Present: All the Justices 

UNINSURED EMPLOYER’S FUND 

 OPINION BY JUSTICE A. CHRISTIAN COMPTON 

v. Record No. 971074 February 27, 1998 

HAROLD C. MOUNTS, ET AL. 

FROM THE COURT OF APPEALS OF VIRGINIA 

In this workers’ compensation case, the sole issue at this 

stage of the appellate process is whether the Uninsured 

Employer's Fund is liable for payment of compensation for a 

claimant’s occupational disease upon the ground that the 

claimant’s employer violated Code § 65.2-801(A)(1). The 

statute, a part of the Workers’ Compensation Act, requires every 

employer to “secure his liability thereunder” by “[i]nsuring and 

keeping insured his liability” under the Act. 

Appellee Harold C. Mounts, the claimant, while working as a 

coal miner for appellee Greasy Creek Coal Company, the employer, 

suffered a disabling, compensable back injury in an industrial 

accident on October 12, 1988. On that date, the employer was 

insured by Rockwood Insurance Company, an insurer authorized to 

transact the business of workers’ compensation insurance in the 

Commonwealth, as required by former Code § 65.1-104.1(A)(1), now 

§ 65.2-801(A)(1). The claimant stopped working because of the 

disability, and the insurer began paying benefits. 
 In August 1991, a Pennsylvania court declared the 

insurer insolvent, and liquidation proceedings commenced. All 

persons with claims against the insurer were required to file 

their claims with the court’s liquidator by August 26, 1992. 

 In August 1991, appellee Virginia Property and Casualty 

Insurance Guaranty Association, pursuant to Code § 38.2-1606, 

began paying Mounts’ award for the October 1988 accidental back 

injury because, at the time of the insurer’s insolvency, 

Rockwood had been paying the award. The Guaranty Association, 

established by statute to “provide prompt payment of covered 

claims to reduce financial loss to claimants” resulting from an 

insurer’s insolvency, § 38.2-1600, is obligated to pay such 

claims that existed prior to the insolvency determination. 

§ 38.2-1606(A)(1). 

 On September 15, 1993, an x-ray report indicated that the 

claimant was suffering from coal workers’ pneumoconiosis. Nine 

days later, he filed with the Workers’ Compensation Commission a 

claim for benefits for that occupational disease, naming Greasy 

Creek Coal Company as his last employer. 

 Subsequently, at a January 1996 hearing, a deputy 

commissioner found “that claimant received a communication of 

diagnosis of occupational disease on September 15, 1993.” The 

deputy denied the claim, however, ruling that it was barred by 

the applicable statute of limitations. 

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 Upon review, the full Commission reversed the deputy’s 

ruling, finding the claim was timely. Turning to the merits, 

the Commission determined that the date of claimant’s last 

injurious exposure to the hazards of the disease was October 12, 

1988, while he was employed by Greasy Creek. The Commission 

ruled that the claimant’s “pneumoconiosis is compensable as an 

occupational disease” under Code § 65.2-400. 

 Next, the Commission considered whether the Guaranty 

Association “is responsible for payment of the claim.” The 

Commission concluded that because the September 1993 claim was 

filed after the August 1992 deadline established during the 

liquidation proceedings, the claim was not “covered” and the 

Guaranty Association was “not responsible for paying benefits to 

this claimant.” 

 Continuing, the Commission ruled, without assigning a 

reason, that the Uninsured Employer’s Fund “is responsible for 

this claim.” Thus, the Commission entered an award against 

Greasy Creek and the Fund for payment of disability benefits at 

the weekly rate of $451 for a period of 50 weeks, plus medical 

benefits. 

 The Fund appealed, and a panel of the Court of Appeals 

unanimously affirmed the Commission. Uninsured Employer’s Fund

v. Mounts, 24 Va. App. 550, 484 S.E.2d 140 (1997). Among other 

issues, the Court of Appeals determined that the Fund was 

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responsible for payment of benefits to the claimant and that the 

Guaranty Association had no such obligation. Id. at 557, 484 

S.E.2d at 143. According to the Court of Appeals, the Fund’s 

liability stemmed from the employer’s violation of Code § 65.2-

801(A)(1) in failing to keep its liability insured. Greasy 

Creek was not insured on September 15, 1993, the date the 

diagnosis was communicated to the claimant. 

 The Fund filed a petition for appeal in this Court, 

assigning error to only one of the Court of Appeals’ rulings. 

The Fund’s assignment of error states: “The Court of Appeals’ 

reliance upon ‘keeping insured his liability’ language in 

§ 65.2-801(A)(1) to make the Uninsured Employer’s Fund liable 

for pneumoconiosis benefits is erroneous.” Thus, because the 

Fund does not assign as error the Court of Appeals’ holding that 

the Guaranty Association is not liable for payment of the 

claimant’s benefits, the judgment in favor of the Guaranty 

Association is final. 

 Determining that the Court of Appeals’ decision involves a 

matter of significant precedential value within the meaning of 

Code § 17-116.07(B), we awarded the Fund this appeal from the 

April 1997 judgment below. 

 Initially, the relevant workers’ compensation statutes must 

be summarized. Code § 65.2-404 provides that when an employee 

has a compensable occupational disease, “the employer in whose 

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employment he was last injuriously exposed to the hazards of the 

disease and the employer’s insurance carrier, if any, at the 

time of the exposure, shall alone be liable therefor, without 

right to contribution from any prior employer or insurance 

carrier.” The claimant’s entitlement to benefits for an 

occupational disease, however, accrues on the date of the “first 

communication of the diagnosis.” Code § 65.2-403(A), formerly 

§ 65.1-49 (1987 Repl. Vol.); Cooper v. Mary E. Coal Corp., 215 

Va. 806, 809, 214 S.E.2d 162, 164-65 (1975). 

