IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

CLARKSBURG DIVISION

 

GLORIA L. NOWLIN,	)
	)
Plaintiff	)
	)
v.	)	Civil Action No. 1:02 CV 51
	)	(Keeley)
EASTERN ASSOCIATED COAL	)
CORPORATION,	)
	)
Defendant	)
	)

BRIEF OF AMICUS CURIAE,
DIRECTOR, OFFICE OF WORKERS' COMPENSATION
PROGRAMS, UNITED STATES DEPARTMENT OF LABOR

CONTENTS

INTRODUCTION

INTEREST OF AMICUS

RELEVANT PROCEDURAL HISTORY

STATEMENT OF THE ISSUES

ARGUMENT

CONCLUSION

CERTIFICATE OF COMPLIANCE

INTRODUCTION

Gloria Nowlin, a coal miner's widow, filed this action against Eastern Associated Coal Corporation ("EACC") seeking to enforce a final award under the Black Lung Benefits Act ("BLBA").  30 U.S.C. §§901-944.  The award became final in 2000, approximately fourteen years after a Department of Labor ("DOL") administrative law judge ("ALJ") first awarded benefits, and after EACC pursued five appeals to DOL's Benefits Review Board.  During litigation of the claim, EACC largely failed to pay benefits when it was obligated to do so.  The parties have stipulated that EACC did not pay $127,332.40 in benefits due Mrs. Nowlin during the merits litigation.  Instead, she received those benefits from the Black Lung Disability Trust Fund.   

Mrs. Nowlin now seeks to recover the twenty-percent additional compensation to which a claimant is entitled "[i]f any compensation, payable under the terms of an award, is not paid within ten days after it becomes due."  33 U.S.C. §914(f) (incorporated by 30 U.S.C. §932(a)).  DOL's applicable black lung program regulation expressly provides that the claimant is entitled to twenty-percent additional compensation even if the Trust Fund pays benefits on behalf of a defaulting operator.  20 C.F.R. §725.607(b).[1] 

EACC has filed a motion for summary judgment challenging the applicability and validity of 20 C.F.R. §725.607, and asking the court to find that Mrs. Nowlin is not entitled to any additional compensation.  Mrs. Nowlin has responded that the regulation applies and is valid, and has moved for summary judgment awarding her twenty-percent additional compensation on all the benefits the Trust Fund paid her during the merits litigation, i.e., $25,464.48.[2]  The Director, OWCP, agrees with Mrs. Nowlin that the regulation applies and is valid.  The Director disagrees, however, that she is entitled to twenty-percent additional compensation on all the benefits the Trust Fund paid. 

Under section 725.607, the claimant is entitled to additional compensation only if there is an effective benefit award, and the operator fails to timely pay the claimant benefits in accordance with it.  As explained more fully at pp. 10-12, infra, an effective award is a decision by a district director, administrative law judge, the Benefits Review Board, or a United States court of appeals, which triggers the payment obligation of a party liable for benefits.  In the case of an effective decision issued by an administrative law judge, the Benefits Review Board, or a court, a party may request further proceedings but the obligation to pay benefits remains.  If no party initiates further proceedings, such an effective award becomes final.  The claimant is entitled to additional compensation on benefits paid by the Trust Fund only if the Fund made the payments on account of the operator's failure to comply with an effective award.   

Applying this test to the facts of this case would entitle Mrs. Nowlin to $10,921.56, not to $25,464.68, as she claims in her motion for summary judgment.  Of the $127,332.40 that the Trust Fund paid Mrs. Nowlin during the merits litigation, only $54,607.80 was paid pursuant to an effective award and on account of EACC's failure to comply with such an award.  Mrs. Nowlin is therefore entitled to twenty percent of $54,607.80, or $10,921.56.    

We detail the basis for our position in the argument section below.

