(Slip Opinion) OCTOBER TERM, 2005 1 

Syllabus 

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader. 

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. 

SUPREME COURT OF THE UNITED STATES 

Syllabus 

HOWARD DELIVERY SERVICE, INC., ET AL. v. ZURICH 

AMERICAN INSURANCE CO. 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR 

THE FOURTH CIRCUIT 

No. 05–128. Argued March 21, 2006—Decided June 15, 2006 

The Bankruptcy Code accords priorities, among unsecured creditors’ 

claims, for unpaid “wages, salaries, or commissions,” 11 U. S. C. 

§507(a)(4), and for unpaid contributions to “an employee benefit 

plan,” §507(a)(5). Petitioner 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 respondent 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 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 panel reversed without agreeing on a rationale. 

Held: Insurance carriers’ claims for unpaid workers’ compensation 

premiums owed by an employer fall outside the priority allowed by

§507(a)(5). Although the question is close, such premiums are more 

appropriately bracketed with liability insurance premiums for, e.g., 

motor vehicle, fire, or theft insurance, than with contributions made 

for fringe benefits that complete a pay package, e.g., pension plans

and group health, life, and disability insurance, which undisputedly 
2 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

Syllabus 

are covered by §507(a)(5). 

United States v. Embassy Restaurant, Inc., 359 U. S. 29, 29–35, 

and Joint Industry Bd. of Elec. Industry v. United States, 391 U. S. 

224, 228–229, held that an employer’s unpaid contributions to collectively-bargained plans providing, respectively, life insurance and annuity benefits to employees did not qualify as “wages” entitled to priority status under the prior bankruptcy law. Congress thereafter

enacted what is now §507(a)(5) in order to provide a priority for the

kind of fringe benefits at issue in those cases. Notably, Congress did 

not enlarge the “wages, salaries, [and] commissions” priority,

§507(a)(4), to include fringe benefits, but instead created a new priority, §507(a)(5), one step lower than the wage priority. The new provision allows a plan provider to recover unpaid premiums—albeit only 

after the employees’ claims for “wages, salaries, or commissions” have

been paid. The current Code’s juxtaposition of the wages and employee benefit plan priorities manifests Congress’ comprehension that

fringe benefits generally complement, or substitute for, hourly pay.

Congress tightened the linkage of §507(a)(4) and (a)(5) by imposing a

combined cap on the two priorities, currently set at $10,000 per employee. See §507(a)(5)(B). Because §507(a)(4) has a higher priority 

status, all claims for wages are paid first, up to the $10,000 limit; 

claims under §507(a)(5) for benefit plan contributions can be recovered next up to the remainder of the $10,000 ceiling. No other §507 

subsections are so joined together. 

 Apart from the clues provided by Embassy Restaurant, Joint Industry Bd., and the textual ties binding §507(a)(4) and (5), Congress

left undefined the §507(a)(5) terms, “contributions to an employee 

benefit plan . . . arising from services rendered.” (Emphases added.)

Maintaining that §507(a)(5) covers more than wage substitutes like

the ones at issue in Embassy Restaurant and Joint Industry Bd., Zurich urges the Court to borrow the encompassing definition of employee benefit plan contained in the Employee Retirement Income Security Act of 1974 (ERISA): “[A]ny plan, fund, or program [that 

provides] its participants . . . , through the purchase of insurance or

otherwise, . . . benefits in the event of sickness, accident, disability, 

[or] death.” 29 U. S. C. §1002(1). Federal courts have questioned

whether ERISA is appropriately used to fill in blanks in a Bankruptcy Code provision, and the panel below parted ways on this issue.

In any event, ERISA’s signals are mixed, for §1003(b)(3) specifically 

exempts from ERISA’s coverage the genre of plan here at issue, i.e., 

one “maintained solely for the purpose of complying with applicable

work[ers’] compensation laws.” That exemption strengthens the 

Court’s resistance to Zurich’s argument. Rather, the Court follows 

United States v. Reorganized CF&I Fabricators of Utah, Inc., 518 U. S. 
Cite as: 547 U. S. ____ (2006) 3 

Syllabus 

213, 219, in noting that “[h]ere and there in the Bankruptcy Code

Congress has included specific directions that establish the significance for bankruptcy law of a term used elsewhere in the federal

statutes.” Id., at 219–220. No such directions are contained in 

§507(a)(5), and the Court has no warrant to write them into the text. 

This case turns instead on the essential character of workers’ compensation regimes. Unlike pension plans or group life, health, and 

disability insurance—negotiated or granted to supplement, or substitute for, wages—workers’ compensation prescriptions modify, or substitute for, the common-law tort liability to which employers were exposed for work-related accidents. Workers’ compensation regimes 

provide something for employees, assuring limited fixed payments for 

on-the-job injuries, and something for employers, removing the risk of 

large judgments and heavy costs in tort litigation. No such trade-off 

is involved in employer-sponsored fringe benefit plans. Moreover, 

employer-sponsored pension and health plans characteristically insure the employee (or his survivor) only. In contrast, workers’ compensation insurance shields the insured enterprise. When an employer fails to secure workers’ compensation coverage, or loses 

coverage for nonpayment of premiums, an affected employee’s remedy would not lie in a suit for premiums that should have been paid

to a compensation carrier. Instead, employees who sustain workrelated injuries commonly have recourse to a state-maintained fund

or are authorized by state law to pursue the larger recoveries successful tort litigation ordinarily yields. Further distancing workers’ compensation and fringe benefits, nearly all States require employers to 

participate in workers’ compensation, with substantial penalties, 

even criminal liability, for failure to do so. It is relevant, although

not dispositive, that States overwhelmingly prescribe and regulate 

insurance coverage for on-the-job accidents, while commonly leaving

fringe benefits to private ordering. 

Zurich’s argument that according its claim a §507(a)(5) priority will 

give workers’ compensation carriers an incentive to continue coverage 

of a failing enterprise, thus promoting rehabilitation of the business, 

is unpersuasive. Rather than speculating on how such insurers

might react were they to be granted a §507(a)(5) priority, the Court is

guided by the Bankruptcy Code’s objective of securing equal distribution among creditors, see, e.g., Kothe v. R. C. Taylor Trust, 280 U. S. 

224, 227, and by the corollary principle that preference provisions

must be tightly construed, see, e.g., id., at 227. Cases like Zurich’s are 

illustrative. The Bankruptcy Code caps the amount recoverable for contributions to employee benefit plans. Opening the §507(a)(5) priority to 

workers’ compensation carriers could shrink the amount available to

cover unpaid contributions to plans paradigmatically qualifying as wage 
4 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

Syllabus 

surrogates, primarily pension and health benefit plans. Pp. 5–16. 

