By Paul J. Nyden
When Gov. Arch Moore left office in January 1989, policy decisions and back-room deals had pushed West Virginia's Workers' Compensation Fund to the brink of bankruptcy.
Moore's 30 percent cut in compensation premiums alone cost the fund $570 million.
"The whole plan was presented to me as a shot in the arm to the economy of West Virginia," said Bob Finger, an Irvine, Calif., actuary and Workers' Compensation Fund consultant.
In 1985, West Virginia had the nation's highest unemployment rate.
"He Moore said his goal was to cut $2 a ton off the cost of mining coal in West Virginia," Finger said. "That would come from all government costs, and Workers' Compensation was one of those."
Moore told Finger that the cuts would last less than a year. "Then they would go back to the old rates. They never did," Finger said.
John Kozak, current general counsel for the Bureau of Employment Programs, said Moore gave "no consideration to the needs of the fund. There was only an intent to get the cost of coal down to a certain level."
Moore also cut back environmental enforcement and created huge state tax breaks. Moore desperately wanted to bring jobs to a struggling state.
To lure a planned Saturn auto plant, Moore got lawmakers to pass the Business Investment and Jobs Expansion Act in 1985.
After General Motors decided to locate the plant in Tennessee, lawmakers passed amendments the next year that would give coal companies $500 million in tax breaks over 10 years.
Moore approved $61 million in refunds from the Coal Miners' Pneumoconiosis (Black Lung) Fund, part of the Workers' Compensation Fund. Some were legal. Others were questionable.
And Moore made secret, illegal deals that eventually landed him in federal prison.
Looking back, Moore may have singlehandedly generated at least half of the agency's current $2.2 billion deficit during his three terms as governor.
Beckley coal operator H. Paul Kizer probably got as much of a break as anyone. In the mid-1980s, Kizer was one of the nation's top 20 underground producers. A decade later, Kizer's empire of 42 coal companies collapsed in bankruptcy.
The Workers' Compensation Fund was a big loser in Kizer's demise. It is obligated to pay $44.6 million to his injured miners over the next 40 years. Other businesses will pick up that bill.
Moore let Kizer become "self-insured," pay no compensation premiums and compensate injured workers directly from company funds.
Kizer ended up playing the central role in Moore's April 1990 indictment for extortion, income tax evasion, mail fraud and obstruction of justice.
From 1985 to 1989, Kizer paid $985,263 to Moore and John Leaberry, a deputy tax commissioner and Workers' Compensation commissioner, for Black Lung refunds, and tax credits.
The key deals included:
* The Workers' Compensation Fund giving Maben Energy Corp. a $2.3 million Black Lung refund in October 1985. Maben sent Moore a $573,721 check for "legal advice."
* Workers' Comp sending a $2.1 million Black Lung refund to Beckley Lick Run Coal in July 1988. Leaberry arranged the deal. Kizer sent $211,542 to Left Coast Inc., a firm Leaberry set up.
'We'll take care of you'
During Moore's third term, Workers' Compensation officials forgave large debts to companies, including:
* $836,062 to Mower Limited Partnership, a Randolph County lumber and coal company. Commissioner Mary Martha Merritt canceled a lien in July 1986, allowing Mower to sell land to the federal government for $12.8 million.
* $694,504 to Shenandoah Quarry and Millville Quarry, Eastern Panhandle limestone quarries.
* $635,550 to Pittston Coal. Commissioner Nelson Robinson approved the deal in September 1988. Gretchen Lewis, Workers' Compensation commissioner under Gov. Jay Rockefeller, said the debt should have been collected.
* $1.7 million in a secret tax settlement with CSX Corp. Tax Commissioner Michael Caryl approved this in January 1987, even after the U.S. 4th Circuit Court of Appeals ruled CSX owed the state $9 million.
* $836,399 in Black Lung refunds to The Lady H Coal Co. Robinson approved this on Moore's last day in office, then created Compensation Strategies Inc. Lady H hired him as a "compensation consultant."
Emily Spieler, Gov. Gaston Caperton's new Workers' Compensation commissioner, nixed this deal. The refund request from Lady H, dated March 10, 1986, mysteriously surfaced in January 1989, nearly three years after the deadline to apply for refunds.
Fred Dillon, Workers' Comp accounting director from 1982 to 1987, said at that time, "On the surface of it, that's the way this governor does business. Contribute and we'll take care of you."
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