1 (Slip Opini o n) OCTOBER T ERM , 20 05 Sy llabu s N O TE : Wh er e it i s feas ibl e , a s y llab u s (h ead n ot e) wil lbe rel e as ed , as is bein g d o n e incon n ecti onwithth is cas e , a tth e ti me th e op in i o n is is s u ed

. Th e s y ll abu s con s titu tes n o p a r t of th e op in i o nof th e C o u r t bu t h a s be en pre p are dbyt h e Re po rte ro f De ci sio n s fo r t h e co nveni e nce of t h e reade r . Se e United Statesv. Detro it Timbe r& Lumb er Co., 200 U. S

. 3 21, 337
. 

## SUPREME CO URT O F THE UNI TED STATES
Sy llabu s HOWAR D DELIV ERY SERV ICE, INC., ET AL
. v . ZURICH AMERIC A NINSU RA NCE CO. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 05–1 28. Ar g u ed M a r c h21, 200 6—D e c i ded Ju n e 15, 2006 The Ba nkrupt c y Code a cco r d s priorit i es , a m ong uns ec ured c r edit ors ’

claims, for u n paid “wages, salaries , or commissions,” 11 U. S. C. §507( a)(4), an d foru n p aid c o n t r ibu tion s to “anemp l oy ee ben efit plan,” §507(a)( 5). Petitioner Howa rd Delivery S e rvice , In c. (Howa r d), wa s req u ired b yea ch S t at e in which itopera t e d t o ma int a i n workers ’ compens a t i on covera ge t o s e cure it s employees ’ receiptof hea l t h , dis

abil i ty , an d de athben efit s in th e ev en t of on -th e-job ac c i den t s. How

a r d cont ra ct ed wit hres p ondent Zuric hAmerica n Ins u r a nce Co. (Zu

rich) t o provide t h is ins ura nce for Howa rd’ s opera t i on s in t e n S t at es . Aft e r Howa rd filed a Cha p t e r 1 1 ba nkrupt c y pet i t i on, Zu rich filed a n u n s ec ur ed cr editor ’s c l aim f o rsome $400, 000 inpr emiu ms, asser t in g th at th eyqu al ified as “c on tr ibu t ion s to an employ ee ben e fit plan ” en

titledto pr ior i tyu n d er§507( a)(5). Th e Ba n k r u p tcyCou r t den i ed pr i

or itystatu s to th e c l aim, r e ason in gth at bec a u s e ov er du e pr emiu ms do n o t qu alify as bar g a in ed-f orben e fits fu rn ish e d inlieu of in cr eased wages, they fall outside §507(a)(5)’s compa s s . The DistrictCourta f

firmed, s i milarly det e rmining t h a tunpa i d workers ’ c o mpens a tion premiums do nots h a r e t h e priorit yprovid ed for u n pa id cont rib u t i ons t o employee pens ion a n d he a l t hpla n s . A Fourt h Cir c u i tpa nel re

v e r s ed w i th out ag r eein gon a r ation ale. Held: Ins ura n c e ca r r iers ’ c l a i ms for un pa id workers ’ compens a t i on

pr emiu ms ow ed byanemp l oy erfall ou ts ide th e pr ior i tyallow e d by §507( a)(5). Although th equestion is close, such premiums are more appr opr i ately br ac keted w i t hliabil i tyin s u r a n c e pr emi u ms for , e. g ., mot o r vehicle, fire, or t h eftins ura nce, t h a nwit hcont rib u t i ons made forfr i n g e benefits th at c o m p lete a paypac k ag e, e. g . , p e ns ion pla n s a n d group he a l t h , life, a n d dis a b ilit yins ura nce, whic h undis put e dly2 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. Sy llabu s
ar e c o v e r e d by §507(a)( 5 ).

United Stat esv. Emb assy Restau rant, I nc., 359 U. S. 29, 29 –35 , an d Joint In d ustry B d . of E l ec. I ndu stryv. Unit ed Stat es, 391 U. S. 224, 2 2 8 –22 9, h e ld th at anemploy er ’s u n p aid c o n t r ibu ti on s to c o llec

tiv e ly -bar g a in ed plan s providing, respectively , life ins ura nce a n d a n n u i tyben efits to employ ees did n o t qu alif yas “w ag es” e n titled to pr i

or itystatu s u n derth e pr iorban kr u p tc y law

. Con g r e s s th er eafter enacted what is now §507(a)(5) in order to p r ovi d e a p r i o r i ty f o r th e ki nd of f

r i n ge b e ne fits atissuei n th osecas e s. N o t ab l y , C o n g r e s s d i d notenla rge t h e “ w a g es , s a la ries , [a nd] commiss ions ” priorit y , §507( a)(4), to i n c l u d e fr ing e ben e fits, bu ti n stead c r e ateda n e wpr ior

ity , §507(a)( 5 ), on e step low e rth anth e w a g e pr ior i ty
. Th e n e wpr ov i

sionallow s a planpr ov iderto recover unp a i d premiums—a lb eitonly afterth e emp l oy ees’ c l aims f o r“w ag es , salaries, or co mm ission s ” h a v e b een pa id. The cur rentCode’s juxtaposition of th e wages and em

ployee b e nefit pla npriorit i es ma nifes ts Congres s ’ compr e hens ion t h a t fringe b e nefit s genera lly co mplement , or s u b s tit u t e for, hourly pa y . Con g r e ss tig h ten e d th e lin kag e of §507(a)(4 ) an d (a)(5) byimposin g a comb ined ca p on t h e t w o priorit i es , curren t ly s e t a t$ 1 0 , 0 0 0 per em ploy ee. See §507( a)(5)(B). Bec a u s e §507( a)(4) h a s a h i g h er pr ior i ty sta t u s , all c l a i ms forw a g e s ar e paid fir s t , u p to th e $10,000 l i mi t; c l aims u n d er§507( a)(5) forben efit planc o n t r ibu tion s c a nbe r e c o v ered next up t o the remaind e r of the $1 0, 000 ceiling. No other §50 7 su bsec tion s ar e so join ed tog e th er . Apar t fr om th e clues provided b y Emb a ssy Restaurant, Joint In

dust ry Bd., and th e tex t u a l ties bin d in g§507( a)(4) an d (5), Con g r e ss left u n d efin e d th e §507( a)(5) ter m s, “ contrib u tio ns to an employee b enefit pla n. . . ar isin gfr om se rvic es re nd ere d .” (Emphases added.) M a in tain i n gt h at §5 07(a)( 5 ) c o v e r s mor e th anw a g e su bsti tu tes like the ones at issue in Emb ass yResta urant an dJointInd ustryBd. , Zu

rich urges t h eCourtt o b o rrow t h e e nco mpa s s i ng definit i on of em

ployee b e nefitpla ncont a i ned in th e Employee Ret i rementIncome S e curit yActof 1 9 7 4(ERISA): “ [A]ny pla n , fund, or progra m [t ha t provides ] it s pa rt icipa n t s . . . , t hrou g ht h e pur cha s e of ins ura nce o r ot herwis e , . . . b e nefit s in the eventof s i cknes s , a ccident , dis a b ilit y , [or ] death .” 29 U. S. C. §1002( 1). Federal c o u r t s h a ve qu estion e d whether ERISA is appropri ately usedto fill in blanks in a Bank

ruptcy Code provision, and the panel be low pa rt ed wa ys on t h is iss u e. Inan yev en t, ERIS A’s sig n a l s ar e mix e d, for§1003(b)( 3 ) spec ific ally exempts from ERISA’s coverage the ge nre of plan hereat issue, i.e. , one “maintained solely for the purp ose of complying wit happlicable work[ers ’ ] co mpens a tion la ws .” That exempt ion st rengt h ens t h e Court ’s res i s t a nce t o Zuric h ’s a r gument
. Ra t h er, t h e Courtfollow s United Statesv. Re orga nize d CF&I Fab r icators of Utah, Inc., 518U. S.3 Cite as: 54 7 U

. S. ____ (2006) Sy llabu s 213 , 219 , i n n o ti ng th at “ [h]e r e a n dt h e r e i nt h e B a n k r u p t c yC o d e Congres s ha s included s p ecific direct ions t h a test a b lis h t h e s i gnifi

ca nce fo r b a n krupt c yla w o f at e rm us edels e where i nt h e federa l sta t u t es.” Id., at 219 –22 0. No su chdir e c t ion s ar e c o n tain e d in §507( a)(5), an d th e Cou r th a s n o w a r r a n tt o w r i te th em i n to th e tex t
.

