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Worker's comp pact OK'd STATE TO GET NEARLY $50 MILLION

Published: Thursday, January 10, 2002
Page: P1A
Byline: Paul J. Nyden A dozen major coal companies agreed Wednesday to pay nearly $50 million in Workers' Compensation premiums that their contractors never paid.

Announcing the settlement in his State of the State Address, Gov. Bob Wise said the settlement will be paid by "the coal companies who were ultimately responsible for those debts." Wise also said these funds may help reduce the future burden on "the pockets of other businesses that paid their premiums on time." Under the settlement with the state Bureau of Employment Programs, if the major coal companies pay their contractors' unpaid premiums, they will be allowed to avoid paying all accrued interest on those premiums.

The agreement came late Wednesday afternoon, after weeks of negotiations between state officials and the Charleston law firm of Jackson & Kelly, which represents the coal companies.

Ten other coal companies, whose contractors owe more than $21 million in unpaid premiums, did not participate in the negotiations completed Wednesday.

BEP officials apparently will offer those 10 companies the same deal: to pay their contractors' premiums and forgo the interest. If they do not agree, the BEP is likely to go to court and ask for interest payments as well as premiums.

If all of the companies involved eventually settle under the same terms as the ones that settled Wednesday, the state might collect as much as $72.2 million. According to Workers' Compensation Fund documents, the accrued interest, in some cases since 1977, totals an additional $400.7 million.

The companies involved in Wednesday's settlement include Massey Energy (formerly A.T. Massey Coal), Island Creek Coal, Consolidation Coal Co and Bluestone Coal Corp.

In the final weeks of former Gov. Gaston Caperton's administration, then-BEP Commissioner Andy Richardson filed lawsuits against Island Creek Coal, Bluestone Coal and National Mines Corp. in an attempt to force the coal companies to pay their contractors' premiums.

The coal companies argued that, because the workers did not work directly for the large companies, the companies could not be held liable for those premiums.

After Cecil Underwood became governor in January 1997, he named William Vieweg, a former Island Creek Coal executive and lawyer, as BEP commissioner.

Vieweg eventually filed an additional 30 lawsuits against delinquent coal companies in April 1998, as the statute of limitations approached. But in May 1999, Vieweg announced he would dismiss all major coal companies from the lawsuits.

The Affiliated Construction Trades Foundation immediately challenged Vieweg's decision to dismiss major coal operators from the lawsuits.

In July 1999, the high court declined to accept ACT's appeal, but suggested that the foundation take the dispute to circuit courts.

ACT lawyers, led to Stuart Calwell of Charleston, then asked to become a party to the lawsuits. McDowell Circuit Judge Booker T. Stephens granted their request in late 2000.

On Oct. 1, 2001, Stephens ruled Vieweg acted irresponsibly and "breached his fiduciary duty" by trying to dismiss the cases against the large coal companies.

Stephens' action intensified the private negotiations that had already begun. He must approve the settlements reached Wednesday.

In his speech, Wise said the "suits were kept alive by the Affiliated Construction Trades Foundation. We owe ACT thanks for their efforts tonight." Under many of the settlements, a company will be allowed to pay 20 percent of the debt immediately, then make payments on the remainder of the debt over the next 10 years.

Coal companies will pay an interest rate equal to the prime rate plus 4 percent on unpaid portions of their debt.

The agreement apparently has no specific requirement making companies refrain from using contractors in the future to avoid making future payments of compensation premiums. That activity, however, is against the law.

To contact staff writer Paul J. Nyden, use e-mail or call 348-5164.

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