UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

JAMES LELAND RADER; KAREN SUE

RADER,

Plaintiffs-Appellees,

v.

No. 97-1134

AMERICAN ASSOCIATION OF CHRISTIAN

SCHOOLS, a corporation; GALLAGHER

BASSETT SERVICES, INCORPORATED, a

corporation,

Defendants-Appellants.

JAMES LELAND RADER; KAREN SUE

RADER,

Plaintiffs-Appellants,

v.

No. 97-1174

AMERICAN ASSOCIATION OF CHRISTIAN

SCHOOLS, a corporation; GALLAGHER

BASSETT SERVICES, INCORPORATED, a

corporation,

Defendants-Appellees.

Appeals from the United States District Court

for the Southern District of West Virginia, at Charleston.

Jerry D. Hogg, Magistrate Judge.

(CA-96-710-2)

Argued: October 29, 1997

Decided: August 4, 1998

Before WILKINS and MOTZ, Circuit Judges, and CAMPBELL,

Senior Circuit Judge of the United States Court of Appeals for the

First Circuit, sitting by designation.
Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Steve L. Cummings, Decatur, Georgia, for Appellants.

William H. Scharf, Charleston, West Virginia, for Appellees.

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Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

PER CURIAM:

The American Association of Christian Schools (AACS) and Gallagher Bassett Services, Incorporated appeal a magistrate judge's order1

granting summary judgment to James Leland Rader and Karen Sue

Rader on their claim for coverage under a health benefits plan. The

Raders cross appeal the denial of their request for attorneys' fees. We

affirm.

I.

The essential facts are undisputed. Karen Rader is employed as a

teacher at Elk Valley Christian School in Elkview, West Virginia. Elk

Valley Christian School is a member of AACS, which provides a

health benefits plan (the Plan) to the employees of its members. The

Plan is administered by Gallagher Bassett Services, Incorporated.2

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1 The proceedings in this action were conducted by a magistrate judge

pursuant to the consent of the parties. See 28 U.S.C.A. § 636(c) (West

1993 & Supp. 1998).

2 For ease of reference, we refer to AACS and Gallagher Bassett Services, Incorporated collectively as "Gallagher."

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Karen Rader elected coverage under the Plan and listed her husband,

James Rader, as a dependent.

In 1988, James and a friend, Terry Bradshaw, formed a partnership,

T&J Painting. All of the work of T&J Painting has been performed

solely by the two partners. The parties agree that when the partnership

was formed, it was not required to furnish contributions to the workers' compensation fund of West Virginia (the Fund) on behalf of the

partners, and that the partnership was not required to notify the Fund

of a decision not to participate. T&J Painting has never contributed to

the Fund.

In September 1994, James was injured during the course of his

employment with T&J Painting. He subsequently filed a claim for

benefits under the Plan. Gallagher denied the claim on the basis of a

provision in the Plan that precludes coverage for, inter alia,

[a]ny accidental bodily injury which arises out of or in the

course of any employment with any Employer and/or for

which the individual is entitled to benefits under any workers' compensation law or ... receives any settlement from a

workers' compensation carrier.

J.A. 111. Gallagher asserted that James was entitled to receive workers' compensation benefits notwithstanding the failure of

T&J Painting to make contributions to the Fund, and thus that James

was excluded from coverage under the Plan.3

The Raders thereafter brought this action in state court, claiming

entitlement to benefits under the Plan. Gallagher then removed the

action to federal court on the basis of diversity of citizenship. After

discovery, the magistrate judge granted summary judgment to the

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3 We note that the language of the Plan appears to prohibit coverage for

injuries that either "arise[ ] out of or in the course of any employment

with any Employer" or for which the injured person is entitled to workers' compensation benefits. J.A. 111. To our knowledge, however, Gallagher has never maintained that James is excluded from coverage on the

basis that his injury was sustained during the course of his employment,

regardless of his eligibility for workers' compensation benefits.

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Raders on their claim that Gallagher had improperly denied benefits

under the Plan.

II.

The parties agree that the dispositive question is whether James

was entitled to workers' compensation benefits under West Virginia

law in September 1994. At that time, West Virginia required participation in the Fund by, inter alia, "all persons, firms, associations and

corporations regularly employing another person or persons for the

purpose of carrying on any form of industry, service or business in"

West Virginia. W. Va. Code § 23-2-1(a) (1994). 4 An employer

required to subscribe to the Fund paid premiums calculated as a percentage of its payroll. See W. Va. Code§ 23-2-5(a) (1994). However,

nonpayment of premiums by an employer did not prohibit an

employee from collecting benefits from the Fund. See W. Va. Code

§ 23-2-5(g) (1994) ("No employee of an employer required ... to subscribe to the [Fund] shall be denied benefits ... because the employer

failed to subscribe or because the employer's account is either delinquent or in default.").

After determining that whether James was eligible for workers'

compensation benefits raised unsettled issues of West Virginia law,

we certified the following questions to the Supreme Court of Appeals

of West Virginia:

(1) Under the law of West Virginia as it existed in 1994,

was a partnership that did not employ anyone other than the

members of the partnership an employer within the meaning

of W. Va. Code § 23-2-1(a) (1994), such that the partnership

was required by West Virginia law to furnish contributions

to the workers' compensation fund on behalf of the members of the partnership?

(2) If a partnership that did not employ anyone other than

the members of the partnership was an employer within the

meaning of § 23-2-1(a), but did not furnish the required con-

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4 This requirement was subject to certain exceptions not applicable

here.

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tributions to the workers' compensation fund and did not

elect not to include the members of the partnership as

employees pursuant to W. Va. Code § 23-2-1(g)(2), (h)

(1994), was a member of the partnership entitled to receive

workers' compensation benefits pursuant to W. Va. Code

§ 23-2-5(g) (1994)?

The Supreme Court of Appeals of West Virginia answered the first

question in the negative and consequently found it unnecessary to

address the second question. See Rader v. American Ass'n of Christian Sch., ___ S.E.2d ___ (W. Va. 1998). Accordingly, we affirm the

judgment in the Raders' favor.5

AFFIRMED

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5 The Raders cross appeal the denial of their request for attorneys' fees

pursuant to 29 U.S.C.A. § 1132(g) (West 1985). After reviewing the parties' briefs and the applicable law, and having had the benefit of oral

argument, we conclude that the magistrate judge did not abuse his discretion in denying the request for attorneys' fees. See Quesinberry v. Life

Ins. Co. of N. Am., 987 F.2d 1017, 1028-30 (4th Cir. 1993) (en banc).

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