INTEREST OF AMICUS

The Secretary of Labor has designated the Director of the Office of Workers' Compensation Programs ("OWCP") the administrator of both the Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. §§901-950, and the Black Lung Benefits Act ("BLBA"), 30 U.S.C. §§901-944.  20 C.F.R. §701.202(a), (f).  The Director is the policymaker under the BLBA.  Jewell Smokeless Coal Corp. v. Street, 42 F.3d 241, 244 (4^th Cir. 1994).  He therefore has an interest in the applicability and validity of the black lung regulation challenged here: 20 C.F.R. §725.607.  Moreover, the Director is a party to all BLBA claims proceedings.  30 U.S.C. §932(k); 20 C.F.R. §725.360(a)(5).  In this capacity, he explains the BLBA and its implementing regulations in the course of claims litigation, and defends the validity of black lung program regulations when challenged.  See, e.g., Betty B Coal Co. v. Director, OWCP, 194 F.3d 491, 498 (4^th Cir. 1999). 

Because he is the policymaker, the Director's reasonable interpretation of the BLBA and its implementing regulations is entitled to deference.  Betty B Coal Co., 194 F.3d at 498 (citing Pauley v. BethEnergy Mines, Inc., 501 U.S. 680, 696 (1991)); Sigma-Tau Pharmaceuticals, Inc. v. Schwetz, 288 F.3d 141, 146 (4^th Cir. 2002) (quoting Pauley).  Accordingly, this Court has deferred to the Director's interpretation of a BLBA provision.  Nowlin v. EACC, 266 F.Supp.2d 502, 507 (N.D. W.Va. 2003) (addressing the proper construction of LHWCA section 21(d) (33 U.S.C. §921(d), incorporated into the BLBA by 30 U.S.C. §932(a))). 

The Director also protects the assets of the Black Lung Disability Trust Fund.  See, e.g., Director, OWCP v. Hileman, 897 F.2d 1277, 1281 n. 2 (4^th Cir. 1990) (Director "charged with a fiduciary duty to protect the Black Lung Disability Trust Fund from unjustified claims").  The Trust Fund is the statutory payor of last resort.  It is statutorily required to pay benefits where there is no coal mine operator that may be held liable, the liable coal mine operator defaults, or the liable operator has not timely commenced payment after a district director's initial determination of entitlement.  26 U.S.C. §9501(d)(1)(A), (B).  The Fund receives monies primarily from an excise tax on coal production.  26 U.S.C. §9501(b)(1).  It was in debt to the U.S. Treasury in the amount of $7,253,557,000 by the end of fiscal year 2001.[3]  In this case, the Trust Fund had to pay Mrs. Nowlin benefits during the entitlement litigation because EACC defaulted on its obligation to do so.  The Director is therefore interested in seeing that proper financial consequences flow from EACC's conduct.       

 

RELEVANT PROCEDURAL HISTORY

Mrs. Nowlin's husband, Malcolm, filed a claim under the BLBA on January 6, 1976.  EACC controverted the claim and began developing medical evidence.  While the claim was pending before OWCP's district director, Mr. Nowlin died, and Mrs. Nowlin filed a claim for survivor's benefits.[4]  On May 4, 1981, the district director determined that Mr. Nowlin had been totally disabled due to pneumoconiosis (i.e., black lung disease) at the time of his death in March 1981, and that Mrs. Nowlin was entitled to survivor's benefits.  The district director's award directed the payment of benefits commencing January 1976.  EACC timely requested a hearing, and declined to begin the payment of monthly benefits.  Thus, the Trust Fund paid Mrs. Nowlin both monthly benefits and the retroactive benefits due from January 1976 forward.  26 U.S.C. §9501(d)(1)(A)(i).[5]

EACC continued to litigate the claim for approximately nineteen years.  EACC appealed five successive ALJ awards to the Benefits Review Board before accepting the Board's affirmation of the fifth.[6]  EACC did not request a stay of payment during any of its Board appeals.[7]  EACC also failed to pay Mrs. Nowlin benefits during four of its five appeals of ALJ awards.[8]  When EACC failed to pay Mrs. Nowlin the benefits due pursuant to the ALJs' awards, the Trust Fund did so as required by statute.  26 U.S.C. §9501(d)(1)(A)(ii).  The chart below summarizes the case's procedural history:

May 4, 1981:	District director awards benefits commencing January 1, 1976.
February 14, 1986:	ALJ awards benefits commencing October 1, 1975.
June 26, 1990:	BRB vacates and remands
August 28, 1991:	ALJ reinstates award of benefits
August 17, 1993:	BRB vacates and remands
June 14, 1994:	ALJ reinstates award of benefits
August 31, 1995:	BRB vacates and remands
June 10, 1996:	ALJ reinstates award of benefits
August 14, 1997:	BRB vacates and remands
January 16, 1998:	BRB denies Director's motion for reconsideration and clarification
May 14, 1999:	ALJ reinstates award of benefits, commencing May 1, 1976.
June 22, 2000:	BRB affirms award and modifies commencement date to January 1, 1976.

