*1 S.E.2d 170 VIRGINIA, INC., VERIZON WEST al., Below,
et Petitioners Corporation,
Eastern Associated Coal
Appellant,
v. OF
WEST VIRGINIA BUREAU EM PROGRAMS,
PLOYMENT WORKERS’ DIVISION, Respon
COMPENSATION Below, Appellee.
dent Inc., Virginia, et
Verizon West
al., Below, Petitioners Corporation, Appellant,
Weirton Steel
v. Virginia Employment
West Bureau Of
Programs, Workers’ Di
vision, Below, J., Respondent Maynard, Appellee. dissenting opinion filed a Davis, J., joined. which Inc., Virginia, et
Verizon West Stareher, C.J., concurring opin- filed al., Below, Petitioners ion. Ridge Company, Appellant, Pine Coal Davis, J., dissenting opinion filed J., Maynard, joined. Employment West Bureau Of
Programs, Compensation Di Workers’
vision, Respondent Below, Appellee.
Nos. 30899-30901.
Supreme Appeals Court of Virginia.
West March
Submitted 2003.
Decided June 2003. Opinion
Dissenting of Justice
Maynard July 2003. Opinion
Concurring of Chief Justice July
Starcher Opinion
Dissenting of Justice July
Davis *4 Carey, Carey, Doug-
Michael W. Scott las, PLLC, Allen, Combs, Phillip J. Guthrie Charleston, McHugh, Appellant, & for the Corporation. Eastern Coal Associated Bowen, Ramey, Henry Aneil G. C. Michelle Piziak, Johnson, PLLC, Steptoe E. & Charleston, Appellant, for the Weirton Steel Corporation. Smith, Harlan,
Sarah E. G. Heather Love, PLLC, Bowles McDavid Graff & Rice Charleston, Appellant, Ridge Pine Company. Coal McGraw, Jr., General, Attorney Darrell V. Deputy Attorney B. Taylor, Silas Senior Gen- eral, Utt, Attorney Christie S. Assistant Gen- eral, Suter, Counsel, Randall B. Senior WV Employment Programs, Bureau of Charles- ton, for Appellee.
ALBRIGHT, Justice: appeals This involves the consolidated case employers, of three Eastern Associated Coal (hereinafter “EACC”), Corporation Legislature Pine operated created state insur- (hereinafter Ridge Company Coal “Pine system provides ance which coverage to Ridge”) Corporation and Weirton Steel Virginia employers West personal inju- (hereinafter Steel”) “Weirton from the Janu- by ries sustained employees during 17, 2002, ary final order of the Circuit Court resulting course of and employ- from their County. of Kanawha The final order af- ment. Chapter W. designed Va.Code 23. As the November administra- firmed Legislature, nearly all2 tive order of the Commissioner the Bureau required the state acquire are workers’ (hereinafter Employment Programs “Com- compensation coverage subjected or be missioner”) upheld methodology which loss of certain applica- common law defenses used the Bureau’s Division of Workers’ workplace injuries, ble to which loss could (hereinafter Division”) “the prove devastating to be employer sued calculate rates for self-insured em- by injured Injured employees. employees3 (hereinafter ployers year for fiscal “FY protected by system are pro- in that it 1998”).1 way By of this appeal, employ- organized predictable vides an method ers challenge continue the calculation of receive FY 1998 compensation premium incapacitated when as a result of *5 rates for employers self-insured on the job-related workplace injuries. diseases and grounds statutory, that it regulatory violates Consequently, by providing protection and provisions. constitutional In addition to against significant such financial losses for decision, of reversal the Appel- lower court’s (1) employers both and employees, adoption lants seek: the Appellants’ of workers’ pro- posed compensation findings system of fact and conclusions of a law become rudimen- (2) as a below; resolution to the proceedings tary part of the economic fabric of this state. an directing order comply the to Division Employers may participate in the manda- Act, Compensation with the Workers’ in- tory portions of the compensation terpreted by Appellants, requiring and (1) system in of ways: by one three4 sub- fund, separate surplus Division to maintain a scribing program to coverage for of all (3) including reserve; injury a second return (2) risks; by subscribing portion for of risk of overpayment premiums of due to the ille- coverage through program but rates, self-insur- gally interest; including fixed accrued ing (3) against risks; by or attorney costs, electing other with to fees such other as may against relief found self-insure appropriate. Employers be all risks. ob- After careful and reflective examination of taining coverage by subscribing to the work- presented, the issues we affirm the of order compensation system pay premiums ers’ deny the court requested. below and all relief upon: respective which are pay- based their Background
I. rolls or by hours employees; worked their the business or function of employees; those gain To understanding a clearer employer the loss record of the over the presented through issues appeal, we be- years; administering cost of gin provi- with of overview the relevant system. premiums by are intended law sions the state’s workers’ system. administering system to cover the Through cost establishment of the (sometimes paying provided Workers’ the benefits for those “Fund”), hereinafter to referred as the suffering workplace injuries or diseases. period Virtually 1. Reference FY every working Virginian to 1998 means the time 3. West is cov- July by compensation system, ered the workers' to June save exempted by may a few or statute who elect to be exempted, partners. such as business owners and narrowly exceptions The few crafted to re- (g). § See W.Va.Code 23-2-1 quired participation system in the are defined in (b) include, West Code 23-2-1 coverage 4. We not do address the alternative others, among employers of domestic services liability available for excess workers, employers of five fewer full-time stemming from deliberate intention actions. See agricultural employees service and churches. §§ W. Va.Code 23-4C-1 to 5. injury injury and a second received subscribing to the Fund and ous In lieu of his or coverage risk under the course and as a result her paying premiums for ability employment.... with the financial system, employers or part as to all be elect 3—1(d)(1). policy ini- W. Va.Code 23— Act,5 may do so under the their liabilities injury underlying fund was tially the second self- originating Claims people encourage hire who processed and admin- employers are insured injury. may This have suffered earlier Division; however, by bene- istered subsequent incentive allows second em- any injury employee for for which fits due an injury ployer subscribing fund to the second employer is self-insured are considered directly charged only benefits responsibility employer. wholly the injury pre- second when attributable subscribing employers for whom Unlike viously injured employee suffers a subse- respective mean “charges” account^ if quent injury resulting disability; in a pay- simply potential higher premium injury in a life award reason results future, employers self-insured ments in the disabled, being employee totally the second obligation particular risks have employer injury not fund and the current actually pay from their own resources charged life with the costs of the award. injured employees. them benefits due contrast, employers subscribing to required employers are Self-insured fund, electing injury instead to self- second expense “the administra- contribute to injuries, against such second insure system tion” of workers’ injury charged the entire cost of life portion paying paid regarding legislative award. The directive subscribing employers. § 23-2- Va.Code W. reserve within the creation a second *6 Further, self-insured are re- surplus contemplated the the fund existence Division, post to quired a bond with payment of a of at least some reserve expected to claims for be sufficient to cover previ- any of of such life to a the cost award may employer later become which the liable injured employee ously who later becomes financially pay to from avail- but be unable totally disabled. able resources. Id. earlier, qualifying employers As related addition, years In law state had for some fully may against elect to all self-insure predecessors required Division and its to workplace against spe- to risks or self-insure premiums develop fix and collect sufficient Thus, employer may cific risks. an be self- long-term “surplus cover liabilities fund” to respect general all insured with workers’ system. surplus The fund was statu- compensation pay claims addi- but elect torily required compo- special to contain a tional to the Division so-called reserve,” injury nent known as the “second risks,6 injury catastrophe and second where- injury often referred “second fund.” injuries arising life awards out of second injury play fund comes into when second arising or of benefits from cata- awards definitely system strophic paid rath- employee an who has a ascer- events are instances, impairment, employer. In physical er than the such tainable caused employer occupational injury, previous occupational otherwise self-insured any subscribing pneumoconiosis occupational posture other em- or disease same totally Alternatively, may ployer. employer elect permanently becomes and disabled injuries7 through previ- against second and the combined effect of such self-insure opinion hospital and bills and other costs as well as 5. General reference to "the Act" in this cal Act, catastrophe paid benefits from reserve is to the Workers’ codified as Virginia surplus Catastrophic and the catas- Chapter 23 the West fund. events Code. passing trophe they reserve are mentioned since Catastrophic where incidents are those events by Appellants. were not addressed employees or more are killed or receive three provisions injuries Virgi- physical of West Code defined in West 7.Under extensive 23-2-9(e), 3—1(c). longer Employers § is generally an avail- who obtain self-insurance no nia Code 23— option through for second catastrophe coverage able the workér's com- risks; only employers enjoying pensation system aggregate injury sec- those have the all medi- catastrophic risks. If self-insured with re- chapter, to this in accordance with the spect injuries, employer to second nature of degree under- the business and the pay all compensation takes to workers’ hazard sec- incident thereto. And the commis- due, injury including manner, ond power, benefits thereafter sioner shall have in like awards, such life reclassify whether benefits arise sole- groups such into industries or ly injuries time, or a combination second classes at and to create addition- injury injuries. previous second and groups al or classes. The commissioner may necessary expenditures make to ob- Appellants employer The three in the case tain statistical and other information to required participate before us are in the establish provided the classes compensation program workers’ and have section. risks, elected to self-insure their albeit keep commissioner shall an accurate ways. somewhat different EACC is self- money account of moneys paid or general insured for fund, credited to the and of liabilities and subscribes the Division for liability incurred and disbursements injury coverage; second Weirton Steel and same; against made accurate ac- wholly Ridge Pine against money count of all moneys received general Ap- risks.8 All of subscriber, from each individual pellants pay premiums, some level of liability incurred and disbursements made by legisla- calculation which was affected injuries on account of death tive amendments enacted the 1990’s. subscriber, each In Legislature 1993 and sub- receipts liability and incurred of each stantially amended Act. The 1993 group or class. amendments included creation of a Com- compensable fatal and perma- total pensation Programs Performance Council cases, disability nent occupa- other than (hereinafter Council”) “Performance consist- pneumoconiosis, charged tional the amount ing representing four nine members: against employer’s account shall be employers, representing interests of four average such sum as is estimated to be the employees, interests of and the Commission- incurred loss of such cases the fund. er. See W. Va.Code 21A-3-3. charged against employ- The amount *7 Act, In the 1995 of the amendment the compensable occupational er’s account in Legislature comprehensive a enacted revision pneumoconiosis permanent claims for total of requirements the and for methods deter- disability or for death be such as shall sum mining premiums for workers’ average to estimated be incurred the coverage specific changes and made to cer- occupational pneumoconiosis of loss such provisions concerning tain entitlement to to cases the fund. benefits under the Act. W. Va.Code 23-2- duty It shall be the of the commissioner of Because the extensive revision compensation programs perform- and the of provisions the of West Code fix council and ance to lowest the maintain 23-2-4, comparison of the statute as possible premiums rates of with consistent appeared in 1993 will versus 1995 aid our the maintenance of a com- solvent workers’ discussion. The 1993 version this of section pensation fund the creation and main- reads as follows: surplus tenance of a in each reasonable industries; § 23-2-4. Classification of ac- group providing payment after to counts; premiums; rate of prior of notice maturity liability of all incurred reason changes; exceptions. rate injury of or death to entitled to shall provisions The commissioner into of chap- distribute benefits under the groups employments subject readjustment or classes the A ter. rates shall of be injury February Ridge ond 2, self-insurance status before Pine to Both EACC and subscribe the fund; 1995, may catastrophe it is not clear whether Weirton continue this if status other- catastrophe Steel coverage. for statutory qualifications. subscribes or wise the meet class, forming July, group or day first at subscribers on the of or yearly
