B-41554, MAY 22, 1944, 23 COMP. GEN. 884

B-41554: May 22, 1944

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WHICH EXPENSES WERE NOT A LEGAL OBLIGATION OF THE CONTRACTOR ARISING OUT OF PERFORMANCE OF THE CONTRACT. MAY NOT BE CONSIDERED AS "LOSSES OR EXPENSES" WITHIN THE MEANING OF THE CONTRACT FOR WHICH REIMBURSEMENT IS AUTHORIZED. REQUESTING A DECISION AS TO WHETHER YOU ARE AUTHORIZED TO MAKE PAYMENT ON A VOUCHER TRANSMITTED THEREWITH STATED IN FAVOR OF THE STONE AND WEBSTER ENGINEERING CORPORATION. THERE IS ATTACHED TO THE VOUCHER A LETTER DATED APRIL 10. WHICH IS. AS HIS PERMANENT ADDRESS WAS MILLPORT. THIS MAN WAS REPORTED SICK ON NOVEMBER 6. 1943 AND WAS TAKEN TO OUR FIELD HOSPITAL FOR TREATMENT WHERE. HE REVEALED SYMPTOMS OF MENINGITIS AND WAS IMMEDIATELY REMOVED TO THE KNOXVILLE GENERAL HOSPITAL.

B-41554, MAY 22, 1944, 23 COMP. GEN. 884

CONTRACTS - COST-PLUS - EXPENSES OF EMPLOYEES' MEDICAL TREATMENT THE LOSS SUSTAINED BY A COST-PLUS-A-FIXED-FEE CONTRACTOR UPON THE FAILURE OF AN EMPLOYEE TO REPAY THE EXPENSES OF PRIVATE HOSPITALIZATION AND MEDICAL TREATMENT PAID ON HIS BEHALF BY THE CONTRACTOR IN CONNECTION WITH A NON-OCCUPATIONAL SICKNESS OR INJURY, WHICH EXPENSES WERE NOT A LEGAL OBLIGATION OF THE CONTRACTOR ARISING OUT OF PERFORMANCE OF THE CONTRACT, MAY NOT BE CONSIDERED AS "LOSSES OR EXPENSES" WITHIN THE MEANING OF THE CONTRACT FOR WHICH REIMBURSEMENT IS AUTHORIZED.

COMPTROLLER GENERAL WARREN TO LT. COL. C. VANDEN BUICK, U.S. ARMY, MAY 22, 1944:

THERE HAS BEEN RECEIVED YOUR LETTER OF APRIL 11, 1944, FILE REFERENCE EIDMV-30, REQUESTING A DECISION AS TO WHETHER YOU ARE AUTHORIZED TO MAKE PAYMENT ON A VOUCHER TRANSMITTED THEREWITH STATED IN FAVOR OF THE STONE AND WEBSTER ENGINEERING CORPORATION, PRIME CONTRACTOR UNDER COST-PLUS-A- FIXED-FEE CONTRACT NO. W-7401-ENG-13 DATED JUNE 29, 1942, IN THE AMOUNT OF $135.25, REPRESENTING REIMBURSEMENT OF PAYMENTS MADE BY IT IN CONNECTION WITH THE HOSPITALIZATION OF ONE LUTHER MCDANIEL, AN EMPLOYEE OF THE CONTRACTOR.

THE PAPERS TRANSMITTED WITH THE SAID VOUCHER DISCLOSE THAT THE AMOUNT THEREOF COMPRISES PAYMENTS MADE TO THE KNOXVILLE GENERAL HOSPITAL IN THE AMOUNT OF $90.25, AND TO ONE J. P. CULLUM, M.D., IN THE AMOUNT OF $45 FOR PROFESSIONAL SERVICES RENDERED TO THE SAID EMPLOYEE. IN SUPPORT OF SAID PAYMENTS, THERE IS ATTACHED TO THE VOUCHER A LETTER DATED APRIL 10, 1944, FROM THE CONTRACTOR TO THE DISTRICT ENGINEER, U.S. ENGINEER OFFICE, OAK RIDGE, TENNESSEE, WHICH IS, IN PERTINENT PART, AS FOLLOWS:

MCDANIEL WORKED AS A LABORER FOR STONE AND WEBSTER ENGINEERING CORPORATION UNDER BADGE NO. 42978 AND TEMPORARILY RESIDED IN HUT 16-G ON THE PROJECT SITE, AS HIS PERMANENT ADDRESS WAS MILLPORT, ALABAMA.