EACC did not petition for review of the Board's June 22, 2000 decision.  The award therefore became final on August 21, 2000, upon the expiration of the sixty-day period for filing a petition for review.  See 33 U.S.C. §921(c) (incorporated by 30 U.S.C. §932(a)).  In December 2000, EACC assumed its obligation of paying monthly benefits to Mrs. Nowlin, and reimbursed the Trust Fund (with interest) for the benefits the Trust Fund had paid on its behalf.  See 30 U.S.C. §934(b)(1) (upon final determination of its liability for benefits, operator must reimburse Trust Fund for benefits paid).

On April 1, 2002, Mrs. Nowlin filed this suit under section 21(d) of the LHWCA.  33 U.S.C. §921(d) (incorporated by 30 U.S.C. §932(a); 20 C.F.R. §725.604) (permitting the beneficiary of a final compensation order, or the district director, to file an action in district court for enforcement of the order).  EACC filed a motion to dismiss on various procedural grounds, which this Court denied.  Nowlin, 266 F.Supp.2d at 508.  Following a scheduling conference, the Court issued an order establishing a timetable for the filing of dispositive motions and accompanying briefs, and inviting the Director to participate as an amicus "[i]n light of the novel question presented."  Order dated July 28, 2003.  The Director now files this amicus brief. 

STATEMENT OF THE ISSUES

1) Whether the Secretary's regulation at 20 C.F.R. §725.607 limits the claimant's entitlement to twenty-percent additional compensation to instances in which the employer defaulted on benefits payable under the terms of an effective award. 

2) Whether the claimant is eligible for twenty-percent additional compensation notwithstanding payment of benefits by the Black Lung Disability Trust Fund on behalf of an employer that has defaulted on an effective award. 

3) Whether section 725.607 is valid because it is "reasonably related" to the Black Lung Benefits Act's purpose of imposing primary liability for black lung benefits on coal mine operators.

ARGUMENT

A. Applicable Law

Section 14(f) of the Longshore and Harbor Workers' Compensation Act ("LHWCA") provides:

If any compensation, payable under the terms of an award, is not paid within ten days after it becomes due, there shall be added to such unpaid compensation an amount equal to 20 per centum thereof, which shall be paid at the same time as, but in addition to, such compensation, unless review of the compensation order making such award is had as provided in section 921 of this title and an order staying payment has been issued by the Board or court.

 

33 U.S.C. §914(f).  Section 14(f) is one of many LHWCA procedural provisions incorporated into the BLBA.  30 U.S.C. §932(a); see generally Donovan v. McKee, 669 F. Supp. 138, 140 (S.D. W.Va. 1987) (awarding BLBA claimant twenty-percent additional compensation), aff'd, 845 F.2d 70 (4^th Cir. 1988).  The BLBA, however, specifically authorizes the Secretary to vary the incorporated LHWCA provisions before applying them under the BLBA.  30 U.S.C. §932(a) (LHWCA provisions are incorporated "except as otherwise provided . . . by regulations of the Secretary"); Director, OWCP v. Nat'l Mines Corp., 554 F.2d 1267, 1274 (4^th Cir. 1977) (the BLBA “empower[s] the Secretary to depart from specific requirements of the Longshoremen's Act in order to administer the black lung compensation program”).[9]  Pursuant to this authority, the Secretary promulgated section 725.607 to implement the incorporated section 14(f):

 (a) If any benefits payable under the terms of (1) an award by a deputy commissioner (§725.419(d)), (2) a decision and order filed and served by an administrative law judge (§725.478), or (3) a decision filed by the Board or a U.S. court of appeals, are not paid by an operator or other employer ordered to make such payments within 10 days after such payments become due, there shall be added to such unpaid benefits an amount equal to 20 percent thereof, which shall be paid to the claimant at the same time as, but in addition to, such benefits, unless review of the order making such award is sought as provided in section 21 of the LHWCA and an order staying payments has been issued.

