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How are my disability benefits calculated under the Defense Base Act?

Calculating disability benefits under the Defense Base Act
“I give you an insider’s view of Defense Base Act Law, with no sugar coating. No lawyer talk, no double talk. Ever." 

Defense Base Act Lawyer - Bill Turley

Compensation is Based on Average Weekly Wage

If you are injured while working as an overseas civilian contractor and you're unable to do your job for three days or longer, you are eligible for disability benefits under the Defense Base Act (DBA). These benefits are paid to you 14 days after your employer is notified of your injury. So, make sure you let your employer know that you were hurt and are unable to work. You will need to do this in writing using form LS 201.

There are four types of disability compensation benefits under the DBA:

  1. Temporary Total
  2. Temporary Partial
  3. Permanent Total with annual increases
  4. Permanent Partial

Regardless of whether your disability is partial or full, temporary or permanent, your compensation is based on your average weekly wage or AWW. All compensation is subject to a Maximum Compensation Rate, which is adjusted each year on October 1. The current rate is $1,436.48 per week.

Temporary Total Disability (TTD): Temporary total disability is granted if your injury leaves you completely unable to work for a short period of time. TDD benefits equal two-thirds of your AWW for the period that you are unable to work.

Temporary Partial Disability (TPD): A person is considered to have a temporary partial disability if he is able to work, but cannot work as many hours as usual or must do a lower-paying job.  TPD benefits are calculated as 2/3 of the difference between the employee’s AWW and his earnings while partially disabled.

Permanent Total Disability (PTD): Permanent total disability benefits are awarded when an injury leaves you unable to work for an indefinite period of time. PTD calculated as two-thirds of your AWW. Permanent disability benefits are subject to an annual increase based on the U.S. national average weekly earnings. The adjustment is applied on October 1 of each year. Permanent disability benefits are payable as long as the disability continues.

Permanent Partial Disability (PPD): If you have a permanent partial disability, you are able to work, but you may be unable to do your former job.  There are two ways PPD is calculated. If you have a scheduled disability, you will receive a percentage of your AWW for a predetermined period of time. The percentage is based on your disability rating. If you have an unscheduled disability, you will receive 2/3 of the difference between your AWW and your current earnings.

There is a whole lot to chew on here

I am giving you an overview here. I suggest you claim your free copy of my book Win Your Defense Base Act Case for more detail on all of this. 

First of all, calculating your disability under the Defense Base Act is not as straight-forward as it may first appear. 

You are going to need to calculate your average weekly wage. Or AWW.  AWW is probably the most heavily litigated part of the law in this area. Maximizing your average weekly wage (you can read more about it here) is critical for you to get the most benefits as possible under the DBA.

You are going to need to use the correct compensation rate (you can read more about it here). 

The DBA is wages driven. Meaning, the higher your wages the more money compensation you are entitled to under the law.Because of this, the DBA insurance company is going to try and calculate your AWW as low as possible.

Generally, your AWW is going to be 2/3's of your earnings (your wages).


Scheduled vs. Non-Scheduled

You have to determine whether you have a scheduled or a non-scheduled injury.

If you have a scheduled injury, then you multiply your compensation rate times the number of weeks under the AMA Guide to the Evaluation of Permanent Impairment.  A case study is provided below. 

I suggest that you visit the articles that I have provided links to in order to put all of this together.

Non-scheduled injuries are based upon a wage loss concept.

 

Calculating your disability for a scheduled injury - a case study - Steve with a leg injury that occurred in Afghanistan 

I will provide an case study for Steve, who worked in Afghanistan as a security expert. Steve has a leg injury.  Steve has an AMA Impairment for the lower extremity (read: leg) of  38%. 

Under the Longshore Act a leg injury is  288 weeks. 

288 weeks times 38% =  109.44

You always need to calculate Average Weekly Wage.  Steve has an AWW of  $3,219.45 a week.  Steve has a maximum compensation rate of $1510.76.

109.44 weeks times $1,510.76 =  $165,337

Calculating your disability for a scheduled injury - a case study - Tim with a back injury that occurred in Afghanistan

I will provide an case study for Tim, who worked in Afghanistan as a security consultant. Tim has a back injury, that prevents him from returning back to work overseas. 

DBA Insurance company's AWW contention

There is a major dispute over Tim's AWW because he worked overseas for only 23 weeks before he was injured. The DBA insurance company contends that using the 52 weeks before his injury, that Tim has a AWW of  $1,284.25.  

 

DBA insurance company's position on extent of disability/ loss of wage earning capacity

The DBA insurance company gets a Labor Market Survey that indicates that their is suitable alternate employment for Tim in the area where he lives, where Tim can earn $1,034 a week. 

Thus, using the DBA insurance company's AWW and Labor Market Survey the calculation is as follows: 


$1,284.25

-$1,034.00

$   250.25 

$ 250.25 times 2/3 =  $166.83 

Admission of injury 

The DBA insurance company  "admits" that had a back injury. Meaning that the insurance company takes the position that Tim really was injured. Which is difficult to contend otherwise considering the incident report and all the witnesses that say that they saw Tim get injured when he was diving for cover during a rocket attack and Tim was grimacing in pain dn holding his back immediately afterwards). 

Malingering

In addition, as usual, the DBA insurance company is taking the position that Tim is "malingering."  Which is a fancy term to say that Tim is faking his injuries. The insurance company doctor is suggesting that Tim is not really as injured as Tim's doctor concludes and that Tim is really able, medically, to return to work as a security consultant. Thus, the DBA insurance company's position is that Tim is able to return to his usual and customary employment with no wage loss.

Unfortunately, as is sometimes the case, there is evidence that supports this malingering contention. Medically, the insurance company reads the back MRI as not "conclusive" that Tim's back is, in fact, painful.  That is the problem with pain. It is difficult to prove pain. The insurance company conducted some sub-rosa videos, which show Tim taking out the trash, doing lifting while working on cars, and working out at the gym. 

If the Judge credits the insurance company's contention in this regard, Tim will be awarded no permanent disability benefits. 

Alternate position 

But if the Judge believes that Tim can't return to work, then it is the DBA insurance company's position that Tim has a loss of wage earning capacity of $166.83 a week. 

Tim's AWW contention

Tim contends that only his overseas earnings should be used in calculating his AWW, and thus he has an AWW of $2,854.56. 

Tim's position on extent of disability/ loss of wage earning capacity

Tim, of course, strongly disagrees with the insurance company's contentions, on just about every level.  Tim's treating physician has opined that Tim is unable to return to his usual and customary work.  Tim's doctor also agrees that Tim can do limited activities such as taking out the trash, doing limited lifting.  In fact, he suggested to Tim that Tim get back into the gym and try and strengthen himself.  However, all of this is a far cry from working in a war theater, in full kit, and having the ability to carry out your co-workers if someone get's injured.  

In fact, all of these activities are in the contract for security consultant. 

It is Tim's contention that the best evidence of his wage earning capacity is the job he is actually doing as real estate appraiser earing  $725 a week. Tim can demonstrate that he was relentless in looking for work in the area where he lives and $725 a week is good money, considering his education, training, skills and his injuries. 

Thus, Tim's loss of wage earning capacity is as follows: 


  $ 2,854.56

 -$    725.00

  $ 2,129.56

 $ 2,129.56 x 2/3 =  $1,419.69 

Thus, Tim contention is that he is owed $1,419.69 in permanent partial disability benefits 

Bottom line

This give you a good idea of how this all plays out in a DBA case. I have been simplistic in order to achieve clarity. But, I think you get the idea. 

William Turley
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