This ca s e t urns inst ea d on the es s e nt ia l c h a r a c t e r of workers ’ com pen s ationr e g i mes. Un like pen s ionplan s or g r ou p life, h e alth , an d disa bili tyin su r a n c e —n eg otiated org r an ted to su pple m e n t, orsu bsti

tu te for , wa ge s —worke rs ’ co mpens a tion pres cript ions modify, ors u b

s t it ut e for, t h e common-la w tort liabilityt o which employ ers were ex posed for work-related accident s . Work ers ’ compens a t i on regimes provide something fo r employees, a ssuring limited fixed payments for on-the-job injuries, and something foremployers, remo ving the risk of large judgmen t s and heavy costs in tort litigation. No such trade-off is involved in employer-spo nsored fringebenefit plans. Moreover, employer-s pons ored pens ion a n d hea l t hp l a n s cha ra ct er is t i cally in

s ure t h e employee (or his s urvivo r) onl y . In cont ra s t , workers ’ com pens a t i on insura nce s h ields t h e ins ured ent e rpris e . When a nem ployer fa ils to s e cure wor k ers ’ compen s a t i on covera ge, or los e s coverage fo r nonpayment of premiu ms, an affected employee’s rem

edy would not lie in a suit f o r premiums t h at should ha ve been pa i d t o acompensa t i on ca rrier. Ins t ea d, employees who s u s t a i n workr e lated in ju r i es c o mmon l yhav e r e c o u r s e t o a state- m ai n tain e d fu n d or are authori z ed by state law to pursue the larger reco ve ries success

ful t o rtlitiga t i on ordina rily yields

. Furt her dis t a ncing workers ’ com pen s ationan dfr in g eben efits, n e ar lyall State s r e qu ir e employ er s to pa rt icipa t e in workers ’ co mpens a tion, wit hs u b s ta ntia l pena lt ies, even criminal liab ility, for failure to do s o . It is relevant, although not dispositiv e, that State s overwhe lmingly prescribe and regulate ins ura nce cov e ra ge for o n -t he-j ob a ccident s , while commonly lea v ing fr in g e ben efits to pr iv ate or der i n g .

Zuric h ’s a r g u mentt h a ta ccording it s cla i m a§5 07 (a)(5 ) priorit ywill give wo rkers’ compensation carriers a nince nt ive t o cont in ue co vera ge of a failing enterprise, thus promotin g rehabil i ta tion of the business, is unpers u a s ive. Ra t h er tha ns p ecula t i ng on how s uch ins ure rs mig h t r e ac t w e r e th eyto be g r an ted a §5 0 7 (a)(5) pr ior i ty , th e Cou r ti s guided b yt h e Ba nkrupt c y C o de’s obj e ct ive of s e cu ringeq ua l dis t rib u tion among creditors, see, e. g., Kothev. R. C. T a

y lor Tru s t, 280 U. S. 2 2 4 , 2 2 7 , an dbyth e c o r o ll ar ypr in c i ple th at pr efer e n c e pr ov ision s mus t b e tight l y cons t rued, s e e, e.g., id., at 227
. Caseslike Zuric h ’ sar e illu str ative. The Ba nkru pt cy Code c a ps th e amou nt rec overable for con

tr ib u ti o n s t oe m p l o y e eb e n e f i tp l a n s . O p e n i n g th e§ 507( a) (5) p r i o r i ty t o w o rk e r s ’ co mpe n s a t i o n carr ie rs c o uld s h rinkth ea m o u ntav a ilab l et o coverun paid c o ntrib u tion s t opla n s par a di g m ati c ally qu alifyi ng as w a g e4 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. Sy llabu s
s u rr o g a t e s , p r i m ar ilyp e n s i o na n d h e al th b e n e f i tp l a n s . Pp

. 5–16. 403 F. 3d 22 8, r e v e r s ed an d reman d ed.

G IN SB U R G , J., delivered the opinion of the Court, in which R OBERTS , C. J., and S TEVENS , S CALI A , T HOMAS , and B REYER , JJ., joined. K ENNEDY , J., filed a diss en tin g opinion, in which S OUTERan d ALITO , JJ., joined._________________

_________________ 1 Cite as: 54 7 U

. S. ____ (2006) Opinion of t h eCourt NOTICE: This op i n ion is subjec t to f o rma l revi si on bef o r e publicat ion in the p r eli m in ary p r in t of th e U n it edS t at es R e p o rts
. R e ad ers ar e r e qu es ted to n o tif yth e R e p o r t e rof D e c i s i on s , Su p r em e C o u r t of th e U n ited St at es , Wa s h

ington, D. C. 2054 3, of any typ o gra p hical or other f o rmal err o rs , in or der th atc o rr ect i on s m a y b e mad e b e f o r e th e p r e lim in aryp r in t go es t o p r es s . 

## SUPREME CO URT O F THE UNI TED STATES
No. 05–1 28 HOWAR D DELIV ERY SERV ICE, INC., ET AL ., PETITION ERS v. Z U R I CH AM ER ICAN IN S U RA NC E CO

. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL S FOR THE FOURTH CIRCUIT [Ju n e 15, 2006 ] J USTICE G IN S B UR Gdelivered the opinion of th e Court. The Bankr u ptcy Code accords a priority, a m ong unse cured credi tors’ claims, for unpaid “wages, salaries, or commission s,” 11 U. S. C. A. §507(a)(4)(A) (Supp. 2006 ), and for u n paid contributions to “an employee benef i t plan,” §507(a)(5). 1 It i s uncontested here tha t§507(a)(5) covers frin ge benefits t hat com p lete a pay package

— typically pe nsion plans , and group health, lif e, and disabil

-

——————

1 All references to provisions of the Bankruptcy Code use the current numb e ring. At t h e t i me res p ondentZurich America n Ins ura nce Com

pa ny (Zuric h ) cla i med priorit yt r ea tmentfor unpa i d workers ’ compen sation premiums, the relevant su bsections were numbered (a)(3) (wages) and (a)(4) (employe e benefi tpla n s )

. The Ba nkrupt c y Ab us e Pr ev en tionan d Con s u m erPr otec tionA c t of 20 05, P u b. L. 109 –8, §212( 2), 11 9 Sta t . 51, alte r e d th e pr ior i tylistso th a t(a)(3) bec a m e (a)(4), an d (a)(4) bec a me (a)( 5). Th e on ly oth e rstatu tor yc h a ng e r e le

v a n th e r e c o nc er n s th e doll aramou n tac c o r d ed pr ior i t ystatu s u n d er c u r r e n t§507( a)(4) an d ( a)(5 ). Wh enZ u r i chfiled it s pr o o f of c l aim, th e total su m al l o w e d u n d ert h ose tw o su b s ec tion s w a s $4,65 0 forea c h employee, see note followin g11 U. S. C. §104 (2000 ed., Supp. III ). Th at c e ilin gh a s s i n c e beenr a ised, pu r s u a n tto §1 04, t o $10,0 00 per employ ee, 11 U. S. C. A. §507(a)(5)(B)(i) ( S u pp. 2006).2 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. Opinion of t h eCourt ity insurance—whethe r unilaterally provided by an em

ployer or the result of collective bargaining. This case presents the questi o n whether the §507(a)(5) priority also encompasses claims f o r unpaid premiums on a polic y purchased by an employer to cover its worker s’ compensa

tion liabil i ty. We hol dthat premiums owed by an em

ployer to a workers ’ co mpensati on carrier do not fit withi n §507(a)(5). Workers’ compensation laws assure that workers will b e compensated for wor k -related injuries whether or not negligence of the employer contributed to the injury. To that extent , arrangements for the payment of compensa

tion awards might be typed “employee benefit plan[s].” On the other h and, statutorily pr escr ibed worker s’ compensa

tion regimes do not run exclusi v ely to the employees’ benefit. In this regard, theydiffer from privately ordered, employer-funded pension and welfa r e plans th at, together with wages , remunerate employ ees for services rendered. Employers, too, gain fro m work ers’ compensation prescrip

tions. In exchange for no-fault li ability, employers gain immunity from tort a ctions that might yield damages many time s higher th an awards payable under workers’ compensation schedules. Althoug hthe question is close, we conclude that premiums paid for workers’ compensa

tion insurance are more approp riately bra c keted wit h premiums paid for other liabilit y insurance, e.g ., motor vehicle, fire, or theft insurance, than with contributions made to secure employee retire ment, health, and disabili ty benefits. In holding that claims for wor k ers’ compensation insur

ance premiums do not qualify for §507(a)(5) priority, we are mindful that the Bankruptcy Code aims, in the main , to secure equal distribution among creditors. See Kothev. R

. C. Ta ylor Trust, 28 0 U. S. 22 4, 22 7 (1 93 0); Kue h n e r v. Irv i ng Trust C o ., 29 9 U. S. 4 4 5 , 4 51 (193 7). W e t a k e i n t o account, as well, the compleme ntary principle that prefer

