US Department of Labor Office of Workers’ Compensation Programs 

 Washington, DC 20210 

 

OWCP BULLETIN NO. 12–01 

Issue Date: October 6, 2011 

Subject: War Hazards Compensation Act (WHCA) and Defense Base Act (DBA) - Ongoing 

handling of DBA cases accepted for reimbursement under 42 U.S.C. § 1704(a)(1) in which the 

Division of Federal Employees’ Compensation (DFEC) has chosen to pay benefits directly to 

the entitled beneficiary in lieu of reimbursing the DBA carrier (“direct payment”) as authorized 

by 42 U.S.C. § 1704(a)(3) and described in 20 CFR 61.105. 

References: This bulletin supplements the information contained in the Federal Employees’ 

Compensation Act (FECA) Procedure Manual (PM) 4-0300 and OWCP Bulletin 05-01.

Background: After accepting a claim for reimbursement under 42 U.S.C. § 1704(a) of the 

WHCA, DFEC may pay benefits directly to an entitled beneficiary, in lieu of reimbursement 

to a carrier in accordance with 42 U.S.C. 1704(a)(3) and 20 CFR § 61.105. The regulations 

at 20 C.F.R. § 61.105(c) provide that DFEC will not assume direct payment unless the rate 

of compensation and the period of payment have become relatively fixed and known. OWCP 

has further determined in OWCP Bulletin 05-01, that only a formal compensation order by 

the Division of Longshore and Harbor Workers’ Compensation (DLHWC) will meet the 

regulation’s requirement of being relatively fixed and known (absent extraordinary 

circumstances). Even if DFEC assumes direct payment, under the regulations DFEC 

maintains the right to transfer any case back to the carrier for it to pay benefits. 20 C.F.R. 

§61.105(f). Nevertheless, as a practical matter, if a compensation order under the DBA 

awards continuing compensation benefits (either due to disability or death), and DFEC 

accepts the case for reimbursement under the WHCA, DFEC usually assumes direct payment 

of compensation. 

20 CFR 61.105(d) outlines that in such direct payment cases, “medical care for the effects 

of a war risk may be furnished in a manner consistent with the regulations governing the 

furnishing of medical care under the Federal Employees’ Compensation Act.” Part (e), 

however, clearly specifies that, “the transfer of a case to the Office [DFEC] for direct 

payment does not affect the hearing or adjudicatory rights of a beneficiary or carrier as 

established under the Defense Base Act or other applicable workers’ compensation law.” 

The regulations reflect that direct payment cases continue to be DBA cases subject to all the 

provisions of the Longshore and Harbor Workers’ Compensation Act (LHWCA). 

Due to the increased number of cases where benefits are being paid directly by DFEC to an 

injured worker or a survivor under 42 U.S.C. § 1704(a)(3) of the WHCA, generally pursuant 

to a compensation order issued under the DBA, it is necessary to outline a protocol for 

handling directly paid WHCA reimbursement cases. 

Purpose: To provide specific guidance on the interplay between DFEC and DLHWC, and the 

responsibilities of each program in the administration of DBA/WHCA reimbursement cases 

with ongoing entitlement. 
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Applicability: All National Office staff and District Office claims personnel for the Division 

of Federal Employees’ Compensation (DFEC) and the Division of Longshore and Harbor 

Workers’ Compensation (DLHWC). 

Actions: 

I. Notification and Interaction between DFEC and DLHWC 

1. The notification and interaction described in this bulletin will occur at the District Office 

level for both DFEC and DLHWC, but the District Offices may seek additional guidance from the 

respective Branches of Regulations and Procedures and appropriate Office of the Solicitor 

divisions as needed. 

2. Any written clarification between the two divisions should be included in the applicable 

case files maintained by each office. 

II. Clarification of DBA Decisions 

On occasion, prior to DFEC accepting the claim for direct payment, clarification of the 

DLHWC Informal Conference Memorandum or Compensation Order may be required. 

1. If clarification regarding the award amount is needed prior to assuming direct 

payment, the District Director for the DFEC Special Claims District Office will seek guidance 

concerning the terms of the order directly from the DLHWC District Director who filed the 

order. Such a request will be made in writing with copies provided to the claimant, the 

insured, and their legal representatives, if any. If a new order is issued, it will be made part 

of the case file maintained by DFEC, as well as DLHWC’s case file. 

