Workers’ Comp for W. Va.’s Sago Mine Families at $10 MIllion

West Virginia’s workers’ compensation insurer may have to spend nearly $4 million more than planned on benefits for the families involved in January’s Sago Mine disaster.

BrickStreet Mutual Insurance Co. had set aside $7.1 million early in the year, but now estimates it could have to pay as much as $10.8 million to survivor Randal McCloy Jr. and the families of 12 men who died after an explosion and prolonged entrapment.

BrickStreet took over the injured-workers program on Jan. 1 as the state privatized its financially troubled system.

BrickStreet initially planned to follow a 2004 state policy and pay benefits to miners’ spouses until the date when the deceased would have reached age 70. In April, however, Gov. Joe Manchin decided benefits should continue until the spouse dies or remarries.

The Sago miners who died ranged in age from 28 to 61.

A June 30 financial statement provided this week to The Charleston Daily Mail includes the revised figures. BrickStreet Chief Financial Officer Chris Howat also said that administering the benefits will likely cost the agency about $300,000 in coming years.

“That’s what workers’ compensation insurance is for — to cover tragedies such as that,” said President Greg Burton. “We want to help those families as much as we can.”

Privacy rules prohibit the agency from disclosing specific benefit payments.

BrickStreet is the state’s exclusive worker injury insurer until mid-2008, when other private insurers can begin selling coverage.

While it has policies to protect against huge losses from a catastrophic event, it also has a $10 million deductible, Howat said. That means it won’t be reimbursed by its own insurers until benefits exceed that level.