made from may necessary. At shall be determined the same be such rates any the time upon to group as commissioner elects of or class shown such times the record such Provided, rates the various the for readjust base books of the commissioner: the classifications, the commissioner any group if number industrial That sufficient readjusted of the base shall file schedule of considerable difference hazard, class with the for each industrial rates of the commission- degrees in them secretary publica- of state for of the may office of fix a rate for each subscriber er arti- register pursuant to tion in the state upon group, such to be based the such rate chapter seq.], 29A-2-1 et twen- [§ cle two the books of subscriber’s record on ty-nine-a of this code. Such schedule shall period for a not to exceed commissioner thirty days prior to be so filed least thirty-first day years ending of three adjust- day quarter to which an first of year year preceding December applicable. rates is to be At such ment of effective; and in which rate is to be to read- times as the commissioner elects liability part of such record shall include just sub- individual merit rates upon as have been acted such cases fund, commissioner scribers during three-year peri- such commissioner of merit rate provide shall notice such od, irrespective date the adjustments the affected received; any group in a subscriber so thirty days prior day first least rated, period such cannot whose record for adjustment which an quarter obtained, given a rate shall be based be applicable. to be The commission- rates is any part record for upon subscriber’s retroactively increase de- er shall period just may such be deemed fraud, except in rates instances crease commissioner; equitable by the and the upon or reliance incorrect infor- mistake authority fix shall commissioner have employer. mation furnished any minimum and maximum reasonable possible rates determination of the lowest this individual group method meaning within hereof rating applied, and to add to the rate surplus and of the existence from record the subscriber’s determined predicated deficit in the fund shall sole- necessary liquidate as is such amount ly experience data upon the and statistical any deficit in the schedule to create a and files in compiled the records surplus. reasonable prior commissioner’s office under commissioner, duty It shall be the laws this state rate, changes any when commissioner June, day period from the first notify every employer thereby affected thirteen, one thousand nine hundred that fact and of the new and when rate practicable prior date such ad- nearest *8 same takes effect. It shall also be the Provided, justment: any expected That fu- duty to furnish em- commissioner’s each return, ture in the of or nature interest requested yearly, or often if ployer more funds, predi- be income from invested shall giving by employer, statement upon average from cated realization employer’s employees name of each compensa- investments the credit of the paid for and who were the amounts years preceding. tion for fund the two next by paid during period so covered Any up set for future liabilities reserves statement. any and commutation of shall like- benefits solely prior expe- predicated upon wise be Reg. ch. W. Va. Acts Sess. preceding under this and rience § Virginia 24- full of West The text Code upon expected compensation laws and real- 2-4, and as amended re-enacted by from ization investments determined follows: respective past periods, as aforesaid. industries; of § 23-2-4. The commissioner Classification may premiums; authority adopt vari- programs performance fix a of council rate systems; alike accounts. premiums applicable rate of ous (a) commissioner, conjunction wages employer. of The Such an election compensation programs perform- apply may with the to all industrial classifications or council, by made, If ance is authorized to establish to less than all. this election is chapter in all system determining rule a for then instances in which classifi- gross wage reports pur- cation and distribution into classes of refers em- ployers subject pose premium tax chapter, system to this determination such determining report for rates of references shall be taken mean a taxes applicable subject number hours so worked. to this system chapter, multiple policy options (c) (a) by The rule authorized subsection thereto, subscription with criteria promulgated this section shall be on or employer’s criteria an annual statement day July, before first one thousand providing liability both benefits informa- ninety-six. nine hundred Until rule is tion and rate determination information. finally promulgated provisions prior (1) chapter addition, this section as found in one hun- provide the rule shall for, seventy-one dred Legis- the acts of but be to: limited lature, ninety- one thousand nine hundred (A) adjustments by industry Rate or in- three, shall remain effect. employer, including dividual merit rate ad- (d) In generally accept- accordance with justments; accounting principles, ed the workers’ com- (B) regarding adjust- Notification rate pensation keep division shall an accurate prior quarter ments to the in which the earned, accounting money moneys of all effect; adjustments rate will be in due, compen- and received the workers’ (C) claims; Changeability of fund, liability sation and of the incurred (D) Such further matters that are neces- same; against and disbursements made sary with goals and consistent money of all accurate account chapter; earned, moneys due and received (2) The rule shall be consistent with the subscriber, each individual and of the lia- duty of the compen- commissioner and the bility incurred and disbursements made programs performance sation council to fix against the same. possible and maintain the lowest rates 2002). (Repl. W. Va.Code 23-2-4 Vol. premium taxes consistent with the mainte- major changes The the 1995 effected of a nance solvent workers’ amendment of 23-2^4 West Code fund and the reduction of deficit that may separated categories. into three may in such keeping exist fund and in with First, power fix for workers’ fiduciary fund; obligations compensation coverage was vested in the (3) rule shall be consistent with Council, Commissioner and the Performance generally accepted accounting principles; than in rather the Commissioner alone. Sec- rule shall be consistent with ond, omitting statutory paragraphs several rate-making classification and methodolo- rates, establishment of direction such gies industry; found in the insurance Commissioner, the statute directed the (5) The rule shall be consistent Council, conjunction with the Performance principles promoting more effective system to establish rule the for determin- workplace safety programs health and *9 ing premiums, system multiple policy a in two-b [§§ contained article 23-2B-1 et options, employ- and criteria for the annual seq.] chapter. of this liability er’s statement of benefit and rate (b) information, Notwithstanding any provision other in with determination accord chapter contrary, legislatively Signifi- of this to the the com- enumerated standards. pensation programs performance cantly, council rule-making power was in vested may premise premium Council, to elect its tax de- the Commissioner Performance methodology termination aggregate requirements on the and clear the usual for free by employees legislative rule-making prior hours number of worked to actual review employer upon promulgation than gross rather of the rule. W. Va.Code Cf. 21A-3-7(c) plan §§ to the Fund’s development reduce W. 29A-3-1 to to Va.Code Third, Legislature removed its rating improve was to bond deficit rate-making to fix instructions the direction state. for the “creation and mainte- sufficient
rates
legislative di-
response
In
to the 1995
group
in
surplus
each
of a
nance
reasonable
rectives,
and Performance
the Commissioner
maturity
payment
to
providing for
after
proceed-
proposed
drafted a
rule
Council
injury
liability
by reason of
of all
incurred
necessary public hearings.
In
to hold
to
ed
employees entitled
benefits under
death to
course,
Management
chapter”
and inserted
the “Risk
Rule”
provisions of
due
rate-making
(hereinafter
9”)
instruction to fix rates suffi-
promulgated.
“Rule was
See
any
“reduction of
deficit that
to effect a
cient
9. This rule retains
85 W. Va.C.S.R.
keeping
with
may
in such fund and
exist
fund and
it to
concept
surplus
of a
defines
...."
fiduciary obligations to the fund
compen-
portion
that
of the workers’
include
23-2-4(a)(2)
(1993),
§§ 23-2-4
W. Va.Code
fund set
“the catastro-
sation
aside
cover
(1995).
hazard,
hazard,
injury
phe
the second
deficit
Legislature
directed and
Prior
reduction, and all other
not otherwise
losses
premiums would be collected
intended that
provided
for
Act.” Id. at
specifically
payment
provide
for the
“to
sufficient
7 of
(emphasis supplied).
§ 3.31
In section
Fund,
obligations of
maturity” of all
to-
vested
Rule
the Performance Council is
surplus”
gether with “a
for each
reasonable
authority to
make
series
determina-
group
estab-
statutory
fix
duty
“to
tions consistent with
system, including a
under the
second
lished
possible
lowest
rates of
and maintain the
However,
specif-
injury
in 1995that
reserve.
premium taxes consistent with the mainte-
legislative
language
ic
and the
was deleted
nance of a solvent workers’
was
and intention
altered
re-
direction
any
fund and the reduction of
deficit
things, premiums
quire, among
calcu-
other
Id.
7.2
may
in such
exist
fund-”
any
deficit
permit
a “reduction
lated
(emphasis
supplied).
Performance
Fund,
may
apparent
exist”
claims
Council is also authorized
include
not col-
realization that the Fund then had
methodology
employs] to
[it
costs in “the
provide
for the
lected
sufficient
costs, and such other
assess deficit reduction
maturity,”
payment of liabilities “to
let alone
of re-
pertinent
costs
to the determination
surplus
provide
reasonable
sufficient
Further,
quired
Id.
revenues.”
Perform-
developed
system
grouping
under the
each
specifically authorized
ance Council is
injury
Testimony
reserve.9
and a
amount
tax
suggested
“[d]etermine
hearing
that a
before the
examiner
impetus
deficit
large part
requiring
the which is assessed
reduce
charged during
period according
report
to the
publisher
rates
9. One service
relates
a 1993
by Emily
actuary
reported
Alliance of American Insurers noted that
for the Fund as
A.
in 1984 all state workers'
funds
Spieler
law
article entitled
review
1990, however,
By the
were solvent.
end
Assessing
Re-
Fairness in Workers’
Virginia
among
which had
West
six funds
Commentary
West
A
on the 1995
form:
insolvency.
Compensa-
reported
CCH Workers’
Compensation Legislation:
Workers'
tion,
¶
Vol. 1
The evolution of the deficit is
(brackets
decrease)
denote
Effective Date
Rate
reports
Division’s annual
reflected
report,
governor.
the FY
a chart enti-
7-1-85
[30%]
Expense by
"Operating
Year” reflects that
tled
change
through
No
gains
regular
first exceeded
subscriber
losses
FY
FY 1985. The same chart in the
accounts
operating
1-1-89
Report
30%
Annual
shows that the
year during
7-1-90
continued for each
the FY 1985
19%
loss
through
period.
FY
Another chart reflect-
7-1-91
15%
ing the account balance for the second
7-1-92
3%
period implies
result
fund
same
similar
7-1-93
7%
*10
practice
it shows a consistent annual
of
since
transferring money
change
7-1-94
No
injury
fund to
the second
7-1-95
12.2%
We further
maintain
fixed account balance.
(1995).
L.Rev.
85 n.
following percentage
98 W. Va.
fluctuation
note
may
compensation
exist
in the workers’
The amortization of discount
first
allo-
regular
fund.” Id.
cated between
as a class
subscribers
as a
self-insureds
class. See note
for
promulgation
After
Rule
the Commis-
explanation.
a more detailed
allocation
The
proceed-
sioner and
Performance
Council
employer
of the self-insured
share of the
process
adoption
ed with
of work-
among specific
amortization of discount
self-
premiums
FY
compensation
ers’
for
1998.
employers
insured
involved a further
two-
Following public hearings at which
ad-
some
step process.
step
upon
The first
was based
received,
notably
were
most
verse comments
the number of
each
claims
self-
employers,
from self-insured
an additional
employer
three-year period;
insured
had in a
hearing was
for further comment on
held
step
among
the second
divided
active self-
proposed
premium
FY 1998
tax rates. Fi-
employers
insured
a share of the claims in-
nally,
May
the Performance
by
curred
employers.
inactive self-insured
adopted
Council
Resolution No. 11 in which it
Upon receipt of the
notifi-
Commissioner’s
essentially
stated
the Performance
proposed
cation
FY
premium
tax
approved
premium
Council
FY
tax
rates, including a calculated allocation of the
by
rates as recommended
then Commissioner
discount,” Appellants11
“amortization of
each
Viewig.
William F.
timely protested the allocation of their share
by
A
Resolution
adopted
feature of
No. 11
premium.
of the “amortization of discount”
Council,
the Performance
which is at the
protest
Their initial
was filed with the Com-
controversy
appeals
heart of the
in the
be-
by
required
missioner as
statute. See W.
us,
requirement
fore
is the
appeals
Va.Code
23-2-17. The
were con-
pay premiums increased in an amount dedi-
solidated,
hearings
and after
before
hear-
“[a]mortization
[discount.”
cated to
examiner,
ing
by
the Commissioner
order
is,
The term “amortization of discount”
30, 2000, upheld
premi-
dated November
purposes
appeal,
of this
the amount directed
charged
Appellants. Appel-
ums
each
by the Commissioner and Performance
judicial
sought
lants
review of this order in
Council to
be included
the FY 1998 work-
County.12
the Circuit Court Kanawha
The
compensation
ers’
tax rates for
January
circuit court in its final order of
employer
purpose
each
in the state for the
decision;
upheld the Commissioner’s
effecting perceived
“reduction
deficit”
through
appeal Appellants
seek rever-
the workers’
fund.10 As the
sal
lower court’s order.
actuary
for the workers’
fund
II. Standard of Review
testified:
repre-
amortization
the discount
Judicial review of the matter at
sought pursuant
sents the amount of investment
hand is
income
to the Administra
that would have
provides
been earned on the stated
tive
Act which
Procedures
beginning
period,
“[a]ny party adversely
liabilities at
final
affected
judgment
may
based on the assumed
interest
rate....
the circuit court
seek
[Assuming
enough
appeal
the Division
supreme
collects
review thereof
state_”
money
prospective coverage,
appeals
[it] is the
court of
of this
W. Va.
2002).
money
amount
(Repl.
has to be
29A-6-1
collected Code
Vol.
stop
increasing just
scope
deficit from
of our review of
cases is
these
missing
points
interest on
syllabus
the discounted lia-
summarized in
two
one and
Wheeling-Pittsburgh
bilities.
Corp. Rowing,
Steel
supporting
thirty
Appellants
among
No. 11 and
10.Resolution
documenta-
were
the over
self-
sought
insured
tion in
disclose
final
who
administrative re-
the record
calcula-
premiums.
view
premiums
of the FY 1998
tion of
for FY 1998 included consider-
ation of both
amortization
of discount and a
component
total,
labeled "reduction of deficit” de-
employ-
initial
six of the
anticipated
scribed as a
calculation
protesting
further
sought judicial
ers
re-
shortfall in investment income on current invest-
view of the Commissioner’s order in the circuit
ments.
court.
*11
(1999),
by
or in-
tion
Division of an additional
C. Decisions tax calcula- of the Act and Provisions tion for Virgi- West Exempt Appellants 2—9(b)(1), nia Code “A reads: 23— pay employer’s sum sufficient to proper Appellants point to several decisions of this portion expense of the administration purpose Court16 in which we addressed the chapter.” that, of this The Division submits injury of the so-called second fund and held Appellants the extent the conflict life awards must be among provisions maintain exists various charged paid by the Commissioner Act, can Virgi- when resolved West *14 charged employer. and not be As 23-l-l(a), §§ 2—5(g) nia Code be, read germane may appear as cases these 23— pari § Virginia materia with West Code 23- they were decided under facts and circum- 2-9. presently stances unlike us and those before
provide guidance no substantive in- outset, pre-
stant
Each of
case.
these decisions
At the
we observe that
presence
and,
of a surplus
by
sumes the
fund
phrase “expense of the administration of this
implication,
the second
not,
reserve. Be-
chapter”
been,19
nor has it ever
de
cause
were
these cases
decided well in ad-
§
fined within the Act. W. Va.Code
23-2-
issue,
statutory developments
9(b)(1).
vance of the
at
application
While historic
giving
do not address the critical issues
phrase
employers’
self-insured
statutory
rise to this
or
action
the 1995
only
rates
manage
included the routine
directing
any
amendments
the “reduction of
Division,
ment costs of the
we must look to
deficit,”
inapposite.
and are thus
Va.W.
if
Virginia
see
the 1995 amendments to West
§
Code 23-2-4.