403 F. 3d 228, reversed and remanded. 

GINSBURG, J., delivered the opinion of the Court, in which ROBERTS, 

C. J., and STEVENS, SCALIA, THOMAS, and BREYER, JJ., joined. KENNEDY, 

J., filed a dissenting opinion, in which SOUTER and ALITO, JJ., joined. 
_________________ 

_________________ 

Cite as: 547 U. S. ____ (2006) 1 

Opinion of the Court 

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press. 

SUPREME COURT OF THE UNITED STATES 

No. 05–128 

HOWARD DELIVERY SERVICE, INC., ET AL.,

PETITIONERS v. ZURICH AMERICAN 

INSURANCE CO. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

APPEALS FOR THE FOURTH CIRCUIT

[June 15, 2006] 

JUSTICE GINSBURG delivered the opinion of the Court. 

The Bankruptcy Code accords a priority, among unsecured creditors’ claims, for unpaid “wages, salaries, or 

commissions,” 11 U. S. C. A. §507(a)(4)(A) (Supp. 2006), 

and for unpaid contributions to “an employee benefit 

plan,” §507(a)(5).1 It is uncontested here that §507(a)(5) 

covers fringe benefits that complete a pay package—

typically pension plans, and group health, life, and disabil-

—————— 

1All references to provisions of the Bankruptcy Code use the current

numbering. At the time respondent Zurich American Insurance Company (Zurich) claimed priority treatment for unpaid workers’ compensation premiums, the relevant subsections were numbered (a)(3)

(wages) and (a)(4) (employee benefit plans). The Bankruptcy Abuse 

Prevention and Consumer Protection Act of 2005, Pub. L. 109–8, 

§212(2), 119 Stat. 51, altered the priority list so that (a)(3) became

(a)(4), and (a)(4) became (a)(5). The only other statutory change relevant here concerns the dollar amount accorded priority status under

current §507(a)(4) and (a)(5). When Zurich filed its proof of claim, the 

total sum allowed under those two subsections was $4,650 for each 

employee, see note following 11 U. S. C. §104 (2000 ed., Supp. III). 

That ceiling has since been raised, pursuant to §104, to $10,000 per

employee, 11 U. S. C. A. §507(a)(5)(B)(i) (Supp. 2006). 
2 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

Opinion of the Court

ity insurance—whether unilaterally provided by an employer or the result of collective bargaining. This case 

presents the question whether the §507(a)(5) priority also 

encompasses claims for unpaid premiums on a policy 

purchased by an employer to cover its workers’ compensation liability. We hold that premiums owed by an employer to a workers’ compensation carrier do not fit within 

§507(a)(5).

 Workers’ compensation laws assure that workers will be

compensated for work-related injuries whether or not

negligence of the employer contributed to the injury. To 

that extent, arrangements for the payment of compensation awards might be typed “employee benefit plan[s].” On 

the other hand, statutorily prescribed workers’ compensation regimes do not run exclusively to the employees’ 

benefit. In this regard, they differ from privately ordered, 

employer-funded pension and welfare plans that, together 

with wages, remunerate employees for services rendered. 

Employers, too, gain from workers’ compensation prescriptions. In exchange for no-fault liability, employers gain

immunity from tort actions that might yield damages

many times higher than awards payable under workers’ 

compensation schedules. Although the question is close, 

we conclude that premiums paid for workers’ compensation insurance are more appropriately bracketed with

premiums paid for other liability insurance, e.g., motor 

vehicle, fire, or theft insurance, than with contributions 

made to secure employee retirement, health, and disability 

benefits. 

In holding that claims for workers’ compensation insurance 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 Kothe v. 

R. C. Taylor Trust, 280 U. S. 224, 227 (1930); Kuehner v. 

Irving Trust Co., 299 U. S. 445, 451 (1937). We take into 

account, as well, the complementary principle that prefer-
Cite as: 547 U. S. ____ (2006) 3 

Opinion of the Court 

ential treatment of a class of creditors is in order only

when clearly authorized by Congress. See Nathanson v. 

NLRB, 344 U. S. 25, 29 (1952); United States v. Embassy 

Restaurant, Inc., 359 U. S. 29, 31 (1959). 

I 

Petitioner Howard Delivery Service, Inc. (Howard), for

many years owned and operated a freight trucking business. Howard employed as many as 480 workers and 

operated in about a dozen States. Each of those States 

required Howard 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 to provide this insurance

for Howard’s operations in ten States.

On January 30, 2002, Howard filed a Chapter 11 bankruptcy petition. Zurich filed an unsecured creditor’s claim 

in that proceeding, seeking priority status for some 

$400,000 in unpaid workers’ compensation premiums. In 

an amended proof of claim, Zurich asserted that these

unpaid premiums qualified as “[c]ontributions to an employee benefit plan” entitled to priority under §507(a)(5). 

App. 32a.2 The Bankruptcy Court denied priority status to 

Zurich’s claim, reasoning that the overdue premiums do 

not qualify as bargained-for benefits furnished in lieu of 

increased wages, hence they fall outside §507(a)(5)’s compass. App. to Pet. for Cert. 51a–57a. The District Court 

affirmed, similarly determining that unpaid workers’ 

compensation premiums do not share the priority provided 

for unpaid contributions to employee pension and health 

—————— 

2 In its initial proof of claim, Zurich did not check the box marked 

“Contributions to an employee benefit plan,” but instead checked a box

marked “Other,” and wrote in “Administrative Expense—Insurance 

Premiums.” App. 22a, 30a. Zurich does not argue here that the workers’ compensation premiums owed by Howard qualify as administrative

expenses entitled to priority under §507(a)(2). 
4 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

Opinion of the Court

plans. Id., at 39a–50a. 

The Court of Appeals for the Fourth Circuit reversed 2

to 1 in a per curiam opinion. 403 F. 3d 228 (2005). The 

judges in the majority, however, disagreed on the rationale. Judge King concluded that §507(a)(5) unambiguously 

accorded priority status to claims for unpaid workers’ 

compensation premiums. Id., at 237. Judge Shedd, concurring in the judgment, found the §507(a)(5) phrase

“employee benefit plan” ambiguous. Looking to legislative

history, he concluded that Congress likely intended to give 

past due workers’ compensation premiums priority status. 

