Specifically insurance fraud, but it’s only the contractors, who have conspired with insurance companies to stick it to the tax payers.

It’s basically kickbacks. The contractors negotiate their own insurance deals, which are over priced, and they get commissions from the insurers:

KBR Inc., one of the largest defense contractors in Iraq, paid the insurance giant AIG $284 million for medical and disability coverage under the Defense Base Act, a reference to the federal law mandating the insurance. Due to the way KBR’s contract is structured, this premium, along with an $8 million markup for KBR, gets billed to the taxpayer.

“Out of this amount, just $73 million actually goes to injured contractors, and AIG and KBR pocket over $100 million as profit,” Waxman said.

Lovely.