 

(b) If, on account of an operator's or other employer's failure to pay benefits as provided in paragraph (a) of this section, benefit payments are made by the fund, the eligible claimant shall nevertheless be entitled to receive such additional compensation to which he or she may be eligible under paragraph (a) of this section, with respect to all amounts paid by the fund on behalf of such operator or other employer.

 

(c) The fund shall not be liable for payments in addition to compensation under any circumstances.

 

20 C.F.R. §725.607 (emphasis added). 

In promulgating this regulation to fit the BLBA, the Secretary altered the language and operation of section 14(f) in three ways that are relevant to the instant case.  First, the Secretary changed section 14(f)'s phrase "not paid" to "not paid by an operator or other employer . . . ."  20 C.F.R. §725.607(a).  Second, the regulation provides that a claimant is entitled to additional compensation even if the Trust Fund pays benefits on behalf of a defaulting operator.  20 C.F.R. §725.607(b).  Third, the regulation provides that the Trust Fund may never be held liable for twenty-percent additional compensation.  20 C.F.R. §725.607(c).  The Secretary explained in the regulation's preamble that it "is intended to encourage the prompt payment of benefits by operators whether or not additional proceedings are pursued."  43 Fed. Reg. 36815 (Aug. 18, 1978).

B. Section 725.607 entitles a claimant to twenty-percent additional compensation on benefits the operator fails to pay pursuant to an effective award, notwithstanding the Trust Fund's payment of those benefits.  It does not entitle a claimant to twenty-percent additional compensation on those benefits the Trust Fund paid in the absence of an effective award.

 

Mrs. Nowlin contends that section 725.607 entitles her to twenty-percent additional compensation on all the benefits that EACC failed to pay her during the merits litigation.  EACC contends that section 725.607 entitles Mrs. Nowlin to nothing because the Trust Fund paid her all the benefits that EACC failed to pay during the merits litigation.  Neither party is correct.     

i) Section 725.607 limits a claimant's entitlement to twenty-percent additional compensation to instances in which the employer defaulted on benefits payable under the terms of an effective award.

 

In order for a claimant to be entitled to additional compensation, section 725.607 requires that there be benefits "payable under the terms of (1) an award by a [district director] (§725.419(d)), (2) a decision and order filed and served by an administrative law judge (§725.478), or (3) a decision filed by the [Benefits Review] Board or a U.S. court of appeals . . . ."  20 C.F.R. §725.607(a).  The three types of awards listed in the regulation have one thing in common: they are all "effective" awards.  See 33 U.S.C. §921(a) (discussed infra at pp. 10-12, 16-17).  Although district director and ALJ awards become effective under different circumstances, once there is an effective award the operator must commence the payment of benefits to the claimant.  20 C.F.R. §725.530(a).[10]

A district director's award – issued before an operator has had an opportunity for a hearing – becomes effective only if uncontested.  Section 725.419(d) specifies that a district director's award becomes effective only if the operator fails to request a hearing or revision of the award within thirty days.  20 C.F.R. §725.419(d).[11]  If the operator timely contests the district director's award, it is not effective, and the operator is not obligated to pay benefits.  Thus, section 725.419(d) ensures that an operator will not be required to pay benefits before it has had an opportunity to defend itself.  Similarly, section 725.607(a)'s reference to section 725.419(d) makes clear that additional compensation is "payable under the terms of a district director's award" only if that award becomes effective and the operator fails to pay benefits.[12] 

An ALJ's award, by contrast, is issued after an operator has had the opportunity for a hearing and becomes effective upon filing regardless of whether it is contested.  LHWCA Section 21(a) states that "[a] compensation order shall become effective when filed in the office of the [district director]."  33 U.S.C. §921(a) (incorporated by 30 U.S.C. §932(a)).  The black lung program regulations applicable to ALJ decisions similarly provide that an ALJ's decision becomes effective when it is filed in the district director's office.  20 C.F.R. §725.478 (ALJ decision must be filed in district director's office upon issuance); 20 C.F.R. §725.479(a) (ALJ's "decision and order shall become effective when filed in the office of the [district director].").[13] 