Id., at 238–239. In dissent, Judge Niemeyer, like Judge

King, relied on the “plain meaning” of §507(a)(5), but read 

the provision unequivocally to deny priority status to an

insurer’s claim for unpaid workers’ compensation premiums. Id., at 241–244. 

We granted certiorari, 546 U. S. ___ (2005), to resolve a 

split among the Circuits concerning the priority status of 

premiums owed by a bankrupt employer to a workers’ compensation carrier. Compare In re Birmingham-Nashville 

Express, Inc., 224 F. 3d 511, 517 (CA6 2000) (denying priority status to unpaid workers’ compensation premiums), In re 

Southern Star Foods, Inc., 144 F. 3d 712, 717 (CA10 1998) 

(same), and In re HLM Corp., 62 F. 3d 224, 226–227 (CA8 

1995) (same), with Employers Ins. of Wausau v. Plaid Pantries, Inc., 10 F. 3d 605, 607 (CA9 1993) (according priority

status), and 403 F. 3d, at 229 (case below) (same).

3 

—————— 

3We have jurisdiction of this case, as did the Court of Appeals, because the District Court’s ruling qualifies as a final decision under 28

U. S. C. §158(d). See 403 F. 3d, at 231, and n. 6 (District Court’s ruling

effectively concluded the dispute between Zurich and Howard, for the

adverse decision rendered Zurich’s claim valueless and Zurich agreed to

withdraw the claim if it failed to prevail on appeal). See also In re Saco 

Local Development Corp., 711 F. 2d 441, 444 (CA1 1983) (majority

opinion of Breyer, J.) (“Congress has long provided that orders in

bankruptcy cases may be immediately appealed if they finally dispose

of discrete disputes within the larger case—and in particular, it has long 
Cite as: 547 U. S. ____ (2006) 5 

Adjoining 

Opinion of the Court 

II 

subsections of the Bankruptcy Code, 

§507(a)(4) and (5), are centrally involved in this case.

Subsections 507(a)(4) and (5) currently provide: 

“(a) The following expenses and claims have priority 

in the following order: 

. . . . . 

“(4) Fourth, allowed unsecured claims . . . for— 

“(A) wages, salaries, or commissions, including vacation, severance, and sick leave pay earned by an individual . . . . 

. . . . . 

“(5) Fifth, allowed unsecured claims for contributions to an employee benefit plan— 

“(A) arising from services rendered within 180 days

before the date of the filing of the [bankruptcy] petition or the date of the cessation of the debtor’s business, whichever occurs first . . . .” 11 U. S. C. A. §507 

(Supp. 2006). 

Two decisions of this Court, United States v. Embassy 

Restaurant, Inc., 359 U. S. 29 (1959), and Joint Industry 

Bd. of Elec. Industry v. United States, 391 U. S. 224 

(1968), prompted the enactment of §507(a)(5). Embassy 

Restaurant concerned a provision of the 1898 Bankruptcy 

Act that granted priority status to “wages” but said nothing of “employee benefits plans” or anything similar. 11 

U. S. C. §104(a)(2) (1952 ed., Supp. V; repealed 1978). We 

held that a debtor’s unpaid contributions to a union welfare plan—which provided life insurance, weekly sick 

benefits, hospital and surgical benefits, and other advantages—did not qualify within the priority for unpaid 

“wages.” 359 U. S., at 29–35. In Joint Industry Bd., we 

—————— 

provided that orders finally settling creditors’ claims are separately

appealable.”). 
6 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

Opinion of the Court

followed Embassy Restaurant and held that an employer’s

bargained-for contributions to an employees’ annuity plan

did not qualify as “wages” entitled to priority status. 391 

U. S., at 228–229. 

To provide a priority for fringe benefits of the kind at 

issue in Embassy Restaurant and Joint Industry Bd., 

Congress added what is now §507(a)(5) when it amended 

the Bankruptcy Act in 1978. See H. R. Rep. No. 95–595, 

p. 187 (1977) (hereinafter H. R. Rep.) (explaining that the 

amendment covers “health insurance programs, life insurance plans, pension funds, and all other forms of employee compensation that [are] not in the form of wages”); 

S. Rep. No. 95–989, p. 69 (1978). Notably, Congress did 

not enlarge the “wages, salaries, [and] commissions” priority, §507(a)(4), to include fringe benefits. Instead, Congress created a new priority for such benefits, one step

lower than the wage priority. The new provision, currently contained in §507(a)(5), allows the provider of an

employee benefit plan to recover unpaid premiums—albeit 

only after the employees’ claims for “wages, salaries, or 

commissions” have been paid. §507(a)(4).

Beyond genuine debate, the main office of §507(a)(5) is

to capture portions of employee compensation for services 

rendered not covered by §507(a)(4). Cf. Embassy Restaurant, 359 U. S., at 35; Joint Industry Bd., 391 U. S., at 228– 

229 (both emphasizing Congress’ prerogative in this regard). The current Code’s juxtaposition of the wages and 

employee benefit plan priorities manifests Congress’ comprehension that fringe benefits generally complement, or 

“substitute” for, hourly pay. See H. R. Rep., at 357 (noting 

“the realities of labor contract negotiations, under which

wage demands are often reduced if adequate fringe benefits

are substituted”); id., at 187 (“[T]o ignore the reality of 

collective bargaining that often trades wage dollars for

fringe benefits does a severe disservice to those working for

a failing enterprise.”); In re Saco Local Development Corp., 
Cite as: 547 U. S. ____ (2006) 7 

Opinion of the Court 

711 F. 2d 441, 449 (CA1 1983) (majority opinion of Breyer,

J.) (substitution of fringe benefits for wages “can normally

be assumed, unless the employer is a philanthropist”). 

Congress tightened the linkage of (a)(4) and (a)(5) by

imposing a combined cap on the two priorities, currently

set at $10,000 per employee. See §507(a)(5)(B).4 Because 

(a)(4) has a higher priority status, all claims for wages are 

paid first, up to the $10,000 limit; claims under (a)(5) for 

contributions to employee benefit plans can be recovered 

next up to the remainder of the $10,000 ceiling. No other 

subsections of §507 are joined together by a common cap 

in this way.

Putting aside the clues provided by Embassy Restaurant, Joint Industry Bd., and the textual ties binding 

§507(a)(4) and (5), we recognize that Congress left undefined the §507(a)(5) terms: “contributions to an employee 

benefit plan . . . arising from services rendered within 180 

days before the date of the filing of the [bankruptcy] petition.” (Emphases added.) Maintaining that subsection

(a)(5) covers more than wage substitutes of the kind at

issue in Embassy Restaurant and Joint Industry Bd., 

Zurich urges the Court to borrow the encompassing definition of employee benefit plan contained in the Employee 

—————— 

4Section 507(a)(5)(B) provides: 

“(a) The following expenses and claims have priority in the following

order: 

. . . . . 