§
regarding general
Code
23-2-4
rate-mak
ing authority allows the definition of
term
enlightening points
More
are raised
respect
to be broadened with
to self-insured
by Appellants regarding seemingly conflict
employer premium tax
is no
rates. There
ing provisions
Appellants
Act.
contend
question
Legislature
failed in 1995
separate
preclude
sections
the Act
parallel
to make
amendments
between
employers
being
self-insured
assessed
general rate-making section and the self-in
charges
part
amortization
discount
as
employer premium
sured
tax section of the
plan
Legis
the deficit reduction
because the
gives
ambigu
Act and that this failure
rise to
(1)
particular
lature
denoted the
elements
ity in
statutory
overall
scheme for such
premium computations
be included in
rate-making.
interpreting
When faced with
employers,17
provided
self-insured
di
multiple statutory provisions, this Court has
rectly
indirectly that
charges
no other
be
maintained that:
against any
employers
levied
self-insured
respect
injuries.18
Appellants
per-
Statutes which
relate to
same
position
stress that their
is bolstered
things,
sons or
or to
same class of
Legislature’s
Act,
failure
revise the
either
persons
things,
or
or statutes which have a
date,
so
unequivocally
1995 or
as to
regarded
purpose
pari
common
will
require
participation
authorize
of self-in
imple-
recognition
materia to assure
employers
pro
sured
in the deficit reduction
legislative
mentation
intent. Ac-
cess.
cordingly, a court should
limit
con-
its
In response,
single
Division
part, provision,
contends that the
sideration to
section, sentence,
word,
authority
phrase
include
but
plan
the deficit reduction
is reflected
rather
review the act or
in its
statute
23-3-l(d), 23-2-9(e)(3).
Compensation
§§
v.
Cardwell
State Workmen's
18. W.Va.Code
700,
Com’r,
(1983);
171 W.Va.
entirety ascertain administering expense part the cost or properly. 23-2-9(b)(l). § Chapter 23. See W. Va.Code Corp. Huntington v. Syl. Pt. Fruehauf Co., Storage Moving W.Va. & conclusion, arriving we at this (1975). S.E.2d agency’s of an are mindful that our review suggests concept The Division it administers construction the statute Virginia 23- administration in West Code agen promulgated in a reflected rule of the entire 2-9 to administration extends cy does not have is limited and this Court broadly be read to in- chapter should preferred con reign to substitute its free obligations directed clude all duties agen that of the struction of the statute for 23-l-l(a) pro- the West Code Act. cy. Syl. Appalachian Pt. Power Co. of the bureau commissioner “[t]he vides Dept., 195 Tax W.Va. programs has the sole employment agency’s 430. In cases where S.E.2d responsibility the administration of this ambiguous with governing is silent or statute except for such matters as are en- chapter *15 issue, specific respect this Court shows performance ... council.” In to the trusted agency’s con substantial deference in participating such addition to duties as the regulation, or struction as reflected a rule rate-making process, the Commissioner also thereof, has agency application or unless obligation Chapter under has the 23 make statutory au its constitutional or exceeded injured workers payments claims arbitrarily thority capricious or acted paid. are in fact not Such benefits whose Paige, ly. Frymier-Halloran 193 W.Va. payment of obligation includes benefits (stating 458 S.E.2d subscribing employees of former and current will not administrative that “courts override adequate pay- not employers who did make decisions, kind, agency of whatever unless business, gone out of as well ments or have explicit consti contradict some decisions employers that as of self-insured right, provision tutional are results of pay from them are unable to the benefits fundamentally process, or are flawed either and have not secured sufficient resources arbitrary”). unfair or bonding gone out of without or have business Our of the record reveals that examination having adequate provision made for matur- hearing properly that examiner found 23-2-5(g). ing W. claims. See Va.Code statutory limits of agency acted within the Virginia According to the terms of West hearing authority reasoning. and valid 23-2-5(g), §§ 23-1-1 and “administra- Code specifically said that: examiner only chapter” tion this embraces not rou- expenses person- the administration of management tine such as The Commissioner must, mandate, nel, keep provision chapter supplies, but also this travel Thus, they fund and the deficit. payment for of benefits as mature solvent reduce injured granted employees. must be qualifying to all Commissioner sense, authority pursuant duty imposed taxes to in- said adminis- have tration, inability for the deficit. Amortiza- allowances of subscrib- reduce clude keeps is the number that ing pay tion of discount or self-insured benefits. Thus, barring express growing. the ad- Consequently, legislative ex- deficit from responsibility keeping contrary, ministrative clusion to the itemization of represented growing, expense of the administration of this deficit “the discount, which was chapter” component as amortization of may appropriate “ex- properly rate defined compensation premium tax that Authority may pense against in- of administration”. levied benefits, Virginia in West provision maturing rationale[ ] found clude 23-2-4, and 85 paid by 23-2-9 required Section[s] law to be the Com- Code employer defaults or oth- CSR 9.20 missioner when 23-1-1, Although hearing it clear this statement was examiner did not ex- Code pressly reference his reliance West
1H swayed by Appellants’ argu- performance We are duties and the activities ment that amortization the discount cannot of the commission.”23 Id. at 55. charge
be an administrative
because
is not
bearing
Additional evidence
on this issue
pertinent regulations
mentioned
ad-
through testimony
introduced
before the
components
dressing the
of administrative
hearing
examiner
administrative
charges.
Initially,
regu-
we observe that the
charges
Kentucky
Island in-
Rhode
underlying
lation21 and
on which
statute22
expenses
expenses
clude
other than the
asso-
Appellants rely
adopted
were not
in the face
directly
management
ciated
with the
looming
growing
aof
deficit in the over-
system. Examples
charged
of such items
all workers’
fund which the
expenses
administrative
were assessments
Legislature chose to address in its 1995
injury
closed second
fund and cost-of-
amendments
the Act. The dominant mes-
living
injured
previously
increases for
work-
sage conveyed by
Legislature in 1995
fund,
Kentucky’s
ers. As to
the Commissioner and Performance Council
actuary
for the Division testified: “The
rate-making
regarding
process
was to
fund was
closed to claims
last
[where]
address the workers’
fund defi-
exposure
beyond
[occurred]
December
Legislature
cit. The
is entitled to substantial
operation
but
fund is still in
dealing
problem.
latitude in
with the deficit
accepting
expo-
claims if
new
are from
Again
Legislature
we note
has met
prior
sures
date.” He went on to
plenary
session on at least
occasions
five
explain
Kentucky
how the
statute24 directs
rate-making methodology
since this
was em-
claims,
pay
including
monies to
un-
ployed
prohibited
and has not
or otherwise
*16
liabilities,
by stating:
funded
be
portion
of
obtained
altered the allocation
of the
employers.
discount
amortized
to self-insured
assessed,
employers
All
in the state are
The record discloses that what constitutes
was,
percent
the last
I
number
saw
nine
of
regard
cost
administration with
premium,
Comp,
[them]
them Workers’
compensation systems
workers’
varies from
premium.
self-insured,
they
If
they
dependent upon
state to state and is
percent
are assessed nine
of what the state
duties of the administrator of the Fund. This
says
them
would be if
were
fact, along
recognition
with the
that there are
It
insured....
is not
on
based
actuarial
statutory and
considerable
structural differ-
principles,
you
employers,
in that
have
among
compensation pro-
ences
the workers’
example,
had
who are new to the state and
states,
grams
it
make difficult to arrive
12/12/96,
exposure prior
no
who must
generally accepted
at a
definition of cost of
pay
Kentucky Special
assessments to the
Nonetheless,
guid-
administration.
we find
They
participate
Fund.
did not
risk
interpretation
ance in the
Ohio has accorded
pool. They get no direct benefits from the
phrase
“cost of administration” be-
payments by the fund.
operates
system
cause Ohio
structured sim-
ex rel.
ilarly
Virginia’s.
legislative
In consideration of the
failure to
State
to West
Morse,
Foundry
including
Fulton
&
v.
practice
Mach. Co.
alter
the amortiza-
(1956),
calculating
App.
Ohio
IIS Legislature fixing thus rates at necessary conclude intended a level to secure part cost with an em- associated payments. future benefit Certainly, fluctua- ployer maintaining privilege to self-in- tions in the valuation assets in rates of employers of such sure was inclusion on return those assets are fac- considerable plan. deficit reduction This conclusion is exhaustive, Although tors. not the enumer- supported by in this further the evidence ated conditions are sufficient to demonstrate lengthy peri- which case indicates that over many employers, subscribing or self- employer security od of time self-insured insured, may not have made direct con- requirements stringently bond have not been tribution financial Funds’ woes. De- enforced, resulting in expanded liability be- spite appearance, simply the record does ing placed on the Fund for these unsecured support not the conclusion that self-insured obligations.25 Legislature While the cannot employers must be from the obli- excluded any point employers in time forecast gation to address deficit. Whether operating may in the state the future be of artificially pre- reason or capped reduced under-assessed, closed, non-paying, or failed miums, closures, bonding business reduced bankrupt employers, improper it would be requirements causes, or other attempt this Court to curb the reason- employers other whose em- —like Legislature able discretion address may ployees have made little or no call on consequences of some inevita- may reasonably the resources of the Fund — bly falling into these classifications. upon called to assist the reduction of deficit, represented in this case premium need to increase taxes reality amortization of discount. The stark been influenced numerous factors. stake, future mentioned, under-assessed, health the Fund is at previously As significant closed, posing a non-paying, threat to the interests of bankrupt failed em ployers employers and contribute to the state. the financial situation recognize sylla- We continue to under discussion. The we did capping reduction point Repass bus rates which has three occurred Workers’ Com- occasion, Division, pensation presumably purpose of en W.Va. 569 S.E.2d (2002), couraging development economic or of that: foster businesses, ing existing the continuation of responsibility The ultimate for the fiscal also problems has exacerbated the financial health of the West Workers’ Com- system.26 practice capping pensation system Legisla- rests with the premiums, determining which was used goals Balancing conflicting ture. according the FY 1998 rates to Resolution minimizing premiums providing while full only implications No. has financial but *18 injured and fair workers obviously also diminishes the correlation be province publicly is exclusive of our the job- premiums charged tween the and the legislators.... elected experience employer. related of the aptly As Court summarized in State ex payable particular Benefits under court deci Richardson, Blankenship rel. v. 196 W.Va. may anticipated sions not in well have been 911(1996): 781, 474 S.E.2d Likewise, fixing particular years. in rates costs, escalating especially care in re Court is [T]his health not concerned the years, may anticipated cent not in legislative policy have been the which motivated en- 19, 2003, $10,629,496 bankruptcy May 25. The on action filed of Weirton for the bene- behalf by Bankruptcy in States Weirton Steel the United Virginia fit State of the West Fund. Virginia deficit, Court for the Northern District West supplies security Notwithstanding the State of timely pertinent example. As Virginia has Weirton West determined that stated in a motion filed Weirton Steel in that eligible participate in the State’s workers’ action, "The State West has calculat- program.” compensation self-insurance ed, basis, security on an actuarial Weirton’s obli- gation Compensation] [Workers' to the in premiums capping 26. Either reductions in $7,109,144 approximately pro- the amount of for past has in the the behest occurred at $40,470,515 liability spective approximately governors. three of at least recent liability. retrospective Frontier Insurance Company surety issued a in bond the amount tH vH taking in 1995 violation of both the federal and of ... amendments to [the actment Const, act], do state constitutions. See U.S. amend. nor we Const, Ill, V; According art. 9.27 W.Va. superlegislature, as a commissioned to “sit charging in social, Appellants, Division’s actions political, economic or
pass upon the
purpose
additional costs
them
pertaining to
of statutes
scientific merits
amortizing
regulato-
the discount constitute
legislation.
It is
subjects of
proper
just
ry “taking”
compensation.
without
See
facts,
duty
legislature to consider
argument, Appellants
As
support
id.
embody
policy
policy, and
establish
rely primarily
on the decisions reached
Merritt,
Boyd
177
legislation.”
v.
W.Va.
Supreme
Eastern
the United States
Court
(1986).
108
354 S.E.2d
Enterprises
524
118
Apfel,
v.
S.Ct.
U.S.
view,
employ-
imposition on all
In our
2131, 141
and the Fifth
L.Ed.2d
premium
taxes
amortize
ers
additional
Fidelity
Appeals
Court of
&
Circuit
U.S.
represent
prohibited
not
discount does
McKeithen,
Guaranty
115
only
agreement
regarding
Enterprises
operators
the limited reach of Eastern
to coal
Enterprises
substantially
in position
“[T]he
the Eastern
decision:
that stand
identical
binding aspect
Ibid.;
only
Enterprises
of Eastern
to that of
Unity
Eastern.”33
accord
Estate,
specific
holding
Act Real
is its
the Coal
Enterprises
Step
v.
Is the
One
Court
2131;
550,
accord 524
U.S.
118 S.Ct.
Unraveling
Takings
Closer to
and Due
J.,
(Kennedy,
concurring
judgment,
Clauses?,
Process
N.C. L.Rev.
dissenting in part).
Eastern had
Because
(1999) (commenting
1526-27
that “the actual
industry
left
coal
had never
holding
Enterprises
quite
in Eastern
narr
signatory
been
national bitumi-
ow”).31
wage agreement
nous coal
that carried the
fashion,
implied promise
In similar
the Fourth Circuit
of lifetime health benefits
Appeals
530-32,
recognized
Court
“East
for miners. See
116
legal
Kennedy
upon “our
tradi
remarked
of lifetime
liability
provision
for the
plated
legisla
economic
miners”
tion’s disfavor
retroactive
widows of deceased
to the
benefits
547-48,
1974,
longer in
118
2131
no
the
at
S.Ct.
when it was
tion.” 524 U.S.
before
531,
J.,
at
mining.35
concurring
judgment,
524
dis
(Kennedy,
U.S.
in
of coal
business
Characterizing
Coal
senting
part).
