West Virginia Coal slurry case to cost Massey $35 million Letter reveals details of confidential settlement

By Vicki Smith Associated Press MORGANTOWN, W.Va. (AP) -- Massey Energy Co. has offered $35 million to settle a 7-year-old lawsuit with hundreds of southern West Virginia residents who say the mining company poisoned their drinking supplies with wastewater called coal slurry. The settlement proposed last month is confidential, but The Associated Press obtained a copy of a letter sent to the more than 500 plaintiffs whose cases were to be tried starting in August. It says the $35 million is in addition to the $5 million that Massey and its subsidiary, Rawl Sales & Processing, had previously agreed to put into a medical monitoring fund. Massey was bought earlier this year by Virginia-based Alpha Natural Resources, which did not immediately comment Monday. Massey was the owner of the Upper Big Branch mine where 29 men died in a blast last year that was the deadliest U.S. coal accident since 1970. It's unclear exactly how much money each plaintiff will receive because the letter doesn't say how much their lawyers are seeking for fees and expenses. The attorneys refused to comment, citing a gag order imposed on the settlement. If they request and are granted the customary 33 percent, that could lower the payoffs to approximately $24 million. That would average out to about $50,000 apiece, but the specific amounts will vary with each plaintiff. Some families experienced cancer or other serious illnesses, while others had deaths they blame on contaminated water. Others have yet to manifest any illness but believe they're at higher risk of becoming sick. The letter says "an independent, neutral person" will help decide how the funds are allocated -- a process "used in other mass tort situations across the country." A hearing on the settlement and its distribution, including legal fees, is set for Sept. 29 at the Kanawha County Courthouse in Charleston. The letter, dated Aug. 5, tells recipients the terms are not to be discussed with anyone other than fellow plaintiffs. "Never forget that we stood and fought where others feared to tread, and you, the people of Rawl, Lick Creek, Merrimac and Sprigg, focused the world's attention on the true human cost of outlaw mining practices," says the letter, signed by attorney Kevin Thompson. The settlement was reached on July 27, after a third attempt by two judges serving on the state's Mass Litigation Panel. Three other judges had been simultaneously preparing to begin a series of trials on Aug. 1. Initially, some 700 people sued Massey, claiming it contaminated their aquifer and wells by pumping 1.4 billion gallons of toxic coal slurry into worked-out underground mines between 1978 and 1987. Slurry is created when coal is washed to help it burn more cleanly. The residents say it seeped out of the old mine workings and into their aquifer, turning their well water varying shades of red, brown and black, and causing ailments ranging from learning disabilities to cancer. The letter also tells the plaintiffs that besides the medical monitoring program, they are eligible for a health benefits program. The details of how that will work are still being negotiated. For decades, coal companies in Appalachia have injected slurry into worked-out mines as a cheap alternative to dams and other systems that can safely store or treat it. The industry claims underground injection is safe, but critics say slurry leaches into water tables through natural and man-made cracks in the earth. The plaintiffs are now mostly served by a public water system, but they argue that chronic exposure to metals and chemicals are to blame for birth defects and other health problems. The settlement letter says the medical monitoring plan will give the plaintiffs "a fighting chance against potential future diseases" and will be in place by year's end. The letter also indicates that many plaintiffs are concerned the settlement could jeopardize their Social Security, Medicaid or Medicare benefits. The attorneys say they're working on creating "special needs trusts," that could shield their settlement money and allow plaintiffs to use it for expenses such as clothing, automobiles or homes. The plaintiffs will also get financial counseling so they understand the implications. Lien claims by Medicaid and Medicare, for example, must be cleared before funds can be distributed. Still, the letter says, the goal is to distribute the money within 90 days. Published: Wed, Aug 10, 2011