-3 Cite as: 54 7 U

. S. ____ (2006) Opinion of t h eCourt ential treatment of a class of creditors is in order only when clearly authorized by Congress. See Na th a n sonv. NLRB , 3 44 U

. S

. 25 , 29( 1 9 5 2 ) ; Unite d Statesv. Embassy Restaurant, Inc

. , 35 9 U

. S

. 29 , 31 ( 1 95 9)

. I Petitioner Howar dDe livery Ser v ice, Inc. (Ho w ard), fo r many years owned and operated a freight tru cking busi

ness. Howard employed as many as 480 workers an d operated inabout a d o zen States. Each of those States required Howar dto maintainworkers’ compensation coverage to secure its employ ees’ receipt of health, disabil

ity, and death benefits in the event of on-the-job accidents. Howar dcontracted wi th Zurich t o provide this insurance for Howard’s operations in ten States. On January 30, 2002, Howard filed a Chapte r 11 bank

ruptcy petition. Zurichfile d an unsecured creditor’s claim in that proceeding, seek ing priority status for some $400,000 inunpaid workers’ compensation premiums. In an amended proof of claim, Zurich asserted that these unpaid pre m iums qualified as “[c]ontributions to an em

ployee benefit plan” entitled to pri o rity under §507(a)(5). App. 32a. 2 The Bankruptcy Court de nied priority status to Zurich’s cla i m, reasoni n g that the overdue premiums do not qualify as bargain ed-for benefits furnished in lieu of increased wages, hence they fall o u tside §507(a)(5)’s com

pass. App. to Pet. for Ce rt. 51a–57a. The District Court affirmed, similarly determining that unpaid workers ’ compensation premiu ms do n o t s hare the pri o rity provided for unpaid contributions to employee pension and health

——————

2 In its initial proof of claim, Zuri ch did not checkthe box marked “Con tr ibu t ion s to anemploy ee ben efit pla n ,” bu t in stea d c h e c k ed a box mar k ed “O th er ,” an d wr ote in“Admin istr ativ e Ex pe n s e—In su r a n c e Premiums .” App. 2 2 a , 3 0 a . Zuric hdoes nota r gue he r e t h a tt h e work

er s’ c o mpen sationpr emiu ms ow ed byHow a r dqu alifya s admin i s t r ativ e ex pen s es en titled to pr ior i ty u n d er§507(a)(2).4 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. Opinion of t h eCourt plans. Id., at 39a–50a. The Court of Appeals for the Fourth Cir c uit reversed 2 to 1 in a p e r cur i am o p inion. 403 F. 3d 228 (2005). The judges in t h e majority , however, disagreed on the ratio n ale. Judge King conclu ded that §507(a)(5) unambiguousl y accorded p r iority stat us to claims for unpaid worke r s’ compensation premiu ms. Id., at237. Judg e Shedd, con

curring in the judgment, found the §507(a)(5) phrase “employee b e nefit plan” ambiguous

. Looking to legislative history, he concluded that Co ngre ss likely intended to give past due work ers’ compensation premiums priority status. Id., at 238–239. In d i ssent, Jud ge Niemeyer, like Judge King, relied on the “pla in meaning” of §507(a) (5), but read the provision unequivocally to deny priority status to a n insurer’s claim for unpaid wo rke r s’ compensation premi

ums. Id., a t241–244. We gr ant ed certi o rari , 546 U

. S. ___ (2 005 ), t or e s o lv e a split among the Circuit s concerning the priority status of prem ium so w ed by a ba nkrupt emp l oy er to a work ers’c o m pen s ation c a rri er. C o mpare I nre Bi rm in gha m - N as h v il le Express, Inc

. , 2 24 F

. 3d 511 , 51 7 (CA6 20 00) (d enyi ng prior

ity status t ounpai d work ers’ compensati on pr emiu ms) , In re Southern St ar Foods, Inc. , 144F. 3d 71 2, 717(CA10 199 8) (same) , and In re HLM Corp. , 62 F. 3d 22 4, 2 26–227(CA 8 199 5) ( s a m e), with Employers Ins. of Wausau v. Plaid Pan

tries, Inc. , 1 0F. 3d 60 5, 60 7 (CA9 199 3) ( a ccor ding pri o rity statu s ), an d 403F. 3d, at 22 9 (c as e b e l o w) (sa m e)

. 3

——————

3 We ha ve j uris d ict i on of t h is ca s e , a s did the Courtof Appea l s , b e ca us e t h e Dis t rictCourt ’s ru ling q u a lifies a s afina l decis i on under 2 8 U. S. C. §158( d). See 40 3 F. 3d, at23 1, an d n

. 6 (D istr ic tCou r t ’s r u lin g effectively con c luded the dispute between Zuric hand Howard, for the a dvers e decis i on rende r ed Z urich ’s cla i m va lueles s a n d Zurich a greed t o w i th dr awth e c l aim if i tfai l e dto pr ev ail onappeal). See also In re Saco Local Deve lopment Corp. , 7 11 F. 2d 441, 444 (CA 1 1 983) ( m ajor i t y opinion of Breyer, J.) (“Co ngress ha s long provided that orders in ban kr u p tc y c a ses maybe immedi atelya ppealed if th eyfin a llydispose of dis c r e tedi s p uteswit h int he la rge r case—a nd in pa rt icula r , it ha s longCite as: 54 7 U

. S. ____ (2006) 5

Adjoining Opinion of t h eCourt II subsections of the Bankru ptcy Code , §507(a)(4) and (5), are centrally involved in this case. Subsections 507(a)(4) and (5) curre ntly provide : “(a) The following expe nses and cl aims have priority in the foll owing order:

. . . . . “(4) Fourth, allowed unsecured claims . . . for— “(A) wa ges, salaries, or commissions, including va

cation, severance, and sick leave pay earned b yan in

dividual . . . .

. . . . . “(5) Fifth, allowed un se cured claims for contribu

tions to an employee b e nefit plan— “(A) arisingfrom servic es rendered within 180 days before the date of the filing of the [bankruptcy] peti

tion or the date of the cessation o f the debtor’ s busi

ness, whichever occurs first

. . . .” 11 U. S. C. A. §507 (Supp. 2006 ). Two decisions of this Court, United States v. Embassy Restau ran t, Inc., 359 U. S. 29 (1959), and Joint Industry Bd. of Elec. Industry v. UnitedStates, 39 1 U. S. 224 (1968), prompted the enactment of §507(a)(5). Emba ssy Restau ran t concerned a provision of the 1898 Bankru ptcy Act that granted priority status to “wages” but said not h

ing of “emp loyee b e nef i ts plans ” or anything similar. 11 U. S. C. §104(a)(2) (1952 ed., Supp. V; repealed 1978). We held that a debtor’s u n paid contributions to a union wel

fare plan—which provided lif e insurance, week ly sick benefits, hospital and surgical benefits, and other adva n tages—did not quali f y within the priority for unpaid “wages.” 359 U. S., at 29–35. In Joint Indu stry Bd. , we

—————— pr ov ided th at or der s fin a ll ysettlin gc r e ditor s ’ c l aims ar e separ ately appeal able.”).6 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. Opinion of t h eCourt followed Embassy Res t auran tan d held that an employer’s bargained-for contributions to an employees’ annuity plan did not qualify as “wag e s” entitled to priority status. 391 U. S. , at 22 8–229. To provide a priority for fringe benef i ts of the kind at issu e i n Embassy Re staurant an d Joint Industry Bd. , Congress a dded what is now §50 7 (a)(5) when it amend e d the Bankruptcy Act in 1978. S e e H. R. Rep. No. 95– 59 5, p. 187 ( 197 7) (her eina f t er H. R. Rep.) ( e xplai n ing that t h e amendm entcovers “he a lth in sura nce programs, l i fe in

surance pla n s, pens ionfunds, andall oth e r f o rms of em ploye e com p ensati on t hat [are] no t in the for m of wages ” ); S

. R e p . No. 95–989, p. 69 (1978). Notably, Congress did not enlarge the “wa ges, salaries, [and] commissions” prior

ity, §507(a)(4), to include fringe benefits. Instead, Con

gress creat ed a new priority forsuch benefits, one st ep lower thanthe wage priority. T h e new pr ovision, cur

rently contained in §5 07(a)(5), all o ws the provider of an employee benefit plan to recover u n paid prem iums—albeit only after the employees’ claims for “wages, salaries, or commission s” have been paid. §507(a)(4). Beyond genuine debate, the main office of §5 07(a)(5) is to capture portions of employee c o mpensatio nfor services rendered not covered by §507(a)(4). Cf. Embass y Restau

rant, 35 9U. S. , at 35 ; JointIndustry Bd., 3 9 1 U

. S

. , at 22 8– 229 (both emphasizin g Congress’ prerogati v e in this re

gard). The currentCo de’s jux t apo s ition of the wages an d employee b e nefit plan priorities manifests Congress’ com

prehension that frin ge benefits generally complement, or “sub sti t u t e ” for, ho url y pa y. See H. R. Rep., a t 357 (noti n g “t he reali t i e s of l abo rcon t ra ctn e got i at ions, un derw h i c h wa ge dema nds are ofte n re du ced if adeq ua te fringe benefi ts are su bs titute d”); id. , at 1 87 (“[T]o ignore the reali t y of colle cti v e b a r g ain i n g t h at o f te n t r a d es wa ge dolla rs fo r frin ge be nef i ts doe s a se vere disse rvice to tho s e wo r k in g fo r a failin g en terprise.”); In reSa co L o ca l De v e lo pm en t Co r p . ,Cite as: 54 7 U