2. If a compensation order awards benefits for more than one injury, and some, but not 

all of the injuries for which benefits are awarded qualify for reimbursement under the 

WHCA, DFEC will request clarification from the carrier submitting the reimbursement 

request to determine how much of the compensation due is attributable to each injury. The 

carrier will be asked to substantiate which portions of the compensation due are attributable 

to each injury. It is the carrier’s responsibility to submit proof of how much of what was 

paid is directly attributable to the WHCA injury or injuries; this must be established to 

DFEC’s satisfaction. 

III. Disagreement with or Modification of a DBA Decision 

As a general matter the findings in a compensation order are accepted and no additional 

review is done by DFEC. (20 C.F.R. § 61.102(c), OWCP Bulletin 05-01) However, if after a 

case has been assumed for direct payment DFEC has reason to believe that there was a 

mistake in determination of fact in the DBA compensation order or the circumstances 

existing at the time the DBA compensation order issued have changed, e.g. payment of 

total disability for a period in which earnings were present, DFEC, after appropriate 

development, should notify the DLHWC District Director that modification of the 

compensation order may be warranted [See Parts V and VI below for further discussion on 

changes in compensation after the case has been assumed for direct payment]. 

1. DFEC will notify DLHWC in writing and provide supportive documentation, if 

applicable. 
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2. If DLHWC agrees that modification is warranted, it will initiate modification 

proceedings under Section 22 of the LHWCA, as incorporated. If DLHWC disagrees with 

DFEC that modification is warranted, it will so notify DFEC. 

3. Reimbursement for the stated period and/or assumption of direct payment may be 

delayed pending receipt of a response from DLHWC. If a modification proceeding is 

commenced, DFEC may consider terminating direct payment and transfer the case back to 

the carrier for it to pay subject to reimbursement. 

 

IV. Medical Treatment 

As outlined in 20 CFR 61.105(d), in reimbursement cases where DFEC takes over direct 

payment of DBA benefits, the furnishing of medical treatment may be provided in a manner 

consistent with the regulations governing the furnishing of medical treatment under the FECA. 

The DFEC Procedure Manual provides that it will utilize these regulations, and therefore, 

medical treatment in reimbursement cases where DFEC has taken over direct payment will be 

authorized and paid for by DFEC in accordance with its regulations and procedures in 

administering the FECA. 

DFEC contracts it medical billing services and this system is premised on the conditions 

specifically accepted by DFEC in adjudicating a FECA claim. It is recognized that compensation 

orders and decisions issued under the DBA do not necessarily identify the specific medical 

conditions associated with the DBA claim. To the extent that stipulations can be reached to 

identify these conditions when carriers and claimants are seeking compensation orders from 

DLHWC District Directors or litigating cases before the Office of Administrative Law Judge, it is 

recommended that they do so. In addition, when an application for reimbursement is 

submitted which is likely to result in direct payment by DFEC, the applicant should include a list 

of conditions that it believes are related to the DBA claim. At the time of acceptance for direct 

payment, DFEC will list these conditions as those accepted for medical treatment which will be 

entered into its electronic claims processing system (iFECS) for the purpose of medical bill 

payments. 

It is recognized that medical treatment and conditions are not static and that changes in 

treatment and conditions do occur. Because of this dynamic process, additional guidance is 

necessary. OWCP has identified the following circumstances and steps it will follow in these 

cases: 

1. If the claimant requests treatment for a consequential condition (a condition that flows 

as a natural consequence from the covered injury), DFEC should develop the medical evidence 

to determine whether it is a consequential condition stemming from the compensable injury. 

 a. If such development substantiates that the new condition is related, DFEC may 

authorize necessary treatment without input from DLHWC, but DLHWC and the carrier 

will be notified of that determination along with the claimant. 

b. If such development does not substantiate that the new condition is related to 

the already covered conditions, DFEC will outline the rationale for its determination in a 

letter to the claimant, attach any applicable medical documentation, and advise the 

claimant to seek an adjudicatory decision from DLHWC. DLHWC and the carrier will be 

notified of this determination as well. 
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Note — A condition that DFEC accepts as consequential for purposes of authorizing medical 

treatment may also give rise to a change in the level or duration of disability benefits. In such 

instance, DFEC should direct the claimant to DLHWC for initiation of modification proceedings. 

See Part V. 1. 

