Peabody Energy, a St. Louis- based company that owns some of the largest mines in the country, is the latest major coal company to file for Chapter 11 bankruptcy. The U.S. mining industry has been declining for years now, helped along by falling natural gas prices and an increasing environmental protection effort nationwide. However, many wonder what this Missouri company’s bankruptcy could mean for miners, particularly those who suffer from black lung disease and may be seeking compensation.
Unlike other bankruptcy plans, the goal of Chapter 11 bankruptcy is reorganization instead of liquidation or the simple discharge of debts. Peabody Energy will now be required to submit a reorganization plan to the courts which, if approved, will allow the company to pay off some of its outstanding debts, reexamine its finances and then continue operations. However, previous bankruptcy cases involving other big coal mining companies have proven problematic for former employees seeking workers’ compensation benefits.
How Could Peabody’s Bankruptcy Affect Miners with Black Lung Disease?
Black lung disease is one of the most common work injuries coal miners develop. It is a painful and often deadly respiratory disease that can make breathing difficult and can limit the victim’s ability to work. The federal government provides protection for miners who develop black lung disease and requires all mining companies to have insurance specifically to cover these kinds of workers’ compensation claims. However, when a company files for bankruptcy, it is not always clear who is liable to pay these claims.
One good example of this problem is the recent bankruptcy of Patriot Coal, which filed for Chapter 11 in May of 2015 (its second Chapter 11 claim in eight years). As part of the reorganization plan, many of its assets were sold to another company. The bankruptcy court ruled that this new company would not be responsible for paying any of the black lung claims that had been filed against Patriot. Then, as the bankruptcy moved forward, Patriot eventually stopped paying those claims, too. What followed was an as-yet unresolved lawsuit against the U.S. Department of Labor, which is responsible for covering claims made against companies that have defaulted in their payments.
This tangle of lawsuits continues to be a headache for the miners involved, and does not bode well for those who are currently seeking compensation for black lung complications from Peabody. The main reason is that Patriot was created by Peabody as a spin-off company in 2007. Depending on how Peabody attempts to restructure itself during the course of its current Chapter 11 bankruptcy, former employees could be facing the same kind of uncertainty in their workers’ compensation claims for black lung.
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