. S. ____ (2006) 7 Opinion of t h eCourt 711 F. 2d 4 41, 4 49 (CA1 198 3) (ma j ori t y o p inio n of Breye r , J.) (sub sti t u t ion o f fri n ge benefi ts for wa ges “can no rm all y be assumed, unless the emplo y er is a philanthropist”). Congress ti ghtened th e linkage of (a)(4) and(a)(5) b y imposing acombined cap on the two prioriti es, currently set at $10,000 per employee. See §507(a)(5)(B). 4Becaus e (a)(4) has a higher prio rity s t atus, all claims for wages a r e paid first, up to the $ 10,000 limi t ; claims u n der (a)(5) for contributions to empl oyee ben e fit plans can be recovered next up to the remaind e r of the $1 0,000 ceilin g. No other subsections of §507 are joined together by a common cap in this way. Putting aside the clue s provided by Embass y Restau

rant , Joint Industry Bd. , and the textual ties bindi n g §507(a)(4) and (5), we recognize that Congre ss left unde

fined the §507(a)(5) terms: “ contributions to an employee benefit plan

. . . arising from servi c es r e nder e dwithin 180 days before the date of the filing of the [bankruptcy] peti

tion.” (Emphases added.) Maint a ining that subsection (a)(5) covers more than wage substitutes of the kind at issue in Embassy Re stau rantan d Joint Industry Bd

. , Zurich urges the Court to borrow the encompassing defini

tion of employee benef i t plan contained in t h e Employe e

——————

4 Sec t ion507(a) (5)(B) pr ov ides:
“ ( a) The following expens es a n d cla i ms have priorit yin t h e following order:

. . . . .

“(5) Fifth , al low e d u n s ec ur ed c l aims forc o n t r ibu tion s to anemploy ee ben efit plan—

. . . . . “(B) foreac hs u c hplan , to the ex ten tof—
“ (i) t h e numb e r of employees covered b yeach s uch pla nmult iplied by $10,0 00; les s

“ (ii) t h e a ggre g a t e a m ountpa id t o s uch e m ployees under pa ra gra p h (4) of th is su b s ec tion , plu s th e ag gr eg ate amou n tpaid byth e estate on behalf of such employees to any ot her employee benefit plan.” 11 U. S. C. A. §507 (Su pp. 2006)

.8 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. Opinion of t h eCourt Retirement Income Security Act o f 1974 (ERI SA), 88 Sta t
. 829, as amended, 29 U. S. C. §1 001 et seq
. (2000 ed. an d Supp. III). See §1002( 1) (ter m “employee welfare benefi t plan” means, inter alia , “any plan, fund, or program [tha t provides] it s participa nts or thei r beneficiaries, through the purchase of in surance or othe rwise, .

. . b e nefits in t h e event of sickness, accident, disability, death or unemploy

ment”); §1002(3) (term “employee benefit pla n. . . mean s an employee welfare benefit plan or an employee pensio n benefit pla nor a planwhich is b o th an emp l oyee welfa r e benefit plan and an e m ployee pension benef i t plan”); cf. §1003(b)(3) (excluding plans “ma i ntained solely for th e purpose of c o mplying w i th applicab le work[ers’] compensa

tion laws or unemployment com p ensation or disabilit y insurance laws”). Th e dissent endorses this borrowing

. See post , at 8–9. Fede ralco u r t s h ave qu estione d wh ethe r E R IS A is a p p r o pri a tel y use dto fill in blan ks in aBan k ru ptcy Co de pro vi

s i o n , an d th ep a n e lb e l o w p a r t ed w a y s on t h is i s s u e . S ee 403 F. 3 d , at 23 5, n
. 9 (Ki n g, J., con c u rri n g in ju dgmen t) (“ decli n [i ng] to rel y up on the E R I S A defi niti on”) ; id. , at 239–2 41 (Shedd, J., co ncu r rin g in judgmen t) (rea din g legi s lati ve histo r y to i n di ca t eth atCo ngress i n te nde d “ ‘ e mp l o y ee benefi t pla n ’ in the b a n k ruptcy prio ri ty pro vision to h ave the same m e anin g th at[the te rm ] has in E R I S A” ); id. , at 245 (Nie me yer, J., dis s enti ng) (m aintainin g tha t ERISA defini tionis ina p t inBan k rupt cyCode p rio ri t y con t e xt) ; c f

. Bi rm in gh a m -N as h v il le Exp ress, 224 F. 3 d , at 516–5 17 (noting division of opinion bu t co nclu din g th at de cisio n s reje c t in g i n cor p o r a t ionof ERI SA’ s “ e mploy e e benefit plan” defini tion i n to §50 7 (a) ( 5) “h a[ve ] the be tte r of the a r gu ment”); HLM Corp., 62 F. 3 d , a t2 26 (“[T]he ERI SA de fi ni

tion andas socia t e dco u r tgu idel ine s we re desi gne d to ef fe c tuate the purpose of ERI SA, not t h e Bankrupt cy Code.” (inte r n a l qu ota t ion ma rks omi tte d)); Sou t h e rn Sta r Foods , 144 F. 3 d , at 7 14 (s a m e). Com p a r e Brief for Ame ri c an9 Cite as: 54 7 U

. S. ____ (2006) Opinion of t h eCourt Home Assu ran c e Com p an y e t al. as Amic iCu r i ae1 7–2 5 (legi s la tive histo r y su g g es ts Con gr e ss inte nde dto i n co r p o ra te ERI S A defi nit i on) , wi thB rie f for Na tio n a lCoo r d i na t

ing Co mmi ttee for Mul t iem p lo yer Plans as Ami c u sC u r i a e 22–27 , a n d n. 21 (le gisl a ti ve hi sto r y s u gges ts Con gress di d not i n te nd to inco rporate ERI SA definitio n). ERISA’s omnibus defini tion does sh ow, at least, that the term “employee welfare benefit pl an” is susceptible of a constructio nthat wo uld include workers ’ compensation plans. That Act’s signals are mixed, however, for 29 U. S. C. §1 003(b)(3) specifically exempts from ERISA’s coverage the genre of plan here at issue, i.e. , one “main

tained solely for the pu rpose of complying with applicabl e work[ers ’] c o mpensation laws.” 5 The §1003(b) (3) exemp

tion strengthens our resistance to Zurich’s argument. W e follow the lead of an earlier decision, U n ite d Statesv. Re organ ized CF&I Fa bri c at ors o f Ut a h, Inc

. , 5 1 8U. S. 21 3, 219 (1 99 6), in no ti n g tha t“[h]e r e a n d t h e r e i n t h e B a n k

ruptc y Cod e Congress has included specific di rections tha t establish t h e significance for bankrup tcy l a w of a ter m used elsew h ere in the federal statutes.” Id., at 219–220. No such directions are containedin §507(a) (5), and we have no warrant to w r i t e them into the text. This case turns, we h o ld, not on a definition borrowed from a statute designed without bankruptcy i nmind, bu t on the essential character of workers’ com p ensation re

gimes. Unlike pension provis ions or group life, healt h , and disability insuran c e plans—n egotiated or granted a s pay sup p lements or s ubstitutes—wor k ers’ compensation

——————

5 Congres s a l s o excluded mo s tworkers ’ co mpens a tion b e nefit s from th e pu rv iewof th e D a v i s-Bac o nAc t, 40 U. S. C. §3141 (2) (2000 ed., Supp. III), a measure that fixes a floor under wages on Government p r oj e c t s . TheD a v i s - B a c o n Ac tincor p or ates “bo n a fide f ring ebene fits, ” b r oadly defi ned, i n to prev aili ng w a g edetermi n ati on s, butspecifi c ally excludesbenefitscon tr a c t or s ar e r e qu ir ed t oprovi d e un derfeder al , s tate, or loc a l law. §3141 (2)(B)

