Sago mining disaster and workers comp: newly formed insurer to pay benefits

January 9th, 2006 by Julie Ferguson

For many years, West Virginia was one of a handful of monopolistic states in which all workers compensation was handled by a state compensation fund. After years of punishing losses, the state legislature moved to privatize the fund. The first phase of this privatization began on January 1 when the state compensation fund passed the baton to BrickStreet Mutual Insurance Co., a newly formed mutual insurance company. On January 2, the Sago mine explosion occurred, resulting in the deaths of 12 workers, and catastrophic injuries to the one survivor.
CNN reports:

“The mutual company — which is owned by the 42,000 employers in West Virginia — will be the sole provider of workers’ compensation policies to businesses that operate in the state until July 2008, when the market fully opens to other private companies. Businesses in the state are required by law to provide workers’ compensation insurance.

“This is a very difficult beginning for the transition,” said Robert Hartwig, chief economist at the Insurance Information Institute, an industry group. “But BrickStreet is fully capable of handling this type of event financially.”

Benefits available for McLoy, families of deceased
Because the deaths and injuries from this mining disaster were work-related, workers compensation benefits will be available to Robert McLoy, the surviving miner, for medical costs and wage replacement. The families of the deceased miners will also be eligible for benefits. Insurance Journal reports

” … the families of the miners who died in the accident will receive a workers’ compensation benefits of up to $5,000 paid to the funeral home for its services. He said there is a workers’ compensation family dependent benefit which would be two-thirds of the average weekly wage of the worker for the proceeding 12 months, up to a maximum of $568.78 per week, and that is for as long as the dependency lasts or until the worker would have reached age 70.

In the case of a dependent spouse Wessels said the benefits would continue until the deceased would have been 70. The benefits for dependents continue until the dependent reaches 18, or if they stay in school, until 25 and there are some provisions about incapacitated independent children. He pointed out that none of the benefits are subject to state or federal income taxes.”

It is possible that workers compensation may not be the exclusive remedy in this instance. Business Insurance notes:

“ICG, which began operating the mine in November 2005, may face claims beyond those falling under workers comp, though, especially if survivors of those killed are able to use safety-related issues as a basis for suing the company outside of workers compensation system, observers note.

Several questions already have been raised about the significance of the mine’s poorer-than-average safety record, including 208 safety violations in 2005. In addition, miscommunications that occurred while miners’ families awaited the outcome of rescue efforts resulted in anger at company officials.”

Confined Space offers more information about safety issues related to the Sago events and to coal mining in general in yesterday’s post, Sago Mine Disaster: Just the facts, Ma’am.
Additional reports:
Boston Globe: Sago Mine safety declined sharply
USA Today: Latest coal tragedy reveals lax safety enforcement
Charlston Gazette: ’05 Sago safety record worse than most