Opinion
Opinion By: Michael A. Richardson, Assistant Attorney General
Subject: Red Fox Coal and HB 287 as enacted
Syllabus: Worker's compensation claimants working for Red Fox Coal Company are also entitled to claim benefits from the SERF Fund created from the pool of unclaimed utility rebates ordered following the Kentucky Utility Co. vs. South East Coal Company case.
OAGs Cited: OAG 96-7 and OAG 96-20
Statutes Construed: KRS 393.080 as amended by HB 287.
Opinion of the Attorney General
We are asked by the Commissioner of the Department of Workers' Claims, acting as the Administrator of the SERF Fund created pursuant to HB 287, whether the workers' compensation claimants working for Red Fox Coal Company would also qualify for benefits from that fund.
THE FACTS
Red Fox Coal Company was a member of Miners' Self Insurance Group (MSIG) along with South East Coal Company (SECC) between 1986 and 1993. 1 In 1993 there were two claimants who had been awarded benefits from MSIG who were employees of Red Fox Coal. When MSIG ceased payment of workers' compensation benefits to the SECC claimants, it also ceased payment on these two claims. The reason for ceasing payments was the fact that MSIG ran out of money, and there were no assets of the members of MSIG to assess for additional premiums.
ANALYSIS
In OAG 96-7 we discussed the "reasonable relationship between the source of, and reason for, the refund" in regard to South East Coal Company. Red Fox Coal Company was closely tied to SECC in many ways, most specifically through MSIG. One of the factors considered in OAG 96-7 was the impact that losing the law suit had on SECC, and its ability to fulfill its commitments to MSIG. These same findings apply to Red Fox as a member of MSIG. That is to say, the default of SECC drained MSIG of its assets, and thereby resulted in the default of Red Fox to its workers.
Red Fox Coal Company merged with DLX, Inc. in 1993, and that merged company declared bankruptcy in 1994. Thus Red Fox is also a "bankrupt employer who purportedly was self-insured, either individually or through a self-insurance group, under KRS Chapter 342." The fact that SECC lost the $ 35,000,000.00 law suit with Kentucky Utilities Company both created the utility rebate fund in question and left MSIG without the assets to pay the claims for SECC and Red Fox employees. Thus it seems clear that employees of Red Fox Coal Company are in basically the same position as the employees of SECC.
CONCLUSION
There is a reasonable relationship between the source of, and reason for, the refund held by Kentucky Utility Company and the unpaid workers' compensation liability of Red Fox Coal Company, within the meaning of KRS 393.080 as amended by HB 287. The workers' compensation claimants of Red Fox Coal Company who have properly elected to do so are entitled to claim benefits from the SERF Fund.
Footnotes
Footnotes