.10 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. Opinion of t h eCourt prescription s have a dominant employer-oriented thrus t : They modify, or substitute for, th e common-l a w t o r t l i abi l

it y to w h ic hemploye r s we re ex pose d for wo r k

- r elate dac ci

dents. See 6 A. Larson & L. Larso n , Wo rk e r s’ Com p ensa tion Law §1 00.01 [1], pp. 100–2 to 100–3 (2 005 ) (herein a fte r La rson & L a rson); 4 J. Lee & B. Li nda h l, Mo d e rn To rt La w: Liabili ty an d Liti gatio n§43:25, pp. 43– 45 to 4 3–46 (2 d e d

. 2003 ). As typi ca lly explained: “The invention of workers compe n sation as it has existed in this country since about 1910 in volves a classic social trade-off or, to use a Latin term , a quid pro quo . . . . What is given to the injured employee i s the right to receive certain limitedbenefits regardless of fault, that is, even in cases in which the employee is partially or entirely at fault, or when there is no fault on an yone ’s pa rt. Wh at is ta ke n a w a y is the e m ployee ’s r i gh t to re co v e r f u ll to rt da ma ges, inclu din g dam a ge s for pain an d s u ffe rin g , in cases i nwhi c h there is fault on the em plo y er’s part.” P. Le ncsis, Work e r s Com p ensation: A Re fe rence and Guide 9 (1998) (here

inafter Le ncsis). Workers’ co mpensation regi mes thus provide something for employees—they assure limit ed fixed pa yments for onthe-job inj u ries—and somethin g for em ployers—they remove the risk of large judgments and heavy costs gener ated by tort litigation. See 6 Larson & Larson§100.03[1], at 100–11 (“[Workers’ compensation] relieves t h e employer not only of common-la w tort liabil i ty, but also of statutor y liability un der virtually all state statutes, as well as of liability incontract and in admi ralt y, for an inj u ry covered by the compensation act.” (footnote omitted)); Lubove, Work men’ s Compensation and the Prerogatives of Volun

tarism, 8 Lab. Hist. 254, 258–262 (Fall 1967) (workers’ compensation progra ms were a d opted by nearly every State in large part because employers anticipated signifi

-11 Cite as: 54 7 U

. S. ____ (2006) Opinion of t h eCourt cant benefits from the progra ms; other progra ms workers ’ groups sought to make mandatory—notably, health insu r ance—were not similarly embrac ed). No such tradeoff is involved in fringe benef i t plans that augment each covered worker ’s hourly pay. 6 Employer-sponsored pensionplan s, and group health or life in surance plans, characteri stically ins u re the em

ployee (or his survivor) only. In contrast, workers ’ co m pensation insurance, in common with other l i ability insur

ance in this regard, e.g . , fire, th eft, and motor vehicle insurance, shield the insured enterprise: Workers’ com

pensation policies b o th prote ct the employer-policyholder from liabilit y in tort, a n d cove r its obligation to pay work

ers’ compe n sation benefits. See In re H LM Corp. , 1 65 B. R. 38, 41 (Bkrtcy. Ct. Minn. 199 4). When a nemployer fails to secure wor k er s’ compensation coverage, or loses coverage for nonpayment of premiums, an affected em

ployee’s remedy woul d not lie in a suit for premiums that should have been paid to a compe n sation carrier. Instead, employees who sustain work -related injuries would com

monly have recourse to a state-maintained fund. See, e.g., Minn. Stat. §176.183, subd. 1 (20 04); N. Y. Work. Comp. Law Ann. §26–a (Wes t Supp. 2006). Or, i nlieuof the limited ben e fits obtain able from astate fund under work

ers’ compensation schedules, the injured employee might

——————

6 Providin g hea l t hca re t o workers fos t ers a hea l t h y a n d ha ppy work

force, a n d a cont ent e d workforce b e nefi t s employers

. The dis s e n t s u gges t s t h is a s areas on t o ra nk worke r s ’ compens a t i on ins ura nce wit h hea l t ha n d pens ion pla n s for b a n krupt c y priorit ypurpo s es . S e e post , at 5. Bu t th e be n efit employ er s g a infr om p r ov idin gh e althan d pen s ion plans for their employees is of a second ary orde r; i n deed, unde rthe dis s e nt ’s logic, wa ges could b e s a id t o “b e nefit” t h e employer b e ca us e they ensure t h at employees come to work , can afford transportation to the job site, etc. These benefits redo und to the employe rreflexively, as a c o n s equ e n c eof th e ben efit to th e employee. Wo rkers’ compensation ins ura nce, b y cont ra s t , direc t ly b e nefit s ins ured employers b yelimina t

ing t h eir t o rtl i ab i lit y for wo rkpla c e a ccide nt s .12 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. Opinion of t h eCourt be authorized to pursue the larger recoveries successful tort litigati o n ordinarily yields. See, e.g., id. , §11 (West 2005); W. Va. Code §23 –2–8 (Lexis 2005); Lencsis 67. Fu rt her dis t an cin g wo r k e r s ’ co mpe n sat i on a r r a nge m en t s from b a rgai ned-for o rvoluntaril y a cco rded frin ge b e n e f i t s , nearly all S t ates, with limited exceptions, req u ire employ

ers to participate in their work ers’ compensation systems

. See, e.g., Ill. Comp. Stat., ch. 82 0, §305/4 (West 2004); Minn. Stat. §176.181, s ubd. 2 (2004); U. S. De pt. of Labor, Office of Work ers’ Compensation, State Workers’ Compen

sation Laws, Table 1: Type of Law and In surance Re

quirements for Priva t e Employment (2005), available at http://www. dol.gov/esa/r e gs/statutes/owcp/stwclaw/tables-pdf/ table1.pdf (as visited J une 13, 200 6, and avail able inCler k o f C o u r t ’ s cas efile). An emp l oy er who fail s t osec u re th e mandat ory cover a ge issubj ect t os ubst anti a l p e nalties, ev en crimi nal li ab ility. We do n o t sug g est, as the dissent hy

poth es iz es , se e post , at 6–7, that a comp en sation carri er would gain §507(a)(5) p riori ty fo r unpaid pr emiums in Stat es where w o rk ers’c o mp en sati on c o v e r a ge i s el ective. Nor do we sugge st th at wage surrogat es or s u ppl em ent s , e.g., pension and h e al thben e f i ts p l an s, would lose protection und er §50 7 (a)(5 ) if a State were to m a n d ate th em. We simp ly count it a factor rel e vant t o our ass e s s ment that St ates overwh e l mi ngly pr escrib e and regu lat einsur ance cov e rage for on-th e -j ob acc i dent s, whil ecommonly l e aving pens ion, heal th , a n d lif e in sur anc e p l an s t oprivate orderi ng. 7

——————

7 Saco Local De velopment Cor p . , 711 F. 2d, at 4 48– 44 9, w e n o te, is n o t a todds wit hour co nclus ion t h a tunp aid w o rkers’ compe n sation premi

u m s do n o t qu alifyforpr ior i tystatu s. Th e Fir s t Cir c u it h e ld in Saco th at a g r ou p life, h e alth , an d disabil i t yin su r a nc e planfit w i th in §507( a)(5), th ou g hth e ben efi t pac k ag e w a s u n ilater a llypr ov ided byth e employer, a n d notins t a lled purs ua ntto collective bargaining. Wag e s urroga t e s , t h en-J udge Bre y er e x pla i ned, need notb enegot i a t e d t o qu alifyu n d er §507( a)(5) a s “employ e e b e n e fit plan s,” for“Con g r es s’ objec tinen ac tin g[th at su b s ec tion ] w a s t o ex ten dth e 1 898 Ac t’s w a g e priorit yt o new forms of compens a tion, s uch a s ins ura nce a n d ot her13 Cite as: 54 7 U

. S. ____ (2006) Opinion of t h eCourt We note th a twhe nthe Fou r t hCi rc uit co nf ron t ed a clai m for wo rk e r s’ com p ensation prem i u ms o w ed no t to a pri v a t e insu rer bu t to a s t a t e f u nd, th at cou r t ra n k ed th e pre m ium s as “e xci s e t a xes ” qua lif yin g fo r ba nkru p t c y p r iori ty u n de r wh at is no w §50 7 (a)(8 )(E). See N e w N e i

gh b o rhoods, In c. v. We stVirg inia W o rk ers’ Comp. Fund , 8 86 F. 2d 7 14, 71 8– 720 (1 989 ). 8 See also I n reS u bu rb an Mo to r F re i gh t, In c. , 998 F. 2d 3 38, 3 42 (CA6 1993 ) (“Where a State ‘com pel[s] the payme n t’ of ‘ i nvoluntary e x a c ti ons, re ga rdl e ss of name ,’ a n d wh e r e s u chpa ym en tis u n iv ers a l l yap p l icab l e t os i mi

larly situated persons or firm s, these payments are taxe s forbankr uptcy pur p oses.” (quoting New Ne ighborhoods , 886 F. 2 d , at 718–71 9 (alte r a t ionand ci ta tio n s omitted in ori ginal))) ; LeRo y et al ., Work e r s’Com p ensation in Bank

r u p tcy : H o wD ot h e Pa rt i e s F a r e ? 2 4T o rt& In s . L

. J. 593, 623–6 24 (1 989) (describ ing di sa greement am ong cou r ts o n w h et h e rpa y m en ts t o s t a t e- ru n w o rk er s’c o mp e n s a t i o n fun d s quali f y as excise taxes un de r §507(a)(8)). We expre s s n ovi ewont h e § 5 07 ( a)( 8) ( E ) is s u epr e s en t e di n New Neighbo rho ods

