According to the most recent Workers' Compensation Fund audits, the top coal companies that owe money include Island Creek Coal ($128.4 million); Massey Energy ($71 million); the Pittston Company ($53.2 million); National Mines ($35.3 million); Peabody Coal ($31.8 million); Dal-Tex Coal ($20.6 million); Bluestone Coal ($18.6 million); and USX Corp. ($15.8 million).
West Virginia is the second largest coal-producing state and has one of the largest concentrations of coal miners in the country. Following a national trend, workers' compensation benefits to injured workers have been dropping. (After looking at the Bush Administration's proposed budget, this trend will continue as Washington plans further cuts in domestic programs, including job, health, and safety programs.)
The early January out-of-court settlement was aptly described by a former West Virginia Supreme Court Justice, who said the situation "smelled like a rotting carp." Unpaid Workers' Compensation premiums became a hot political issue in 1993 after the Charleston Gazette published a series of in-depth articles about how the large coal companies were using contractors to avoid their responsibilities and to weaken the union.
The series, "Coal field Contracts: Mining at What Price?" contained reports based on government records, internal company documents, as well as interviews with miners, contractors, and company and union officials.
The Affiliated Construction Trades Foundation (ACT), the main labor organization behind 21 lawsuits filed to force the coal companies to pay up, was disappointed with the settlement, saying that the amount was too low. Not surprisingly, the West Virginia Coal Association, opposed the agreement because it "still contends the coal companies weren't responsible for their subcontractors debts," according to the Daily Mail, a big-business newspaper in Charleston, West Virginia.
At the same time that the coal bosses were skirting their workers' compensation obligations, the fund fell deeper and deeper into crisis. In 1995 the Workers' Compensation Fund had $2.2 billion in "unfunded liabilities." In response, former West Virginia governor Gaston Caperton led an assault on the workers' compensation law. One of the worst features included a provision making it harder for injured workers to qualify for lifetime "permanent total disability" benefits.
The employers abused the workers' compensation system and the state went along with it. "For years, the Workers Compensation Fund failed to collect premiums from employers, especially mining companies, amounting to hundreds of millions of dollars in losses," reported the Gazette.
Steve White, executive director of ACT, said, "Injured workers were made to pay for bad debts of coal companies. And the problems weren't being corrected. Benefits got cut, but the problem of companies not paying premiums continued."
A West Virginia official had an opposite response. "It was critical to address workers' compensation and its many financial problems to improve West Virginia's bond rating on Wall Street," he said. While ACT was organizing to keep the lawsuits alive, a concerted effort, led by William Vieweg, a former Bureau of Employment Commissioner, was made to kill the lawsuits.
Vieweg was an executive and lawyer for Island Creek Coal Co. between 1976 and 1986. However, he failed in his attempt to blame the contractors for the nonpayment of the unpaid premiums. Echoing this claim, Bluefield Coal president James Justice said, "We had no clue, none, that anybody owed anything until the article came out in the Charleston Gazette in December of 1996."
Vieweg's effort was slapped down by a McDowell County judge last fall, who said he had breached his "fiduciary duty," calling his actions "irresponsible and without any basis."
Getting away with murder
The facts behind the agreement show how the coal bosses have been getting away with murder. In response to a miners' upsurge around health and safety issues and union democracy in the 1970s, one of the ways the coal bosses have sought to break the United Mine Workers union was through the use of contractors. Particularly in the southern Appalachian coalfields of Kentucky, Virginia, and West Virginia, coal companies began to hire contractors to mine their coal, thereby shifting the costs of mining onto smaller companies. In practice this meant the contractors became responsible for providing health care, pensions, and workers compensation benefits.
The "philosophy" behind the switch to widespread use of contractors was spelled out in a confidential document, "The Massey Coal Company Doctrine," which began circulating in the early 1980s. According to the "doctrine," less attractive reserves, for example low coal seams, should be mined by contractors. "We are willing to settle for a smaller but reasonably assured profit, but avoid the mining risk," it said.