498.
the
524 U.S.
in
on
imposition
liability
employers
Act’s
amount of
substantial
Recognizing the
place thirty-five
on
that
took
based
events
million),
($50-$100
liability
plu-
Eastern’s
legislation”
ago
retroactive
years
as “severe
Enterprises, observed that
rality in Eastern
legislation was
“un
noting that such
past
Act reaches
into the
distance
“[t]he
reach,
Ken
its
precedented scope” in
Justice
liability
Eastern and the
impose
back
specific
nedy
circum
determined that
liability
substantial
of that
raise
magnitude
Enterprises37
present
in Eastern
stances
534,
at
118
questions of fairness.” 524 U.S.
that “rare in
egregious
presented
were
guessing
Refraining from second
2131.
S.Ct.
permissive
such a
stance[]
in
even
Congress’
decision
enact
wisdom
accorded to sub
review
[deferential
standard
however,
Act,
plurality
reasoned:
Coal
process challenges of economic
due
stantive
remedy
sought
legislative
Congress
That
at
legislation]
been violated.”
U.S.
grave prob-
to be a
perceived
it
for what
J.,-concur
549-550,118
(Kennedy,
S.Ct.
funding of retired coal miners’
in the
lem
part).
ring
judgment, dissenting in
in
understandable; complex
health benefits
typically
for a
that sort
call
problems of
analysis
com-
Distilling
the factors
When, however, that
legislative solution.
plurality
Justice Kenne-
mon to both the
employers to
singles out certain
solution
concurrence,
Fourth Circuit deter-
dy’s
is substantial
a burden
bear
that,
applying
purposes
mined
amount,
employers’ conduct
based on the
decision,
Enterprises
opera-
coal
“a
Eastern
any
past,
and unrelated
far
‘substantially
position
in a
identi-
tor stands
made or
commitment
it
of Eastern if had no connection
cal’ to that
caused,
governmen-
injury they
any
subsequent
1974 or
NBCWAs [nation-
princi-
implicates
action
tal
fundamental
wage agreements].” 305
al bituminous coal
Takings
underlying the
ples
fairness
Massey plaintiffs
F.3d
237. While
to bear
Eastern cannot be
Clause.
forced
signed
argued
that since
never
expense
health
of lifetime
benefits for
subsequent
wage
national bituminous coal
on its
decades be-
miners based
activities
position
agreements they
the same
were
promised.
were
those benefits
fore
Eastern,
disagreed,
the Fourth Circuit
(emphasis
S.Ct.
citing
persons”
“related
status of the
supplied).
plaintiffs
respect
signatory
Massey
Act.
operators under the Coal
Based
coal
Applying principles of substantive
upon
Congressional
intention to
clear
Takings
process36 rather
than
due
though ...
persons”
[each
“as
Clause,
treat “related
similarly
Kennedy
concluded
Justice
group
corpora-
controlled
member
Act
retroactive reach of
Coal
every
employed
miner who worked
had
tions]
In contrast to econom
was unconstitutional.
group,” the Fourth
prospective
member
legislation that is limited to a
ic
non-signatory
Circuit determined
which “carries with
application and
Massey companies
constitutionality,”
plaintiff
status of the
presumption of
Justice
J.,
concurring
(Kennedy,
high
were
to the second
fund’s
tion was
“newly-created
the fact that
formula, which
expressly
assessment
liability
proportionality
no
reflect[ed]
policies
made retroactive
written before
plaintiffs’ experience with the
Ibid. In
SIF.”
legislation’s
enactment.
Id. at 415. The
serving
payment
marked contrast to
as a
in-
legislation
Fifth Circuit concluded that
years,
termediary
twenty
receiving
no
taking,
relying
constituted
unlawful
on the
costs,
incurring
net
benefits
no net
analysis employed by
plurality in
Eastern
plaintiff
required
insurers
now
were
under
Enterprises.39
reviewing
In
the Louisiana
challenged
“significant
act to
make
net
legislation
‘justice
...
“evaluate]
contributions to the fund.” Ibid.
action,”
government
fairness’ of the
the Fifth
Focusing on the
retroactive reach
analysis by using
Circuit framed its
three
costs assessed to the insurers —a reach of
plurality
factors that the
in Eastern Enter-
(1)
twenty years
quickly
prises
perform
analysis:
Fifth Circuit
used
de-
—the
impact
cost-neutrality
regulation
economic
termined
basis
on the
(2)
claimant;
prior funding
regula-
the extent which the
scheme had been dismantled.
tion has interfered with
Court
reasonable invest- The
McKeithen then examined
expectations;
plaintiff
char-
ment-backed
whether
could
insurers
have
government
acter
action. 226 F.3d at
premium-
foreseen either an alteration in the
rejecting
Essentially
Kennedy's
the contention that Eastern’s sub-
Justice
fun-
dismissing
sidiary's post-1974 signatory status to
objection
relevant
application
damental
to.
a Tak-
óf
wage agreements were sufficient to attach liabili-
ings
analysis
legislation by
Clause
to economic
Act,
ty
Supreme
under the Coal
the United States
stating
property
specific
that his concerns that a
assigns
Court stated that "the Act
re-
Eastern
interest must be
"would be
identified
muted-or
sponsibility
relating
for benefits
to miners that
mooted-here," the Fifth Circuit reasoned that
itself,
subsidiary],
[its
Eastern
not EACC
em-
analysis
Kennedy’s
process
because "Justice
due
ployed,
assigned
while EACC would be
the re-
retroactivity
essentially
focuses
[it]
har-
sponsibility for
miners that
it had em-
reasoning
monious with the
four
the other
ployed.”
(citing
524 U.S.
opined:
Act
retroactively imposes a
contracts
actment
might have
on notice
plaintiffs
been
While
heavy
burden on
who could
economic
those
change away
that there could be
reasonably anticipate
liability.
the
assessments,
no
premium-based
there was
liability
disproportionate
is
extent
the
plaintiffs
have
the
should
evidence that
SIF,
plaintiffs’ experience ivith the
cost-neutrality.
suspected abandonment
legislation
unnecessatry to
sub-
no evidence that
the cost of
was
There
legitimate
stantially advance a
state inter-
financing
was
intended to be
the SIF
ever
est.
insurers,
any
that there existed
borne
(emphasis supplied).
at 420
226 F.3d
imposing
the cost on
policy
rationale or
insurers,
contemplat-
that
was
the state
Applicability
Takings
funding
ing shifting the burden of
onto
Analysis
Clause
insurers.
application
analysis
With minimal
Enterprises
employed in
Eastern
Ibid,
omitted).
(footnote
On the issue
McKeithen, Appellants conclude that
those
plaintiff
insurers had sufficient
whether
position
support
their collective
decisions
challenged legislation,
the court
notice of
premium
that
assessment of
rates
in
“There
no indi-
observed McKeithen:
amortizing the dis
an amount for
include
itself,
legislative
law
in
in
cations
taking.
an unlawful
Pre
count constitutes
history, or in the record of this case that the
broadly-worded
ferring
to focus
various
insecure,
financially
employ-
or that
SIF was
decisions,
appear
that
in those
statements
bearing
having
costs of
trouble
ers were
glaring
Appellants overlook the
distinctions
operating
Appellants argue premi operating recognized principles leg- under of um process tax the power increase violates due delegation,45 spread islative the clauses of federal state the and constitutions costs amortizing of the discount all between grounds on the that no there is rational basis employers is a determination which is simi- underlying legislative the measures at issue. larly Usery, entitled to deference. See 428 Const, Const, XIV; 18, See U.S. amend. W.Va. (stating U.S. at 96 2882 “it S.Ct. that Ill, § making argument, art. In Congress imposing choose between the Appellants “legislative overlook that the fact of burden miners’ disabilities on all inactive adjusting Acts and of the burdens benefits operators, including new and entrants far- economic pre life come to the Court with a sighted early operators might who have tak- sumption constitutionality, and ... the steps dangers, lung en black or minimize complaining of pro burden is on one a due impose liability solely that early on those legislature cess violation establish that the operators profits may whose in- have been arbitrary way.” has acted and irrational at expense employees’ creased the of their 2882; 15, Usery, health”). at 96 see U.S. S.Ct. also repeatedly remonstrating In Enterprises, 528, Eastern 524 U.S. at responsibility lack of for the financial condi- (recognizing “Congress Fund, S.Ct. 2131 that Appellants tion of the what overlook is leeway leg considerable to fashion economic responsibility the collective islation, including power to the affect con unpaid as a class for benefits and private tractual par commitments between in pre- their concomitant interest and role ties”). venting insolvency the of the Fund. More- over, the critical issue whether the meth- Challenges legislation to economic assessing odology chosen for the additional process based on substantive due are exam premiums costs at here is a rational issue ined under a deferential standard review. addressing plight, means of the Fund’s Pipe Concrete & Constr. Products v. Labor identifying problem. who caused the Trust, ers Pension (citing payment 124 L.Ed.2d In upholding S.Ct. the of health 2882). Usery, against pro 428 U.S. 96 S.Ct. under Act Un benefits the Coal due high derstandably, challenges by employers that cess who level deference raised had legislative agreements actions signatories accorded aimed been to coal addressing problems industry economic results from a but had who been out recognition uniquely years, lawmakers are eleven the Third Circuit that declared charged responsibility passing “[e]ssentially, Congress’s attempt with laws the Act is reject outright guidance perform- 45. We with the contention raised Council sufficient Ridge Syl. Quesenberry Pine Council Performance exceed- Pt. ance of duties. See powers upon Legisla- ed the ture, conferred (1956). Estep, 142 W.Va. S.E.2d 832 provided noting Legislature Estate, assessing com- Unity Real the discount the workers’ equity.” F.3d to do legis- piece of pensation premium economic tax for self-insured em- at 673. As with comprehensive fashion in a ployers lation that seeks does not violate Due Process obligation, a serious financial to address clause of the federal state constitu- either challenges always predicated there will tion. entitlement deference fairness. Given arguments Finding no merit in the raised however, legislation, we can to such accorded by Appellants, January we affirm the premium funding mecha- only set aside order Circuit final Court of here if we conclude that at issue nism County deny request- Kanawha relief arbitrary funding structure was adopted Specifically, ed. we decline enter re- It is clear to Court irrational. quested compel order the Commissioner to employed to the amor- methodology calculate Act, obligations fiduciary past meet discount factor a de- tization involved deferring present, in the circumstances to identify all factors effort to relevant tailed legis- current efforts of executive to the Fund’s financial situa- that contributed lative branches address such workers’ process, grounded which was tion. That plenary fashion. issues principles recognized and correlat- insurance compelling circum- consideration differing of the various experience toed stances, hereby entry we direct Fund, appeal’s types necessary order forthwith issuance cannot this dec- reasonable. While we make *26 pertaining of the mandate this decision. preciseness of a mathemati- laration with formula, reviewing obligation our does cal Affirmed. require “[U]nder
not
such exactness:
applied
of review
standard
sub-
deferential
concurs and
Chief Justice STARCHER
challenges
process
to economic
stantive due
concurring opinion.
files a
legislation
is no need for mathematical
there
Justice DAVIS dissents
files a
justification
fit
precision in the
between
joined by
dissenting opinion
Justice
Pipe, 508
means.” Concrete
U.S.
MAYNARD.
S.Ct. 2264.
opinion
our
Based on
Performance
MAYNARD dissents and files
Justice
clearly charged
responsibil-
with
Council was
opinion joined by
dissenting
Justice DAVIS.
ity
setting premium
rates that included
MAYNARD, Justice, dissenting.
necessary to
a
costs
maintain
solvent work-
ers’
fund and to reduce the
(Filed
2003)
July
deficit,
cannot conclude that the mecha-
we
many things wrong
There
opt-
nism
which
Performance Council
majority’s
clearly
affirmance of
unlawful
ed
address
serious and well-known
premiums
paid
unfair increase in
self-
financial situation of the Fund was either
However,
employers.
insured
I will limit
arbitrary
irrational.
See W.Va.Code
my
this
firm
dissent
belief that the Work-
23-2-4(a)(2).