. We venture only this obse rvation: I tis c o mmon for Congr e ss to pr efer G o v e rnment cr edit or s ov er private cre dito r s, see Bi rm in gh a m -N as h v il le Exp ress , 22 4 F. 3 d , a t5 17–51 8; i t woul d be a n omalou s, howe ve r, to advan c e Z u rich ’ s claim to le vel (a)(5) whi l e le avin g state

fun d cre di to rs a tle vel( a)(8 ). Zuri c ha r gu es th at accordi n g its claim a n(a)(5) prio ri ty will gi ve workers’ com p ensa tion carriers an incen t i v e to

—————— fringe benefits.” Id. , at 449. Saco did notinvolve wo rk ers ’ compens a t i on regimes , a n d t h e Firs tCircuitexpres s e d no opinionon t h em.

8 Th e state fu nd in New Neighb orhoods , it appear s, did n o t u r g e th at c l aims foru n p aid w o r k er s’ c o mpen satio npr emiu ms qu alifyforth e higher (a)(5 ) priorit y . The Fourt h Circui t ’ s opinion in t h a tcas e , how

ev er , su gg ests th at th e c o u r t a ssu med a pr iv ate c o mpe n sationc a r r i er w o u l d be ac c o r d ed n o pr ior i ty
. See 886 F. 2d, at 720 (u n d er c o u r t ’s h o ldin g , “a sta t e ag en c yis g iv e n , as anin s u r e r, pr ior i ty inban kr u p tc y when ap r iva t e ins ureris no t” )

.14 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. Opinion of t h eCourt
con t inue co vera ge of afailin g enterprise , thu s promo t i n g rehabilitati o n of the b u siness

. It may be do u b te d wheth e r the proj ecte d ince ntive would ou tweigh com p eting fi nan c ia l pres su re to pull the p l ug s w i f tly on an insolvent policy

holde r , and the r eb y co ntai n pote n t ial lo sses. An ins u re r unde r ta kes to pa y the s c he dule d be nefit s to wo r k er s inj u re d on the job while the policy is in effe ct. In the case of serious inju ries, ho we ver , bene fits m a y re main p a y ab l e yea r s af t e r termination of cove rage . See 1 Larson & Larson §§10.02– 10.03 , at 10 –3 to 10 –7; Lencsis 51 –52. While can c ella tio n relie ves the insu re r fro mre spon sibility for fu tu re in ju rie s , the insure r cannot escape the ob li g a tion to con t inue pa yin g benefi ts for endu ri ng mala dies or di s ab i l i t i e s , eve nthough no premiums are paid by th e forme rpolicyholder. An insu rer wo u l d li kel y we igh i nt h e b a lan c e t h e r i sk o f in cu r rin g f

r esh o b lig atio ns o f long du ra tion we re itto co nti n u e insu rin g e m plo y er s u n able to pa y c u r r en tl yfor cove ra ge . Tha tco nsi d era t ion mi ght well be controllin g e v en wi th a n assu ran c e o f p riori t y s t atus , fo r there is no guarantee that cre di tor s a c cor d e dpre f erre d posi ti ons will in fac t be pai d

. See Tr. of Oral Arg. 3 1–32 (“[A]s soon as the y smell ba n k

ru pt c y , the y ’re goin g to pull the pl u g an y w a y . ” (S CALIA , J.)); LeRo y, su p r a , a t596 (noting “ge n eral reluctance o n the pa rt of pri v ate insu re rs to pro vi d e debto r s wi th the nece s sary Work er s’ Compensat i on c o v e r a g e ”). Rathe rthan speculating on ho w wo rk ers’ co mpensatio n insu rers mi gh t rea c twe re the y to be gr a n t e d a n(a) ( 5 ) prio ri t y , we are gu ide din re ac hi ng ou r de c i sion b y th e equal distributio n objective underl yi ng t h e Bank ruptcy Code , an d the co rolla ry pri n ciple that p r ovisio ns allo win g p r ef e r en c e s m u s t b eti gh t l y c o n s t r u e d. S e e Kothe, 280 U. S., a t22 7 (“The bro a d pu rp ose of the Bankruptcy Act i s to bri n g ab out an eq ui table dis t ributio nof the ban kru p t’s est a t e. . . .”) ; Na th an so n, 34 4 U. S., a t29 (“The th eme of theB a n k r u p t c y Ac t i s ‘e qua li t y o f dis t ribu ti on ’, .

. . a n d if one claimant is to be prefer r e d o v eroth e r s , th epurp os e15 Cite as: 54 7 U

. S. ____ (2006) Opinion of t h eCourt
s h o u ldb e c l earfr omth e st at ut e.”(qu o ti ng Sa mpse ll v. Imperial Paper & Color Corp., 31 3 U. S. 21 5, 2 19 (1 94 1))); H. R. Rep., at 186; 2 Collier Bankruptcy Manual ¶507.01 , p. 507–4 (rev. 3d ed. 2005) (“[P]riorities under the Code are to be narrowly construed.”). Everyclai m gran ted priority s t a t us reduces the funds available to general unsecured cre ditors and may diminish the recovery of other claim ants qualifying for equalor lesser priorities. See Join t I ndu stry Bd ., 3 91 U. S., a t22 8– 229
. “ To give p rio ri t y to a cl ai m a n tno t c l e a rl y en ti tle d the r eto is not only inco nsiste nt w i th the policy of equality o f di strib u ti o n ; i tdi lu te sth e v a l u e of th e p ri o ri ty f

o rth o s e cr edit or s Co ngre s sinte n d e d t opr ef er .” In re M a m m o t h Mart, Inc. , 536 F. 2 d9 50, 9 53 (CA1 197 6). Cases li ke Z u ri ch ’s a r e i llus t ra t ive. The B a n k ru p t c y C o de ca ps t h e a m ou ntr e co v e rab l e f o r co ntributi on st o em plo y e e be n e f i t pla n s . See su p ra , at6–7. Opening the (a)(5) priori ty to wo r k e r s ’co mpe n s a tionca r rie rs co uld sh ri n kthe amo u n t av ail ab l e t oco ve r u n p aid co n t rib u t i on s t op l an s p a ra di g ma ti ca ll y q uali f yi n g as wa ge su rro g ate s , prim e amo n g the m , pen s io n an d he al thbe ne fi t pl ans . 9 In sum, we find it far from clear that an employer’ s liability to provide workers’ compe n sation coverage fits the §507(a)(5) category “co ntributions to an employee benef i t plan

. . . a ri s ing f r om s e rvices re ndered.” Wei ghing a g ai ns t suc hcate go riz a tio n , wo r k er s’ co mp ensat i on do es not co m pensate em ployee s for wo rkpe rf o r med, bu t in stea d, f o r o n the-job injuries incurred; wo rkers ’ compensation regimes substitute not for wa ge paym en ts, but for tort liability. Any doubt concerning the appr opri ate charact e rization, we conclude, is best res o lved inaccor dwith the Bankru ptc y Code’s equ a l distribution aim. We therefore reject the

——————

9 The di s s e n ting op in ionnow h e re h o me s in o nth e re a l i ty th a t inc luding amou nts ow edto w o rk er s’ c o mpen sationc a rrier s r i sk s di minishing fu n d s av ailable t oc o ver contr ib u tions to workers’ pen s ion a n d healthc are pla n s.16 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. Opinion of t h eCourt expanded interpretati on Zurich invites. Unless and until Congress otherwise directs, we hold that ca r r iers’ claim s for unpaid workers ’ co mpensation premiums remain out

side the priority allowed by §507(a)(5). * * * For the re asons stated, the judgment of the United States Court of Appeals for th e Fourth Circuit is reversed, and the case is remanded for furt her proceedings consis

tent with th is opinion. It is so orde red._________________

_________________ 1 Cite as: 54 7 U

. S. ____ (2006) K ENNEDY , J., d i ssenting 

## SUPREME CO URT O F THE UNI TED STATES
No. 05–1 28 HOWAR D DELIV ERY SERV ICE, INC., ET AL ., PETITION ERS v. Z U R I CH AM ER ICAN IN S U RA NC E CO

. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL S FOR THE FOURTH CIRCUIT [Ju n e 15, 2006 ] J USTICE K ENNEDY , w i th whom J USTICE S OUTERand J USTICE ALI T O join, dissenting. The Court of Appeals for the Fourth Circuitheld tha t payments for workers’ compen sation coverage are “contri

butions to an employee benef i t pl an . . . arisi n g from ser

vices rendered.” 11 U. S. C. A. §507(a)(5) (Supp. 2006). In reversing t hat jud g ment the Cour t’s opinion relies on the premise that “statuto rily prescri bed worker s’ compensa

tion regimes do not run exclusi v ely to the employees’ benefit.” An t e, a t2. This rationale, however, does not suffice to justify the Court’s ho lding. It does not accord, moreover, with the text or purpose of th e bankruptcy priority def i ned in §507(a)(5). These are the main point s of this respectful dissenting opinion. I Before commencing a more detailed discussion of the central issue, certain preliminary matters must be ad

dressed. To begin with, th e Court states a background rule of construction t hat, when we interpr e t the Bank

ruptc yCod e , “provisions allowing preferenc e s must be tightly cons trued.” Ante, at 14. T h e Court li nks this rule with a general objective in the Code for equaldistribution. Ibid

. That objective, it is true, i s ack n owledged by our2 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. K ENNEDY , J., d i ssenting precedents, and we ha ve said tha ta Code provision must indicate a clear purpose to prefer one claim o v er another before apriority will b e found. See Na th an sonv. NLRB, 344 U. S. 2 5 , 29 (1 95 2 )

. This is di ffe re n t , thou gh, fro m est ab lis hin g an in te rp r e tive p rin ci ple of s t ri c tcons t r u c t i o n when the Code addresses prio ri t i es , fo r s t ri c t co ns t ru c tio n ca n be in te nsio n wi th the obje ctiv e of “eq ual ity of dis t rib u ti onfo r s i mi l a r cr edit ors . ” Small BusinessAdministration v. McCle llan, 36 4 U. S. 446 , 45 2 (196 0). Theban kru p tcy prio ri tie s , then , sh oul d not be re ad sim p l y to give prio ri tie s to a sfe w c r e di to rs as p o ssib le. Th ey s h o u l db ein te rp re te d in a c co r dwi t ht h e p ri n c i p l e of equal treatment o f lik e claims. I nany event the prio ri ty pro vis ion ss h oul dno t b e r e ad so narrowly as t oconflic twi ththe i r pl ainmea n in g . In accord w i th these principles the Court does not seem to dispute that the pa yments at issue here are “contribu

tions” that “aris[e] from serv ices rendered,” §507(a)(5). There seems little doubt that both these statutory re quirements are met. Petitioner Howar dDelivery Servi c e, Inc. (Howa r d), argues that a contribution must be volun

tary; and itsays tha t because the wor k ers’ c o mpensation payments in this cas e are man d atory, the ycannot be contributions. In some situations—for example, in di s cussing charitable contributions—it is pos s ible to rea d “contributions” as Howard sugge sts. See Web s ter’s Third New Intern ational Dictionary 496 (1971) (defining “contri

bution” as “a sum or thing volun t arily contributed”). I n the context of employer payments, however, the volun

tariness requirement does not accord with the usual meaning of the word. See ibid. (defining “contribution” alternatively as “a su m paid by an employer to an unem

ployment or group-insurance fund”). Many federal stat

utes and this Court’s own cases expressly refer to “manda

tory contr i butions” when discussing payments b y employers and em ployees. See, e.g., 26 U. S. C. §411(a)(3)(D); 29 U. S. C. §1053(a)(3)(D); §1054(c)(2)(C);3 Cite as: 54 7 U

. S. ____ (2006) K ENNEDY , J., d i ssenting §1344; H u

ghesAircraft Co. v. Ja cob s on, 52 5 U. S. 43 2, 43 5 ( 1 99 9) ; Ge nera l Bu ildi ng C o nt ractorsAs sn., Inc

. v. Penns y l

va ni a, 45 8 U. S. 3 7 5 , 3 94 (198 2); U n ite d Statesv. Lee, 45 5 U. S. 2 5 2 , 2 58 (1 98 2). Eve nfo r pe nsio n an d h e al th be ne fi t p l an s, wh ich und en iably f

a l lw i th inth e §50 7 (a)( 5) pri o ri ty , th e p a y m ent sar e ra rely if evervo lu nt ary i nth e c h arit ab le sense that H o ward invokes. Th e m a ndat ory n a t u r eof mo s t wo r k e r s ’co mpe n s a tion co ve ra g e , th en, f a il s t oe s t abl ish t h a t the pa ymen ts a r eno t co ntribu ti ons . Howar d ’s argument that the workers ’ c o mpensation payments here do not “aris[e] f r om servic es rendered,” §507(a)(5), i s also unpersuasive. T h is phrase, according to Howar d , do es not cover payments to insurance companies because those payments are made in exchange for the services of the insurance company, not the se rvices of the employees. The Cou rt seems to accept that insurance payments c an receive the priority, see ante, at 5–6, 9, and this is part of the statute’ s necessary operation. Even if the payments may go to the insurance company, they are predicated nonethele ss on the employee s’ performing services for the empl o y er. They therefore “aris[e] from services rendered” in the same manner as do payments to a pension, health, or disability plan. From a practica l standpoint, moreover, “[t]o allow the insurer to obtain its premiums through the priority would seem the surest wa y to provide the employees with the policy benefits to which they are e n titled.” I n re Sa co Local Dev el opment Cor p . , 711 F. 2d 441, 449 ( CA1 1983) (majority opinionb y Breyer, J.). II The question that rem a ins—and my main point of dis

agreement with the C o urt—is wh ether workers’ compen

sation insu rance qualifies as an “employee b e nefit plan. ” The answer , one would think, dep e nds on wh ether wor k

ers’ compensation plans provide benefits to employees. It4 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. K ENNEDY , J., d i ssenting is clear that they do, as the employer’s contributions en

able the insurer to giv e out substantial payments to em

ployees. Even assuming that the be nefit the employer provide s must be a net benefit, this condition is easilysatisfied. It is true that, in return f o r receivingwor k ers’ co mpensation, employees give up some of the common-law tort remed i es they otherwise could have pursued. See an te, at 9–11
. The common-law reme dies, though, typi cally required t h e employer to be at fault; and they were furthe rlimited by the defens es of contributory negligence, assumption of risk, and th e fellow-serv ant doc tri ne. See 1 A

. Larson & L. Larson, Workers’ Com p ensation Law §2.03 (2005). As a result, only a small per c entage of injured wor k ers received any recover y . Ibid. Work ers’ compensation plans, eve n considering the tort claims re linq u ished, thu s are gener ally a benefit to employees. See id., §2.03, at 2–6 (noting the “helplessness which character i zed the position of the injured work er of the precompe nsation era”). Even where an employe e might have received greater damages in a tort suit, t h e greater speed and certainty of payment i n workers ’ co mpensation is often worth the tr ade-off. In many State s , moreover , the emplo y ee has a c h oice to opt out of the work ers’ co mpensationsystem, leaving him o r her with tr aditional tort remedies. See, e.g., Ariz. Rev. Stat. Ann. §23–906 (West 1995); Cal. Lab. Code Ann

. §4154 (Wes t 2003); Ky. Rev. Stat. Ann. §34 2 .395 (Wes t 2005); Mas s . Gen. Laws, ch. 152, §24 (West 2005); N. D. Cent. Code Ann. §65–07.1–03 (Lexis 2003); Pa. Stat. Ann. Tit. 77, §1402(b) (Purdon 2002); R. I. Gen. Laws §28–29– 17 (Supp. 2005). Wh en the employee chooses workers’ compensation, it plain l y should b e considere da benefit

. For these reasons, workers’ comp ensation plans, on the whole, are a benefit to employees; and indeed, the Court does not su ggest otherwise. Instead, the Court holds that wor k ers’ compe n sation is5 Cite as: 54 7 U

