Contractors in Iraq Suing Over Exposure to Cancer-Causing Toxin

Once again, the bloggers at Workers’ Comp Insider highlight an interesting legal case involving a group of employees who are suing their employer over exposure to toxic substances. What makes this case interesting is that it involves government contractors working for KBR in Iraq.

The Boston Globe has the story about the nine Americans who have accused the one-time Halliburton subsidiary of knowingly exposing them to a deadly substance and failing to provide them with the protective equipment needed to keep them safe. KBR says that the employees have no grounds to sue because they are covered by the Defense Base Act, similar to workers’ compensation for contractors working in Iraq.

The American contractors were working for Houston-based KBR to repair a water plant.

According to the Globe:

When the American team arrived in Iraq in the summer of 2003 to repair the Qarmat Ali water injection plant, supervisors told them the orange, sand-like substance strewn around the looted facility was just a "mild irritant," workers recall.

Edward Blacke, a safety representative on the project, said he tried to raise safety concerns but was told not to get involved. The workers got it on their hands and clothing every day while racing for 2 1/2 months to meet a deadline to get the plant, a crucial part of Iraq's oil infrastructure, up and running.

But the chemical turned out to be sodium dichromate, a substance so dangerous that even limited exposure greatly increases the risk of cancer. Soon, many of the 22 Americans and 100-plus Iraqis began to complain of nosebleeds, ulcers, and shortness of breath. Within weeks, nearly 60 percent exhibited symptoms of exposure, according to the minutes of a meeting of project managers from KBR, the Houston-based construction company in charge of the repairs.

Workers Comp Insider has a good discussion of the DBA and the possible ramifications of this lawsuit, which we’ll excerpt here:

Regular readers may recall that we've discussed Iraq-based contractors previously - all contractors - whether nationals or foreign - are covered by the Defense Base Act. Although this involves some creative insurance arrangements, the DBA essentially acts very similarly to workers comp.

As with workers comp, one of the cornerstones of the coverage is that the DBA is the employee's exclusive remedy. In other words, it is an employee's only legal redress in the event of injuries or illnesses. However, in workers comp, there are generally some exceptions, although the window for such exceptions is pretty narrow. Some states allow an employee to pierce the exclusive remedy shield if "willful intent" of injury can be proven or if there was substantial certainty that an injury would have been likely to occur. The burden of proof is on the employee, and courts usually require something more that goes beyond the realm of mere negligence - the employer's actions need to be quasi criminal.

KBR is relying on exclusive remedy for protection, but this troublesome matter may be a factor:

"But the company's own actions have undermined its case: To avoid payroll taxes for its American employees, KBR hired the workers through two subsidiaries registered in the Cayman Islands, part of a strategy that has allowed KBR to dodge hundreds of millions of dollars in Social Security and Medicare taxes.

That gives the workers' lawyer, Mike Doyle of Houston, a chance to argue to an arbitration board that KBR is not an employer protected by federal law, but a third-party that can be sued."

My colleague has talked about the matter of independent contractors vs. employees several times in the past - most notably in the case of the fascinating FedEx state-by-state saga. It will be interesting to see how the matter of these giant federal contractors plays out. Being a military contractor is apparently good work for the firms that can get it: lucrative no-bid contracts, U.S. taxpayers subsidizing the DBA coverage, and little in the way of pesky employee taxes, labor laws, or government oversight.

In looking into these issue, we stumbled on the Defense Base Act Blog (who knew there was such a critter?!) and blogger Aaron Walter makes some good points about being careful what you wish for - if KBR is not covered by DBA, then thousands of injured or deceased employees and their families would no longer receive income benefits or medical treatment.

For the full analysis, visit Workers Comp Insider, which also has some great links to more about KBR and the Defense Base Act.