"HELL, I WAS VACATIONING ON THE RIVERIA WITH MY BILLIONAIRE COAL MINE OWNER BUDDY; WHO SAYS I MIGHT SHOW ANY FAVORITISM TOWARDS HIS COMPANY IN A $70 MILLION DOLLAR LAW SUIT BEFORE THE SUPREME COURT OF WEST VIRGINIA THAT DON BLANKENSHIP SPENT MILLIONS TO GET ME ELECTED TO - WE JUST DON'T LIKE THE WAY YA'LL DO IT UP NORTH!"
Massey Energy Bought Workers Comp Insurance Coverage Shortly Before Mine Explosion
Massey Energy Corp., owner of the Upper Big Branch Mine in West Virginia where at least 25 miners were killed April 5 in a methane gas explosion, apparently arranged for and purchased disability compensation insurance coverage only a month before the disaster, according to one source with inside knowledge about the company’s risk management operations.
Prior to that, the company, known for its aggressive challenges to workers’ comp claims, was self-insured for workers compensation.
But given the number of safety violations at its mines--there were 53 in March alone, 495 in 2009 and 1300 since 2005, at just the Upper Big Branch Mine, and 2,074 over the past year at other mines owned by Massey across the Appalachian region--perhaps the money spent buying insurance to cover workers’ injury claims might have been better spent fixing chronic problems with methane gas build-ups in the mine. Then again, maybe the company felt that violation citations were no big deal--it has reportedly challenged two out of three instead of fixing them as a matter of course.
The company certainly has not shown particularly good judgement when it comes to its insurance decisions. Last year, despite noting in its annual report that its operations were “subject to certain events and conditions that could disrupt operations, including fires and explosions,” Massey Energy decided not to purchase business interruption insurance, according to Business Week magazine. With some analysts suggesting that the accident at the big West Virginia mine, where metalurgical coal used in the production of steel is extracted, could lead to a shutdown of that mine, and to a nearly 50% loss in overall corporate earnings this year, that decision could prove costly to Massey investors. The ratings agency Standard & Poors earlier this week placed the company, which already sports a junk-bond-level BB- credit rating, on watch for a downgrade, citing lost production, the “workers’ compensation liability and any impact potential lawsuits brought against the company may have.”
The accident could also prove costly for Massey CEO Don Blankenship, who only recently had the performance pay portion of his compensation package upped significantly by the company’s board of directors from $900,000 in 2009 to $1.5 million for 2010 and 2011. Blankenship reportedly would also be in line to receive 81,500 Massey shares if certain performance targets are met for the year, and another 32,250 shares if a second set of targets are met. Among the performance areas considered are financial results, sales volume, and safety performance, all of which are likely to be problematic this year in the wake of the West Virginia disaster.
Blankenship, a local boy who made good and became the first non Massey family member to head the giant mining firm, has been aggressively anti-union, as has the entire company. A bitter strike by the United Mineworkers in 1984-85, in which the company, backed by the Reagan administration, brought in scab workers and hired private armed guards backed by West Virginia State Troopers to harass and intimidate unionized workers, lead to a breaking of the union at the company, which is now largely non-union, and across the country.
A call to Massey asking for comment had gone unanswered as of this posting.
West Virginia Mine Explosion: CEO Tried To "Buy" Supreme Court Judge
Posted by Brett EmisonSince the tragic Montcoal, West Virginia coal mine explosion, the world has learned a lot more about Don Blankenship, the CEO of mining giant Massey Energy, Co. What you might not know is that Don Blankenship tried to "buy" a West Virginia Supreme Court judge in 2004. It's a story that great novels are made of -- literally. Don Blankenship's attempt to "buy" a supreme court judge was the basis for John Grisham's novel, The Appeal.
In 2004, Blankenship threatened to shoot and then physically assaulted an ABC reporter attempting to interview him about the case.
