Citizens United To Reform Bankruptcy Laws Blog

Saturday, October 16, 2004

Horizon sale leaves miners out in the cold

WASHINGTON — When Kentucky coal miner Denzil Ratliff retired in July from the Star Fire mine in Bulan, Ky., he thought the mine's owner, Horizon Natural Resources Co., would continue his health insurance for the rest of his life.
But Ratliff and at least 200 other workers and former workers at Star Fire Mining lost their insurance because of the bankruptcy and sale of Ashland, Ky.-based Horizon, once the fourth-largest coal mine operator in the nation.
And while the United Mine Workers of America, the miners' labor union, provides health insurance for six months, what they and their families will do about long-term coverage is a question mark.
"I'm concerned, and when I think about it I get kind of angry, but I don't try to dwell on it," said Ratliff, a 55-year-old resident of Softshell, Ky.
He is healthy, but his wife had surgery earlier this year and she was covered under his plan.
The sudden evaporation of jobs and benefits at Star Fire underscores in microcosm the constant economic pressures in the coal industry, in which employment levels have dropped steadily for 50 years despite increased demand for coal.
And the loss of benefits at Star Fire is likely to add to the spiraling number of Americans without health insurance coverage — now 45 million, according to the U.S. Census Bureau.
Even union funds that historically have aided unemployed miners and their families are strained as more people seek help after company bankruptcies.
Congress hasn't decided what to do about it.
Sale ends benefits
Besides the Star Fire employees and retirees, about 4,800 current and former employees and family members at other union mines operated by Horizon in the Appalachian region also lost health benefits because of the company's sale, according to the union.
Star Fire, a surface coal mine, employed an average of 111 people earlier this year. Horizon closed Sept. 24, and Massey Energy, the Richmond, Va.-based company that bought Horizon, plans to keep it closed temporarily.
In addition to Star Fire, 16 other operating Horizon mines in Kentucky — none unionized — were affected by the sale. They are still open and are now owned by International Coal Group, a new company set up and chaired by New York private equity investor Wilbur Ross Jr., who bought Horizon with Massey Energy for $786 million last month.
In a recent interview, Ross said of the other mines: "We have no immediate plans to close anything.
"Our policy in everything we do is, we don't buy things to liquidate them," he said. "As long as it's economically feasible to do so, we operate them."
Phone calls to Horizon and its attorneys were not returned.
U.S. District Judge Henry R. Wilhoit Jr. had halted the sale Sept. 28 at the UMWA's request. But two days later the judge lifted the stay, and the sale was completed.
Horizon obtained court approval to end its union contracts at Star Fire, its only union property in Kentucky, and at union mines in other states. It also was permitted to end health-care benefits for current and former union miners and their families.
The union is appealing that ruling.
Union fund shrinking
Star Fire workers negotiated a contract that did not require the company to pay into a union health benefit fund to help miners and retirees whose companies go out of business.
As a result, Star Fire's UMWA members don't qualify for health benefits under the usual union funds, said Michael Buckner, the union's research director.
Ratliff is philosophical about the position Horizon has put him and his family in.
"I've still got my name, I've still got my integrity. That's something they've lost that I've not," he said.
UMWA President Cecil Roberts said some of the $786 million paid for Horizon should have been used to preserve employee benefits.
"It's just tragic, just tragic," he said in an interview.
Roberts said the union is picking up health-care benefits for about half of the 4,800 unionized Horizon workers and family members, and it may help more later.
He said Congress must re-examine bankruptcy laws to give workers' health-care coverage priority over other claims against failing companies.
Now, miners and their families have no more rights to corporate assets than suppliers that delivered rock dust to Horizon mines in recent weeks, Roberts said.
"No way that's good public policy for America," he said.
Over the years, Congress created funds to pay health-care benefits for so-called "orphan" miners — those whose companies have folded.
But, according to the union, the funds need more money to cover the people who continue to be added after bankruptcies like Horizon's.
Mining is far less labor-intensive, and more consolidated, than it once was. In 1923, there were nearly 705,000 coal miners, and by 1953 there were still nearly 300,000.
Federal numbers show that the nation's coal-mining force had dwindled to about 75,000 at the end of 2003 — including more than 22,000 workers in Kentucky and more than 8,000 in Indiana — leaving thousands without promised health-care coverage.
Kentucky's House members are co-sponsoring legislation by Reps. Nick Rahall, D-W.Va., and Barbara Cubin, R-Wyo., that would renew a coal industry tax that pays for the federal Abandoned Mine Land program, whose interest pays health-care benefits for some retired miners.
That legislation hasn't passed, but lawmakers voted recently to extend the tax until Nov. 20, providing more time to work on a longer-term solution.
The National Mining Association, a Washington-based industry group, disputed whether the AML program needs more contributions from companies to stay solvent.
Out of work and time
Darrell Keyes, president of the UMWA's Local 5890 and a miner at Star Fire, said employees learned they had worked their last day about 3:30 p.m. on Sept. 24.
Company foremen gathered employees around a trailer on the mine property and announced the closure.
Keyes, 52, has worked in coal mining for 24 years, all but three at Star Fire, which was owned by several different companies before Horizon.
"We were disgusted they (Horizon officials) didn't have enough gumption to come out and talk to us," he said.
The six months of health insurance is nice, Keyes said. "But that's just for six months," he said. "It'd really help if somebody would help us."
Massey intends to look for ways to improve Star Fire before reopening it, possibly before the end of the year, spokeswoman Katharine Kenny said.
The cancellation of health coverage for the mine's workers and retirees was "terrible," Kenny said, but she emphasized that Massey only bought the physical assets of the mine.
When the mine reopens, however, former Horizon workers can interview for jobs, which likely will be non-union, she said. Only 106 of 4,800 Massey workers are union members, she said.
"It's a very tight labor market right now, and it's very difficult to get experienced miners," Kenny said. "We would be happy to consider any and all workers."
Retired Star Fire foreman Sheldon Ritchie, 61, of Bulan, had heart surgery in August. A letter telling him his health insurance was canceled wasn't a scheduled part of his recuperation.
"I'd have recovered quicker if I didn't hear about that," he said.
As a foreman, he wasn't a member of the UMWA, so he can't seek help from the union. Ritchie is a veteran, however, and can receive some of his medicine through the Department of Veterans Affairs and some through Medicare.
But he needs to buy private health insurance for his wife. After asking around, he figures the premiums will be around $500 a month.
"It's going to be rough," Ritchie said. "By the time I pay that, I won't have any money left for nothing."