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Published: Thursday, December 19, 1996
Page: P1A
Byline: Paul J. Nyden

STAFF WRITER Bluestone Coal Corp. became the first target of a special lawyers' task force created to pursue Workers' Compensation Fund scofflaws.

On Wednesday afternoon, the West Virginia Bureau of Employment Programs sued Bluestone Coal in McDowell County Circuit Court. The suit says contractors for Bluestone Coal Corp. owe the state at least $5 million in unpaid compensation premiums, interest and penalties.

Since 1984, Bluestone Coal has used at least 50 different coal contractors to mine coal, according to West Virginia Division of Environmental Protection records. About 30 of these contractors owe compensation premiums, according to Workers' Compensation Fund records.

Like many larger companies, Bluestone hired contractors to mine coal it owns or controls. Most coal contractors are small businessmen, who were once mine foremen or mine superintendents themselves.

Bluestone Coal, incorporated in 1971, is based in Beckley. The company's mines are all located in McDowell County, near Keystone.

No one at Bluestone Coal's offices could be reached for comment on Wednesday.

The lawsuit states Bluestone violated its legal duty "to ensure that its contractors complied with their statutory obligations" to pay compensation premiums, "thereby tending to deceive and mislead [Workers' Compensation], violate public or private confidence, and/or injure public interests." James C. Justice II, Bluestone's president, and Byrd E. White III, the company's vice president, each contributed $1,000 to Republican Cecil Underwood's successful campaign for governor.

During the spring Democratic primary, Justice and Kathy Justice each gave $1,000 to Sen. Joe Manchin, D-Marion, at a Beckley fund-raiser.

Manchin lost to Charlotte Pritt in that race.

In 1992, Justice and his late father, James C. Justice, each gave $1,000 to Cleveland Benedict, a Republican who unsuccessfully challenged Democratic incumbent Gov. Gaston Caperton.

In 1988, the Justices gave $18,000 to Republican incumbent Gov. Arch Moore's re-election campaign. Caperton, then a political newcomer, defeated Moore in the November 1988 election.

In 1984, when Moore beat Democrat Clyde See in the general election, the Justices and Bluestone officials gave Moore $9,000, according to records at the Secretary of State's office.

The Justices also invested in Morgantown Industrial Park Associates, a limited partnership set up in 1983 by Underwood to help foster new businesses.

James C. Justice II and Stephanie Justice invested $100,000 in the project, according to records at the Monongalia County Courthouse in Morgantown.

The suit against Bluestone Coal is likely to be followed by suits against several more coal companies.

Andy Richardson, Bureau of Employment Programs commissioner, first set up the special legal task force in August 1995, with approval from the Workers' Compensation Fund Performance Council.

The lawyers who filed the suit include: Bill Druckman and H.F. Salsbery of Salsbery & Druckman in Charleston, Josh Barrett and Debra Hamilton of DiTrapano & Jackson in Charleston and Robert R. Fredeking II of Fredeking & Fredeking in Huntington.

The lawsuit names 18 contractors: 16 Tons Coal Co., BLM Corp., Blair & Hatcher Mining, Burke Mountain Coal Co., DK's Pride Inc., Faye Coal Co., Fox Chase Coal Co., G M Mining Inc., Golden Arrow Mining, Harman Energy, H&L Leasing Inc., Hard Hat Mining, Idewild Collieries, J.D. Mining Co., Linda Enterprises, Lucky M Inc., Matbe Coal Co. and U.S.

Mining Inc.

The suit lists 13 different coal mines in which these contractors worked. In some cases, three or four different contractors worked in the same mine at different times.

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