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SHANNOPIN MINING COMPANY v. COMMONWEALTH PENNSYLVANIA (03/23/89)

decided: March 23, 1989.

SHANNOPIN MINING COMPANY, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF LABOR & INDUSTRY, STATE WORKMEN'S INSURANCE FUND, RESPONDENT



Appeal from the Order of the Board of Claims in the case of Shannopin Mining Company v. Commonwealth of Pennsylvania, Department of Labor and Industry, State Workmen's Insurance Fund, No. 1069.

COUNSEL

William M. Wycoff, with him, Diana L. Reed, and J. Frank McKenna, III, Thorp, Reed & Armstrong, for petitioner.

Frederick H. Hobbs, with him, Thomas P. Kennedy, Deputy Chief Counsel, State Workmen's Insurance Fund, for respondent.

President Judge Crumlish, Jr., Judge McGinley, and Senior Judge Narick, sitting as a panel of three. Opinion by Judge McGinley.

Author: Mcginley

[ 124 Pa. Commw. Page 365]

Shannopin Mining Company (Shannopin) appeals from the decision of the Board of Claims finding in favor of the State Workmen's Insurance Fund (Fund).*fn1

Shannopin commenced this action in this Court seeking coverage of certain claims pursuant to a policy of insurance which was issued to Shannopin by the Fund. This Court transferred the matter to the Board of Claims.

[ 124 Pa. Commw. Page 366]

The Board of Claims found in favor of the Fund and against Shannopin. Shannopin filed this appeal.

Shannopin is a Pennsylvania corporation formed in approximately May 1980 for the purpose of mining bituminous coal. In or about June of 1980, Shannopin purchased mining operations from J & L Steel Corporation (J & L). Pursuant to the purchase agreement between Shannopin and J & L, Shannopin agreed to assume liability for state and federal occupational disease claims filed after the closing date of the transaction by employees who had worked the mine for J & L and who subsequently would be employed by Shannopin.*fn2

Shannopin was required by state law to obtain workers' compensation insurance.*fn3 Shannopin and the Fund entered into an insurance contract for a period from June 1, 1980, to June 1, 1981, whereby the Fund agreed to provide Workmen's Compensation Insurance for Shannopin, including Federal Black Lung coverage. Shannopin paid $1,486,359.87 for Pennsylvania Occupational Disease and Federal Black Lung coverage.

Subsection I of the policy is divided into two sections, "Coverage A -- Workmen's Compensation" and "Coverage B -- Employers' Liability." Under Coverage A, which is the subject of this litigation, the Fund agreed to pay " all compensation and other benefits required of the insured by the workmen's compensation law."*fn4 (Emphasis added.)

[ 124 Pa. Commw. Page 367]

Under Subsection II of the policy, the Fund also agreed to defend Shannopin against claims for benefits and to pay all expenses of such defenses. Pursuant to Subsection IV, captioned "Application of Policy," the policy stated that it applied to " disease caused or aggravated by exposure of which the last day of the last exposure, in the employment of the insured, to conditions causing the disease occurs during the policy period." (Emphasis added.)*fn5

At the expiration of the policy between the parties, Shannopin did not renew its agreement or coverage with the Fund, but rather changed to a private carrier. Subsequent to the expiration of the policy period, certain employees, whose date of last employment occurred during the policy period, filed both State and Federal Occupational Disease Claims naming Shannopin as the defendant. The Fund defended these claims. With respect to some of the claims the Fund defended Shannopin on the basis of the fact that the employees had not been working for Shannopin for at least one-year, which is a defense pursuant to Section 301(c)(2) of The Pennsylvania Workmen's Compensation Act.*fn6 As a result of this defense, Shannopin was found not to be liable for the compensation claims, and liability fell upon J & L. However, because Shannopin contractually had assumed J & ...


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