Worker's comp claims from Iraq could cost millions

WASHINGTON - The mounting deaths and injuries to civilian contractors in Iraq could cost the federal government millions of dollars for hundreds of worker's compensation claims.

Federal law requires all U.S. government contractors and subcontractors to obtain worker's compensation insurance for civilian employees who work overseas. If an injury or death claim is related to a "war-risk hazard," the War Hazards Compensation Act provides for government reimbursement to insurance carriers.

Nearly half the 771 injury claims filed by U.S. contractors so far this year occurred in Iraq - 345. Of the 66 deaths reported as of last week, all but nine occurred in Iraq, according to the Labor Department, which handles the reporting of claims and reimbursements.

Since January 2003, there have been claims for 476 injuries and 80 deaths in Iraq.

Casualties are rising. A convoy of contractors was ambushed Tuesday in Baghdad. Two people were killed and three were injured when shots were fired from a highway overpass. Among the most gruesome deaths were four civilian security personnel who were killed March 31 in Fallujah, their bodies mutilated and burned. The remains of two were hung from a bridge.

"The security situation is virtually unprecedented," said Bob Hartwig, chief economist with the Insurance Information Institute, an industry group. "You've got the potential to be kidnapped, to be killed, to be tortured, shot at, blown up."

Labor Department officials said they had no cost estimate for reimbursements of Iraq-related claims, but given the maximum payment of $1,030.78 per week and the number of injuries and deaths, it could well climb into the multimillions. In past years, annual reimbursement costs under the War Hazards Act have ranged from $1 million to $2 million.

The Employees Compensation Fund, which pays war hazard claims as well as workers' comp claims for federal employees, is allocated about $2.3 billion annually, according to the Labor Department.

Coverage for employees of U.S. contractors, regardless of citizenship, is required under the 1941 Defense Base Act, just as workers in the United States must have workers' compensation insurance.

Military personnel are not eligible and have a separate program.