Congress’s actions in
Like
ers’
Division
its-
exceeded
stat-
Act,
enacting
Coal
Performance
utory authority to
portion
allocate
simply
equi-
“attempt[ing]
Council was
to do
“amortization
discount”
self-insured em-
Estate,
ty.” Unity Real
What are we here? ministration of chapter; this mistake, just crippled Make no what is is not (2) A sum well-being companies pay employer’s the financial a few sufficient to proper doing portion expense Virginia, business in West but also claims for Virginia jobs. those scarce West who are in Worst of default in the payment of premium harm immeasurable done to the taxes or business other obli- gations; community’s perception of Virginia West as a
place you to do business. If (8) were the CEO A pay sum sufficient to the employer’s large of a medium or business and what saw portion fair expenses of the disabled case, Eastern in you done would fund; workers’ relief open come to West busi- new (4) A sum sufficient to maintain as an ad- Sadly, destroyed ness? is ultimately what deposit vance equal pre- an amount decisions such as this is future economic quarter’s payment vious of each of the development possibility and the of attracting foregoing three sums. jobs new businesses and Virgi- new to West majority authority finds for the addition- nia. premiums al against appellants levied to emphasize just I want how addi- much subsection phrase expense “the tional some these self-insured chapter.” administration ma- to pay. were forced For fiscal jority despite reaches this conclusion its rec- *27 1998, year regular Eastern Associated Coal’s ognition phrase “expense of the ad- premium approximately was million. To $1.4 of chapter” ministration this by is not defined discount, charged amortize the Eastern act; compensation the workers’ ap- “historic $7,265,945.00, an additional which is more plication phrase of the em- self-insured greater than five times regu- than Eastern’s ployers’ premium only rates has included the premium. Steel, According lar Weirton management Division[,]” routine of costs company struggled valiantly which has Legislature and “the in 1995 to failed make keep good Virginia jobs, charged West it was parallel general amendments between $206,000.00 year for fiscal 1998. Weirton rate-making section and the em- self-insured Steel has never subscribed to the Second ployer premium tax section of Act[.]” paid nothing Reserve and had 184.). (Op. at prior 1, July liabilities nutshell, majority In a fol- reasons as 1998. The evidence shows that the Division First, lows. phrase “expense of the ad- charged self insurers a total of almost $46 chapter” ministration of this ambiguous. is million for amortization of the discount. Therefore, interpret the Court must joke government old There about the phrase by resorting statutory provi- to other simplifying the tax return form to contain 23-l-l(a), According § sions. to W.Va.Code asks, only two lines. Line 1 “How much did “[t]he of employ- commissioner the bureau you year?” says, last 2 make it “Send —Line programs responsibili- ment ... has the sole in.” I am afraid that is we head- where ty chapter administration this ex- ing employers’ cept for such matters as are entrusted to premiums given bankruptcy the near addition, performance In counsel.” W.Va. political stop fund and the lack of will to § 23-2-5(g) provides employee Code that “no monthly hemorrhaging of millions of dollars employer required by chapter out the fund. subscribe to the workers’ fund It is provided obvious to me that im- the Division shall be denied benefits posed significant premium chapter these employer increases because the failed to sub- incidentally.” Cropp v. State Workmen’s employer’s account is or because scribe Comm’r, 160 W.Va. When one delinquent or default.” either omitted). (1977) (citation 480, 484 majority, says the one 236 S.E.2d together, these adds by major- statutory two code relied on authori- The sections that there is must conclude 23-l-l(a) 23-2-5(g), ity, §§ on self- W.Va.Code levied ty for the increased all, if self-in- only incidentally, relate employers. insured hand, employers. On the other W.Va. sured reasoning. majority’s I to follow the fail 23-2-9(b)(l) specifically to Code relates outset, phrase agree I do not
At the prevail. should administration of this expense of the “the However, if it concluded that even could be ambiguous. Syllabus chapter” In Point 13 ambiguous, I do “administration” the term Harden, v. 62 W.Va. S.E. of State statutory our rules of con- believe (1907), grounds by on other disapproved of interpretation permit W.Va. struction Calvert, 134 W.Va. Wiseman v. 23-2-9(b) majority. Code arrived (1950), explained that this Court S.E.2d majority that “the It is conceded of sus- “[ajmbiguity in statute ... consists a. parallel Legislature failed 1995 to make meanings and un- ceptibility of two or more general rate-mak- amendments between certainty to which was intended. Mere employer and the self-insured ing section informality phraseology clumsiness (Op. at Aet[.]” tax section if ambiguous, it expression does not make that, 184.). recognized has This Court meaning language imports one or intention addition, qualification legislature certainty.” In includes “[i]n [i]f the with reasonable statute, qualification any specific in one but omits the indication the absence statute, courts should in another related contrary, used in statute will be words intentional; common, ordinary accepted the omission was given assume Legislature Valley infer that intended meaning.” Syllabus Tug Point Re- courts Center, Comm., qualification apply to the Mingo Cty. would not covery Inc. v. (1979). product canon is latter statute. This 261 S.E.2d W.Va. sense, special ordinary meaning logic term “ad- and common common statutory scheme is careful- management or direction force when the is the ministration” fact, dictionary ly something. defini- drafted. management “administration” is “the tion of Sugg, 401 n. W.Va. office, business, organization; di- (1995). 469, 482 n. 14 The workers’ *28 S.E.2d Una- Random House Webster’s rection.” carefully compensation is drafted. scheme 1998). (2nd It bridged Dictionary 26 is ed. Therefore, this Court should assume reasonably expense that “the of the certain to the self-in- Legislature’s failure amend chapter” of this W.Va.Code administration in- employer premium tax section was sured 23-2-9(b)(l) § cost of the routine means the Legisla- tentional and should infer that the management of the Workers’ require did not intend to self-insured ture absolutely specific in- is no Division. There participate in deficit employers to reduc- statute it means some- dication process. tion thing “administration” is different. Because sum, In this Court should reverse deci- only meaning, is susceptible of one it Compensation Division sion of the Workers’ § 23- ambiguous. Accordingly, W.Va.Code statutory it has authori- because exceeded 9(b)(1) simply that self-insured indicates 2— (autho- 29A-5-4(g)(2) ty. See W.Va.Code por- to employers responsible pay their rizing agency decision court reversal of management costs of the tion of the routine statutory authority). By failing excess Division. so, majority this Court’s do abandons construction, addition, statutory accepted rule rules of vi- In is an traditional “[i]t sense, statutory logic canons of and common particu- olates the construction where wholly unsupported specifically and construction lar of a statute relates forces section unambiguous matter, statute in order reach particular prevails on an that section over patently unfair. only result which referring to such matter desired another section I Accordingly, I am dissent. authorized to Executive —and then we catch heck for joins “judicial DAVIS this state Justice me activism.” On day, another we de- dissent. uphold Legislature cide must we in this again Executive —as case—and arewe
STARCHER, C.J., concurring: attacked. (Filed 2003) July job, In pleasing there is no everybody. dissents, According the two this Court I right think we made the call in this case. (1) ignore opinions should and overrule the of Accordingly, I concur. government; other two branches of (2) help throw the workers’ DAVIS, Justice, dissenting: insolvency. I disagree. fund into (Filed 2003) July Legislature has The had more than six proceeding In this employers, three who years it make clear'that it did not want are self-insured for burden-sharing apply assessments to purposes, appealed an order of the circuit employers. Legislature But the obligating court them to share the burden of nothing has done to indicate dissatisfac- retiring a six billion dollar debt1 that was having apply tion with these assessments caused failure to maintain a State’s employers. Injury Second Reserve Fund from 1947 to appellant companies experienced The have opinion majority disingenu- lobbyists how legislation who know to have ously brushed aside federal constitutional Legislature introduced. If the has not acted rights of employers2 and affirmed the years in six to exclude self-insured circuit court’s decision. For the reasons set assessments, from paying a share it is below, out I dissent. say safe to that the Executive branch’s rea- interpretation application sonable I. BACKGROUND 1995 statute does not offend the wishes sought the State to encourage Legislature. preexist- to hire workers that had majority opinion scholarly and well- injuries. ing The “carrot” used the State respect reasoned with to the constitutional injured encourage employment workers involved, I nothing issues add need was the Injury creation of the Second Re- that discussion. Reasonable minds can differ (hereinafter Injury serve “Second area, but comes down to a fairness Fund”). Acts See Ch. codified at issue —an issue that the instant case is W. Va.Code 23-3-1. “The basic intent of consigned to the wisdom Legislative encourage [Second Fund] branches. Executive hiring handicapped by not charging In this regard, it should be noted —one employer preexisting disabilities[.]” dissenting could never tell it from opin- Comm’r, Comp. McClanahan Workmen’s *29 exag- ions—that the dissents’ bombastic and 161, 163-64, 184, 158 W.Va. 207 S.E.2d gerated charges castigations and —about (1974). legislature The encour- deemed this policies that “keep “evil” will businesses out agement necessary to be because workers Virginia” entirely West directed —are injuries preexisting suscepti- with were more policies created, devised, that were set in sustaining injuries ble to other that could place, by Legislative and continued and collectively permanent result total disabili- Executive branches —and not this Court. 23-3-l(d)(l) (1995) ty. § See W. Va.Code 2002) (“If occasions, this (Repl. employee On some Court decides that Vol. a who has an action Legislature injury] permanently [second must overrule becomes and to- majority opinion incorrectly $2.2 The discounted value the debt is billion. 2. The also resolved However, dissent, my the state and purposes constitutional non-constitutional as- for I will However, my signments of error. dissent will refer the debt’s actual value of billion six only address the federal constitutional issues dollars. appeal. raised in this level, court, circuit through at the administrative the combined effect tally disabled Court, injury that from 1947 to injury and and before previous such been expenses of and as a result had never in the course “administrative” received shall be employer In- employment, payment include of the Second or her defined to his pay- only chargeable Work- jury v. State Fund deficit. See Smith injury[.]”). 108, 116, Comm’r, for such second able Comp. 159 W.Va. men’s (1975) 361, (“Except for the 219 S.E.2d out a and Acts 1947 set definite The expenses, charges administrative small Inju- funding the Second express method payments no employers make self-insured method, ry Fund. Pursuant Fund, Compensation be- into the Workmen’s that shall be portion of [a] employers have ... such elected cause compensation fund into paid pecuniary com- payment self-insure electing carry their not by subscribers (citation and pensation medical attention.” set ..shall aside create risk own omitted)). surplus fund to cover maintain hazard, all losses not the second that, al- majority opinion has found provided for in this specifically otherwise fifty years ex- though “administrative” chapter. pay- did not include penses for self-insureds added). 3—1(b)(emphasis W. Va.Code 23— deficit, Injury Fund of the Second ment conclusively in this case estab- record prohibit did the State federal constitution that, State from 1947 lished redefining term to force self-in- from the Workers’ to set aside monies failed helping pay six billion dollar sureds into Fund, required by W. Va. Compensation creating. had role in no debt 23-3-l(b), place such monies Code NO. 11 VIOLATES II. RESOLUTION Injury As Fund. a result such Second THE CONTRACT CLAUSE failure, Injury has an Fund esti- the Second six billion dollar deficit. mated reply argued its brief Weirton Steel State, through agents the In 1997 the No. 11 violated of Resolution enforcement Division Workers’ constitu- the Contract Clause federal Council, pay plan devised Performance explana- majority opinion, without tion. The Injury Fund six dollar Second off the billion tion, This totally failed to address this issue. plan, No. called Resolution debt. Under precludes addressing rule that Court has no respon- were held self-insured properly merits of issue raised Injury pay helping Second sible for fact, previously reply we have brief.4 dragged The State Fund debt. solely raised granted upon issues relief based guise of under the employers into deficit ex rel. West reply in a brief. See State expenses. paying “administrative” increased Conservancy, Virginia Highlands Inc. Prot., Virginia Div. Envtl. 191W.Va. West employers in this The three self-insured (1994) n. 1 720 n. S.E.2d Coal, Ridge Pine Associated appeal, Eastern though petition- (granting “[t]he relief even Corpora- Company Weirton Steel Coal request particular for relief th[e] ers tion, authority raise[d] to force challenged the State’s brief’). also ex rel. reply in their See a debt that was created help retire them Conservancy, Virginia Highlands Inc. West comply law failure State’s Prot., 193 Envtl. begin- v. West Div. funding the Second 458 S.E.2d employers argued ning in 1947.3 The three W.Va. *30 VI, Supreme 2 of W. Va. Ridge Rule Section 3. Pine and Weirton under The record shows that " Steel, self-insureds, Rules, alleged point, did not subscribe to or not error '[n]o Court afterwards, Although brief, Injury Fund. Eastern Associat- Second ed be raised forth in the shall set self-insured, brief, it elected to subscribe to was printed argu- by reply or either or oral Injury Fund. Second ”). However, prohibition in- ment' was Virginia Rules corporated current West into the did, fact, 1980, appellate 4. our Prior to rules Procedure, adopted in Appellate were which prohibit raising in a for tire first time issue made effective 1979 and 905, Starr, reply 914, v. 158 W.Va. brief. See State that, 242, (1975) (noting 216 248 S.E.2d
127
granted
(noting
Highlands
challenged
that “the relief
court must determine whether the
brief’).
reply
I
raised in
relators’
operates
law
“as
impairment
a substantial
Consequently, I will address the Contract
a
relationship.”
contractual
Allied Structural
issue,
though
majority opin-
even
Clause
234, 244,
Spannaus,
Steel Co. v.
438 U.S.
98
incorrectly
ion
do so.
failed to
2716, 2722,
(foot-
S.Ct.
57
727
L.Ed.2d
omitted). Second,
impairment
note
if the
is
I,
10,
Article
1
Under
section
clause of the
substantial, the court must determine wheth-
Constitution,
United States
shall
“[n]o State
significant
legitimate pub-
er there is “a
pass any
...
impairing
Law
the Obli
purpose
[challenged
lic
behind
law.]”
gation of Contraets[.]”5 This Court has not
Energy
Group,
Reserves
v.
Inc. Kansas Pow-
[Cjontract [Cjlause prohibits
ed that “the
Co.,
400,
Light
411,
er &
459
103
U.S.
