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Workers' comp deal good, say state's lawyers

Published: Monday, January 21, 2002
Page: P1A
Byline: Paul J. Nyden The proposed $50 million settlement to collect delinquent workers' compensation premiums from 12 coal companies is a good deal, even though $295 million in interest payments will be forgiven.

That's the conclusion reached by both Alex Macia, Gov. Bob Wise's general counsel, and Sean McGinley, a lawyer who helped the state develop those lawsuits to collect premiums unpaid by contractors working for larger coal companies.

"The companies would have gone to trial if we had insisted on interest. ... There is always a substantial risk of losing a case in trial." Alex Macia, governor's general counsel Macia said, "The companies would have gone to trial if we had insisted on interest. That would have been the breaking point.

"I wish we could have gotten more, but it wasn't possible," Macia said on Saturday. "And there is always a substantial risk of losing a case in trial.

"Look at the case of Bluestone Coal, which was the most developed and ready for trial. It had one of the best sets of facts. Our lawyers did not say it was a sure victory.

"Not agreeing to a settlement also fails to recognize that jurors would know a victory for the state would have sent Bluestone into bankruptcy," Macia said.

Bluestone Coal Co., owned by James Justice II of Beckley, operates both underground and surface mines near Northfork in McDowell County.

Bluestone employs about 200 miners, who are United Mine Workers members.

According to documents released by Bureau of Employment Programs Commissioner Robert J. Smith, Bluestone contractors owed $5.1 million in premiums and $15.7 million in interest.

"Any litigation is not just an intellectual exercise," Macia said. "We are trying to collect as much as we can for the benefit of the state without harming people we want to help - working families in the coalfields.

"It would be no good to win a legal victory on paper that would force some companies into bankruptcy and some working families into destitution." Macia said the settlements reached on Jan. 9 are better for the state than payments made under an amnesty program back in 1999.

Under the workers' compensation amnesty program, companies that owed premiums were allowed to pay those premiums over 12 months, at 9 percent interest.

Under the settlement agreements, companies must pay 20 percent initially and the remainder over 10 years, at 11 percent interest.

Unlike the amnesty program, these payments all must have corporate guarantees, such as surety bonds or legal commitments by a parent company to make the full payments.

McGinley, a Charleston lawyer, said, "Obviously, the state believed in these cases. But in any litigation, there are risks. If we went to trial, the coal companies would put on every defense they could.

"These cases have already gone on for six years. It could have been six years more before we got any results.

"There was also the threat some companies might be unable to pay judgments for the full amounts, even if were successful. With the settlement, the state is guaranteed money," McGinley said on Saturday.

The Affiliated Construction Trades Foundation kept the suits alive when former BEP Commissioner William Vieweg tried to dismiss them. In December 1999, McDowell County Circuit Judge Booker T. Stephens gave the ACT Foundation status as interveners.

Steve White, executive director of ACT, believes the settlements are too low.

Macia said if any company had filed for bankruptcy protection, the state might have received only a small fraction of the unpaid premiums.

"It was highly improbable we would have come out nearly as well. Even if we had gotten something, it would have been a fraction of what we got today.

"We owe ACT a great measure of gratitude for keeping the cases alive after the previous administration dismissed them," Macia said. "ACT enabled the Wise administration to reopen the cases." McGinley said Dal-Tex Coal Co. agreed to a settlement of $2.88 million on Thursday, completing the first group of settlements by companies represented by the Charleston law firm of Jackson & Kelly.

Ten additional companies that were sued owe another $21.2 million in premiums. Those cases may be settled in the coming months.

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

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