National Mines Corp. v. Carroll

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
8-30-1995
Natl Mines v Carroll
Precedential or Non-Precedential:
Docket 94-3711
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"Natl Mines v Carroll" (1995). 1995 Decisions. Paper 237.
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 94-3711
IN THE MATTER OF:
NATIONAL MINES CORPORATION;
and
OLD REPUBLIC INSURANCE COMPANY,
Petitioners
v.
MARTHA CARROLL, Widow of Andrew J. Carroll;
and
DIRECTOR, OFFICE OF WORKERS' COMPENSATION
PROGRAMS, UNITED STATES DEPARTMENT OF LABOR,
Respondents
On Petition for Review of a Decision
and Order of the Benefits Review Board
(BRB No. 93-0887 BLAO;
OWCP No. XXX-XX-XXXX)
Submitted under Third Circuit LAR 34.1(a)
August 21, 1995
BEFORE: GREENBERG, COWEN, and SAROKIN, Circuit Judges
(Filed: August 30, 1995)
George H. Thompson
Thompson, Calkins & Sutter
1412 Frick Building
Pittsburgh, Pa. 15219
Attorneys for Petitioners
Thomas S. Williamson, Jr.
Solicitor of Labor
Donald S. Shire
Associate Solicitor
Helen H. Cox
1
Christian P. Barber
United States Department of
Labor
Office of the Solicitor
200 Constitution Avenue, N.W.
Washington, D.C. 20210
Attorneys for Respondent
Director Office of
Workers' Compensation
Programs
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This matter is before us on a petition for review of a
decision and order of the Benefits Review Board of the United
States Department of Labor dated October 26, 1994, affirming an
award of benefits on a miner's and survivor's claim filed
pursuant to the provisions of the Black Lung Benefits Act, as
amended, 30 U.S.C. § 901 et seq. (the "Act").
This case originated when the miner, Andrew J. Carroll,
filed a claim for benefits on June 7, 1978. The Department of
Labor (the "DOL") issued a Notice of Initial Finding on June 25,
1979, indicating that it had determined preliminarily that
Carroll had become totally disabled as of June 7, 1978, and
identifying National Mines Corporation as the operator
potentially liable for benefits to be paid from June 1, 1978. See
20 C.F.R. §§ 725.413, 725.412. The DOL required National Mines
2
to file a controversion to the determination within 30 days or be
deemed to have accepted the initial finding of entitlement and to
have waived its right to contest the claim, absent good cause
shown. See 20 C.F.R. § 725.413. The notice was sent to National
Mines on June 27, 1979, but not to its insurance carrier, Old
Republic Insurance Company. On September 30, 1980, the DOL
issued an Award of Benefits addressed to Old Republic which, in
light of National Mines' failure to respond to the June 25, 1979
order, was essentially a default judgment. However, neither
National Mines nor Old Republic initiated payment and thus the
Black Lung Disability Trust Fund made the payments on their
behalf from June 1978 to February 1981.0
On March 25, 1981, counsel entered an appearance on
behalf of National Mines and Old Republic who together are the
petitioners. By letter dated July 10, 1981, petitioners' counsel
informed DOL that Old Republic intended to controvert Carroll's
claim. Old Republic stated that it elected to have Carroll
examined by a physician on September 3, 1981, and requested that
the record stay open on the ground that this was the earliest
available appointment. On September 25, 1981, and June 16, 1983,
Old Republic submitted the results of its medical testing. The
matter then languished.
0
The fund paid Carroll $12,908.84. It ceased payments to Carroll
after he was awarded Pennsylvania workers' compensation benefits
as the result of his pneumoconiosis. See 30 U.S.C. §932(g); 20
C.F.R. § 725.533(a)(1). Moreover, because Carroll's widow was
awarded state benefits as a result of Carroll's pneumoconiosis,
the Fund has not paid her interim benefits. Id.
