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US House committee investigates potential insurance fraud in Iraq

[JURIST] The US House Committee on Oversight and Government Reform [committee website] heard testimony [transcripts] on Thursday regarding potential abuse of the Defense Base Act of 1941 (DBA) [text] in Iraq and Afghanistan. The Act requires [PDF, US DOL backgrounder] contractors working on military installations to provide workers' compensation insurance coverage for their employees, the cost of which is reimbursed to the contractors using taxpayer funds. Civilian employees often have difficulty processing their claims [Federal Times report] after returning to the US. In his opening remarks, Committee Chairman Rep. Henry Waxman (D-CA) [official website; JURIST news archive] stated that the "inefficient" DBA system has encouraged excessive profit-taking by insurance companies. Waxman asserted [PDF, opening statement] that "Rube Goldberg could not design a more inefficient way to help employees wounded or injured in Iraq." Additionally, AP reported Wednesday that the US Army Criminal Investigation Command [official website] is investigating [AP report] two Iraqi contractors working on public development projects in Iraq for insurance fraud related to the requirements of the DBA. AP has more.

On Monday, two former US State Department officials condemned the Bush administration's ineffectiveness in combating corruption in Iraq. In December 2007, the FBI launched a criminal probe into the activities of the Special Inspector General for Iraq Reconstruction. In October 2007, the State Department admitted that it could not account for most of the $1.2 billion in Iraqi police training funds. In August 2007, Pentagon investigators looked into allegations of fraud and corruption in military contracting in Iraq [JURIST reports].

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Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

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