2. If the claimant requests treatment for or acceptance of a completely new condition not 

readily identifiable in the DLHWC compensation order (e.g. DLHWC issued a decision finding an 

injury to the arm and the claimant seeks treatment for the ankle), DFEC will direct the 

claimant to file a claim for medical benefits or, if appropriate, seek a modification of the 

compensation order from DLHWC; DLHWC and the carrier will receive copies of this 

correspondence as well. DFEC will not take any development action in such a case and will 

await the outcome of claimant’s request for modification. DLHWC will initiate modification 

proceedings under Section 22 of the LHWCA, as incorporated. The employer and/or the carrier, 

as well as the claimant, will be the parties to such proceedings. The carrier is reminded that a 

failure to present any and all viable defenses to such claim may result in a subsequent denial 

of its reimbursement claim under the WHCA. The carrier should also be put on notice that the 

new claim, if accepted, will not be covered under the WHCA absent a subsequent request by 

the carrier and determination by DFEC. 

3. If the claimant requests a change in treating physician, DFEC will consider such factors 

as the reason for the request, the appropriateness of current care, and other circumstances 

(e.g. whether the current treating physician has retired, the claimant has moved, etc.). 

 a. If a change in the treating physician is clearly warranted (such as a change due 

to a geographical move or to an appropriate medical specialist), DFEC will authorize the 

change without input from DLHWC, and DLHWC and the carrier will be notified of such 

approval along with the claimant. 

 b. If it appears such change may not be warranted, DFEC will outline the rationale 

for its determination in a letter to the claimant, attach any applicable medical 

documentation, and advise the claimant to seek an adjudicatory decision from DLHWC. 

DLHWC and the carrier will be notified of this determination as well. DLHWC will take 

necessary action to resolve the medical dispute, including an informal conference and 

an independent medical examination as necessary. The DLHWC District Director may 

issue an Order for Medical Treatment under certain circumstances. If a factual dispute 

exists that cannot be resolved at the district office, the case will be referred to the 

Office of Administrative Law Judges for formal adjudication. The employer and/or the 

carrier, as well as the claimant, will be the parties to such proceedings. 

V. Compensation for Disability and Permanent Impairment 

In cases where DFEC has taken over direct payment and for which regular periodic payments 

are being made for disability, DFEC pays compensation as specified by the DBA 

compensation order. A change in benefit level or amount of the award cannot be made by 

DFEC without modification of the order. 

1. If a claimant requests a change in benefit level, e.g. an increased schedule award or 

total disability benefits in lieu of partial disability benefits, DFEC will advise the claimant to 

seek such modification from DLHWC. DLHWC and the carrier will be copied on this notification. 

If DFEC disagrees with the claimant’s request for change in the benefit level at that time, DFEC 

will outline the rationale for its disagreement and attach any applicable documentation. 
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Note -- If a claimant initially seeks modification directly from DLHWC, DLHWC should provide 

notice of the request to DFEC. 

2. If DFEC obtains evidence that it believes warrants a change in benefit level (i.e. partial 

disability benefits in lieu of total disability benefits), DFEC will, after appropriate development 

of the case, notify DLHWC in writing that modification of the order may be warranted. DFEC 

will include any supporting documentation and request a review of the benefit level. If DLHWC 

agrees that modification is warranted, it will initiate modification proceedings. If DLHWC 

disagrees with DFEC that modification is warranted, it will so notify DFEC. 

3. If an overpayment of compensation exists, DFEC will take no action without direction 

from DLHWC. As a general rule, payment at the rate prescribed by the compensation order 

must continue until a new or modified order is issued. FECA overpayment procedures do 

not apply in these cases. If DLHWC determines that an overpayment exists, DLHWC will 

determine whether and how a credit will be taken for DFEC to recoup the amount overpaid. 

[Under certain circumstances, such as where a surviving spouse receiving death benefits 

remarries or a child turns 18, DFEC can unilaterally stop or change the amount of 

compensation being paid. See Part VI below.] 

4. DFEC can request periodic medical updates to substantiate continued disability. 

Generally, this will occur once every three years, unless more frequent reports are needed to 

monitor medical care and support the payment of medical bills. A yearly inquiry will also be 

sent to the claimant to verify the current address, continuing receipt of benefits, and 

employment. 