Applying these principles to the facts here, there were five distinct periods during which no benefits were payable pursuant to an effective award.  EACC, therefore, bears no liability for additional compensation on the benefits the Trust Fund paid during those periods.  First, there were no benefits payable pursuant to an effective award before the first ALJ decision in February 1986.  The Trust Fund, however, paid a total of $47,866.20 in benefits before February 1986 pursuant to the district director's May 4, 1981 award.  Because EACC had timely contested that award, it did not become effective, and did not obligate EACC to pay benefits.  20 C.F.R. §725.419(d); Reich v. Youghiogheny & Ohio Coal Co., 858 F. Supp. 1381, 1390 (S.D. Ohio 1994), aff'd, 66 F.3d 111 (6^th Cir. 1995).  And, because EACC was not obligated to pay benefits pursuant to an effective award, it has no liability for additional compensation on the benefits paid from May 1981 through February 1986 – the date of the first ALJ decision.

The four additional periods during which there were no benefits payable under the terms of an effective award were the periods between each of the Board's four decisions vacating the preceding award and each of the succeeding ALJ awards on remand.  See supra, p. 6.  Following each Board vacatur, there was no effective award until the filing of the succeeding ALJ award on remand.  During these four periods, the Trust Fund once again paid benefits – a total of $24,858.40 – pursuant to the district director's May 4, 1981 award.  Added to the $47,866.20 the Trust Fund paid Mrs. Nowlin before the first ALJ award, the total amount the Trust Fund paid Mrs. Nowlin pursuant to the district director's May 4, 1981 award was $72,724.60 ($47,866.20 plus $24,858.40).  Because this amount was not paid pursuant to an effective award, no twenty-percent additional compensation attaches to it.  It must therefore be deducted from the total of $127,332.40 that the parties have stipulated the Trust Fund paid Mrs. Nowlin before calculating the twenty-percent additional compensation due.  This subtraction leaves $54,607.80.  This is the amount that EACC failed to pay pursuant to an effective award within the meaning of section 725.607.  Mrs. Nowlin is entitled to twenty percent of that amount, i.e., $10,921.56.[14] 

Mrs. Nowlin's only argument to the contrary lacks merit.  She starts from the correct premise that an ALJ award obligates the operator to reimburse the Trust Fund for any benefits the Fund has previously paid the claimant.  Mrs. Nowlin argues that an operator's failure to timely reimburse the Trust Fund entitles the claimant to twenty-percent additional compensation on the amount the operator owes the Fund.  Mrs. Nowlin's Brief at 8.  As we explain below, however, the regulation Mrs. Nowlin cites in support does not address operator reimbursement of the Trust Fund and makes no mention of operator liability for twenty-percent additional compensation.  Moreover, the statutory and regulatory provisions that do address an operator's obligation to reimburse the Fund specify other consequences for an operator's failure to make timely reimbursement and also fail to mention operator liability for twenty-percent additional compensation.     

Mrs. Nowlin cites 20 C.F.R. §725.502(b)(2) (2003) in support of her argument.  Mrs. Nowlin's Brief at 8.  Although this regulation does not apply, supra, footnote 1, the applicable regulation, 20 C.F.R. §725.502(c), embodies an identical principle: an ALJ award requires payment not only of monthly benefits to the claimant, but also of any "past due benefits."[15]  Mrs. Nowlin incorrectly assumes that the obligation to pay "past due benefits" refers to the operator's obligation to reimburse the Trust Fund.  The phrase "past due benefits," however, refers to benefits that were due but not paid to the claimant.  20 C.F.R. §725.502(c).  In this case, no past benefits were due Mrs. Nowlin at the time of the first ALJ award in 1986, or at the time of any of the subsequent ALJ awards on remand, because the Trust Fund had timely paid her all the benefits that were due.  Thus, section 725.502(c) is simply not relevant here.  It addresses a situation in which there are "past due benefits" owed the claimant.  It does not address an operator's obligation to repay the Trust Fund pursuant to an ALJ award, as Mrs. Nowlin contends.  Finally, although section 725.502 addresses how benefit payments should be made, e.g., benefits shall be paid periodically, promptly and directly to the individual entitled, it makes no mention of operator liability for twenty-percent additional compensation.        

