Insurers slow to pay claims of injured U.S. contractors in Iraq and Afghanistan

American civilians injured while working in the war zone in Iraq and Afghanistan often have claims denied by insurance companies, according to an investigative report by the Los Angeles Times, ABC News and the public-interest Web site ProPublica.

It's a reminder of why CWA wants to see, as part of any health reform, a strong role for government in making sure insurance companies treat consumers fairly.  It's also why one of CWA's priorities for reform is a public health insurance plan, similar to Medicare for people under 65, to provide competition and benchmarking for private insurance companies.

"The insurance companies responsible for their treatment under taxpayer-funded policies have routinely denied the most serious medical claims," the investigative report found. "Those insurers - primarily American International Group (AIG) - recorded hundreds of millions of dollars in profits on this business."

The contractors provide many services - delivering supplies, preparing meals, guarding bases - done by active military in the past.  The government requires the companies that employ them to buy insurance, similar to workers' comp policies, which are supposed to pay claims when the workers are hurt or killed.  Taxpayers pay for the insurance, since the companies build that cost into the rates they charge the government.

The investigative report found that insurance companies initially deny 44 percent of claims involving serious injuries and more than half of claims related to post-traumatic stress disorder and other psychological issues, the investigative report found.

Denied claims can be appealed, and the worker often wins, but such appeals take an average of six months for arbitration and two years for court reviews, the report found.  

For example, Kevin Smith, driving in a supply convoy outside Baghdad, had his leg shattered in 2004 in an ambush.  AIG cut off his medical and disability payments in 2007, leaving him with $13,000 in medical bills.  He appealed, and in December 2008, an administrative law judge ruled that AIG had failed "to offer any medical evidence" for denying the claims, and directed the insurance company to pay up.  AIG is appealing the decision.