U.S. Supreme Court Holds That Insurance Company's Claim To Recover Unpaid Workers' Compensation Premiums In Debtor-Employer's Chapter 11 Case Was Not Entitled To Priority Treatment Under 11 U.S.C. § 507(a)(5) As "Contributions To An Employee Benefit
Howard Delivery Serv., Inc. v. Zurich Am. Ins. Co., 126 S.Ct. 2105 (2006) (Justice Ruth Bader Ginsburg)
Resolving a split among the circuits, the Supreme Court held that an insurer’s claim to recover unpaid workers’ compensation premiums in a Chapter 11 case was not entitled to priority treatment under 11 U.S.C. § 507(a)(5) as “contributions to an employee benefit plan.” Insurer Zurich American Insurance Company provided workers’ compensation insurance for debtor Howard Delivery Service, Inc. The Court held that, because the benefits of such coverage inure mainly to the employer, workers’ compensation insurance is not an “employee benefit plan.” Although the Court acknowledged that employees do benefit from such coverage, the greater benefit is to the employer.
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