. S. ____ (2006) K ENNEDY , J., d i ssenting not an “employee benefit plan” largely because it al so benefits em ployers. An te, at 10–11. The text of the st at

ute does not refer to whether the plan benefits employers, nor would it make sense to do so. Since the goal of the priority is to protect the benefits of employees, there i s little reason to suppose that employees should lose that protection based on the additional fact that employers may gain something as well. Employers ra rely make large payments to employee funds out of altruism, and surely the Court should not hold t hat employee bene fits provide no benefit to the employer. In the case of health benefits, for example, the empl oyer may receive tax break s , good will, a healthy work fo rce, and th e leverage to pay lower wages. Wo rkers’ compensation cannot be distinguished on this basis f r om pension, health, or disability plans, all of which the C o urt recogni z es as covered by the pr iority. The Court’s three ot her bases for treatin g wor k ers ’ compensation differently also find no support in the Bank

ruptc yCod e . First, t h e Court maintains, based on the purpose and structu re of the “employee benefit plan” priority in relation to the wage p r iority of §5 07(a)(4), th at only wage substitutes are covere d. Ante, a t5–7. Eve n assuming this proposition were correct, it would not lead to the Cour t’s conclusi on. That is because workers ’ co m pensation plans, as a matter of economic realities, a r e wage subst i tutes. Th e Court ma de this pre c ise point in one of th e f i rst cases a ddressing a work ers’ compensation scheme: “[J]ust as the employee’ s assumption of ordinary risks at common law presumably was takeninto account in fixing the rate of wages, so the fixed responsibility of the employer, and the modified as sumption of riskby the employee u n der the n e w system, presumably will be re

flected in the wage scale.” New York Ce ntral R. Co. v. White, 24 3 U. S. 1 88, 201– 2 02 (191 7). Re cent e m pi ri cal studies con f irm tha tem plo y e r s pa ss on the co st of wo rk e r s’ co mpe n sation to emplo y ee s in th e form of lo we r wage s. Se e6 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. K ENNEDY , J., d i ssenting Fishback & Kantor, Di d Workers Pay for the Passage of Workers’ Compensation Laws? 1 10 Quarterly Journal of Econ. 713 (1995); Gru ber & Kru eger, The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers’ Compensation Insurance, 5 Tax Policy and the Economy 111 (D. Bra d ford ed. 1991); Viscusi & Moore, Workers’ Compensation: Wage Effects, Benefit Inadequa

cies, and the Value of Health Losses, 69 Review of Econ. and Stats. 2 49 (1987). Second, the mandatory nature of most worke r s’ compen

sation plan s does not c hange the a pplicability of the prior

ity. The b e nefit to employees is real and s i gnificant re

gardless of whether the government has mandated the benefit. While States genera lly “prescribe and regulate ” workers ’ co mpensation and leave other benefits “to privat e ordering,” ante, a t12, the presence of barga ining has no bearing on whether contributions should rec e ive priority. See Saco, 71 1 F. 2d, at 448–449. Indeed, it is difficult to imagine that if Sta t es began to mandate other kinds of benefits, those benef i ts would promptly fall outside §507(a)(5). This woul d amount to saying that whenever some form of protection for employees comes to be acceptedas so necessary for their welfare that it i s mandated as an empl oyer respon sibility it is no longer a benefit. While the Court says the general practice among the States of mak i ng workers’ compensation man d atory is just one factor in the anal ysis, ante, at 12, presumably the Court does not suggestthat an optional workers’ compen

sation scheme is an “employee b e nefit plan” simply b e cause other States have mand atory schemes. Assuming, then, that a given optional workers ’ compensation scheme might receive the priority, the Court’s approach will create uncertaintyabout appl ication of t h e priority to the rele

vant payme n ts. Only a few States have wholly permissive regimes, see, e.g., Tex. Lab. Code Ann. §406.002 (Wes t7 Cite as: 54 7 U

. S. ____ (2006) K ENNEDY , J., d i ssenting 2006), but many mo re offer exemptions for particul a r k i nds of e m ployers, see, e.g., Te nn. Code Ann. §50–6– 106(5) (2005); Mich. Comp. Laws §418.118(2) (1981). No t only will a pplication of the prio rity depend on va ryi n g state laws, but also multistate workers ’ co mpensation plans may have to be s e gmented f o r purposes of determi n ing bankru ptcy priorities. There is nothing i n§507(a)(5 ) to suggest an intent to cause this kind of disuniformity. Third, the existence of state funds to compe n sate em

ployees when their e m ployers fail to provide work ers’ compensation benef i ts has little relevance. Once again, i t is unclear how much weight th e Court places on this factor, and it seems doubtful that the Court would remov e health plans from the priority simply because a State created a fallback pu blic health system. In any event state fallba c k funds do not chan ge the fact that the em

ployer is providing a benefit; a fal l back fund simply indi

cates the e m ployee could have re ceived the benefit from somewhere els e . Wer e it otherwi se, pensi o nplans would also fall outside the p r iority, sinc e it appear s they mus t provide benefits even if the employer has defaulted on its contributions. See Central States, Southeast & South w est Areas Pension Fundv. Centr a l Tr ansport, In c., 472 U. S. 559, 567, n. 7 (1985) (citing Department of Labor advisory opinion). As a pract i cal matter, moreover, most large multiemployer plans effectively guarantee compensation (unless all the employers happen to go bankrupt at th e same time), and the Pension Ben e fit Guaran ty Corpora

tion ensure s payment of at least some of the promise d benefits. The exclusio n of these plans from the priority, however, w o uld accord with ne ither the text of the provi

sion nor t h e commonsense noti on that protecting the insurer—whether it b e a private company, a multiem

ployer plan, or a government fund—is the best way to protect the employees. See Saco, supra , a t 449. Simply put, harm to the insurer will be passed alongto the em

-8 HOWARD DELIVERY SERV ICE, INC. v. ZURICH AM ERICAN IN S. CO. K ENNEDY , J., d i ssenting ployees, eit h er by rendering the insurer unable to pay or causing it t o charge higher rates f o r the same coverage. Finally, even if the lan g uage of §5 07(a)(5) were ambigu

ous, the de finition of “employee b e nefit plan” in th e Em

ployee Retirement Income Secu rity Act of 1 974 (ERISA), 88 Stat. 829, as amen ded, 29 U. S. C. §1001 et seq. (2000 ed. and Supp. III), would lend considerable support to respondent’ s view. ERISA de fines “employee benefit plan” as includin g an “employee welfare benefitpla n ,” §1002(3), which in turn “mean[s] any plan, f und, or program which

. . . was established or is maintained for the purpose of providing for its pa rticipants or their b e neficiaries, through the purchase of insurance or otherwise, .

. . b e ne fits in the event of sickness, acci dent, disability, death or unemployment,” §1002( 1). The def i nition of a term in one statute does not necessarily contr o l the interpretation of that term i nanother statute, for where the purposes or contexts ar e different the terms may take on different meanings. See U n ite d State sv. Reorga nized CF &I Fa brica

to rsof U t a h, I n c. , 51 8 U. S. 213 , 2 1 9

– 2 24 (19 9 6)

. W h e r e n o conflicting purpose or context is apparent, t h ough, other statutes may provide at least so me evidence of Congre ss’ understanding. See Sec u rit i esIndustr yAssn. v. Bo ard of Go v e rno rs, FR S, 4 6 8U. S. 1 37, 150– 15 1 (1 984); see also ante, at 9. The ERISA definition is of particular relevance here given that “employee b e nefit plan” is not a generic phras e but something closer to a term of art, with a m e aning that seems unl ikely to change based ons t atutory context. Also, neither Ho wardnor th e Court ci tes any source for a defin i

tion of “employee benefit plan” th at would e x clude wor k

ers’ compensation. The Court attempts to minimize t h e significance of the ERISA definition by noting that ERISA exempts from its coverage anyplan “maintained solely for the purpose of complying with ap plicable workmen’s co m pensation l a ws.” §10 03(b)(3); see ante, at 9. Congress9 Cite as: 54 7 U

. S. ____ (2006) K ENNEDY , J., d i ssenting exempted these plans from cove ra ge, but it di d not exclu d e them from its definition, and this is the relevant consid

eration. In deed, the languag e of the exclusion confirms that work e r s’ compensation is anemployee benefit pla n . See §1003(b) (“The provisions of this subchapter shall n o t apply to any employee benefit p l an if .

. . such plan is maintained solely for the purpose of complying with appl i

cable workmen’s compensation laws”). The exemption also belies the Court’s position because it shows that man d a tory wor k er s’ compensation pl ans were not included in the definition for any pur p ose partic u lar to ERI SA. Instead, since they were exempted from co verage, the most plausi

ble reason for their inclusion (o nly to be then excluded) is that Congre ss was simply giving the ordinary definition of the term. There is n o indication in §507(a)( 5 ) that Con

gress chose to depart from that o r dinary definition. By contrast, w h en Congress wanted a particula r provision of the Bankru ptcyCode t o narro w th e ordinary definition to exclude mandatory work ers’ compensation, itdid so ex

pressly byr e ferring to those plans covered b y ERISA. See 11 U. S. C. A. §541(b)(7) (Supp. 200 6).

An “employee benefit plan,” whether viewed as a term of art or in accordance with its plain meaning, includes work ers’ compensation

. Thes e a r e the reas ons for my respectful d i ssent.