“(5) Fifth, allowed unsecured claims for contributions to an employee

benefit plan— 

. . . . . 

“(B) for each such plan, to the extent of— 

“(i) the number of employees covered by each such plan multiplied by

$10,000; less 

“(ii) the aggregate amount paid to such employees under paragraph

(4) of this subsection, plus the aggregate amount paid by the estate on 

behalf of such employees to any other employee benefit plan.” 11 

U. S. C. A. §507 (Supp. 2006). 
8 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

Opinion of the Court

Retirement Income Security Act of 1974 (ERISA), 88 Stat. 

829, as amended, 29 U. S. C. §1001 et seq. (2000 ed. and 

Supp. III). See §1002(1) (term “employee welfare benefit 

plan” means, inter alia, “any plan, fund, or program [that

provides] its participants or their beneficiaries, through

the purchase of insurance or otherwise, . . . benefits in the 

event of sickness, accident, disability, death or unemployment”); §1002(3) (term “employee benefit plan . . . means 

an employee welfare benefit plan or an employee pension

benefit plan or a plan which is both an employee welfare

benefit plan and an employee pension benefit plan”); cf. 

§1003(b)(3) (excluding plans “maintained solely for the 

purpose of complying with applicable work[ers’] compensation laws or unemployment compensation or disability 

insurance laws”). The dissent endorses this borrowing. 

See post, at 8–9. 

Federal courts have questioned whether ERISA is appropriately used to fill in blanks in a Bankruptcy Code provision, and the panel below parted ways on this issue. See 

403 F. 3d, at 235, n. 9 (King, J., concurring in judgment) 

(“declin[ing] to rely upon the ERISA definition”); id., at 

239–241 (Shedd, J., concurring in judgment) (reading legislative history to indicate that Congress intended “‘employee 

benefit plan’ in the bankruptcy priority provision to have

the same meaning that [the term] has in ERISA”); id., at 

245 (Niemeyer, J., dissenting) (maintaining that ERISA 

definition is inapt in Bankruptcy Code priority context); cf. 

Birmingham-Nashville Express, 224 F. 3d, at 516–517 

(noting division of opinion but concluding that decisions

rejecting incorporation of ERISA’s “employee benefit plan” 

definition into §507(a)(5) “ha[ve] the better of the argument”); HLM Corp., 62 F. 3d, at 226 (“[T]he ERISA definition and associated court guidelines were designed to effectuate the purpose of ERISA, not the Bankruptcy Code.” 

(internal quotation marks omitted)); Southern Star Foods, 

144 F. 3d, at 714 (same). Compare Brief for American 
Cite as: 547 U. S. ____ (2006) 9 

Opinion of the Court 

Home Assurance Company et al. as Amici Curiae 17–25 

(legislative history suggests Congress intended to incorporate ERISA definition), with Brief for National Coordinating Committee for Multiemployer Plans as Amicus Curiae 

22–27, and n. 21 (legislative history suggests Congress did 

not intend to incorporate ERISA definition). 

ERISA’s omnibus definition does show, at least, that the 

term “employee welfare benefit plan” is susceptible of a 

construction that would include workers’ compensation

plans. That Act’s signals are mixed, however, for 29 

U. S. C. §1003(b)(3) specifically exempts from ERISA’s

coverage the genre of plan here at issue, i.e., one “maintained solely for the purpose of complying with applicable

work[ers’] compensation laws.”5 The §1003(b)(3) exemption strengthens our resistance to Zurich’s argument. We 

follow the lead of an earlier decision, United States v. 

Reorganized CF&I Fabricators of Utah, Inc., 518 U. S. 213, 

219 (1996), in noting that “[h]ere and there in the Bankruptcy Code Congress has included specific directions that

establish the significance for bankruptcy law of a term

used elsewhere in the federal statutes.” Id., at 219–220. 

No such directions are contained in §507(a)(5), and we 

have no warrant to write them into the text. 

This case turns, we hold, not on a definition borrowed 

from a statute designed without bankruptcy in mind, but 

on the essential character of workers’ compensation regimes. Unlike pension provisions or group life, health, 

and disability insurance plans—negotiated or granted as

pay supplements or substitutes—workers’ compensation 

—————— 

5Congress also excluded most workers’ compensation benefits from 

the purview of the Davis-Bacon Act, 40 U. S. C. §3141(2) (2000 ed., 

Supp. III), a measure that fixes a floor under wages on Government 

projects. The Davis-Bacon Act incorporates “bona fide fringe benefits,”

broadly defined, into prevailing wage determinations, but specifically

excludes benefits contractors are required to provide under federal, state, 

or local law. §3141(2)(B). 
10 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

Opinion of the Court

prescriptions have a dominant employer-oriented thrust: 

They modify, or substitute for, the common-law tort liability to which employers were exposed for work-related accidents. See 6 A. Larson & L. Larson, Workers’ Compensation Law §100.01[1], pp. 100–2 to 100–3 (2005) (hereinafter

Larson & Larson); 4 J. Lee & B. Lindahl, Modern Tort Law:

Liability and Litigation §43:25, pp. 43–45 to 43–46 (2d ed. 

2003). As typically explained: 

“The invention of workers compensation as it has

existed in this country since about 1910 involves a 

classic social trade-off or, to use a Latin term, a quid 

pro quo. . . . What is given to the injured employee is

the right to receive certain limited benefits 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 anyone’s part. What is taken away is the employee’s right to recover full tort damages, including

damages for pain and suffering, in cases in which there

is fault on the employer’s part.” P. Lencsis, Workers 

Compensation: A Reference and Guide 9 (1998) (hereinafter Lencsis). 

