Gazette photo by F. BRIAN FERGUSON
Coal miners at Arch Coal's Hobet No. 21 mine prepare to be shuttled to their job site on Tuesday. The miners are among more than 750,000 working West Virginians. If any of these miners get hurt on the job, will the state's Workers' Compensation Fund be able to take care of them?
By Paul J. Nyden
What does the future hold for the Workers' Compensation Fund? Will its "safety net" system provide benefits for injured workers who really deserve them?
Jim Bowen, president of the West Virginia Federation of Labor, AFL-CIO, said labor unions will ask the state Legislature to reverse what he sees as draconian cuts made in compensation benefits in February 1995.
House Speaker Robert Kiss, D-Raleigh, helped pass that legislation, which resulted in higher employers' premiums and cuts in workers' benefits.
Kiss believes there was no alternative. The Workers' Compensation Fund still faces a $2.2 billion unfunded liability - the amount of money needed in the bank to cover benefits already awarded to injured workers.
The deficit could get worse. If it does, every taxpayer could end up paying part of it.
Coal companies played a major role in creating the deficit. But coal employment is falling, which could cut into the total premiums the coal industry pays the Workers' Compensation Fund.
Coal production keeps rising. But compensation premiums are based on hours worked, not tons produced. In 1976, 59,802 miners produced 109 million tons of coal. Last year, it took just 21,296 miners to dig 174 million tons.
"People on all sides fought us," said former Gov. Gaston Caperton, reflecting on what happened nearly three years ago. "Anyone who has a workers' compensation claim should be paid quickly and fairly.
"But you've got to have a fund that has money in the bank to pay that claim. In 1995, we were running out of money," he said.
In early 1995, labor leaders opposed tightening eligibility requirements for benefits. And many business leaders fought the prospect of increased premiums.
Now, nearly three years later, Kiss and other legislators are taking a close look at what has happened since the law was passed.
Last week, Kiss said he may ask lawmakers to commission a study to determine whether some benefits can be restored, including lowering the 50 percent impairment threshold needed to qualify for lifetime permanent total disability (PTD) awards.
Early statistics suggest that the 1995 law made it harder to qualify for PTD awards in West Virginia than in most other states, even though industries here tend to be more dangerous.
"Care must be taken to preserve the balance we created in 1995. The Legislature tightened benefits, but beefed up employer accountability and collections," said former Workers' Compensation Commissioner Andy Richardson, a lawyer who previously worked for the McDonough Caperton Insurance Group.
"It appears that the 50 percent PTD threshold has been more restrictive than the actuaries projected, and it should be reviewed," he said last week.
Kiss is looking at the human side of the issue too.
"One place we did not do an adequate job was with the 'pain index,' the 'social safety net' structure. Senate President Earl Ray Tomblin and I have been meeting with labor about this.
"In 1995, I dealt with aggregate numbers. I didn't deal with the human element. The growing deficit was caused by years of human irresponsibility. We know it's not fair. But I don't want to do to a future generation what was done to us."
Kiss worries about the human impact of benefit cuts.
"There are a number of tragedies in this whole thing. There is that poor person working out there right now. He may get injured tomorrow.
"Now he will have to play by rules we in the Legislature didn't think he should play by. But can we offer the same standards to the guy injured now that we did before 1995? That is one of the tragedies."
Gov. Cecil Underwood would not be interviewed for this series of articles. Dan Page, his spokesman, said the governor's schedule was filled throughout the month of December.
James Teets, Underwood's chief of staff, said the Workers' Compensation Fund was a mess when Underwood became governor in January.
Underwood replaced Richardson with William Vieweg, a top Workers' Compensation Fund administrator for Gov. Arch Moore from 1969 to 1973.
After leaving state government, Vieweg spent his career working for Island Creek Coal Co. and in the insurance industry.
"For the first time, a workers' compensation person, and not a political appointee, was brought in to clean up the mess," Teets said. "Vieweg is a professional."
Bob Phalen, president of United Mine Workers District 17, criticized Vieweg.
"For years, we heard about insolvency at Workers' Comp," he said. "Now Commissioner Vieweg wants to give coal operators another break by shelving lawsuits against people who created the mess that exists."
During the final month of Caperton's administration, private lawyers hired by the Workers' Compensation Fund filed three lawsuits for $28.5 million against three coal companies and their contractors. In February, Vieweg stopped the filing of additional suits, already planned under Caperton.
Teets defended Vieweg. "The suits were brought against not the businesses who actually own the mining equipment and hired the miners, but against the businesses that hired the contract miners."
Actually, the lawsuits were filed against both the mining contractors who produced the coal and the larger companies who owned that coal.
Today, many of the smaller contractors have gone bankrupt or simply disappeared.
If courts rule the state can sue the larger coal companies, Teets said, more suits will be pursued. "It is a waste of money to pursue them now."
John McClaugherty, managing partner of Jackson & Kelly law firm, represents some of the coal companies being sued for debts incurred by contractors they hired. The state law, he points out, requires employers only to pay premiums for workers they employ directly.
McClaugherty criticized Workers' Compensation Fund collection officials. "For years, they could have shut these contractors down. They could have put them out of business. They could have filed liens. But they didn't do anything."
Kiss said the situation bothers some legislators. "We wanted to accelerate and reinvigorate mechanisms to deal with bad actors - some aggressive things to allow us to go after bad actors. Some occurrences this last year have caused us a number of concerns."
Kiss questioned Vieweg's decision in May to cap all premium increases at 25 percent, even for companies with bad safety records.
Vieweg said he feared companies would shut down if he raised premiums too high.
But by capping the increases, Vieweg effectively shifted $21.6 million in premium increases from the state's 19 most dangerous industries to the 72 safest ones. Coal companies alone saved $18 million by Vieweg's action, which was approved by the Performance Council.
Kiss, a lawyer and an accountant, said he understands premiums cannot jump astronomically.
"We have a commissioner who says we don't want to go too quickly. I can understand that with a good actor. But do we want to do that with someone who is injuring people?
"That makes the rate system unfair, if your objective is to charge those who are creating the losses and reward those who have no losses," Kiss said.
"Another one of those small tragedies we see is that a lot of the bad actors of the 1970s and 1980s, who created problems, don't exist anymore."
He said the coal lawsuits and premium caps could become issues in the 1998 legislative session.
Kiss criticized former Gov. Arch Moore, who cut most business premiums by 30 percent in 1985.
"That was an irresponsible act. It was fundamentally wrong. He knew what he was doing. But it is easy to blame Arch Moore.
"There was also a Legislature here at the time. They could have passed a bill and overruled the governor. They did not," Kiss said.
Stuart Calwell, a Charleston lawyer whose firm represents injured workers, believes some businesses will continue trying to get out of paying workers' compensation premiums.
"Certain businesses don't want to pay the true costs of labor. They want to shift them to anybody else. And government wants to help them.
"The question is 'Who will pay?' The taxpayers may ultimately have to pay."
Private insurance could be an alternative, Calwell said. "Let employers buy insurance. Let insurance companies figure out what the true risks are. They have done a good job historically.
"Maybe government can't resist the temptation to do favors for the powerful. Maybe it is too much to expect a politician to resist temptation. Let the employer buy insurance and let the injured worker sue.
"The deserving injured will prevail," Calwell said.