The sections of the BLBA and its implementing regulations that do address operator reimbursement of the Trust Fund further undermine Mrs. Nowlin's argument.  30 U.S.C. §934; 20 C.F.R. §§725.602, 725.603.[16]  Under these provisions, an operator that fails to timely reimburse the Trust Fund is subject to a lien on its property in the amount of the debt, and a lawsuit by the Secretary to enforce the lien and/or collect the debt.  30 U.S.C. §934(b)(2), (b)(4); 20 C.F.R. §725.603(b), (c).  These provisions apply only after the award has become final, i.e., the time for requesting further proceedings has expired.  Id.  Significantly, none of them mentions operator liability for twenty-percent additional compensation.  Thus, EACC is not liable for twenty-percent additional compensation based on its failure to reimburse the Trust Fund after issuance of the ALJ awards in this case.  The Court should therefore reject Mrs. Nowlin's argument that she is entitled to twenty-percent additional compensation on all the benefits the Trust Fund paid her.[17]

ii) The Trust Fund's payment of benefits on behalf of EACC while an effective award was in place does not render Mrs. Nowlin ineligible for twenty-percent additional compensation on those benefits.

EACC contends that section 725.607 does not apply where, as here, the Trust Fund paid the claimant the benefits owed her after the employer's default.  EACC's Brief at 5-12.  EACC seeks support for this proposition not only in the language of section 725.607, but also in the Secretary's regulations at sections 725.502 and 725.522.  All three regulations, however, support the opposite conclusion: notwithstanding Trust Fund payment, a claimant is entitled to twenty-percent additional compensation after an employer's default, provided an effective award was in place at the time of the Fund payment.   

First, EACC argues that there are no "unpaid benefits" pursuant to section 725.607 because the Black Lung Disability Trust Fund paid all the benefits due Mrs. Nowlin during litigation of the claim.  EACC's Brief at 5-12.  The language of section 725.607(a) clearly refutes this argument.  It provides that the claimant is entitled to twenty-percent additional compensation "[i]f any benefits . . . are not paid by an operator or other employer . . . within 10 days . . . ."  20 C.F.R. §725.607(a) (emphasis added).  The benefits paid by the Trust Fund pursuant to the ALJ awards were "not paid by an operator or other employer," thus rendering the benefits "not paid" within the meaning of the regulation.  Moreover, section 725.607(b) expressly provides that "[i]f, on account of an operator's . . . failure to pay benefits [pursuant to an effective award] . . . benefit payments are made by the fund, the eligible claimant shall nevertheless be entitled to receive" twenty-percent additional compensation.  20 C.F.R. §725.607(b).    

Second, EACC argues that an operator has no obligation to pay benefits unless and until an award becomes final.  EACC cites revised section 725.502 of the Secretary's regulations in support of its argument that the regulations fail to define when an award becomes "effective," and that absent such a definition, only a final award requires operator payment.  EACC's Brief at 11.[18]  The statute and applicable regulations clearly state, however, that an ALJ's award is effective – and therefore requires payment of benefits – when filed in the district director's office.  33 U.S.C. §921(a) (incorporated by 30 U.S.C. §932(a)) (award "effective" when filed in district director's office); 20 C.F.R. §725.479(a) (same); 20 C.F.R. §725.530(a) (requiring payment of benefits within thirty days of ALJ award).[19]  Thus, the filing of each successive ALJ award, coupled with EACC's failure to pay Mrs. Nowlin benefits, imposes on EACC liability for additional compensation.  

Finally, EACC argues that the Trust Fund, not the operator, must pay any benefits due pursuant to an ALJ award while the award is on appeal.  EACC relies on section 725.522 for this proposition.  EACC's Brief at 9-10.[20]  Section 725.522, titled "Payments prior to final adjudication," does not relieve an employer of the obligation to pay benefits pending appeal.  Rather, section 725.530(a) requires "[a]n operator . . . ordered to pay . . . benefits by an administrative law judge . . . [to] commence the payment of benefits . . . within 30 days of such . . . order . . . ."  Section 725.522 merely echoes the Trust Fund's statutory obligation to pay benefits after an operator defaults.  The Trust Fund must pay benefits when the "operator . . . fails or refuses to commence the payment of benefits . . . ."  20 C.F.R. §725.522(b).  Similarly, the applicable statutory provision mandates that the Trust Fund pay benefits (subject to reimbursement by the operator) when the liable operator "(i) has not commenced payment of such benefits within 30 days after the date of an initial determination of eligibility by the Secretary of Labor, or (ii) has not made a payment within 30 days after that payment is due."  26 U.S.C. §9501(d)(1)(A).  Importantly, section 725.522 explicitly states that section 725.607's twenty-percent additional compensation provision applies to cases in which the Trust Fund pays benefits on behalf of an operator.  20 C.F.R. §725.522(b) ("[i]n the event that the fund undertakes the payment of benefits on behalf of an operator or carrier, the provisions of §§725.601-725.608 shall be applicable to such operator or carrier."). 