If the claimant does not submit the requested medical evidence, DFEC may arrange for an 

examination under Sections 7 and 19(h) of the LHWCA, as incorporated. If the claimant fails 

to submit the required medical evidence, fails to attend the examination, or fails to return the 

yearly benefit verification statement, DFEC will provide written notice to DLHWC, with any 

supporting documentation, and request appropriate modification of the order, which may 

include suspension, reduction, or termination of benefits. The claimant and the carrier will also 

be advised of this request for modification of the benefit level. 

5. DFEC will on a yearly basis send Form LS-200 to claimants receiving compensation for 

total or partial disability, requesting a report of their earnings from employment or selfemployment. However, because disability compensation is payable under the DBA at a rate of 

two-thirds of average weekly wage (for total disability) and is not subject to augmentation of 

the compensation rate similar to that allowed under the FECA, information about a disabled 

employee's marital status or dependents need not be requested as the presence or absence of 

a spouse or dependent children has no effect on compensation rates for disability under the 

DBA. However, that information is germane and should be obtained in death benefit cases – 

see Part VI below. 

VI. Compensation in Death Cases 

In cases where DFEC has taken over direct payment and for which regular periodic payments 

are being made for the death of an employee, DFEC pays death benefits as specified by the 

DBA compensation order. DFEC cannot terminate such benefits without a modified award 

by DLHWC, except in certain specific circumstances. 
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1. In DBA reimbursement cases for which benefits are being paid to the spouse of a 

deceased employee, a yearly inquiry will be made to verify that there has been no change in 

the marital status of the widow or widower. DFEC will use Form LS-267 for this purpose. If 

the widow/widower fails to return the yearly benefit verification statement, DFEC will provide 

written notice to DLHWC, with any supporting documentation, and request a review of the 

ongoing benefit payments and/or consideration of suspension of benefits. The widow/widower 

and the carrier will also be advised of this request for a review of ongoing benefit payments. 

Note - DFEC cannot stop benefit payments in this instance, but must await a determination 

by DLHWC. If benefits are ultimately suspended and the widow then submits the required 

information, DFEC will reinstate benefits and notify DLHWC. 

2. If a widow/widower notifies DFEC that he/she has remarried, or if DFEC obtains 

evidence that a widow/widower has remarried, DFEC will immediately stop ongoing 

payments and compute a two-year, lump-sum payment representing two years of 

compensation. DFEC will pay the lump sum, taking credit for any amount paid since the 

remarriage in order to avoid an overpayment, and notify the beneficiary of the payment 

amount. DLHWC and the carrier will also be advised, but this action can be taken without 

input from DLHWC as the remarriage itself extinguishes any order issued by DLHWC. This 

procedure is currently set forth in the FECA Procedure Manual. See FECA PM 4-300-15(b). 

Note - If the beneficiary has already received compensation in excess of the two-year, 

lump-sum amount at the time of notification/verification, DLHWC and the carrier should be 

advised along with the beneficiary, but no action can be taken with regard to any 

overpayment, as an overpayment under the FECA cannot be declared. 

3. If benefits are being paid to a minor child, DFEC must monitor the age/status of that 

child and adjust beneficiary benefit levels in a timely manner to avoid any excess 

compensation payments. Compensation may continue after a child's 18th birthday if he/she 

meets the definition of a student. The requirements for student status are the same as 

those under the FECA, and DFEC should request the necessary documentation needed for 

verification of student status prior to the child's 18th birthday, and on a periodic basis 

thereafter. DFEC will use Form LS-266 for this purpose. DFEC should promptly terminate 

compensation payments for a child when he/she turns 18 years of age if full-time student 

status is not established or if the evidence on file no longer supports student status after 

initially established. 

Note - If the beneficiary has already received excess compensation at the time of the 

cessation of compensation, DLHWC and the carrier should be advised along with the 

beneficiary, but no action can be taken with regard to any overpayment, as an overpayment 

cannot be declared. Credit can be taken, however, if the child subsequently becomes eligible 

again, based on the same injury or death, e.g. a student. 

