New Bill Proposes to Exclude Private Carriers from DBA Insurance Market

New Bill Proposes to Exclude Private Carriers from DBA Insurance Market

John Kawczynski By John E. Kawczynski, Field, Womack & Kawczynski, LLC, South Amboy, New Jersey

Congressman Elijah E. Cummings (D-MD), the Ranking Member of the House Oversight and Government Reform Committee, has introduced the “Defense Base Act Insurance Improvement Act of 2012” (H.R. 5891) which would exclude private insurance carriers from the Defense Base Act insurance market. Instead, a new “Government Defense Base Act self-insurance program” would be created.

The current version of the Bill is short on specifics. Other than setting forth the general proposition that compensation and benefits would be “funded by the agencies whose contracts are affected” no other details about the new program are included in the Bill. However, the Bill directs the Secretaries of Defense and Labor to “jointly develop and execute an implementation strategy” addressing such topics as claims processing and “timeline and strategy to transfer exiting claims” from the private carriers to the new Government self-insurance program.

This proposal traces its roots to a September 2009 Department of Defense Report to Congress entitled “Acquisition Strategy for Defense Base Act Insurance” which considered and ranked four alternatives to reform the Defense Base Act insurance market. The four alternatives considered were: (1) Open Market with Improvements; (2) Single Provider; (3) Multiple Providers; and (4) Government Self-Insurance with contract Third-Party Administration. The report then narrowed those four choices to Open Market with Improvements and Government Self-Insurance.

The press release issued by Congressman Cummings’ office characterizes the current insurance program as “a boondoggle for private insurance companies.” Additionally, the press release criticized what the Congressman believes is the slow delivery of benefits by the private carriers because, in his opinion, too many claims are controverted. The press release does not attempt to reconcile whether the claimed “savings” of creating a self-insurance program would survive what he expects to be the more liberal delivery of benefits under the self-insurance program.

According to the website, the Bill has a 1% chance of passing because Congressman Cummings is in the minority party in the House and because just 4% of all bills passed Congress in its last session.

The Bill is now pending before the House Oversight and Reform Committee. A link to the Bill can be found at:

© Copyright 2012 John E. Kawczynski. All rights reserved. Reprinted by permission. This article will appear in a forthcoming issue of the Benefits Review Board Service—Longshore Reporter (LexisNexis).

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