In re Primeline Industries, Inc., Bankruptcy No. 585-1092.
| Decision Date | 31 December 1987 |
| Docket Number | Bankruptcy No. 585-1092. |
| Citation | 103 BR 861 |
| Parties | In re PRIMELINE INDUSTRIES, INC., Debtor. |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
Daniel McGown, Akron, Ohio, for debtor.
George D. Mallo, Akron, Ohio, special counsel to the Atty. Gen.
FINDING AS TO OBJECTION TO PROOF OF CLAIM
On October 2, 1987 the debtor filed an objection to the second amended proof of claim of the State of Ohio, Bureau of Workers' Compensation. The facts are not in dispute.
The debtor filed for protection under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 101 et seq. on September 10, 1985. On December 30, 1985, the creditor, State of Ohio, Bureau of Workers' Compensation, filed an estimated proof of claim in the amount of $21,031.61 for unpaid workers' compensation premiums for January 1, 1985 to August 31, 1985. On February 21, 1986, the creditor filed an amended proof of claim for payroll premiums due from January 1, 1985, through September 10, 1985, the date of the filing of the debtor's bankruptcy petition. On June 18, 1986, the creditor filed a second amended proof of claim in the amount of $42,561.33 to include indebtedness based on a violation of specific safety requirement award (VSSR). The VSSR award was in the amount of $6,968.00 for temporary total compensation paid in workers' compensation Claim No. 84-8527. On February 17, 1987, another original proof of claim was filed in the amount of $316.00 as a result of expenses incurred in workers' compensation Claim No. 46313-27.
The VSSR award in the amount of $6,968.00, being workers' compensation Claim No. 84-8527, arose on April 29, 1984 when Roberta Mendendez Myers (claimant) suffered injury when the ladder on which she was standing collapsed. The claimant received temporary total disability benefits due to the injury in the amount of $31,417.62.
The VSSR or additional award in dispute was granted by the Industrial Commission of Ohio on July 9, 1985 based on the employer's failure to maintain the wooden step of a ladder as required by Ohio Administrative Code Rule 4121:1-5-03(C)(1)(b).
The sole question for review is whether or not the additional violation of specific safety requirement award (VSSR) in the amount of $6,968.00 paid in workers' compensation Claim No. 84-8527 should be allowed priority pursuant to 11 U.S.C. § 507(a)(7)(E) as an excise tax?
Counsel for the debtor in his brief admits Article II, Section 35 of the Constitution of the State of Ohio makes clear the basis both for the awarding of such funds to an employee as well as the charging of such amounts to to the employer. Essentially, that Section authorizes the Industrial Commission to determine whether an injury, disease or death of an employee was caused by the failure of the employer to comply with any specific requirement for the protection of the lives, health or safety of employees. When it is found, after hearing, that such is the case, the Industrial Commission is authorized to make specific additional awards for compensation to the employee and to charge such awards back to the employer by increasing the employer's premium.
The law is clear that the premiums paid by the employer to the State of Ohio, Bureau of Workers' Compensation are an excise tax. This matter has been litigated in an overwhelming number of bankruptcy courts and district courts, and the circuit courts have held that the payment of premiums is a tax. See In re A.C. Williams Co., 51 B.R. 496 (Bankr.N.D.Ohio 1985); In re Mansfield Tire & Rubber Co., 660 F.2d 1108, 1110 (6th Cir.1981); In re International Automated Machines, Inc., 9 B.R. 575 (Bankr.N.D.Ohio 1981).
The debtor claims in his trial brief that in In re Jenny Lynn Mining Co....
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