4. In DBA reimbursement cases where benefits are being paid to an employee who 

subsequently dies, DFEC will direct any potential survivor to file a death benefits claim with 

DLHWC; DLHWC and the carrier will receive copies of this correspondence as well. DFEC will 

not take any development action in such a case and will await a determination on the death 

benefits claim. The carrier’s failure to present any and all viable defenses to such claim may 

result in a subsequent denial of its reimbursement claim under the WHCA. Upon approval of 

the death benefits claim, DLHWC should instruct the carrier of its responsibility to initiate 

timely payment on the DBA order. The carrier may subsequently seek reimbursement from 

DFEC under the WHCA. 
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VII. DLHWC Determinations and DFEC’s Role 

Once DLHWC receives a request for modification, either from the claimant or from DFEC, 

DLHWC will take appropriate action required under the DBA. Given that DFEC has assumed 

responsibility for direct payments, however, DFEC should maintain active oversight of that 

claim and will provide any information or assistance requested by DLHWC to determine 

claimant entitlement or resolve claim disputes. 

1. DLHWC will seek input from DFEC, as it would from the claimant and the carrier, and 

DFEC will provide written or verbal input as requested. 

2. The DFEC Special Claims District Director, or his/her designee, will usually be the 

point of contact for DFEC in proceedings before the DLHWC District Director. He/she may 

request assistance as needed from the Branch of Regulations and Procedures and/or the 

Office of the Solicitor. In some instances a representative from the Branch of Regulations 

and Procedures and/or the Office of the Solicitor will act as DFEC’s point of contact in a 

DLHWC District Director proceeding, in lieu of or along with the Special Claims District 

Director, or his/her designee. 

VIII. DBA Decisions 

1. Generally, DLHWC may only issue an order resolving an issue based on the agreement 

of the claimant and the employer/carrier. 

2. If no agreement is reached, any party may seek adjudication of the issue through 

formal hearing and the various levels of review established under the LHWCA/DBA -- Office 

of the Administrative Law Judge (OALJ), the Benefits Review Board (BRB) and federal 

courts. FECA appeal rights are not applicable in these cases. 

3. Any of those adjudicatory bodies may issue a decision and order that is effective 

upon filing or issuance and which will become final once the time to appeal to a higher body 

has passed. 

4. Once an order on an issue outlined in this bulletin is filed, it is binding and DFEC 

must proceed accordingly, e.g. increasing the benefit level, paying an additional award, 

accepting a new medical condition, etc. 

5. If payment of compensation is due, it must be paid within 10 calendar days of the 

DLHWC District Director’s filing of the order or additional compensation is also owed in the 

amount of twenty percent (20%) of the accrued amount of compensation due. 

6. Any request for payment of additional compensation due to a late payment should be 

made to DLHWC. If DLHWC determines that additional compensation is payable, DFEC will 

be so notified along with the claimant and carrier, and DFEC will process any necessary 

payment. 

 

IX. Attorney Fees 

The LHWCA/DBA requires approval of any claimant’s attorney fee by the body before whom 

the work was performed, e.g. the DLHWC District Director, the OALJ, the BRB, or the 

federal courts. Therefore, if a fee petition is received by DFEC due to an issue outlined in 
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this bulletin (or any other reason), DFEC will direct the representative to seek approval from 

the appropriate body. DFEC can object to the requested fee, and will submit its response to 

the fee request to the appropriate body when necessary. DFEC will not review such fee 

petitions in accordance with FECA standards. 

X. Notice to the Employer/Carrier 

Once DFEC takes over direct payment of reimbursement cases, any notice to the 

employer/carrier provided for in this bulletin should be given as follows: 

 DFEC will send a letter to the employer/carrier, and to their attorney, containing all 

relevant information and/or proposed actions to be implemented. 

 The letter should also contain the caveat that the employer/carrier will be deemed to 

have consented to the action proposed unless it files an objection to such action with 

the DLHWC within 15 days. 

 If the employer/carrier does object, it is incumbent upon it to take the appropriate 

action in furtherance of its objection. 

XI. Miscellaneous 

1. DFEC requires, before acceptance of any WHCA reimbursement claim, that the 

employer/carrier has made only reasonable and prudent efforts in presenting all meritorious 

defenses against a DBA claim without regard to whether the case is eligible for WHCA 

reimbursement. An employer/carrier’s inadequate or overly zealous representation in 

defending against a DBA claim may be grounds for denying all or some portion of a request 

for WHCA reimbursement. 

2. DFEC’S development of any aspect of a claim may include communication with the 

claimant and his legal counsel, as the situation dictates. 

Disposition: This bulletin is to be retained until the FECA and LHWCA Procedure Manuals 

have been updated. 

CECILY A. RAYBURN 

Director, Division of 

Planning, Policy and Standards