groin injury he sustained while loading his truck for a convoy mission, and that he also suffers from PTSD. He says he has tried to look for work, but cannot find a job that will accommodate his work restrictions.
Carlisle says he fell behind on car and home mortgage payments after AIG cut off his disability pay last September. He expects the bank to re-possess his car in the next few days. His home, which is now under foreclosure, is scheduled to go on the auction block next month.
"It's just horrible. I've gone from having good credit to having bad credit, and now I'm one step from being homeless," said Carlisle.
Filings with the Department of Labor (DOL), which oversees the civilian contractor insurance program, show that AIG halted Carlisle's payments, stating that he had been released to work by doctors with no restrictions. A DOL claims examiner later found that Carlisle was still entitled to receive the benefits under the program because doctors had determined that Carlisle could not return to his job in Iraq and he established that he had been making efforts to obtain other work.
In a statement, AIG spokesman Mark Herr said the company was "committed to handling and resolving" benefit claims from injured contractors "professionally, ethically and fairly."
"We owe all these injured contractors a debt for their service to our country," said Herr. "They have been supporting our military in a hostile war zone, often incurring very serious injuries while engaged in that service,"
But Herr said that the claims were "exceedingly complex," and blamed the 60-year-old law governing civilian contractor insurance, the Defense Base Act, for part of the delay in resolving the claims." Said Herr, "Resolution under an act that is ill-suited for its purpose makes timely conclusion that much more complicated."
The ABC News investigation found that the injured workers' cases often took months, and sometimes years, to go through the Department of Labor's administrative judicial process. Even when the judge ruled in favor of the worker, AIG did not always pay promptly.
In December of 2008, an administrative law judge ordered AIG to reinstate and pay back pay to Kevin Smith, another injured truck driver, after the insurer contested his claim and cut off his benefits for months. Smith says that AIG started sending him his disability checks after the ruling, but has still not paid the $91,000 in back pay, penalty and interest payments the DOL said it still owed him.
Smith says he has had to pay hundreds of dollars out of pocket for psychological therapy to treat his PTSD because AIG has not approved any of his psychologists.
Herr said AIG does not ordinarily comment on individual claims but stated "in this instance, we paid and are continuing to pay all medical and disability claims that are due and payable to Mr. Smith and Mr. Carlisle under this program." Herr invited the two men to have their attorneys contact AIG's chief claims officer, Charles Schader, if there was "any continuing disagreement regarding that conclusion."
Smith and Carlisle's cases also illustrate the shortcomings of the World War II-era system for handling claims of those civilian workers who say they were psychologically traumatized after experiencing IED attacks and insurgent ambushes.
Carlisle says he has suffered from depression and anxiety since returning from Iraq in 2008. As a naval veteran, he has been able to see a local Veteran Affairs psychiatrist to treat his psychological symptoms, but he says that many of the other traumatized drivers have nowhere to turn for help.
The injured truck drivers expressed frustration that officials and lawmakers in Washington have not done anything to fix the system in the months since a Congressional hearing examined the problems.
At the hearing last June, the deputy secretary of the Department of Labor called for "fundamental reform" of the law governing insurance claims by civilian contractors, the Defense Base Act, that was first enacted in 1941 and originally designed for claims from only hundreds, not thousands, of contractors.
"Tinkering around the edges is not going to work here," said Seth Harris, the number-two official in the DOL, to lawmakers on the House Government Oversight and Reform committee.
At the same hearing AIG's Schader testified that the company had done its best to handle the contractor claims under a law he described as "ill-suited" for handling the complexities of the injuries faced by today's war-zone workers. For the post-traumatic stress claims, AIG specifically recommended "interagency cooperation" between the DOL and the Department of Veterans Affairs for the diagnosis, prognosis and treatment of post-traumatic stress disorder.
Since that hearing, said a DOL spokesman in a statement Wednesday, the DOL's Office of Workers Compensation has "initiated new performance measures intended to facilitate the delivery of benefits to claimants." The spokesman also said that the DOL is continuing its efforts to shorten the dispute process, which has dropped from 285 days in 2002 to a current average of 251 days. "We remain ready to work with Congress to improve the Defense Base Act."
Carlisle worries that if the system isn't fixed it will ultimately end up hurting U.S. war efforts overseas.
"No civilian will be willing to go and do what we've done, because they'll be afraid to," said Carlisle. "What's going to happen if they get hurt or injured? What's going to happen to their spouse if they get killed? They're going to have to deal with companies like AIG."