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Coal debt $200 million in limbo
Publication: THE CHARLESTON GAZETTE
Published: Friday, February 02, 2001
THANK heaven, Gov. Bob Wise prevented dismissal of state lawsuits seeking to recover $200 million in Workers' Compensation debts owed by the coal industry. We hope his action leads to solution of a costly West Virginia problem.
Since mining is dangerous, coal firms must pay high rates into the state fund that supports injured workers. In the past, some large corporations eluded this expense by letting contractors perform their mining. The contractors - often mere stooges - went out of business without paying huge sums owed to Workers' Comp and other obligations.
After Gazette investigative reporter Paul Nyden exposed this evasion, the Caperton administration sued 19 owner corporations for $200 million owed by their contractors. But the Underwood administration, in bed with coal owners, did its utmost to scuttle the suits.
The first case, seeking $10 million from Bluestone Coal Corp., got a boost in December when McDowell County Circuit Judge Booker T. Stephens allowed the Affiliated Construction Trades Foundation to intervene, putting the lawsuit on a fast track for trial. Just before leaving office, former state Employment Programs Commissioner William Vieweg filed a Supreme Court petition to undo the judge's action and derail the case. Now Wise has halted Vieweg's attempt. Hurrah.
The issue cries out for justice. In the late 1970s, Bluestone hired the first of 75 contractors to mine coal near Northfork in McDowell County. More than 50 of them failed to pay the Workers' Compensation Fund more than $10 million.
Vieweg and former Gov. Cecil Underwood did everything they could to help James Justice II, Bluestone's owner, avoid paying a dime of this debt. (Underwood and Vieweg were both executives for Island Creek Coal Co., a company that owes more than $45 million to Workers' Comp.) Jackson & Kelly lawyers representing Bluestone want to shift the $10 million debt to the whole Workers Compensation Fund. This would mean that honest coal corporations and other employers who paid their premiums faithfully would shoulder Bluestone's obligation. The lawyers filed legal documents last week claiming Bluestone was never notified about its contractors' debts, and therefore doesn't owe them.
Preposterous! Bluestone completely ran the mining, using the contractors as puppets. James Justice II, like his father before him, gets all mining permits for Bluestone contractors. He pays all electricity bills. He hires engineers to develop all the mining plans.
Bluestone pays all Abandoned Mine Land fees to the U.S. Office of Surface Mining. The company pays all federal black lung fees.
Bluestone owns every ton of coal its contractors mine. Bluestone then sells all the coal they mine.
Does anyone honestly believe Bluestone routinely paid all the other debts and fees, then just happened to overlook Worker's Compensation premiums for 50 contractors, month after month, year after year?
During these same months and years, conscientious coal companies like Arch Mineral Corp. and Ashland Coal Co. routinely required their contractors to prove they paid their compensation premiums every three months.
The Caperton administration sued Bluestone in December 1996. During the 49 months since, Bluestone has allowed new contractors to run up hundreds of thousands of dollars in new debts.
And the whole time, company lawyers worked to stall and delay. When the trial was set to begin in September 1998, lawyers tried to move the case to federal court. They failed. In May 1999, Vieweg dismissed the suits against Bluestone and 18 other large coal companies. But Judge Stephens wants the Bluestone Coal trial to proceed.
Bluestone's owners and lawyers apparently fear a public, open trial.
Maybe the Workers' Compensation Fund will win. Maybe Bluestone will win. No one knows.
Let the trial begin. Gov. Wise has taken a big step to resolve this dilemma and help put the embarrassing legacy of Underwood and Vieweg behind the state.