Workers’ compensation regimes thus provide something 

for employees—they assure limited fixed payments for onthe-job injuries—and something for employers—they 

remove the risk of large judgments and heavy costs generated by tort litigation. See 6 Larson & Larson §100.03[1],

at 100–11 (“[Workers’ compensation] relieves the employer 

not only of common-law tort liability, but also of statutory 

liability under virtually all state statutes, as well as of 

liability in contract and in admiralty, for an injury covered

by the compensation act.” (footnote omitted)); Lubove,

Workmen’s Compensation and the Prerogatives of Voluntarism, 8 Lab. Hist. 254, 258–262 (Fall 1967) (workers’ 

compensation programs were adopted by nearly every

State in large part because employers anticipated signifi-
Cite as: 547 U. S. ____ (2006) 11 

Opinion of the Court 

cant benefits from the programs; other programs workers’ 

groups sought to make mandatory—notably, health insurance—were not similarly embraced). No such tradeoff is 

involved in fringe benefit plans that augment each covered 

worker’s hourly pay.6 

Employer-sponsored pension plans, and group health or 

life insurance plans, characteristically insure the employee (or his survivor) only. In contrast, workers’ compensation insurance, in common with other liability insurance in this regard, e.g., fire, theft, and motor vehicle 

insurance, shield the insured enterprise: Workers’ compensation policies both protect the employer-policyholder 

from liability in tort, and cover its obligation to pay workers’ compensation benefits. See In re HLM Corp., 165 

B. R. 38, 41 (Bkrtcy. Ct. Minn. 1994). When an employer 

fails to secure workers’ compensation coverage, or loses 

coverage for nonpayment of premiums, an affected employee’s remedy would not lie in a suit for premiums that 

should have been paid to a compensation carrier. Instead, 

employees who sustain work-related injuries would commonly have recourse to a state-maintained fund. See, e.g.,

Minn. Stat. §176.183, subd. 1 (2004); N. Y. Work. Comp. 

Law Ann. §26–a (West Supp. 2006). Or, in lieu of the 

limited benefits obtainable from a state fund under workers’ compensation schedules, the injured employee might 

—————— 

6Providing health care to workers fosters a healthy and happy workforce, and a contented workforce benefits employers. The dissent 

suggests this as a reason to rank workers’ compensation insurance with

health and pension plans for bankruptcy priority purposes. See post, at 

5. But the benefit employers gain from providing health and pension

plans for their employees is of a secondary order; indeed, under the

dissent’s logic, wages could be said to “benefit” the employer because 

they ensure that employees come to work, can afford transportation to

the job site, etc. These benefits redound to the employer reflexively, as 

a consequence of the benefit to the employee. Workers’ compensation

insurance, by contrast, directly benefits insured employers by eliminating their tort liability for workplace accidents. 
12 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

Opinion of the Court

be authorized to pursue the larger recoveries successful

tort litigation ordinarily yields. See, e.g., id., §11 (West

2005); W. Va. Code §23–2–8 (Lexis 2005); Lencsis 67. 

Further distancing workers’ compensation arrangements

from bargained-for or voluntarily accorded fringe benefits,

nearly all States, with limited exceptions, require employers to participate in their workers’ compensation systems.

See, e.g., Ill. Comp. Stat., ch. 820, §305/4 (West 2004); 

Minn. Stat. §176.181, subd. 2 (2004); U. S. Dept. of Labor, 

Office of Workers’ Compensation, State Workers’ Compensation Laws, Table 1: Type of Law and Insurance Requirements for Private Employment (2005), available at 

http://www.dol.gov/esa/regs/statutes/owcp/stwclaw/tables-pdf/ 

table1.pdf (as visited June 13, 2006, and available in Clerk 

of Court’s case file). An employer who fails to secure the 

mandatory coverage is subject to substantial penalties, even

criminal liability. We do not suggest, as the dissent hypothesizes, see post, at 6–7, that a compensation carrier

would gain §507(a)(5) priority for unpaid premiums in States 

where workers’ compensation coverage is elective. Nor do we 

suggest that wage surrogates or supplements, e.g., pension

and health benefits plans, would lose protection under

§507(a)(5) if a State were to mandate them. We simply

count it a factor relevant to our assessment that States 

overwhelmingly prescribe and regulate insurance coverage 

for on-the-job accidents, while commonly leaving pension, 

health, and life insurance plans to private ordering.7 

—————— 

7 Saco Local Development Corp., 711 F. 2d, at 448–449, we note, is not 

at odds with our conclusion that unpaid workers’ compensation premiums do not qualify for priority status. The First Circuit held in Saco 

that a group life, health, and disability insurance plan fit within

§507(a)(5), though the benefit package was unilaterally provided by the 

employer, and not installed pursuant to collective bargaining. Wage

surrogates, then-Judge Breyer explained, need not be negotiated to

qualify under §507(a)(5) as “employee benefit plans,” for “Congress’

object in enacting [that subsection] was to extend the 1898 Act’s wage

priority to new forms of compensation, such as insurance and other 
Cite as: 547 U. S. ____ (2006) 13 

Opinion of the Court 

We note that when the Fourth Circuit confronted a claim 

for workers’ compensation premiums owed not to a private

insurer but to a state fund, that court ranked the premiums

as “excise taxes” qualifying for bankruptcy priority under

what is now §507(a)(8)(E). See New Neighborhoods, Inc. v. 

West Virginia Workers’ Comp. Fund, 886 F. 2d 714, 718– 

720 (1989).8 See also In re Suburban Motor Freight, Inc., 

998 F. 2d 338, 342 (CA6 1993) (“Where a State ‘compel[s] 

the payment’ of ‘involuntary exactions, regardless of name,’ 

and where such payment is universally applicable to similarly situated persons or firms, these payments are taxes 

for bankruptcy purposes.” (quoting New Neighborhoods, 

886 F. 2d, at 718–719 (alteration and citations omitted in

original))); LeRoy et al., Workers’ Compensation in Bankruptcy: How Do the Parties Fare? 24 Tort & Ins. L. J. 593, 

623–624 (1989) (describing disagreement among courts on

whether payments to state-run workers’ compensation

funds qualify as excise taxes under §507(a)(8)). We express 

no view on the §507(a)(8)(E) issue presented in New 

Neighborhoods. We venture only this observation: It is 

common for Congress to prefer Government creditors over

private creditors, see Birmingham-Nashville Express, 224 

F. 3d, at 517–518; it would be anomalous, however, to 

advance Zurich’s claim to level (a)(5) while leaving statefund creditors at level (a)(8). 

