[author: Aaron F. Mandel]
The Black Lung Benefits Act (“BLBA”), 30 U.S.C. §§ 801-962, requires coal mine operators to pay compensation benefits, medical benefits, and other benefits to miners suffering disabling occupational lung diseases. In fulfilling their statutory duties to provide these benefits, operators must either self-insure or obtain insurance from a person or company authorized to insure workers’ compensation. Travelers Insurance Company v. Blackstone Mining Company, Inc., Nos. 2007-CA-001610-MR and 2009-CS-000015-DG, 2012 WL 2603623 (Ky. Ct. App. July 6, 2012), addressed the effect of an operator’s partial compliance with the BLBA on a workers’ compensation insurer’s right to additional premium.
In Travelers, Blackstone Mining purchased workers’ compensation insurance from Travelers. Twenty-three of Blackstone Mining’s employees rejected workers’ compensation coverage (as permitted under Kentucky law), and Blackstone Mining provided them with disability insurance. Travelers did not believe that the employees’ rejection of workers’ compensation benefits complied with Kentucky law, and instead believed that it was liable to insure those employees for workers’ compensation while the workers’ compensation program was in effect. Accordingly, Travelers sued Blackstone Mining for unpaid premiums. The trial court concluded that the disability policy covered black lung in accordance with the BLBA, and that Blackstone Mining had overpaid Travelers for both state workers’ compensation premiums and black lung premiums. Modifying that judgment, the Kentucky Court of Appeals wrote:
In this case, Blackstone Mining ostensibly procured the disability policy to insure payment of black lung benefits commensurate with the mandates of the BLBA. However, the disability policy clearly did not provide for payment of medical benefits to the miners. Yet, medical benefits are integral benefits provided under the BLBA. And, the disability policy did not contain a provision to pay benefits corresponding to those benefits available under the BLBA. A review of the disability policy reveals that it was intended to merely provide replacement income for disabled miners rather than provide those miners the full panoply of benefits found under the BLBA.
In short, we conclude that the disability policy did not provide benefits commensurate with the benefits provided under the BLBA. Effectively, Travelers continued to provide black lung coverage under the BLBA for the twenty-three miners who rejected state workers’ compensation coverage while employed by Blackstone Mining. Thus, we hold that Blackstone Mining owes Travelers additional premiums in the amount of $42,279.99, and that the circuit court erred by rendering judgment in favor of Blackstone Mining upon this issue….
Travelers demonstrates the importance – in any type of insurance policy – of exercising due diligence in auditing programs subject to premium adjustments post-expiration. By closely scrutinizing Blackstone Mining’s employment records, Travelers learned that it was entitled to additional premium under the terms of its insurance policy.