THIS MAN WAS REPORTED SICK ON NOVEMBER 6, 1943 AND WAS TAKEN TO OUR FIELD HOSPITAL FOR TREATMENT WHERE, ON EXAMINATION BY OUR DR. H. STUART HODGES, HE REVEALED SYMPTOMS OF MENINGITIS AND WAS IMMEDIATELY REMOVED TO THE KNOXVILLE GENERAL HOSPITAL. ACCORDING TO THE MEDICAL REPORT OF DR. J. P. CULLUM, HE WAS TREATED FOR AN UNDETERMINED TYPE OF MENINGITIS AND WAS DISCHARGED AS CURED ON NOVEMBER 20, 1943. MCDANIEL DID NOT HAVE SUFFICIENT FUNDS TO DEFRAY THE COST OF HOSPITALIZATION, AS THE HOSPITAL REQUIRES A DEPOSIT OF $30.00 BEFORE ADMISSION, AND WE WERE THEREFORE OBLIGED TO GUARANTEE THE PAYMENT OF THIS ACCOUNT TO THE HOSPITAL. SINCE THE DATE OF DISCHARGE THIS MAN HAS NOT RETURNED TO WORK ON THE PROJECT SITE AND CONSEQUENTLY, WE HAVE BEEN UNABLE TO ARRANGE FOR COLLECTION OF THIS DEBT.

THIS SECTION OF THE STATE COULD NOT POSSIBLY SUPPLY THE MANPOWER REQUIREMENTS OF SO VAST AN ENTERPRISE AND IN ORDER TO PROSECUTE THE WORK IN THE BEST INTERESTS OF THE GOVERNMENT, WE HAVE FOUND IT NECESSARY TO RECRUIT LABOR FROM BORDERING STATES, AS WELL AS MORE DISTANT POINTS, AND TO PROVIDE LODGING ON THE PROJECT SITE FOR ALL INDIVIDUALS WHO HAVE FORSAKEN THEIR HOMES TO PARTICIPATE IN THIS PROGRAM WHICH IS ALL IMPORTANT TO THE WAR EFFORT.

EMPLOYEES SUFFERING FROM SICKNESS OR DISEASE, WHICH IN MANY INSTANCES ARE CONTAGIOUS, RESULTING IN DISABILITY AND CONFINEMENT TO BED MUST BE REMOVED FROM HIS OR HER DOMICILE ON THE PROJECT SITE AND PROVIDED WITH THE NECESSARY HOSPITALIZATION TO INSURE PROPER CARE AND TREATMENT.

IN THE MCDANIEL CASE AND OTHERS OF SIMILAR NATURE, WE ARE MORALLY OBLIGATED TO RENDER ASSISTANCE TO SUCH PERSONS WHO ARE UNABLE TO SUCCOR THEMSELVES BECAUSE OF INSUFFICIENT FUNDS, INACCESSIBILITY TO HOME AND FRIENDS, AND THE LACK OF AN ESTABLISHED PROGRAM ON THE PROJECT SITE THAT WOULD PROVIDE THE NECESSARY CARE AND TREATMENT REQUIRED UNDER THESE CIRCUMSTANCES.

THE INSURANCE COVERAGE PROVIDED UNDER THE WAR DEPARTMENT INSURANCE RATING PLAN DOES NOT PROVIDE FOR NON-OCCUPATIONAL SICKNESS OR INJURY CASES AND IN OUR OPINION ADDITIONAL INSURANCE TO COVER THIS CLASSIFICATION WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT AS THE ANTICIPATED LOSSES BY DEFAULT ON THE PART OF THE INDIVIDUAL WOULD BE A SMALL PERCENTAGE OF THE PREMIUM PAYMENTS FOR THIS CLASS OF INSURANCE.