Reporting on how widespread this practice became, the Gazette noted that Massey and Island Creek used more than 725 different contractors in West Virginia and Kentucky. The paper reported most state agencies "never try to untangle complex corporate webs. Records show the West Virginia Workers' Compensation Fund, for example, has done little in the past to force Massey, Island Creek and other companies to pay millions of dollars owed by their contract miners."
The move to contractors was carefully planned out and executed by the big coal companies. In 1993, Thomas Hoffman, a Bituminous Coal Operators Association spokesman who is currently the head of CONSOL, said, "Look around corporate America at what people are doing to avoid health-care and other payments. They're contracting out work. That's the whole point of using contractors."
By employing contractors, the coal corporations had other goals as well. One of the most important was to switch liabilities, often referred to as "legacy costs," of their union miners onto the contractors. For example, when a longtime union miner retires while working for the contractor, that contractor is responsible for paying his pension and lifetime health benefits. This is how companies like Massey and Peabody got rid of their union workers.
Benefits won by union in 1940s
These benefits were won by the union through hard fought battles in the 1940s. In the recent period, the union organized a demonstration of 8,000 miners in Washington in May 2000 to demand that the government honor its commitment to support lifetime health benefits for retired coal miners.
In addition, the coal bosses used contractors to bypass safety regulations contained in the 1969 Coal Mine, Health and Safety Act, as well as the 1977 Surface Mining Control and Reclamation Act, which imposed new environmental standards on all coal companies. These laws were the product of a decade-long fight by the United Mine Workers of America (UMWA).
In all of this the coal companies had one objective in mind: increase profits. Most contracts between the large coal companies and the contractors included the unilateral right of the coal company to cut prices and to cancel contracts on short notice. Numerous small contractors were forced to declare bankruptcy. It was not uncommon for contractors not to pay workers' compensation premiums, taxes, or royalties to the UMWA health and pension funds, and in some cases, even wages. Miners were left out in the cold with nothing.
Contract mining was not a small part of coal production. In 1991, coal from contract mining accounted for 42 percent of all coal mined in southern West Virginia, eastern Kentucky, and southwestern West Virginia. Contractors also accounted for a high percentage of injuries and fatalities in the mines.
From its inception in 1913, the workers' compensation system has worked poorly with workers getting the short end of the stick. The system is based on a "social contract" whereby injured workers are compensated for injuries quickly, and individual employers are immune from costly injury-related lawsuits. Even with this favorable setup, the bosses have been let off the hook countless times. "For years, the Workers' Compensation system paid a pittance, or nothing at all for bodies destroyed in the mines, mills and factories," reported the Gazette.
In addition, the coal bosses have consistently challenged workers' compensation claims to the point that in recent years 40 to 50 percent of all cases before the Supreme Court have been workers' compensation appeals.
The most important change in workers' compensation came in the aftermath of the upsurge in miners' fight for democracy in the late 1960s and early 1970s. The high point was the black lung strike of 45,000 coal miners in 1969, who demonstrated in the West Virginia state capital of Charleston until a favorable black lung bill was passed.
In the next few years, new laws were passed forcing the participation of employers in workers' compensation and increased funds were allocated for injured workers.
The political importance of the workers' compensation issue will only increase in the years ahead as the employers intensify their attack on the conditions of coal miners and other workers in West Virginia. Last year West Virginia led the nation in coal mine fatalities with 14, the largest increase in years and double the fatalities of the previous year. Nationwide, 42 miners were killed in the mines in 2001. There is also a big jump in serious health and safety violations, including those that result in serious injury.
The West Virginia Office of Miners Health and Safety and Training is woefully inadequate. In 2001 West Virginia spent $6.2 million on mine safety, about $4 million less than Kentucky, which is also under close scrutiny for safety violations. Under today's law a killed miner brings no more than a $200 to $300 fine against the coal boss. For the first time in two decades there are a significant number of young inexperienced miners in Southern Appalachian coalfields. As in the past, the fight around safety--from workers' compensation for industrial injuries, to black lung compensation, to preventing mine explosion like the one in Alabama last September--will be growing concerns for coal miners and coal field communities. Already this year, four coal miners have been killed--all of them in the Southern Appalachian coalfields.
Frank Forrestal is a member of United Mine Workers of America Local 1248 and works in southwestern Pennsylvania.
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