In 2004, [Blankenship] spent millions on advertising that attacked a West Virginia state Supreme Court justice, leading to the election of challenger Brent Benjamin.
Massey had a $70 million case before the state Supreme Court and, once elected, Benjamin made the controversial decision not to recuse himself because of Blankenship's support of him and to hear arguments anyway. Another member of the court hearing the case was Chief Justice Elliott "Spike" Maynard. He later recused himself after photographs surfaced showing that he vacationed with Blankenship in the French Riviera.
When an ABC News reporter tried to interview Blankenship about the possible conflicts in the parking lot of a Massey Energy office in Belfry, Ky., Blankenship became agitated.
"If you're going to start taking pictures of me, you're liable to get shot," Blankenship told the reporter before grabbing his camera.
Blankenship later told the Charleston Daily Mail he couldn't recall making any threats. "Quite frankly, I don't know what I said except that I know I'm never loud, vulgar or rude to strangers," he said.
The conflicts surrounding the state Supreme Court saga triggered a cascade of changes, including a U.S. Supreme Court ruling that called on judges to recuse themselves when major donors come before them in court, and a vote by the West Virginia legislature to adopt public financing of judicial campaigns.
In Caperton v. A.T. Massey Coal Company, a Don Blankenship, through his company, Massey Energy, tried to buy the vote of a Supreme Court judge after it received a verdict against it at the trial court level.
In Caperton, a West Virginia jury found the Massey Coal Company liable for fraudulent misrepresentation, concealment and tortious interference with contract in this corporate litigation lawsuit and awarded Caperton $50 million in damages. After the award, West Virginia held its 2004 judicial elections.
Knowing the State Supreme Court of Appeals would consider the appeal, Massey's chairman supported the challenger -- Brent Benjamin -- rather than the incumbent justice seeking reelection.
Massey's $3 million in contributions to Benjamin exceeded the total amount spent by all other Benjamin supporters and by Benjamin's own committee.
Benjamin won by fewer than 50,000 votes and then heard Massey's appeal of the $50 million verdict against it. Newly elected Justice Benjamin was the deciding vote overturning the verdict.
The United States Supreme Court narrowly held that Justice Benjamin should have recused himself and not heard the appeal because "the probability of actual bias on the part of the judge or decisionmaker [was] too high to be constitutionally tolerable."
However, the Court provided little - if any - guidance as to an actual standard for when recusal is constitutionally required. Rather, its said merely that the question was whether, "under a realistic appraisal of psychological tendencies and human weakness," the interest "poses such a risk of actual bias or prejudgment that the practice must be forbidden in the guarantee of due process is to be adequately implemented."
There is a serious risk of actual bias when a person with a personal state in a particular case had a significant and disproportionate influence in placing the judge on the case by raising funds or directing the judge's election campaign when the case was pending or imminent. The proper inquiry centers on the contribution's relative size in comparison to the total amount contributed to the campaign, the total amount spent in the election, and the apparent effect of the contribution on the outcome. It is not whether the contributions were a necessary and sufficient cause of Benjamin's victory. In an election decided by fewer than 50,0000 votes, [Massey's] campaign contributions - compared to the total amount contributed to the campaign, as well as the total amount spent in the election - had a significant and disproportionate influence on the outcome. And the risk that [Massey's] influence engendered actual bias is sufficiently substantial that it "must be forbidden if the guarantee of due process is to be adequately implemented. [citation omitted] The temporal relationship between the campaign contributions, the justice's election, and the pendency of the case is also critical, for it was reasonably foreseeable that the pending case would be before the newly elected justice.
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[T]here was here a serious, objective risk of actual bias that required Justice Benjamin's recusal.
Remarkably, four Supreme Court justices dissented, essentially finding that paying $3 million to purchase a hand-picked West Virginia Supreme Court justice to overturn a negative verdict is constitutionally acceptable. In fact, Justice Roberts disagreed that Massey's conduct was even an "extreme case."
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