WHERE THE INDIVIDUAL HAS RETURNED TO WORK WE HAVE BEEN ABLE TO SECURE PAYMENT IN WHOLE OR IN PART IN SETTLEMENT OF THE ACCOUNT BY ARRANGING COLLECTIONS ON CONVENIENT WEEKLY INSTALLMENTS. IN THE CASE PRESENTED HEREWITH THE EMPLOYEE, LUTHER MCDANIEL, DID NOT RETURN TO WORK AND OUR PAYMENT TO THE DOCTOR AND THE HOSPITAL REPRESENTS AN EXPENSE TO US UNDER CONTRACT W-7401-ENG-13.

REIMBURSEMENT IS THEREFORE CLAIMED UNDER ARTICLE XI, PARAGRAPH I, SUBPARAGRAPH L OF OUR CONTRACT, WHICH PROVIDES FOR LOSSES AND EXPENSES NOT COMPENSATED BY INSURANCE OR OTHERWISE.

ARTICLE XI, PARAGRAPH 1, SUBPARAGRAPH L, OF THE CONTRACT, REFERRED TO IN THE ABOVE QUOTED LETTER, IS AS FOLLOWS:

LOSSES AND EXPENSES, NOT COMPENSATED BY INSURANCE OR OTHERWISE (INCLUDING SETTLEMENTS MADE WITH THE WRITTEN CONSENT OF THE CONTRACTING OFFICER), ACTUALLY SUSTAINED BY THE A-E-M IN CONNECTION WITH THE WORK AND FOUND AND CERTIFIED BY THE CONTRACTING OFFICER TO BE JUST AND REASONABLE UNLESS REIMBURSEMENT THEREFOR IS EXPRESSLY PROHIBITED HEREIN.

WHILE, UNDER THE TERMS OF THE SAID CONTRACT PROVISION, THE CONTRACTOR IS TO BE REIMBURSED FOR LOSSES AND EXPENSES NOT COMPENSATED BY INSURANCE OR OTHERWISE, SAID PROVISION, REASONABLY CONSTRUED, MAY BE CONSIDERED AS COVERING ONLY SUCH LOSSES AND/OR EXPENSES AS ARE INCURRED BY THE CONTRACTOR IN THE DISCHARGE OF ITS LEGAL OBLIGATIONS ARISING OUT OF THE PERFORMANCE OF THE CONTRACT WORK. IN THE PRESENT CASE, SINCE IT APPEARS THAT THE EMPLOYEE'S ILLNESS AND SUBSEQUENT HOSPITALIZATION DID NOT ARISE OUT OF HIS EMPLOYMENT WITH THE CONTRACTOR, IT IS EVIDENT THAT THE CONTRACTOR WAS NOT LEGALLY OBLIGATED TO GUARANTEE THE PAYMENT OF SUCH EXPENSES. IN FACT, IT IS ADMITTED BY THE CONTRACTOR IN ITS LETTER OF APRIL 10, SUPRA, THAT IT MERELY FELT THAT ITS PAYMENT OF THE EXPENSE WAS A MORAL OBLIGATION. MOREOVER, MEDICAL SERVICES, BY THEIR NATURE, GENERALLY ARE CONSIDERED AS PERSONAL TO, AND PROPERLY FOR PAYMENT BY, THE EMPLOYEE CONCERNED AND, IN THE ABSENCE OF A SPECIFIC CONTRACTUAL PROVISION PROVIDING FOR THE PAYMENT THEREOF, THE EXPENSE IS NOT PROPER FOR CHARGING TO THE GOVERNMENT AS AN ALLOWABLE ITEM OF COST UNDER A COST-PLUS-A-FIXED- FEE CONTRACT. THEREFORE, AND SINCE A REVIEW OF THE ENTIRE CONTRACT FAILS TO DISCLOSE ANY SPECIFIC PROVISION AUTHORIZING REIMBURSEMENT TO THE CONTRACTOR FOR EXPENDITURES MADE IN CONNECTION WITH THE TREATMENT AND HOSPITALIZATION OF AN EMPLOYEE FOR NON OCCUPATIONAL SICKNESS OR INJURY, IT MUST BE HELD THAT REIMBURSEMENT THEREFOR IS NOT AUTHORIZED.

ACCORDINGLY, THE VOUCHER, TOGETHER WITH THE ACCOMPANYING PAPERS, IS RETURNED HEREWITH AND YOU ARE ADVISED THAT, FOR THE REASONS STATED, PAYMENT THEREON IS NOT AUTHORIZED.