By ELI SEGALL
ANNAPOLIS (Nov. 16, 2008)—With General Motors Corp. near bankruptcy,
Maryland officials are preparing for a possible fallout: If GM collapses, it may
not have the cash to fund its workers' compensation plan in Maryland.
The automaker has more than 200 employees statewide, most of whom work
at a transmission plant in White Marsh. Slammed by plunging car sales and
the global credit squeeze, GM has been burning through cash in recent
months.
Analysts have said GM may be forced into bankruptcy protection next year.
The firm is now lobbying Congress for an emergency bailout loan to keep it
afloat.
In Maryland, GM has a "self-insurance" workers' compensation plan, meaning
it can bankroll insurance and benefits itself, instead of buying a plan through
a private vendor. According to state officials, if GM collapses, the firm may
not have the money to pay for the program, among other possible outcomes.
Workers' compensation plans fund the benefits for employees who are injured
at work.
R. Karl Aumann, chairman of the state's Workers' Compensation Commission, said at a hearing Wednesday that state officials are closely monitoring GM
and other distressed, self-insured firms with operations in Maryland.
"When the economy is in a bad state, it's our responsibility to make sure the
self-insured program remains viable, and that those employees covered in
the program aren't left in the lurch," Aumann said, in a phone interview.
Nevertheless, a bankruptcy filing may not automatically wipe out GM's
funding, he said. A Chapter 11 filing, for instance, lets a company stay in
business and reorganize, while shielding its assets from creditors.
In addition, if the funding did vanish, the Worker's Compensation
Commission, which regulates the health of all self-insured firms in Maryland,
can use GM's security deposit to pay for the program. Aumann could not immediately confirm the amount of GM's deposit.
Tom Wilkinson, a GM spokesman, said Friday that the firm is not considering
a bankruptcy filing, as this would scare off consumers and further dry up
liquidity. He declined to comment on GM's future ability to pay for the self-insurance plan.
Aumann said it's rare for a company to default on its workers' compensation program. The last time this happened, he said, was with Bethlehem Steel
Corp., which declared bankruptcy in October 2001.
The Pennsylvania steel company had roughly 4,000 workers in Maryland at
the time of its collapse. Within a few years, the number of claims and benefits
that had to be paid outstripped available funds, and the state assumed
responsibility for the payments.
Dennis Carroll, general counsel for the Injured Workers' Insurance Fund, a
quasi-state agency, said most of Bethlehem's claims have since been paid
off.
GM, based in Detroit, is not the only company in Maryland with self-insurance.
According to the Workers' Compensation Commission, more than 430,000
employees are covered by this kind of plan. Their combined payroll makes up
roughly 15 percent of salaries statewide.
One such company is Safeway Inc., which operates dozens of stores across
the state.
The state received more than 24,000 workers' compensation claims last fiscal
year, a 3.5 percent drop from the previous year. In the commission's most
recent annual report, manufacturing, auto or otherwise, was not in the top
five of claims filed.
At the top of the list was "policemen-security", who filed more than 2,000
claims last fiscal year. Other industries in the top five included trucking,
construction and hospitals.
Capital News Service contributed to this report.