Federal judge finds Justice coal companies liable for nearly six years of unpaid UMWA retiree benefit plan premiums

May 22—A federal court has ruled Gov. Jim Justice's family coal companies are liable for nearly six years of unpaid premiums under a union retiree health benefit plan.

It's the latest in a long history of court rulings that Justice's coal business empire has failed to meet its obligations.

Three companies controlled by the Justice family are liable to a United Mine Workers of America benefit plan for unpaid premiums accrued since July 2017, with interest and liquidated damages totaling 20% of the principal, the U.S. District Court for the Southern District of West Virginia found in a ruling Thursday.

U.S. District Judge Frank Volk gave the plaintiff trustees of the benefit plan 30 days to calculate how much those liabilities total for Bluestone Coal Corp., Bluestone Industries, Inc. and Keystone Service Industries, Inc. The trustees said those liabilities totaled roughly $130,000 as of Sept. 15 in an October court filing.

Volk granted the trustees' motion for summary judgment in the case but directed the trustees and companies to try to agree on a final judgment order addressing the relief to which he found the plaintiffs entitled in 30 days.

Four trustees of the benefit plan filed the lawsuit in August 2021, saying the Justice coal companies failed to pay required monthly per beneficiary premiums for the plan.

The benefit plan to which the trustees say the Justice companies have caused "continuing and irreparable injury" is the 1992 Benefit Plan, so named because it was established under the Coal Industry Retiree Health Benefit Act of 1992, also known as the Coal Act.

Volk rejected the companies' argument questioning the trustees' "assumption" that eligible retirees could choose to depend on a "backstop" for retirees eligible for but not receiving benefits from two other vehicles for providing health care benefits under the Coal Act.

The trustees said the companies' alleged failure to pay premiums caused the plan to not only lose income but incur administrative and legal expenses. That constituted a violation of federal law — the Employee Retirement Income Security Act of 1974 — setting minimum standards for most voluntarily established retirement and health plans, the trustees said.

Attorneys for the Justice coal companies and the trustees did not respond to requests for comment. The Governor's Office did not respond to a request for comment.

Individuals must have retired from the coal industry on or before Sept. 30, 1994, according to the website for UMWA Health and Retirement Funds, a group of multi-employer plans that provide health and pension benefits to retired coal miners and their eligible dependents.

UMW spokesman Phil Smith has said the lawsuit has nothing to do with the Justice companies' pension obligations or contractual obligations to provide benefits to its employees and retirees not covered by the Coal Act.

Gov. Justice's son, James C. "Jay" Justice III, is listed as president of all three companies, according to the West Virginia Secretary of State's Office. Gov. Justice's daughter, Jillean L. Justice, is listed as a director of all three, as is Jay Justice.

Upon taking office in 2017, Jim Justice said he would put his children in charge of his family's business operations. The governor has suggested in court proceedings and interviews since taking office that he remains familiar with his coal companies' operations.

Justice's coal companies have been under legal fire from the UMW for not providing other health benefits for retirees.

The UMW says Justice's coal companies have failed intermittently to provide contractually promised prescription drug coverage for retirees and their dependents in recent years, estimating 300 members have been affected.

In 2019, four retired miners and the UMW asked a federal court to enforce the companies' agreement to provide that coverage, reporting some members learned from their insurance provider that their claims were covered but the companies' self-funded account lacked money to pay the bills.

In January, the case in the U.S. District Court for the Southern District of West Virginia was stayed for a six-month period upon a request from the parties, according to an order from Senior U.S. District Judge David Faber.

In September 2021, Justice said Bluestone Resources had offered Swiss investment bank and financial services company Credit Suisse $300 million and half the value of the Justices' coal firms to settle about $740 million in outstanding loans with the company.

The Justice family's companies had been in talks with Credit Suisse after the downfall of London-based Greensill Capital, which loaned the family companies $850 million in May 2018. Justice said he personally guaranteed the $850 million in loans, putting him on the hook for paying back the remaining balance. Greensill filed for bankruptcy in March 2021.

Earlier last year, Bluestone Resources agreed to pay up to $320 million in recurring payments starting in June to lenders.

Last month, Justice and his wife, Cathy, acknowledged debt exceeding $305 million in principal, interest, late charges and attorney's fees to Virginia-based Carter Bank & Trust in a Virginia circuit court.

Earlier this month, Justice family attorneys filed motions in Martinsville (Virginia) Circuit Court to set aside the confessions of judgment, arguing in part that Carter Bank had breached contractual obligations.

U.S. Department of Justice attorneys said in a court filing last week that the Justice family coal companies failed to pay monthly federal mine safety fine debt payments for February through May, running up more than $409,000 in past due payments.

Gov. Justice, Jay and Jillean Justice were listed by MSHA as the controllers of mines owing $3.14 million in federal mine safety fine debt as of October.

Last month, a federal court affirmed another court's decision that Justice's companies can't get out of paying $2.54 million in environmental penalties and clean up sites as required by Tennessee regulators.

Mike Tony covers energy and the environment. He can be reached at 304-348-1236 or mtony@hdmediallc.com. Follow @Mike__Tony on Twitter.

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