The Supreme Court in a recent split decision dealt a blow to the insurance industry with a ruling that claims for unpaid workers' compensation premiums do not have priority in bankruptcy actions.
The decision places claims for unpaid workers' comp premiums in the same category as unsecured creditors, meaning the insurance company that provided the coverage to the bankrupt company is likely to collect only pennies on the dollar for unpaid premiums.
Bruce Wood, assistant general counsel at the American Insurance Association, which submitted a friend of the court brief on behalf of the insurance industry, said the case "raised an issue of significant public policy," and the decision "is an unfortunate policy result, irrespective of whatever intellectual gymnastics that led to the majority's result."
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