S.Ct.
a
passage
impairs
law
statute or
697, 704,
(1983). Third,
I will address each United States against the forceable State.” ly- Co., 14, Trust 431 at 17 n. 97 S.Ct. at U.S. Relationship. It has 1. Contractual Moore, 181 v. 1515 n. 14. See also Dadisman statutory correctly “[a] that enact been held 816, 779, 789, 384 S.E.2d W.Va. 826 presumed not to generally create ment is (“A as the is a contract when statute treated merely rights but de ‘contractual or vested legisla- language and circumstances evince a legisla pursued until the policy a to be clares ” private rights of a con- tive to create intent City Koster v. ture shall ordain otherwise.’ (citation omitted)). nature.” When tractual (8th Davenport, 183 F.3d 766 Cir. to “language and circumstances” are used Passenger R.R. 1999) (quoting National statute, the is find a contract from a contract Atchison, Ry., Topeka Fe Corp. & Santa v. Nieves, See implied. 819 F.2d deemed 451, 465-66, 105 S.Ct. (“[T]he reaches Clause Contract (1985)).7 However, the lan “[i]f L.Ed.2d contracts_”). implied expressly guage indicates that of the statute case, applicable In laws do being to a con instant the is enacted form the the statute expressly creates tract, party language the not contain that a determination that state is clear.” National the and the self- binding obligation a a contract between State to case, is, by Scigulinsky Island v. in this that Educ. Ass’n-Rhode insured Employees’ Rhode Island typically of the words associated Retirement Bd. of “[m]ost formation, ‘contract,’ as Sys., Ret. F.Supp. with contract such The mere ‘reliance,’ ‘consideration,’ language ‘acceptance,’ and fact a does not that statute use Perry v. appear expressly creating statute[s].” a contract mean do not does not (D.R.I. Island, found in a statute. Rhode F.Supp. that cannot a contract be 1997). show, However, implied I will Supreme has noted The States Court United that, viewing clearly general, a contract established when statute itself treated “[i]n language language circum and the circumstances attend- as a contract when the In re to those laws.8 See Workers’ legislative a intent ant stances evince create sharing Finding obligation The public a successor from the commissions. contractual subsequent applied It that state trial court the amended statute effect. means considerable legislature impair plaintiff significantly half of the commissions. free awarded is not Supreme merely The affirmed. obligation State Court rational for reasons. legis- subsequent Because latures, this constraint appeal Supreme In to the United States subsequent by and thus on decisions argued plaintiff Court the in Robertson is, represent public, who there those amended statute was not enforceable because it Clause, purposes higher Contract bur- Contract In a unanimous violated the Clause. obligation den to that a contractual establish opinion agreed Supreme with the Court reasons, similar has been created. For plaintiff. opinion in The Robertson found federal, law. issue is one of not state plaintiff in-place when the was in statute Employ v. Retirement Bd. Rhode Island Parella implied contract that entitled office created an (1st 1999). Sys., ees’ Ret. 173 F.3d Cir. him recover a full commission. This issue succinctly opinion as fol- addressed in implied helps to 8. A case which illustrate how an lows: Mississippi may contract be found in a statute is well clause It is understood that the contract Miller, ex 266, 276 U.S. 48 S.Ct. rel. Robertson power during does not limit the state (1928). L.Ed. 517 Robertson the pass give effect terms of officers agent plaintiff was a former revenue for the state prescribing to be laws performed by, future duties Mississippi. During plain- period compen- the salaries or other agent tiff was a revenue the State had a statute to, But, paid to be them. after services sation permitted which him receive commission by public under a have been rendered officer by him all suits initiated to recover taxes. Short- specifying compensation, arises law his there ly plaintiff position, after the left his the State implied contract under he is entitled his amended the statute allow successor to And to have the amount so fixed. the constitu- just obtain a share of all commissions earned from protection such contracts tional extends to plaintiff expressed. specifically filed before he left office. suits it does those passage Agent Subsequent plaintiff amended stat- selection of Revenue plaintiff’s request ute the successor obtained commis- to a or direction amounted authority discharge plaintiff. exert sions from suits initiated that he performance plaintiff prevent In the filed a his the duties that office. thereafter lawsuit
129
(8th
omitted).
Refund,
(Citations
See also
v. Heck’s
46 F.3d
Cir.
Cook
813
Inc.,
1995)
373,
368,
453,
(finding
176
contract between state work
W.Va.
342 S.E.2d
458
(1986) (“The
contract,
concept of
compensation
agency
unilateral
and insurers
ers’
documents).9
party
promissory
a
where one
makes
offer
upon
and
based
statute
other
accepts by performing
and the other
an act
requires
step
analysis
The next
in the
the
by making
promise,
rather than
a return
application
principles
of traditional contract
recognized:
acceptance
also been
‘That an
implied
to determine the
contract between
may
by
accompanied by
be effected
silence
employers in
the State and the self-insured
an act of the offeree which constitutes
a
applicable
case.
of the
contract
Part
by
performance
requested
of that
the offeror
National Education
out
framework was set
established.’”)
First Nat’l
(quoting
is well
by Scigu
Asso ciation-Rhode
Island
Co.,
Mfg.
Bank v. Marietta
636,
151 W.Va.
linsky v. Retirement Board
Rhode Island
of
641-42,
(1967)).
172,
153
176
S.E.2d
More-
Employees’
System,
Retirement
F.Supp.
890
over,
case,
in the instant
contract
be-
1157, as
follows:
parties
legal
tween the
comes
under
the-
agreement
In order for an
to be enforce-
ory
contract,
of an
“implied
fact”
not an
law,
parties
able under contract
must
“implied in
agreement
contract.
“An
law”
objective
manifest their
intent to be bound.
implied in
meeting
fact
‘founded
upon
is
through
par-
Such intent is manifested
one
minds, which, although not
in an
embodied
ty’s
party’s acceptance
offer and the other
express contract,
inferred,
fact,
aas
of the
ac-
offer. When the offeror seeks
parties
conduct of
showing,
light
in the
ceptance
an act
through
performance
circumstances,
surrounding
tacit
”10
offeree,
part
propos-
of the
the offeror
Hercules,
Inc. v. United
understanding.’
aes
unilateral contract. A unilateral con- States,
417, 424,
981, 986,
516
116
U.S.
S.Ct.
promise
by
tract
(1996)
consists of
made
one
Baltimore &
(quoting
ployment significantly reduced. If the em- Notwithstanding any provisions chap- of this ployer pays premium tax a basis other than contrary, following types ter to of em- quarterly, may require deposit the division ployers may apply permission for to self-insure upon period. to be based some other time The compensation including their workers' risk premium deposit shall be credited to em- catastrophic injuries. Except their risk of as ployer’s account on books of the division (e) section, provided for in subsection of this pay premium and used to taxes and other may employer no self-insure its second employer sums due the fund when an becomes risk. delinquent provided inor default this (1) types employers are: article. (A) Any employer capa- who is of sufficient (4) premium premium deposits All taxes and bility responsibility and financial to ensure the required by paid paid this article shall be payment injured depen- employees and the division, by employers which shall fatally injured employees dents of benefits Any maintain a record of all so received. sums provided chapter equal at least such sum mailed to the division shall be compensation provided value for in this envelope deemed to be on the date received chapter; or transmitting by postmarked it is the United (B) Any employer capability and fi- such postal States All service. sums received responsibility nancial who maintains its own treasury deposited division shall be in the state system compensation benefit fund or compensation to the credit the workers' required per- which its are not prescribed by division in now the manner law. mitted contribute and whose benefits are (5) may encourage employer ef- division equal provided least value to those for in workplaces, forts to create and safe maintain chapter. encourage prevention programs, loss approved In order to be for self-insur- encourage employer provided pro- wellness status, employer ance must: grams, through operation the normal (A) formula, safety pro- an experience rating Have effective health and seminars and other gram workplaces; public presentations, development mod- (B) security safety programs may el and other initiatives Provide or bond in amount pro- compensation be determined the commissioner and to be determined performance programs grams performance council. council which shall bal- 9(e)(3)(A) employers subscribing voluntarily all of self-insured self-insure in compensation obligations, Injury pay specif their workers’ Fund must to the Second also injury claims. The State cluding second Fifth, ic tax.19 under W. Va.Code 23-2-9(b), § W. Va.Code provided, under 23-2-9(e)(3)(B) who employ totally self-insured in which manner Fund, Injury subscribe the Second gener into the pay premium taxes would ers inju only for a employee liable Fourth, Compensation Fund.18 al Workers’ permanent ry, other provided a mechanism self- disability paid from the and total Second part take the Second employers to insured Injury Fund.20 23-2- Fund. Under W. Va.Code furnished, security or bond be in the employer’s such shall financial condition based ance upon *35 analysis approved form forms and au- of its audited financial state- most current or upon by employ- value by full accrued based ments and the generally accepted the division for use the thorized accounting banks, principles companies, of the guarantors, surety er or its liability; existing expected employer's and in for or others its behalf financial institutions (C) Security may or be compensa- such bond which purpose. such and the form as the commissioner performance programs council created 23-2-9(b) tion pursuant three, § reads in full: 18. W. Va.Code 21A-3-1], article [§ to section one shall, employer on be- self-insured or Each twenty-one-a per- chapter of this code day of the the first month each fore last of mits. quarter, with a certified file the division state- (3) Any upon employer record whose the earnings gross wages of of total ment the liability, as deter- of the division shows books employer's employees subject this all of the to against the work- on an accrued basis mined chapter preceding quarter. the Each self- for compensation account of ers’ fund incurred on employer pay into the workers’ shall insured employer's injury any death of of the to or portions compensation its self-in- fund as of by premiums paid employees, in excess of such premium sured tax: granted right, employer, be indi- shall not (1) employer's pay A sum sufficient to directly vidually or from benefit such portion proper expense of of the adminis- die compensation, system be to self- funds or of chapter; of tration employer paid has until the into insured (2) employer’s pay A sum sufficient the amount of workers’ fund proper portion expense claims for of the of liability premiums paid, over such excess of employers in the who are default those payment including employer's proper proportion of premium other taxes or obli- liability incurred account of catastro- gations; phes injuries defined in section or second (3) pay employer's A sum sufficient to 23-3-1], chapter article three [§ one expenses portion fair of the of the disabled charged against such fund. fund; and workers’ relief (4) finding employer Upon that the (4) ad- A sufficient maintain as an section, sum requirements all of the of this met previous deposit equal vance amount may permitted employer be self-insurance sta- foregoing quarter’s payment of each of the An review each self-insurer’s tus. annual three sums. continuing ability obligations and to meet its requirements be made the by of this section shall 23-2-9(e)(3)(A) 19. W. Va.Code reads full: compensation division. This the workers' review shall include redetermination employers For which do not self-insure those security or which shall be amount of bond risk, injury premium tax for their second provide employer. provided Failure to injury coverage second shall be determined security any form or bond new amount or implement rules which section four of this discretion, may, in the cause the division’s may provide rate for merit article. Such rules employer’s be terminat- self-insurance status to premium adjustments of amount of tax security provided employ- bond ed. or upon paid the accrued costs to be based February, prior day one ers second generally accepted account- determined under ninety-five, con- nine hundred shall thousand paid ing principles of second benefits perform- until tinue in full force and effect employees. paid employer’s and to be employer’s review and the ance of the annual employer’s adopted, such rules are Until any entry appropriate decision on the be determined in accor- taxes shall security employer’s or form the or amount provisions chapter hun- dance with the one bond. seventy-four, Legislature, one dred acts employer shall Whenever self-insured ninety-one. thousand nine hundred bond, security including replace- furnish securities, ment and amended bonds and other 23-2-9(e)(3)(B) reads full: W. Va.Code security guaran- employer’s to ensure injury to an em- obligations In case there a second payment of under this tor’s making ployee security employer such second chapter which the or bond en, statutory provisions voluntarily above clear- was that all employers cited three ly responsibility made an “offer” to directly show State undertook the pay- employers per- ing self-insured this case that general benefits voluntarily opt out mitted to their workers.21 This burden relieved the mandatory participation in the State’ s responsibilities of all pro- involved general Workers’ Fund and its viding healthcare other benefits to the Fund, Injury upon meeting Second certain employers’ employees. Addi- an option criteria. The offer also included tionally, Ridge Pine and Weirton Steel also subscribe to the Second Fund. See provide elected direct benefits Ass’n, F.Supp. National Educ. at 1157 injury employees. This additional (“By enacting a in 1987which statute allowed undertaking by Ridge Pine and Weirton plaintiffs voluntarily join and thereafter provided savings direct Steel financial System, contribute to the Retirement the State, because State had the exclusive Assembly statutory General extended ... a responsibility providing financial perma- offer.”). disability injured nent and total benefits to
(b) Inju- who came under the Second Acceptance. The record in this case is ry Fund. dispute showing not in that each of the accepted statutory in this case sum, employers] “[i]t [the because *36 accepted to offer self-insure. “The was offer voluntarily opted System [out of] and on the terms that proposed. [the State] made decisions about their [businesses] Thus, meeting a of the minds was accom- response [employers] [thereto] that the and Ass’n, plished.” F.Supp. National Educ. 890 [State] parties implied to con- at 1158. Ass’n, tract.” F.Supp. National Educ. Ridge accepted Pine and Weirton Steel 1161. to offer self-insure so as not to have to Impairment. step The second deter general Compen- to subscribe Workers’ mining whether there has been a substantial Fund, Injury sation as well the Second Fund. impairment relationship, of a contractual re accepted Associated Eastern offer to self- quires “identifying precise contractual gen- insure and not have to to subscribe right impaired[.]” Keystone that has been Fund, Compensation eral Workers’ as well as DeBenedictis, Bituminous Ass’n Coal v. accepted the offer to to subscribe the Second 1232, 1251, S.Ct. Injury Fund. (1987). words, L.Ed.2d 472 “In other before (c) purposes Consideration. For the impair can [a] [e]ourt determine whether the “ law, contract ‘consideration consists either substantial, ment identify it must first right, accruing some or interest benefit to rights, any, what contractual if have been forbearance, party or one some detriment impaired.” Equipment v. Inst. Jank Mfrs. responsibility given, suffered or undertaken low, (8th Cir.2002). 300 F.3d ” Ass’n, the other.’ National Educ. (a) (quoting
F.Supp.