Zurich argues that according its claim an (a)(5) priority

will give workers’ compensation carriers an incentive to 

—————— 

fringe benefits.” Id., at 449. Saco did not involve workers’ compensation regimes, and the First Circuit expressed no opinion on them. 8The state fund in New Neighborhoods, it appears, did not urge that 

claims for unpaid workers’ compensation premiums qualify for the 

higher (a)(5) priority. The Fourth Circuit’s opinion in that case, however, suggests that the court assumed a private compensation carrier

would be accorded no priority. See 886 F. 2d, at 720 (under court’s 

holding, “a state agency is given, as an insurer, priority in bankruptcy 

when a private insurer is not”). 
14 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

Opinion of the Court

continue coverage of a failing enterprise, thus promoting 

rehabilitation of the business. It may be doubted whether 

the projected incentive would outweigh competing financial

pressure to pull the plug swiftly on an insolvent policyholder, and thereby contain potential losses. An insurer 

undertakes to pay the scheduled benefits to workers injured

on the job while the policy is in effect. In the case of serious 

injuries, however, benefits may remain payable years after

termination of coverage. See 1 Larson & Larson §§10.02–

10.03, at 10–3 to 10–7; Lencsis 51–52. While cancellation 

relieves the insurer from responsibility for future injuries, 

the insurer cannot escape the obligation to continue paying

benefits for enduring maladies or disabilities, even though 

no premiums are paid by the former policyholder. An 

insurer would likely weigh in the balance the risk of incurring fresh obligations of long duration were it to continue

insuring employers unable to pay currently for coverage.

That consideration might well be controlling even with an

assurance of priority status, for there is no guarantee that 

creditors accorded preferred positions will in fact be paid.

See Tr. of Oral Arg. 31–32 (“[A]s soon as they smell bankruptcy, they’re going to pull the plug anyway.” (SCALIA, J.)); 

LeRoy, supra, at 596 (noting “general reluctance on the 

part of private insurers to provide debtors with the necessary Workers’ Compensation coverage”). 

Rather than speculating on how workers’ compensation

insurers might react were they to be granted an (a)(5)

priority, we are guided in reaching our decision by the

equal distribution objective underlying the Bankruptcy 

Code, and the corollary principle that provisions allowing

preferences must be tightly construed. See Kothe, 280 

U. S., at 227 (“The broad purpose of the Bankruptcy Act is

to bring about an equitable distribution of the bankrupt’s

estate . . . .”); Nathanson, 344 U. S., at 29 (“The theme of 

the Bankruptcy Act is ‘equality of distribution’, . . . and if

one claimant is to be preferred over others, the purpose 
Cite as: 547 U. S. ____ (2006) 15 

Opinion of the Court 

should be clear from the statute.” (quoting Sampsell v. 

Imperial Paper & Color Corp., 313 U. S. 215, 219 (1941))); 

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.”). 

Every claim granted priority status reduces the funds

available to general unsecured creditors and may diminish 

the recovery of other claimants qualifying for equal or 

lesser priorities. See Joint Industry Bd., 391 U. S., at 228– 

229. “To give priority to a claimant not clearly entitled

thereto is not only inconsistent with the policy of equality of

distribution; it dilutes the value of the priority for those

creditors Congress intended to prefer.” In re Mammoth 

Mart, Inc., 536 F. 2d 950, 953 (CA1 1976). Cases like Zurich’s are illustrative. The Bankruptcy Code caps the 

amount recoverable for contributions to employee benefit 

plans. See supra, at 6–7. Opening the (a)(5) priority to 

workers’ compensation carriers could shrink the amount

available to cover unpaid contributions to plans paradigmatically qualifying as wage surrogates, prime among them, 

pension and health benefit plans.

9 

In sum, we find it far from clear that an employer’s

liability to provide workers’ compensation coverage fits the

§507(a)(5) category “contributions to an employee benefit 

plan . . . arising from services rendered.” Weighing against 

such categorization, workers’ compensation does not compensate employees for work performed, but instead, for onthe-job injuries incurred; workers’ compensation regimes

substitute not for wage payments, but for tort liability. 

Any doubt concerning the appropriate characterization, we 

conclude, is best resolved in accord with the Bankruptcy

Code’s equal distribution aim. We therefore reject the 

—————— 

9The dissenting opinion nowhere homes in on the reality that including

amounts owed to workers’ compensation carriers risks diminishing funds 

available to cover contributions to workers’ pension and health care plans. 
16 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

Opinion of the Court

expanded interpretation Zurich invites. Unless and until 

Congress otherwise directs, we hold that carriers’ claims

for unpaid workers’ compensation premiums remain outside the priority allowed by §507(a)(5). 

* * * 

For the reasons stated, the judgment of the United 

States Court of Appeals for the Fourth Circuit is reversed, 

and the case is remanded for further proceedings consistent with this opinion. 

It is so ordered. 
_________________ 

_________________ 

Cite as: 547 U. S. ____ (2006) 1 

KENNEDY, J., dissenting 

SUPREME COURT OF THE UNITED STATES 

No. 05–128 

HOWARD DELIVERY SERVICE, INC., ET AL.,

PETITIONERS v. ZURICH AMERICAN 

INSURANCE CO. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

APPEALS FOR THE FOURTH CIRCUIT

[June 15, 2006] 

JUSTICE KENNEDY, with whom JUSTICE SOUTER and 

JUSTICE ALITO join, dissenting. 

The Court of Appeals for the Fourth Circuit held that

payments for workers’ compensation coverage are “contributions to an employee benefit plan . . . arising from services rendered.” 11 U. S. C. A. §507(a)(5) (Supp. 2006). In 

reversing that judgment the Court’s opinion relies on the 

premise that “statutorily prescribed workers’ compensation regimes do not run exclusively to the employees’ 

benefit.” Ante, at 2. This rationale, however, does not 

suffice to justify the Court’s holding. It does not accord, 

moreover, with the text or purpose of the bankruptcy 

priority defined in §507(a)(5). These are the main points

of this respectful dissenting opinion. 

I 

Before commencing a more detailed discussion of the

central issue, certain preliminary matters must be addressed. To begin with, the Court states a background 

rule of construction that, when we interpret the Bankruptcy Code, “provisions allowing preferences must be 

tightly construed.” Ante, at 14. The Court links this rule 

with a general objective in the Code for equal distribution. 

Ibid. That objective, it is true, is acknowledged by our 
2 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

KENNEDY, J., dissenting 

precedents, and we have said that a Code provision must 

indicate a clear purpose to prefer one claim over another 

before a priority will be found. See Nathanson v. NLRB, 

344 U. S. 25, 29 (1952). This is different, though, from

establishing an interpretive principle of strict construction

when the Code addresses priorities, for strict construction

can be in tension with the objective of “equality of distribution for similar creditors.” Small Business Administration 

v. McClellan, 364 U. S. 446, 452 (1960). The bankruptcy 

priorities, then, should not be read simply to give priorities

to as few creditors as possible. They should be interpreted 

in accord with the principle of equal treatment of like 

claims. In any event the priority provisions should not be

read so narrowly as to conflict with their plain meaning.

