Appellant, the State Insurance Fund (Fund), appeals from the Bankruptcy Appellate Panel (BAP) decision that its claim for unpaid workers’ compensation insurance premiums is not entitled to priority status under 11. U.S.C. § 507(a)(4) in the Chapter 7 bankruptcy of the debtor, Southern Star Foods.
1
See State Ins. Fund v. Mather (In re Southern Star Foods, Inc.),
. Southern Star contracted with the Fund to provide workers’ compensation insurance coverage. On November 17, 1994, the insurance was canceled. At the time the coverage was canceled, Southern Star owed the Fund hundreds of thousands of dollars in unpaid premiums. When an involuntary petition in bankruptcy was filed against Southern Star on December 23, 1994, the Fund claimed priority status for their unsecured creditors’ claim under § 507(a)(4), in the amount of $186,898.27. 2 The trustee objected to the *714 Fund’s claim of priority status, and the Bankruptcy Court sustained the objection, finding that § 507(a)(4) did not give priority status to a claim for unpaid workers’ compensation premiums. The Fund appealed the decision to the BAP, which affirmed the denial of priority status under § 507(a)(4) in a very thorough and well-reasoned opinion.
The relevant portion of § 507(a)(4) provides:
(a) The following expenses and claims have priority in the following order;
(4) Fourth, allowed unsecured claims for contributions to an employee benefit plan—
(A) arising from services rendered within 180 days before the date of the filing of the petition or the date of the cessation of the debtor’s business, whichever occurs first; but only
(B) for each such plan, to the extent of—
(I)the number of employees covered by each such plan multiplied by $4,000; less
(ii) the aggregate amount paid to such employees under paragraph (3) of this subsection, plus the aggregate amount paid by the estate on behalf of such employees to any other employee benefit plan. 3
The position of the parties in this appeal is simple and straightforward. The Fund argues that the unpaid workers’ compensation insurance premiums owed to it by Southern Star are contributions to an employee benefit plan within the meaning of §■ 507(a)(4), and are, therefore, entitled to priority status. The trustee argues that they are not.
We begin our analysis with the premise that the overriding objective in bankruptcy cases is equal distribution of the debtor’s limited resources among its creditors.
See Isaac v. Temex Energy, Inc. (In re Amarex, Inc.),
The Bankruptcy Code does not define “contributions to an employee benefit plan.” The Fund urges us to look to the Employee Retirement Income Security Act of- 1974 (ERISA) and apply the definition of “employee benefit plan” set forth in that statute to § 507(a)(4). We decline to read the ERISA definition of “employee benefit plan” into the Bankruptcy Co'de. We agree with the Eighth Circuit that “‘[t]he ERISA definition and associated court guidelines were designed to effectuate the purpose of ERISA, not the Bankruptcy Code.’ ”
Employers Ins. of Wausau, Inc. v. Ramette (In re HLM Corp.),
Two other circuit courts have addressed the issue of whether workers’ compensation premiums are contributions to an employee benefit plan within the meaning of § 507(a)(4) so as to be entitled to priority status, and they reached opposite conclusions.
Compare Employers Ins. of Wausau, Inc. v. Ramette (In re HLM Corp.),
Before we can answer this question of first impression in this Circuit, we must first determine whether the meaning of the statute is evident from its plain language, or if the phrase is ambiguous. The split in the circuits is, in itself, evidence of the ambiguity of the phrase “contributions to an employee benefit plan;” its meaning is not evident based on the plain language of the statute. Because the phrase is ambiguous, we turn to the legislative history of the statute to aid our analysis. See
United States v. Simmonds,
Like the BAP, we agree with the Eighth Circuit that the legislative history clarifies that § 507(a)(4) grants priority for “ftinge benefits” accepted in lieu of wages.
In re HLM, Corp.,
The Supreme Court has held that the wage priority does not extend to fringe benefits, such as pension fund or health insurance contributions. When the wage priority was last amended in 1926, perhaps the intent of Congress was not to extend it in that fashion, because fringe benefits were little heard of at the time. Now, however, to ignore the reality of collective bargaining that often trades wage dollars for fringe benefits does a severe disservice to ■ those working for a failing enterprise.
In recognition of changes since 1926, the bill ... establishes a new category, a fourth priority immediately following the wage priority, for contributions and payments to employee benefit plans. This will include health insurance programs, life insurance plans, pension funds, and all other forms of employee compensation that is not in the form of wages.