Hayes
Ridge
v. Planta
Pine
and Weirton Steel. Un-
(R.I.1982)
Co.,
1091, 1094
tions Steel
438 A.2d
der the contract
the State had with Pine
(internal
omitted)).
Steel,
citations
Ridge
In the instant
employ-
and Weirton
those two
case,
giv-
one form consideration that
exempt
was
were self-insured
from
ers
and
hav-
injury premium
Syl.
payments,
employer
pt.
tax
See
Smith
State Workmen's
pay
Comm’r,
compensation
shall be liable to
ex-
Comp.
159 W.Va.
After
of these
payment
insured
insure
for all neces-
employee
paid
shall be
die remainder of the
sary
injured
medical treatment
rendered
expenses
that would be due
compensable
incident to
claim
permanent
disability
total
from the second
provided
other
same extent
covered em-
surplus
reserve of the
compensation
addi-
fund. Such
Act.").
ployees
Compensation
the Workmen’s
expenses
tional
shall
charged against
employer.
such
employers. Prior
general
ees of nonself-insured
ing to subscribe
the State’s
implementation
Fund and its Sec-
No.
un-
of Resolution
Workers’
exemp-
As
Injury Fund.
a result
Ridge
ond
terms of the contract Pine
der the
tion,
only
obligated
assess
State,
State was
had with the
were
Weirton Steel
premium
against
tax
special self-insured
absolutely exempt
now be-
from the burden
2—9(b),
Va.Code
W.
them. Under
23—
ing imposed by
No. 11.
Resolution
(1)
payments for:
tax
premium
consisted
(b) Eastern Associated. Under the con-
(2)
expenses;
costs associated
administrative
Associated,
with Eastern
tract the
had
(3)
default;
ex-
employers who were
exempt
having
self-insured and
was
fund;
penses
the disabled workers’ relief
general
pay
into the State’s
Workers’
(4)
foregoing
deposit for the
an advance
Compensation Fund. As a self-insured em-
Through
appli-
the retroactive
three costs.
ployer,
Eastern Associated was assessed
No.
the State has
Resolution
cation of
W.
special
premium tax under
Ridge
sought
hold Pine
and Weirton Steel
23-2-9(b).
Injury
premium
tax
helping
pay
That
Second
Va.Code
liable for
(1)
deficit, by expanding the definition of
payments
for:
administrative
consisted of
pay-
(2)
to include annual
administrative costs
expenses;
employ-
associated with
costs
specifically
(3)
earmarked
re-
default;
ments that are
expenses
ers who were
Injury
duce the six billion dollar Second
fund;
disabled workers’ relief
Fund deficit.
deposit
foregoing
three costs.
advance
application of Reso-
The State’s retroactive
Eastern
contract also included
Associated’s
provi-
impairs
No. 11
tax
lution
subscription
Injury
the State’s Second
had
of the contract the State
with Pine
sion
subscription
As
result of its
Fund.
Ridge and Weirton Steel. Resolution No.
Fund,
Second
Eastern Associated
*37
Ridge
tax
premium
for Pine
has caused the
specific premium
obligated
pay
to
a
tax for
payment
of a
and Weirton Steel
include
pursuant
§
coverage
W. Va.Code 23-
such
Injury Fund debt that accrued dur-
Second
2-9(e)(3)(A).22 Additionally, Eastern Associ-
During
ing
period
1947 to 1997.
that
injured
liability
previously
ated’s direct
a
period
Ridge
Pine
and Weirton Steel
entire
employee,
injury
who
a second
sustained
exempt
from
were self-insured and
re-
disability,
permanent
was
resulted in
total
sponsibility for or to the States’s Second
contractually
limited
Injury Fund.
injury only, pursuant
second
to W. Va.Code
11,
effect, making
Resolution No.
Pine
2—9(e)(3)(B).23
§
Under that statute
23—
Steel,
Ridge
retroactively
and Weirton
sub-
exclusively responsible
for all addi-
State
general
Workers’
scribe
Further,
compensation.
tional
the statute
Fund,
Injury
period
for
Fund and Second
“ [sjuch
com-
expressly stated that
additional
of time when
were self-insured and
charged
pensation
expenses
not be
shall
contractually exempt
subscription.
from such
§
against
employer.”
23-
such
W. Va.Code
way,
11
Put another
under Resolution No.
9(e)(3)(B).
v.
Syl.,
See also
Mullens
2—
Ridge
being
Pine
and Weirton
Steel
Comm’r,
502,
Comp.
159 W.Va.
Workmen’s
retroactively pay premiums for
forced to
(‘Where
(1976)
employee
135
(cita
11,
813,
(8th Cir.1995)
Refund,
Through Resolution No.
the State has
46
819
F.3d
omitted).
sought to hold
Associated liable for
Eastern
tion
This
mean
“[t]o-
does not
helping
pay
Injury
Fund defi-
Second
tal
expectations
destruction of contractual
cit, by
expanding the definition
adminis-
necessary
finding
of substantial
2—9(b),
trative costs under W. Va.Code
impairment.” Energy
Group,
Reserves
Inc.
23—
payments
specifi-
to include annual
that are
Co.,
400,
Light
v. Kansas Power &
459 U.S.
cally
Injury
earmarked to
reduce
Second
411, 103
697,
(1983)
704,
S.Ct.
Resolution No. 11 seeks to hold Eastern
dustry may
expecta
reduce reasonable
responsible
helping
Associated
to retire
_However,
regulation
Injury
tions
does not auto
a deficit in the Second
Fund that ac-
matically
during
period
possibility
crued
1997. Dur-
foreclose the
of contract
ing
impairment.
period
found
entire
Eastern Associated’s
Courts have
substantial
impairment
heavily
regulated
self-insured administrative costs did not in-
contracts
Comp.
clude additional
earmarked for
areas
monies
retir-
commerce.”
re Workers’
ing
Injury
Refund,
(citing
the Second
Fund debt. One
regulated
the State. See
Co., 208
fact
Consequently,
Coal
W.Va.
erts
mere
v. Consolidation
(“
(2000)
478,
218, 234,
Tt has
regulated
premiums
539 S.E.2d
494
previously
State had
repeatedly
been held
Court
employers,
not
paid by the
does
is
right
benefits
to workmen’s
automatically
insignificant the State’s
render
statutes,
wholly
in no sense based
based
employers
to
the self-insured
decision
force
law; that such statutes are
on the common
retiring
to
a six
share the financial burden
rights,
controlling; that the
generis
sui
Injury Fund
See
billion dollar
debt.
Second
thereby provided
and procedures
remedies
Comp.
46
at 820
Refund,
F.3d
In re Workers’
” (citation omitted)); Boyd v.
exclusive[.]’
are
impairment
con-
(finding substantial
106,
Merritt,
354 S.E.2d
177 W.Va.
heavily-regulated
com-
workers’
text
(“The
(1986)
compensa-
to
right
108
pensation
industry).
insurance
wholly a
of stat-
tion
is
creature
benefits
ute[.]”);
Comp.
Lester v.
Workmen’s
in this case had
State
The self-insured
299,
Comm’r,
315,
443,
that,
242 S.E.2d
161 W.Va.
expectation
because
reasonable
(1978) (“[T]he legislature
power
has the
452
status, they
not be
their self-insured
would
modify
state’s industrial
insurance
a six
charges
assessed
reduce
long
fit so
as no constitu-
program as
sees
dollar
did
billion
deficit which
infringed.”);
v.
provision
tional
is
Bailes
contribute,
contractually exempt
and were
Comm’r,
Comp.
152
State Workmen’s
W.Va.
having
pay.
See Toledo Area AFL-
from
261,
(“The
212,
210,
263
S.E.2d
Council,
(“[Sjhowing
137 imposition premium impairment may The State’s taxes be constitutional if it is upon employers, necessary the self-insured reasonable and to serve an im- portant public purpose. amount to a In applying calculated contribute reduc- deficit, standard, however, complete tion of dollar the six billion has deference to legislative caused a substantial increase the amount a assessment reasonableness necessity appropriate taxes the self-insured is not because 1998, required pay. year For fiscal the State’s is at self-interest stake. $206,000 charged was Weirton Steel as 'its (Footnote omitted). Nieves, also 819 See payment reducing first annual for the Second (“If party F.2d at 1243 is a the state to the Injury year Fund deficit. For the same Pine contract, inappropriate, such deference $271,228 Ridge charged as its first annu- may inquire the court whether less drastic payment al reducing Injury the Second rights alteration of contract could achieve the year Finally, deficit. fiscal 1998 purpose[.]”). same $7,266,945 charged Eastern Associated was It is clear that under the decision in Unit payment reducing as its first annual grant ed States Trust not to “courts are carte Injury Second Fund deficit. legislative blanche to a deference assessment The annual Second Fund debt re- legislation. what is reasonable Reason charged duction being to the self- through ableness must filter a more strin employers substantially impairs insured gent analysis.” Virginia ex rel. West State contract have with the State. addi- The Reg’l Facility Jail & Auth. Corr. v. West premium charges tional annual paid must be Bd., Mgmt. Inv. 203 W.Va. self-insureds, though employers, even 130, (Davis, C.J., 508 S.E.2d 143 dis exclusively financially obligated are still senting). Lipscomb See also v. Columbus respective employees payment Dist., Separate Mun. 269 Sch. F.3d “[Tjhis of workers’ benefits. (5th Cir.2001) (“The party is a State impairment substantial was not foresee- contracts, so we cannot defer the manner Janklow, Equipment Inst. able[.]” v. Mfrs. process judgment of due to the State’s (8th Cir.2002). 300 F.3d reasonableness of its threatened action.” (footnote omitted)); Wakelin, Parker Purpose B. Public (1st Cir.1997) (“Where F.3d the contract point analysis in a next Contract created, allegedly impaired is one entered requires Clause claim a consideration of into, by itself, the state less deference to a significant legiti- whether the State legislative determination reasonableness public purpose adoption mate behind of Res- necessity required[.]”); McGrath v. olution No. II.26 United States Su- (1st Bd., Rhode Island Ret. F.3d United, preme Court discussed the issue Cir.1996) (“[Wjhen party a state itself a Co., 25-26, States Trust S.Ct. contract, courts must scrutinize the state’s at 1519 as follows: purpose asserted with an extra measure of “[wjhen words, vigilance.”).
The Contract
is not an
bar
Clause
absolute
other
contract,
subsequent
of a
simply
modification
State’s own itself enters into a
cannot
obligations.
impair-
away
obligations.”
financial
As with laws
walk
from its financial
ing
contracts,
obligations
private
Energy
Inc. v.
Group,
Reserves
Kansas Pow-
Blaisdell,
may
emergency,
26. "If
there is an
state
Ass’n v.
290 U.S.
54 S.Ct.
*40
permitted
impair
(1934)
that it
emergency
a contract
would not
(applying
L.Ed. 413
doctrine
normally
impair.
honoring
If
be allowed to
holding
that a new
did not violate the
law
govern-
jeopardizes
of a contract somehow
Clause).
Contract
But see Allied Structural Steel
ment,
justify
then there is sufficient reason to
234,
2716,
Spannaus,
Co. v.
98 S.Ct.
438 U.S.
57
Strasser,
modification of that contract.” Mark
(1978) (striking
legislation
L.Ed.2d 727
down
Constitutional Limitations
Baehr Possibili-
reducing pension rights
violation of
Contract
Legislation,
ties: On Retroactive
Reasonable Ex-
Clause);
Jersey,
United
Co. v. New
States Trust
pectations,
Injustice, Rutgers
29
L.J.