In accord with these principles the Court does not seem 

to dispute that the payments at issue here are “contributions” that “aris[e] from services rendered,” §507(a)(5). 

There seems little doubt that both these statutory requirements are met. Petitioner Howard Delivery Service,

Inc. (Howard), argues that a contribution must be voluntary; and it says that because the workers’ compensation

payments in this case are mandatory, they cannot be 

contributions. In some situations—for example, in discussing charitable contributions—it is possible to read

“contributions” as Howard suggests. See Webster’s Third 

New International Dictionary 496 (1971) (defining “contribution” as “a sum or thing voluntarily contributed”). In 

the context of employer payments, however, the voluntariness requirement does not accord with the usual 

meaning of the word. See ibid. (defining “contribution”

alternatively as “a sum paid by an employer to an unemployment or group-insurance fund”). Many federal statutes and this Court’s own cases expressly refer to “mandatory contributions” when discussing payments by 

employers and employees. See, e.g., 26 U. S. C. 

§411(a)(3)(D); 29 U. S. C. §1053(a)(3)(D); §1054(c)(2)(C); 
Cite as: 547 U. S. ____ (2006) 3 

KENNEDY, J., dissenting 

§1344; Hughes Aircraft Co. v. Jacobson, 525 U. S. 432, 435 

(1999); General Building Contractors Assn., Inc. v. Pennsylvania, 458 U. S. 375, 394 (1982); United States v. Lee, 455 

U. S. 252, 258 (1982). Even for pension and health benefit 

plans, which undeniably fall within the §507(a)(5) priority, 

the payments are rarely if ever voluntary in the charitable 

sense that Howard invokes. The mandatory nature of most 

workers’ compensation coverage, then, fails to establish that

the payments are not contributions.

Howard’s argument that the workers’ compensation

payments here do not “aris[e] from services rendered,”

§507(a)(5), is also unpersuasive. This phrase, according to 

Howard, does not cover payments to insurance companies 

because those payments are made in exchange for the

services of the insurance company, not the services of the 

employees. The Court seems to accept that insurance 

payments can 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 nonetheless on the employees’ performing

services for the employer. They therefore “aris[e] from 

services rendered” in the same manner as do payments to

a pension, health, or disability plan. From a practical 

standpoint, moreover, “[t]o allow the insurer to obtain its

premiums through the priority would seem the surest way

to provide the employees with the policy benefits to which 

they are entitled.” In re Saco Local Development Corp., 

711 F. 2d 441, 449 (CA1 1983) (majority opinion by 

Breyer, J.). 

II 

The question that remains—and my main point of disagreement with the Court—is whether workers’ compensation insurance qualifies as an “employee benefit plan.” 

The answer, one would think, depends on whether workers’ compensation plans provide benefits to employees. It 
4 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

KENNEDY, J., dissenting 

is clear that they do, as the employer’s contributions enable the insurer to give out substantial payments to employees.

Even assuming that the benefit the employer provides

must be a net benefit, this condition is easily satisfied. It 

is true that, in return for receiving workers’ compensation,

employees give up some of the common-law tort remedies 

they otherwise could have pursued. See ante, at 9–11. 

The common-law remedies, though, typically required the

employer to be at fault; and they were further limited by 

the defenses of contributory negligence, assumption of 

risk, and the fellow-servant doctrine. See 1 A. Larson & L. 

Larson, Workers’ Compensation Law §2.03 (2005). As a 

result, only a small percentage of injured workers received 

any recovery. Ibid. Workers’ compensation plans, even

considering the tort claims relinquished, thus are generally a benefit to employees. See id., §2.03, at 2–6 (noting

the “helplessness which characterized the position of the 

injured worker of the precompensation era”). Even where 

an employee might have received greater damages in a 

tort suit, the greater speed and certainty of payment in

workers’ compensation is often worth the trade-off. In 

many States, moreover, the employee has a choice to opt 

out of the workers’ compensation system, leaving him or

her with traditional tort remedies. See, e.g., Ariz. Rev. 

Stat. Ann. §23–906 (West 1995); Cal. Lab. Code Ann.

§4154 (West 2003); Ky. Rev. Stat. Ann. §342.395 (West 

2005); Mass. 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). When the employee chooses workers’ 

compensation, it plainly should be considered a benefit.

For these reasons, workers’ compensation plans, on the 

whole, are a benefit to employees; and indeed, the Court 

does not suggest otherwise. 

Instead, the Court holds that workers’ compensation is 
Cite as: 547 U. S. ____ (2006) 5 

KENNEDY, J., dissenting 

not an “employee benefit plan” largely because it also 

benefits employers. Ante, at 10–11. The text of the statute 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 is

little reason to suppose that employees should lose that

protection based on the additional fact that employers may 

gain something as well. Employers rarely make large

payments to employee funds out of altruism, and surely 

the Court should not hold that employee benefits provide

no benefit to the employer. In the case of health benefits, 

for example, the employer may receive tax breaks, good 

will, a healthy work force, and the leverage to pay lower 

wages. Workers’ compensation cannot be distinguished on 

this basis from pension, health, or disability plans, all of 

which the Court recognizes as covered by the priority. 

The Court’s three other bases for treating workers’ 

compensation differently also find no support in the Bankruptcy Code. First, the Court maintains, based on the 

purpose and structure of the “employee benefit plan” 

priority in relation to the wage priority of §507(a)(4), that 

only wage substitutes are covered. Ante, at 5–7. Even 

assuming this proposition were correct, it would not lead

to the Court’s conclusion. That is because workers’ compensation plans, as a matter of economic realities, are

wage substitutes. The Court made this precise point in 

one of the first cases addressing a workers’ compensation 

scheme: “[J]ust as the employee’s assumption of ordinary 

risks at common law presumably was taken into account

in fixing the rate of wages, so the fixed responsibility of 

the employer, and the modified assumption of risk by the

employee under the new system, presumably will be reflected in the wage scale.” New York Central R. Co. v. 

White, 243 U. S. 188, 201–202 (1917). Recent empirical

studies confirm that employers pass on the cost of workers’ 

compensation to employees in the form of lower wages. See 
6 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

KENNEDY, J., dissenting 

Fishback & Kantor, Did Workers Pay for the Passage of 

Workers’ Compensation Laws? 110 Quarterly Journal of

Econ. 713 (1995); Gruber & Krueger, The Incidence of 

Mandated Employer-Provided Insurance: Lessons from 

Workers’ Compensation Insurance, 5 Tax Policy and the

Economy 111 (D. Bradford ed. 1991); Viscusi & Moore, 

Workers’ Compensation: Wage Effects, Benefit Inadequacies, and the Value of Health Losses, 69 Review of Econ. 

and Stats. 249 (1987). 