H.R.Rep. No. 95-595, at 187 (1978), reprinted in 1978 U.S.C.C.A.N. 5963, 6148 (footnotes omitted). Specifically addressing § 507(a)(4), the legislative history provides:
Paragraph (4) overrules United States v. Embassy Restaurant,359 U.S. 29 ,79 S.Ct. 554 ,3 L.Ed.2d 601 (195[9]), which held *716 that fringe benefits were not entitled to wage priority status. The bill recognizes the realities of labor contract negotiations, under which wage demands are often reduced if adequate fringe benefits are substituted. The priority granted is limited to claims for contributions to employee benefit plans such as pension plans, health or life insurance plans, and others, arising from services rendered after the earlier of one year before the bankruptcy case and' the date, of cessation of the debtor’s business.
Id. at 357, reprinted, in 1978 U.S.C.C.A.N. 5963, 6313- (footnotes omitted); see also S.Rep. No. 95-989, at 69 (1978) reprinted in 1978 U.S.C.C.A.N. 5787, 5855.
The legislative history makes it clear that Congress enacted § 507(a)(4) to benefit employees. It recognized the reality that employees often bargain for fringe benefits in lieu of higher wages. The two Supreme Court cases that gave rise to the .enactment of § 507(a)(4) both involved plans organized to provide benefits for employee's pursuant to collective bargaining agreements.
See Embassy Restaurant,
Workers’ compensation coverage, on the other hand, is not a fringe benefit that an employee can bargain for, either explicitly or impliedly, in lieu of higher wages. It is not a fringe benefit or wage substitute, as contemplated by Congress in enacting § 507(a)(4). In addition, the legislative history indicates that workers’ compensation is not an employee benefit plan because the coverage benefits the employer at least as much, if not more, than the employee. As both the Bankruptcy Court and the BAP recognized, “since workers’ compensation premiums are required to meet an obligation imposed by the state, they were primarily for Southern Star’s benefit, not its employees.”
In re Southern Star Foods,
[t]he purpose of the Oklahoma workers’ compensation benefit scheme simply cannot be interpreted as a “fringe benefit” supplementing wages. In fact, the scheme was a compromise between workers and employers in which the workers gave up the right to sue for damages for work-related injuries, and the employers gave up certain defenses, such as the “fellow servant rule.” Carroll [v. District Court], 579 P.2d [828,] 830 [ (Okla.1978) ]. The Oklahoma Supreme Court observed, “[e]very common-law right of the workman has been abrogated, and another right substituted, not governed by common-law rules____ The injured workman can no longer use common-law rules ... to extract compensation for injuries sustained by him.” Brooks v. A.A. Davis & Co.,124 Okla. 140 ,254 P. 66 , 70 (1926).
Id. at 844.
In reaching our holding today, we are mindful of the Ninth Circuit decision in
Plaid Pantries,
with which we respectfully disagree. That court examined the legislative history, but interpreted it differently in holding that premiums owed for workers’ compensation coverage were entitled to priority under § 507(a)(4).
See Plaid Pantries,
We hold that premiums for workers’ compensation insurance are not contributions to an employee benefit plan as contemplated by Congress in the enactment of § 507(a)(4). Therefore, a claim for unpaid workers’ compensation premiums is not entitled to priority status under that statute. AFFIRMED.
Notes
. After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed. R.App. P. 34(a); 10th Cir. R. 34.1.9. The case is therefore 'ordered submitted without oral argument.
. The parties have stipulated that this is the amount of premiums incurred within 180 days of *714 the petition date. See 11 U.S.C. § 507(a)(4) (providing for priority of certain claims arising from services rendered within 180 days 'before the filing of the petition).
. Paragraph (3) provides priority for unpaid wages.
. Also helpful to our analysis, although not directly on point, are the decisions that have reached the question of priority with regard to premiums for types of insurance other than workers' compensation.
Compare In re The Montaldo Corp.,
. The fact that the holding of In re HLM Corp. is based on Minnesota's workers’ compensation scheme does not negate its persuasive authority. Only a small portion of the court's reasoning is based on the unique aspects of that state’s statutory scheme; the bulk of the analysis is based on general workers’ compensation characteris'tics. The factual distinctions between Oklahoma’s and Minnesota’s statutory schemes do not vitiate the applicability of In re HLM Corp. to this case.
. Because it is not necessary to our decision in this case, we do not reach the question of whether Congress intended that third parties, such as insurance companies, may claim the priority afforded in § 507(a)(4).
Compare In re Saco,