Manifest
1,
1505,
(1977)
431 U.S.
97 S.Ct.
States not of a [and] sonable conditions character purpose justifying appropriate public to the public purpose behind Resolution No. adoption.” Comp. In re Workers’ Re [its] Injury pay off the Second Fund’s six 11 is to way, at fund, 46 F.3d 817. “Framed another salvage deficit and the workers’ billion dollar inquiry entails an ‘overall determination having system to im- compensation without Nieves, of reasonableness.’” 819 F.2d at pose special tax on Trust, (quoting 1249 United 431 U.S. States imposition employers nonself-insured 19). 19, 22 n. 97 n. at at 1518 S.Ct. public. special general tax some other on the legitimate, purpose may be its Although this Under the terms of the State’s contract legitimacy Associated, does not to the level satis- Ridge rise with Eastern Pine “Something Steel, fying the Contract Clause. more had the Weirton the State exclusive showing survive rational made to responsibility Injury than the funding the Second scrutiny required justify State, such an basis through Fund. 23- W. Va.Code higher giv- impairment. 3-l(a), The hurdle is even promised Injury to fund Second [Sjtate’s To- self-interest[.]” en the obvious through it received from non- monies Pizza, v. 154 ledo Area AFL-CIO Council subscribed to self-insured who (6th Cir.1998). 307, F.3d general Compensation State’s Workers’ previously Fund.28 This Court acknowl Supreme has ob States Court The United edged employers, East self-insured like “taxing power may that a have served State’s Associated, Ridge and ern Weirton Pine repaid.” if to be to be exercised debts are Steel, payments “elect[ed] to make direct Trust, at 97 S.Ct. United States subscribing in lieu of is, That “a cannot refuse at 1519. State Compensation Fund.” Workers’ Deller v. legitimate obligations sim its financial meet 108, 110 5, Naymick, 176 n. W.Va. S.E.2d ply prefer [not it would because raise (1985). Consequently, “[ejxcept 75 n. 5 good[.]” Id. promote public at taxes] charges for the small administrative ex could at 1521. “If a State reduce S.Ct. penses, pay self-insured make no obligations it wanted its financial whenever into the ments Workmen’s breaching [by contract] its own for what it Comp. Fund[.]” Workmen’s Smith State important public purpose, regarded as Comm’r, W.Va. S.E.2d protection no provide Contract Clause would added). (emphasis (footnote 26, 97 at 1519 all.” Id. S.Ct. omitted).27 has, sought Through Insofar as the State Resolution No. effect, viability repudiated promised com maintain the of the workers’ its method of pensation by invalidating funding program its con Fund. Second Under W. 3—1(b) employers, portion pre- of all “[a] tract with Va.Code 23— them, imposing upon paid draconian costs miums that into the [must] support purpose Contract Clause cannot fund subscribers not elect- carry supposed being legitimate. ing to their own risk’’ was Exceptionalism suggest "The case law does that there is at ence and in Government Con- Law, particular governmental purpose, con- least one serving tracts Wash. L.Rev. Geo. expenditures, will be (1996). considered justify impairment. insufficient contract governmental Where is the sole basis for noted, previously 28. As Eastern Associated con- obligations, impairment own of its contract lia- *41 pay specific premium tax for its tracted bility likely breach is found.” Joshua I. for to be subscription Injury Fund. the Second Schwartz, Liability Congm- Sovereign Acts: for
139
Educ.,
Injury
369, 377,
Higher
962,
be set aside for the Second
Fund. Id.
505 Pa.
479 A.2d
added).
(1984) (citation omitted).
(emphasis
fifty years
For
the State
966
can-
The State
carry
responsibility
failed to
impose
out its exclusive
“a
impairment
drastic
when
money
Injury
to allocate
for the Second
evident and more moderate course would
§
required by
purposes
Fund as
its
equally
W. Va.Code
23-3-
serve
well.” United
1(b).
Trust,
31,
States
431
at
97
U.S.
S.Ct. at 1522.
keep
‘While the need to
the workmen’s com-
23-3-l(b)
West
Code
constitut-
pensation fund on a sound financial basis
a promise by
ed
State
self-insured
may justify prospective legislation designed
employers
any responsibility
did not
have
purpose,
for that
justify
it cannot
type
Injury
Second
had
Fund-the State
exclu-
Nieves,
retrospective legislation.”
819 F.2d
responsibility
payments
sive
for making
into
at 1252.
Injury
and out
the Second
Fund. The
Supreme
United States
Court has held that
“
III. DUE PROCESS
promise
pay,
right
‘[a]
with reserved
deny
By
or change
promise,
imposing
premium upon
effect
self-insured
absurdity.’”
Trust,
long
United States
431
recover funds to reduce a
23,
at 25 n.
standing
U.S.
funding 2131, 2154, required Second Fund S.Ct. L.Ed.2d 451 3—1(b), (Kennedy, J., concurring W. judgment Va.Code and forces in the self- 23— dissenting part). insured respon- undertake that sibility maintaining while re- them financial Eastern, In Supreme the United States sponsibilities employees. to their own Clear- presented challenge Court was with a similar ly nothing there is reasonable about these presented one this case. Eastern in light of conditions the contract the State Enterprises challenged Industry the Coal Associated, had with Ridge Eastern Pine (hereinaf- Retiree Health Benefit Act of 1992 Steel, Weirton viable alternative Act”). ter “the Coal Act The Coal had “es- taxing wages employees. of nonself-insured funding tablish[ed] mechanism for health “ I ‘[a]ccept[ principle Even if ] the care benefits retirees from coal indus- [Sjtate’s duty integ try Eastern, to maintain dependents.” the fiscal and their rity system] [workers’ U.S. S.Ct.
through actuarial soundness is a valid basis
accomplish
goals,
L.Ed.2d 451. To
deficit],
changes
pay
[to
some
never
funding
imposing
Coal Act obtained
“an-
theless, the
[S]tate’s
[breach
unilateral
of its
nual
against
op-
assessed
... coal
employers]
contract
signed any
erators that had
[National Bitu-
pass
cannot
constitutional
Wage Agreement]29
muster and must minus
other
”
Pennsylvania
fall.’
agreement
Association
requiring
contributions to the
Coll. & Univ. Faculties v. State
1950 or 1974 Benefit Plans.”30 524
at
U.S.
Syst. of
Wage Agree-
29. The National Bituminus Coal
another NBCWA was
It
executed.
(hereinafter
trust,
"NBCWA”)
multiemployer
"created a new
ment
of 1947
Unite
"estab-
Mine
Wei.-,
Workers
America Welfare and Retire
lished the United Mine
of America
Workers
d
Fund)."
(1950
Fund
&
ment
of 1950
W R
East
fare and Retirement
Fund....
towas
ern,
violate the Due clause under the violated care benefits was egregious most circumstances: Takings The Court acknowl- Clause. that,
Finding process taking edged a due while not a in the classic violation sense, principle regulation may case consistent “economic none- taking.” “under deferential standard review theless effect applied process High due on to substantive chal- S.Ct. 2146. The Court went lenges legislation explain to economic there is no that: supra supra
32. See
note 16 for the text of W. Va.Code
33. See
note 19 for the text of W. Va.Code
(b).
23-2-9(e)(3)(A).
23-3-1
paid
course,
govern
lating premiums to be
into
Louisiana
party challenging
[o]f
Injury Fund
taking
action as
unconstitutional
Workers’
Second
mental
United
a substantial burden. See
&
v.
bears
insurers. United States Fid. Guar.
52, 60[,
McKeithen,
Corp.,
McKeithen,
493 U.S.
Sperry
States
The
reflects no
Coal
With re-
spect
proportionality
plaintiffs’ experience
regulation’s
to a
imposition
of a retro-
Injury
liability,
with the SIF [Second
Fund]. For
active
Court explained
twenty years
plaintiffs
over
before Act
Congress
may impose
lia-
retroactive
intermediary
They
were
for the SIF.
bility
degree, particularly
to some
it
where
collected assessments from
and
periods
is “confined to short and limited
received SIF
for payment
reimbursement
required by
practicalities
producing
injury
They
of second
benefits.
received
legislation.”
national
[Pension Benefit
no
no
net benefits and incurred
net costs.
Co.,
Corp. R.A. Gray
Guar.
&
argue
policy
Defendants do
that
2709, 2719,
104 S.Ct.
81 L.Ed.2d
purpose
changed
of the SIF have
since
(internal
(1984)]
quotation
marks omit-
inception
its
in 1974. But under Act
ted).
decisions, however,
Our
left
have
plaintiffs
significant
must make
net contri-
open
possibility
legislation might
that
imposes
butions
the fund. Act 188 thus
imposes
if
be unconstitutional
it
severe
parties
that
profited
costs
never
liability
retroactive
on a
limited class
the SIF.
parties
anticipated
that could not
have
Id.
liability,
liability
that
the extent of
case,
instant
imposed
State
substantially disproportionate
par-
to the
a substantial financial burden on self-insured
experience.
ties’
relationship
that bears no
to their
528-29,
Eastern at
at
S.Ct.
2149. Re-
experience
Injury
with the Second
Fund. For
claims,
garding
Enterprises
Eastern
alone,
Fiscal Year
employ-
Court remarked that
ers
aas whole were assessed
than
more
operates retroactively,
Act
forty-five
the Coal
million
divest-
dollars under Resolution
ing
long
property
Eastern of
premiums
No. 11 to
after
reduce
deficit. The
imposed upon
company
its liabilities
appellants
believed
under
individually
year
1950 W
single
similarly
that
& R Fund
been settled.
were
substantial.
have
$206,000,
Weirton Steel
And the extent
retroactive
was assessed
Pine
Eastern’s
$271,228,
Ridge
liability
particularly
is substantial and
far
assessed
Eastern
$7,265,945.
reaching....
Associated was
past
assessed
into
These
distance
against
were
impose
assessed
these self-
that
the Act
back to
reaches
Ridge
subscription
34. Pine
and Weirton Steel fulfilled
miums tax associated with
its
their
by directly
obligations
paying
Injury
the Second
Workers’
See W.
Fund.
Va.Code
employees.
of their
claims
Eastern Associated
23-2-9(d)(3)(B).
obligation
paying
special pre-
its
fulfilled
magnitude
special premium
tax to cover that
assessed
liability on Eastern
§ 23-2-
questions
participation.
liability
See W. Va.Code
raise substantial
9(e)(3)(B).
employers fulfilled
Because these
fairness.
obligation
employees, ei-
to then* own
(internal
at
cita-
Id.
S.Ct.
claims,
injury
by directly paying
ther
second
omitted).
Eastern
ultimate-
tions
Court
special
by paying
properly
assessed
nothing included
ly
concluded
participation in
tax for
the Work-
Enterprises
par-
had
plans in which Eastern
Fund,
Injury
Res-
Compensation Second
ers’
coal
ticipated
to its exit from the
indus-
prior
causing
No. 11
them retroactive-
olution
pattern
try,
nothing in the
of the Federal
ly pay
premiums for the benefit
additional
coal
involvement in the
indus-
Government’s
of nonself-insured
Enterprises
Eastern
try,
have led
could
Moreover,
em-
employers.
these self-insured
respon-
a future
that would have
conclude
expectation
ployers had
the reasonable
sibility
providing
health
lifetime
benefits
duty
legal
fulfill
to fund
the state would
its
Id.
and their families.
at 535-
retirees
way
They
no
Second
Fund.
had
118 S.Ct.
charge
anticipating that
would
case,
Fifth
In the McKeithen
Circuit
thousands,
mil-
or even
them hundreds
“[r]etroactivity
similarly observed
*46
lions,
per
to
a six
year
of dollars
reduce
generally
in the law-Retroac-
disfavored
un-
by
dollar
billion
debt created
State’s
opposed
prospective
legislation,
tive
to
Injury
lawful failure to fund the Second
kind,
present
problems
more
can
severe
in
that
spite
Fund. This is true
of the fact
legitimate
can upset
because it
unfairness
compensation system
State’s workers’
is
expectations and
settled transactions.”
regulated.
heavily
adoption
Prior to the
(citations omitted).
F.3d at 418
The retroac-
No.
had never
Resolution
the State
in
application of the Act at
tive
issue
sought
payment
regulate
to
of the deficit that
twenty
“reached back at least
McKeithen
Injury
accrued
the Second
Fund from
years
upset
plaintiffs’
to
reliance on the
fifty years
to 1997. Due to this
cost-neutrality
funding
[prior]
State,
inaction
em-
the self-insured
Id.
scheme.”
The defendants McKeithen
ployers could not have had
notice”
“sufficient
argued
companies’
expec-
that the
economic
McKeithen,
funding
aof
new
scheme. See
in-
tations were “unreasonable because the
Here Resolution 11 reaches back retired coal miners’ health understandable; years, complex problems the duration the time fits is by failing typically legislative that for a created a six billion dollar to sort call deficit When, however, duty legislatively fulfill fund solution. that solution its mandated Injury singles employers Fund. to bear a the Second W. Va.Code out certain See 23-3-l(a). amount, employers As that substantial in based self-insured burden Fund, Injury past, far subscribing employers’ Pine on the conduct in the the Second Ridge any legislatively that and Weirton Steel were and unrelated commitment any they exempt any responsibility employers to fund the made caused, Injury governmental implicates § 23- action Second Fund. See W. Va.Code 3-l(b). underly- principles sub- fundamental of fairness While Eastern Associated did Fund, Takings ing the Clause. Eastern cannot scribe to the Second it was expense against of lifetime mium these forced bear “implicates principles health benefits for miners based on fundamental of fairness underlying Takings Eastern, before those activities decades benefits Clause.” 537,118 promised. were S.Ct. at 537,118 Id. at S.Ct. at V. similarly CONCLUSION Fifth found the na- Circuit government action at
ture issue them; that “The evil men do lives after regard, McKeithen to be unusual. good is oft interred with bones.” Court remarked Shakespeare, William Julius Caesar act sc. identifying compelling problem, [w]ithout majority opinion 2. The in this repre- case SIF, insecurity the financial such as will, unchanged, sents an if evil left live “singles the state enacted a solution that corrupt already deeply troubled West [parties] out certain bear a burden Compensation Program Workers’ amount, [par- substantial in based on corresponding rights and threaten the past, ties’] conduct far in the and unrelated gener- liabilities State’s [parties] made commitment stated, Simply ations to come. I cannot con- caused_” any injury they ensuing done such result and its devastat- (citation omitted). ing economy Virginia. effect West F.3d at 419 above, explained For reasons plain it is singled Here the State has out self-insured Contract, No. Resolution 11 violates the significant employers to bear a burden Process, Takings Due Clauses of the Rather, creating. had no role Accordingly, United States Constitution. I sought No. debt be relieved Resolution am dissent. I to state authorized that Jus- 11 was created the State’s con- unlawful *47 joins dissenting tice MAYNARD in this me perpetuated fifty years failing to duct over opinion. Injury Fund as fund the Second it was statu- torily required to do. The here exempted paying
were either into the Fund, charged pre-
Second were years participation tax for
mium years during they participat- those I Consequently,
ed. conclude that assessing pre- action
State’s retroactive