3
By letter dated September 24, 1986, a supervisor at Old
Republic wrote to the DOL claims examiner inquiring into the
status of Carroll's claim. The letter referred to an August 12,
1986 telephone conversation in which "it was determined that the
initial finding issued by the Department of Labor [in] June, 1979
was not controverted by either Old Republic Insurance Company or
[its] attorney." The supervisor stated that the DOL claims
examiner had indicated in that conversation that she "would
review the file and issue an amended notice." However, the
supervisor stated that no amended order or notice had been
received. The supervisor sent similar letters of inquiry on July
6, 1987, and June 1, 1989.0
On August 14, 1989, pursuant to 20 C.F.R. §§ 725.310
and 725.480, the DOL entered an order directing Carroll to show
cause within 30 days why Old Republic should not be given the
opportunity to controvert the claim.0 The order stated as a
finding of fact that "[a]n initial finding of entitlement to
benefits was made on June 25, 1979; the responsible operator's
insurance company was not notified of that finding and,
0
On June 3, 1989, Carroll died. Martha E. Carroll, his widow,
filed a survivor's claim on February 16, 1990, and her claim
proceeded independently. The DOL initially denied the claim but
notified National Mines of its potential liability for survivor's
benefits. National Mines controverted the claim and submitted
additional evidence. After her claim was denied again, the widow
requested a hearing before an administrative law judge and her
claim was consolidated with Carroll's claim for a hearing. Her
claim, however, may be moot because she was awarded derivative
survivor's benefits under her husband's claim. See 30 U.S.C.
§932(1).
0
There is no explanation in the record for the approximate
three-year time span between the 1986 correspondence and the 1989
Order to Show Cause.
4
therefore, did not have the opportunity to controvert the claim."
Because Carroll did not respond, the DOL gave Old Republic 30
days to controvert the claim. On October 3, 1989, Old Republic
filed an "Operator Controversion Form" on behalf of itself and
National Mines. In its supplemental response, petitioners
argued, inter alia, that the DOL was precluded by the statute of
limitations set forth in 20 C.F.R. § 725.603(c)(6) from
collecting benefit reimbursements from both National Mines and
Old Republic because the DOL had failed to bring an enforcement
action within six years of the date upon which there had been a
final determination of liability, September 30, 1980.
By letter dated November 16, 1989, the DOL informed
petitioners that because it had accepted the controversion, the
DOL intended to rescind the Decision and Order of September 30,
1980, which had been based upon National Mines' failure to
controvert the initial findings. Old Republic objected to the
rescission. In response, the DOL stated that it would not
rescind the Decision and Order of September 30, 1980, and that
the issue would be addressed at an informal conference.
After an informal conference, a DOL deputy commissioner
recommended that the September 30, 1980 decision and order be
rescinded. The deputy commissioner also stated that "[t]he
Controversions filed by [petitioners] on October 3, 1989 and
October 17, 1989 are herewith accepted as timely." The case was
referred subsequently to the Office of the Administrative Law
Judges for consideration of several contested issues, including
the questions of whether the September 30, 1980 Decision and
5
Order should be considered final and whether the six-year statute
of limitations set forth in 20 C.F.R. § 725.603(c)(6) precludes
imposition of liability on National Mines and/or Old Republic for
any benefits awarded in this case.
On October 22, 1991, a formal hearing was held. On
December 14, 1992, the administrative law judge ("ALJ") issued a
Decision and Order - Awarding Benefits. The ALJ determined, as a
preliminary matter, that the rescission of the September 30, 1980
order was proper and equitable. The ALJ concluded that the claim
had been reopened on petitioners' own initiative. In support of
his conclusion that National Mines and Old Republic "were aware
of [Carroll's] claim and [had] attempted to file a controversion
well before the expiration of the six-year statute of
limitations," the ALJ cited the petitioners' counsel's appearance
on March 25, 1981, and the subsequent letter, dated July 10,
1981, which stated that petitioners were controverting the claim
and electing to have Carroll examined by a physician.0 The ALJ
concluded that a final determination regarding Carroll's
eligibility had not been reached yet, thereby precluding the
applicability of the six-year statute of limitations.