Accordingly, none of the three regulations EACC cites supports its position.  Rather, all three clarify that section 725.607 renders the operator liable for twenty-percent additional compensation for the benefits the Trust Fund pays pursuant to an effective award because the liable operator has defaulted.

C. Section 725.607 is valid because it is "reasonably related" to the BLBA's purpose of imposing primary liability for black lung benefits on coal mine operators.

 

EACC last argues that section 725.607 is invalid if it entitles a claimant to twenty-percent additional compensation notwithstanding the Trust Fund's payment of benefits on behalf of a defaulting employer.  EACC's Brief at 12-18.  EACC claims that providing additional compensation "to claimants that already have use of the money as paid by the Trust Fund would constitute pure windfall and be inconsistent with the purpose of the §914(f) penalty which was to insure [that] injured workers timely received their benefits."  EACC's Brief at 17. 

The validity of a regulation promulgated under the BLBA will be sustained if it is "'reasonably related to the purposes of the enabling legislation.'"  Harman Mining Co. v. Director, OWCP, 826 F.2d 1388, 1390 (4^th Cir. 1987), quoting Mourning v. Family Publications Service, Inc., 411 U.S. 356, 369 (1973); Nat'l Mines Corp., 554 F.2d at 1275.  BLBA regulations "are presumptively valid," and the party seeking to demonstrate their invalidity bears a "heavy burden."  Harman Mining, 826 F.2d at 1390.  EACC has not met that burden here.

Section 725.607 is reasonably related to the purposes of the BLBA.  The Act imposes on coal mine operators primary liability for benefits due their former employees who are totally disabled due to pneumoconiosis.  30 U.S.C. §932(a), (h).  Congress intended to impose liability for black lung benefits on individual coal mine operators – rather than the Trust Fund – to the "maximum extent feasible."  Old Ben Coal Co. v. Luker, 826 F.2d 688, 693 (7^th Cir. 1987), citing S. Rep. 95-209, 95^th Cong., 1^st Sess. 9 (1977), reprinted in Committee on Education and Labor, House of Representatives, 96^th Cong., Black Lung Benefits Reform Act and Black Lung Benefits Revenue Act of 1977 at 612 (Comm. Print) (1979). 

The Trust Fund, therefore, is a payor of last resort.  It is available to make payments when no liable coal mine operator may be identified or the liable coal mine operator defaults.  26 U.S.C. §9501(d)(1)(A), (B); see generally Director, OWCP v. Trace Fork Coal Co., 67 F.3d 503, 506 n. 6 (4^th Cir. 1995) (Trust Fund must pay benefits when a coal mine operator cannot be held liable); Nat'l Mines Corp., 554 F.2d at 1275 (Trust Fund must pay benefits when liable operator defaults). 

Section 725.607 seeks to encourage operators to comply with effective awards pending appeal, thereby protecting the Trust Fund from being used as an operator-surrogate while an award is contested.    Operator non-compliance with effective awards has been a pervasive problem under the BLBA and has contributed significantly to the Trust Fund's multi-billion dollar debt.  65 Fed. Reg. 80009-11 (Dec. 20, 2000); 64 Fed. Reg. 54999-55000 (Oct. 8, 1999).  DOL explained section 725.607's purpose in detail in the preamble to the revised black lung program regulations.  65 Fed. Reg. at 80009-11; see also 64 Fed. Reg. at 54999-55001; 62 Fed. Reg. 3365-66 (Jan. 22, 1997).[21]  Just as EACC argues here, operators had commented that the Trust Fund's statutory obligation to pay interim benefits after an operator declined to do so eliminated the need for the twenty-percent provision because Trust Fund payment put compensation in the claimant's hands during an employer's appeal.  In response, DOL explained that the congressional objective of ensuring timely receipt of benefits by claimants "does not extend to insulating the responsible operator from the economic risks of paying benefits on an award which might ultimately be reversed."  64 Fed. Reg. at 55000. 