Second, the mandatory nature of most workers’ compensation plans does not change the applicability of the priority. The benefit to employees is real and significant regardless of whether the government has mandated the 

benefit. While States generally “prescribe and regulate” 

workers’ compensation and leave other benefits “to private 

ordering,” ante, at 12, the presence of bargaining has no

bearing on whether contributions should receive priority.

See Saco, 711 F. 2d, at 448–449. Indeed, it is difficult to 

imagine that if States began to mandate other kinds of 

benefits, those benefits would promptly fall outside 

§507(a)(5). This would amount to saying that whenever some form of protection for employees comes to 

be accepted as so necessary for their welfare that it is

mandated as an employer responsibility it is no longer a

benefit. 

While the Court says the general practice among the 

States of making workers’ compensation mandatory is just 

one factor in the analysis, ante, at 12, presumably the

Court does not suggest that an optional workers’ compensation scheme is an “employee benefit plan” simply because other States have mandatory schemes. Assuming,

then, that a given optional workers’ compensation scheme

might receive the priority, the Court’s approach will create

uncertainty about application of the priority to the relevant payments. Only a few States have wholly permissive 

regimes, see, e.g., Tex. Lab. Code Ann. §406.002 (West 
Cite as: 547 U. S. ____ (2006) 7 

KENNEDY, J., dissenting 

2006), but many more offer exemptions for particular 

kinds of employers, see, e.g., Tenn. Code Ann. §50–6–

106(5) (2005); Mich. Comp. Laws §418.118(2) (1981). Not 

only will application of the priority depend on varying 

state laws, but also multistate workers’ compensation 

plans may have to be segmented for purposes of determining bankruptcy priorities. There is nothing in §507(a)(5) 

to suggest an intent to cause this kind of disuniformity.

Third, the existence of state funds to compensate employees when their employers fail to provide workers’ 

compensation benefits has little relevance. Once again, it

is unclear how much weight the Court places on this

factor, and it seems doubtful that the Court would remove 

health plans from the priority simply because a State 

created a fallback public health system. In any event

state fallback funds do not change the fact that the employer is providing a benefit; a fallback fund simply indicates the employee could have received the benefit from 

somewhere else. Were it otherwise, pension plans would 

also fall outside the priority, since it appears they must

provide benefits even if the employer has defaulted on its 

contributions. See Central States, Southeast & Southwest 

Areas Pension Fund v. Central Transport, Inc., 472 U. S. 

559, 567, n. 7 (1985) (citing Department of Labor advisory 

opinion). As a practical matter, moreover, most large 

multiemployer plans effectively guarantee compensation 

(unless all the employers happen to go bankrupt at the

same time), and the Pension Benefit Guaranty Corporation ensures payment of at least some of the promised

benefits. The exclusion of these plans from the priority, 

however, would accord with neither the text of the provision nor the common sense notion that protecting the 

insurer—whether it be a private company, a multiemployer plan, or a government fund—is the best way to

protect the employees. See Saco, supra, at 449. Simply

put, harm to the insurer will be passed along to the em-
8 HOWARD DELIVERY SERVICE, INC. v.

ZURICH AMERICAN INS. CO. 

KENNEDY, J., dissenting 

ployees, either by rendering the insurer unable to pay or 

causing it to charge higher rates for the same coverage. 

Finally, even if the language of §507(a)(5) were ambiguous, the definition of “employee benefit plan” in the Employee Retirement Income Security Act of 1974 (ERISA), 

88 Stat. 829, as amended, 29 U. S. C. §1001 et seq. (2000

ed. and Supp. III), would lend considerable support to 

respondent’s view. ERISA defines “employee benefit plan” 

as including an “employee welfare benefit plan,” §1002(3), 

which in turn “mean[s] any plan, fund, or program which

. . . was established or is maintained for the purpose of 

providing for its participants or their beneficiaries, 

through the purchase of insurance or otherwise, . . . benefits in the event of sickness, accident, disability, death or 

unemployment,” §1002(1). The definition of a term in one 

statute does not necessarily control the interpretation of 

that term in another statute, for where the purposes or

contexts are different the terms may take on different

meanings. See United States v. Reorganized CF&I Fabricators of Utah, Inc., 518 U. S. 213, 219–224 (1996). Where no 

conflicting purpose or context is apparent, though, other 

statutes may provide at least some evidence of Congress’ 

understanding. See Securities Industry Assn. v. Board of 

Governors, FRS, 468 U. S. 137, 150–151 (1984); see also 

ante, at 9. 

The ERISA definition is of particular relevance here

given that “employee benefit plan” is not a generic phrase

but something closer to a term of art, with a meaning that

seems unlikely to change based on statutory context. Also, 

neither Howard nor the Court cites any source for a definition of “employee benefit plan” that would exclude workers’ compensation. The Court attempts to minimize the 

significance of the ERISA definition by noting that ERISA

exempts from its coverage any plan “maintained solely for 

the purpose of complying with applicable workmen’s compensation laws.” §1003(b)(3); see ante, at 9. Congress 
Cite as: 547 U. S. ____ (2006) 9 

KENNEDY, J., dissenting 

exempted these plans from coverage, but it did not exclude 

them from its definition, and this is the relevant consideration. Indeed, the language of the exclusion confirms 

that workers’ compensation is an employee benefit plan. 

See §1003(b) (“The provisions of this subchapter shall not 

apply to any employee benefit plan if . . . such plan is

maintained solely for the purpose of complying with applicable workmen’s compensation laws”). The exemption also

belies the Court’s position because it shows that mandatory workers’ compensation plans were not included in the 

definition for any purpose particular to ERISA. Instead, 

since they were exempted from coverage, the most plausible reason for their inclusion (only to be then excluded) is 

that Congress was simply giving the ordinary definition of 

the term. There is no indication in §507(a)(5) that Congress chose to depart from that ordinary definition. By

contrast, when Congress wanted a particular provision of

the Bankruptcy Code to narrow the ordinary definition to 

exclude mandatory workers’ compensation, it did so expressly by referring to those plans covered by ERISA. See

11 U. S. C. A. §541(b)(7) (Supp. 2006). 

An “employee benefit plan,” whether viewed as a term of

art or in accordance with its plain meaning, includes 

workers’ compensation. These are the reasons for my 

respectful dissent.