__NOTOC__ Howard Delivery Service, Inc. v. Zurich American Insurance Co., , was a United States Supreme Court case in which the court held that a creditor cannot seek priority status in a bankruptcy case to recover unpaid premiums owed for legally-required workers' compensation insurance.Syllabus of . Johnson, Clayton. "Howard Delivery Service, Inc. v. Zurich American Insurance Co.: The US Supreme Court Resolves the Split among Circuits regarding Whether Workers' Compensation Premiums May Be Eligible for Priority Treatment in Bankruptcy Proceedings." (2007).Frost, Amanda. "Overvaluing uniformity." Virginia Law Review (2008): 1567-1639.Krishnakumar, Anita S. "Reconsidering Substantive Canonss." The University of Chicago Law Review (2017): 825-908.
Background
The Bankruptcy Code accords priorities, among unsecured creditors' claims, for unpaid "wages, salaries, or commissions" in 11 U.S.C. §507(a)(4), and for unpaid contributions to "an employee benefit plan" in §507(a)(5). Howard Delivery Service, Inc. (Howard), was required by each state in which it operated to maintain workers' compensation coverage to secure its employees' receipt of health, disability, and death benefits in the event of on-the-job accidents. Howard contracted with Zurich American Insurance Co. (Zurich) to provide this insurance for Howard's operations in ten states. After Howard filed a Chapter 11 bankruptcy petition, Zurich filed an unsecured creditor's claim for some $400,000 in premiums, asserting that they qualified as "contributions to an employee benefit plan" entitled to priority under §507(a)(5). The Bankruptcy Court denied priority status to the claim, reasoning that because overdue premiums do not qualify as bargained-for benefits furnished in lieu of increased wages, they fall outside §507(a)(5)'s compass. The federal District Court affirmed, similarly determining that unpaid workers' compensation premiums do not share the priority provided for unpaid contributions to employee pension and health plans. A Fourth Circuit Court of Appeals panel reversed without agreeing on a rationale.McFadden, Timothy S. "Are Insurers Entitled to Priority under § 507 (a)(4)? The Circuit Split Deepens." American Bankruptcy Institute Journal 24.4 (2005): 30.
The Supreme Court granted certiorari.
Opinion of the court
The Supreme Court issued an opinion on June 15, 2006.
Later developments
References
External links