 On the date of this claimant’s last injurious exposure to 

the hazards of pneumoconiosis in October 1988, former Code 

§ 65.1-149(A) (1990 Cum. Supp.) (now § 65.2-1203(A)(2)) 

provided: “After an award has been entered against an employer 

for compensation benefits . . . and upon a finding that the 

employer has failed to comply with the provisions of § 65.1-

104.1 . . . the Commission shall order the award, or any unpaid 

balance, to be paid from the Uninsured Employers Fund.” The 

Fund was created by the General Assembly to provide funds to 

claimants for benefits awarded against an employer which has 

breached its duty “to secure compensation insurance.” A. G. Van 

Metre, Jr., Inc. v. Gandy, 7 Va. App. 207, 213, 372 S.E.2d 198, 

202 (1988). See § 65.2-1201(A). 

 In October 1988, former Code § 65.1-104.1(A)(1) (1987 Repl. 

Vol.), like present § 65.2-801(A)(1), provided that every 

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employer “shall secure his liability” for workers’ compensation 

payments by, among other methods, “[i]nsuring and keeping 

insured his liability” with an authorized workers’ compensation 

carrier. 

 The Court of Appeals, in ruling against the Fund, stated: 

 “To read Code § 65.2-801 to require only that 

employers have insurance on the date of the employee’s 

last exposure, and not on the date when the diagnosis 

of the disease was communicated to the employee, would 

exempt employers from insuring themselves against a 

great number of occupational disease claims. 

Moreover, Code § 65.2-801, by its use of the phrase 

‘keeping insured,’ requires employers to remain 

insured. Therefore, we hold that because Greasy Creek 

was not insured on the date the diagnosis was 

communicated to Mounts, Greasy Creek failed to ‘keep[] 

[itself] insured’ as required by Code § 65.2-801.” 

Mounts, 24 Va. App. at 556, 484 S.E.2d at 143 (alteration 

in original). 

 In this appeal, the Attorney General contends, on 

behalf of the Fund, that by virtue of the language in 

§ 65.1-149 (§ 65.2-1203), Greasy Creek was in compliance 

with the requirements of § 65.1-104.1 (§ 65.2-801) because 

it was insured by Rockwood on October 12, 1988. Thus, the 

Attorney General argues, because the Fund can be 

responsible for an award only “upon a finding that the 

employer has failed to comply with the provisions of 

§ 65.1-104.1,” this Court should reverse that portion of 

the award that imposes liability upon the Fund. 

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 Continuing, the Attorney General says that the Court 

of Appeals, in holding the Fund liable, incorrectly 

“latched onto” the “keeping insured” language in § 65.1-

104.1 (§ 65.2-801(A)(1)), while noting the employer was not 

insured in 1993. He argues that the Court of Appeals’ 

reasoning is flawed because only the carrier that insured 

the employer’s liability on the date of the last injurious 

exposure can be held liable, in view of the provisions of 

§ 65.2-404. 

 The Court of Appeals answered this argument by saying 

that § 65.2-404, by its terms, “addresses only the 

liability of the employer in whose employment the employee 

was last injuriously exposed, and its insurance carrier, in 

contradistinction to prior employers and their insurance 

carriers.” Mounts, 24 Va. App. at 557, 484 S.E.2d at 143. 

The Court of Appeals stated: “Nothing in Code § 65.2-404 

was intended to release employers from the duty of ‘keeping 

[themselves] insured’ as required by Code § 65.2-801 or to 

exempt the Fund when the employer has breached its 

statutory obligation.” Id. (alteration in original). 

 In a final argument, the Attorney General contends: 

“The ‘keeping insured’ language is not meant to require an 

employer like Greasy Creek to anticipate future 

pneumoconiosis claims when his carrier is declared 

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insolvent, particularly in the face of the plain wording of 

§ 65.2-404 that makes the employer and carrier on the last 

date of injurious exposure liable.” We disagree with the 

Attorney General, and agree with the Court of Appeals. 

 The “keeping insured” language has been a part of the 

workers’ compensation statutes since the Act was adopted in 

1918. Acts 1918, ch. 400, § 68. We have observed, as the 

Court of Appeals correctly held, that the language under 

scrutiny here means that an employer subject to the Act 

“must be and remain insured.” Hartford Accident & Indem. 

Co. v. Fidelity & Guar. Ins. Underwriters, Inc., 223 Va. 

641, 643, 292 S.E.2d 327, 328 (1982). 

 We shall elaborate on the Court of Appeals’ analysis 

to answer one portion of the Attorney General’s argument in 

this Court. He contends that the statutes do not require 

an employer to anticipate future pneumoconiosis claims and 

to remain insured when its insurer has been declared 

insolvent. This argument, however, is answered by merely 

referring to the statute of limitations governing 

occupational diseases. 

 An employer has potential liability for a claim of 

coal miners’ pneumoconiosis for “three years after a 

diagnosis of the disease” is first communicated to the 

employee, or for “five years from the date of the last 

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injurious exposure in employment, whichever first 

occurs. . . .” Code § 65.2-406(A)(1), formerly § 65.1-

52(1). Therefore, given the statutory mandate to insure 

and keep insured its liability, an employer whose employees 

are susceptible to pneumoconiosis must anticipate that such 

claims will accrue in the future and must secure its 

liability for such potential claims as required by § 65.2-

801, even when its insurer has been declared insolvent. 

When, as here, there has been a failure to do so, the Fund 

will be liable because the employer has violated its 

statutory duty. 

 Consequently, the judgment of the Court of Appeals 

will be 

Affirmed. 

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