Clearly there is a risk that claimants whose awards are reversed will be unable to repay the resulting overpayment.[22]  "[R]ecovering overpayments from a largely elderly and unemployed population [is] problematic at best."  65 Fed. Reg. at 80011.  An operator's failure to comply with an ALJ award pending appeal shifts to the Trust Fund the risk of non-recovery of overpayments.  That risk, however, properly rests with the liable operator.  65 Fed. Reg. at 80009-11; 64 Fed. Reg. at 54999-55001.[23] 

To discourage operators from using the Trust Fund in this manner, DOL promulgated section 725.607 and made explicit an operator's liability for twenty-percent additional compensation when the Trust Fund pays benefits on account of an operator's default.  65 Fed. Reg. at 80009.  The regulation imposes on EACC the cost of additional compensation because of its failure to timely pay the claimant the benefits owed pursuant to effective ALJ awards, a failure that necessitated Trust Fund payment and the associated risk of non-recovery of any overpayment.  In this manner, the regulation serves Congress' purpose of imposing liability on responsible operators to the "maximum extent feasible."  65 Fed. Reg. at 80010.[24]

Finally, EACC argues that receipt of twenty-percent additional compensation would be a "windfall" to the claimant where, as here, the Trust Fund paid her benefits throughout the entitlement litigation.  EACC's Brief at 17.  Imposition of liability for twenty-percent additional compensation, however, seeks to deter coal mine operators from failing to comply with effective awards in future cases.  It attempts to protect the Trust Fund from operator default such as happened here.  This public purpose overrides the fact that a claimant may receive additional compensation. 

In sum, section 725.607 serves the BLBA's purpose of imposing on coal mine operators primary liability for benefits due their former employees who are totally disabled due to pneumoconiosis.  The operator held liable for benefits pursuant to an effective award must pay the claimant in a timely manner or pay twenty-percent additional compensation.  The regulation is reasonably related to the statute's purpose and is therefore valid. 

CONCLUSION

For all of the foregoing reasons, the Director, OWCP, respectfully urges the Court to deny EACC's motion for summary judgment, and to grant Mrs. Nowlin's motion for summary judgment to the extent it seeks twenty-percent additional compensation on those benefits the Trust Fund paid pursuant to an effective award.   

                                                                        Respectfully submitted,

                                                                        THOMAS E. JOHNSTON

                                                                        United States Attorney

                                                                        Northern District of West Virginia

 

                                                                       

                                                                        ­­­­­­­­____________________________

BETSY STEINFELD JIVIDEN

                                                                        Assistant United States Attorney

                                                                        1100 Main Street, Suite 200

P.O. Box 591

                                                                        Wheeling, WV 26003

                                                                        (304) 234-7764

 

Of Counsel:            HOWARD M. RADZELY

                        Acting Solicitor of Labor

 

                        DONALD S. SHIRE

                        Associate Solicitor

 

                       

                        _____________________

EDWARD WALDMAN

                        Counsel for Enforcement

                        U.S. Department of Labor

                        Office of the Solicitor

                        Suite N-2117

                        200 Constitution Ave., N.W.

                        Washington, D.C. 20210

                        (202) 693-5671

 

                        Attorneys for the Director, Office

                        of Workers’ Compensation Programs,

                        United States Department of Labor

CERTIFICATE OF COMPLIANCE

            I hereby certify that on November ___, 2003, a copy of the foregoing Brief of Amicus Curiae was mailed, postage prepaid, to the following:

            Robert F. Cohen, Jr., Esq.

            Cohen, Abate & Cohen, L.C.

            P.O. Box 486

            Morgantown, WV 26507-0846

 

            William S. Mattingly, Esq.

            Jackson Kelly PLLC

            P.O. Box 619

            Morgantown, WV 26507

 

                                                                        __________________________

                                                                        BETSY STEINFELD JIVIDEN

                                                                        Assistant U.S. Attorney

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