The ALJ also determined that the medical evidence
showed that Carroll was totally disabled due to pneumoconiosis
and that, as a result, his widow was entitled to benefits on his
behalf as well as survivor's benefits under 20 C.F.R. § 725.212.
0
The ALJ also referred to a letter dated April 2, 1981, in which
Petitioners "stated it had received a copy of the September 30,
1980 letter from the carrier, and had requested a complete file
for review." We do not find this document in the appendix.
6
The ALJ determined that Carroll was entitled to benefits
commencing June 1, 1978, and that the widow was entitled to
derivative benefits commencing on June 1, 1989. Consequently,
National Mines was ordered to pay benefits under the Act to
Carroll with derivative benefits to his widow and to reimburse
the Trust for payments previously made.
National Mines and Old Republic appealed the Decision
and Order to the Benefits Review Board, specifically challenging
the ALJ's findings regarding the applicability of the statute of
limitations set forth in 20 C.F.R. § 725.603(c)(6) and the
commencement of benefits date. On October 26, 1994, the Board
issued a Decision and Order affirming the ALJ's award of
benefits. On December 23, 1994, National Mines and Old Republic
filed a petition for review to this court challenging the Board's
affirmance of the ALJ's decision to rescind the September 30,
1980 Award of Benefits.0
We have jurisdiction over the petition for review
pursuant to 33 U.S.C. § 921(c), as incorporated by the Act, 30
U.S.C. § 932(a). We review decisions of the Board "for errors of
law and to assure that it has adhered to its own standard of
review." BethEnergy Mines, Inc. v. Director, OWCP, 39 F.3d 458,
462-63 (3d Cir. 1994) (citing Director, OWCP v. Barnes & Tucker
Co., 969 F.2d 1524, 1526-27 (3d Cir. 1992)). "[T]he Board must
accept an ALJ's findings of fact if they are supported by
substantial evidence in the record considered as a whole." Id.
0
Mrs. Carroll is not participating in the appeal.
7
at 463. We exercise plenary review over the Board's legal
determinations. Id.
II. DISCUSSION
Petitioners do not challenge the award of benefits on
the merits. Rather, they argue that the DOL was without
authority to rescind its September 30, 1980 Award of Benefits and
thereby reopen the claim. Petitioners allege that the DOL, after
nine years of inactivity, realized in 1989 that no action had
been taken within the six-year statute of limitations period set
forth in 20 C.F.R. § 725.603(c)(6) to enforce the lien against
them. Petitioners assert that the DOL, to reinstate its
enforcement rights, reopened the case without authority to
restart the running of the six-year statute of limitations and
legitimize a future enforcement action.
In the first place, petitioners' reliance on section
725.603(c)(6) is misplaced. Under that section, a lien for the
amount paid out by the Fund due to an employer's failure to pay
benefits arises in favor of the United States against the
employer's property when liability for those benefits finally is
determined. 30 U.S.C. § 934(b)(2); 20 C.F.R. § 725.603(b).
Section 725.603(c)(6) provides that the Secretary of Labor may
enforce the lien in a district court where "the proceeding is
commenced within 6 years after the date upon which liability is
finally determined."
However, the statute of limitations cited refers only
to the enforcement proceedings described in section 725.603,
8
which must brought in the district court. Thus, the statute of
limitations on which petitioners rely is not applicable in the
administrative proceedings we review, as those proceedings were
aimed not at enforcing a lien but at determining liability. In
short, because the petition before us has been filed to review an
administrative determination and not to review a judgment in a
district court enforcement action, the question of whether
section 725.603(c)(6) acts to bar the enforcement of liens
against petitioners is not before us. Because petitioners have
not directed our attention to any applicable statute of
limitations, there is no basis for us to vacate the Board's
decision on statute of limitations grounds.
Nonetheless, implicit in petitioner's brief is an
argument that the DOL lacked authority to reopen Carroll's claim
after 30 days from the September 30, 1980 Award of Benefits.
Petitioners argue that the September 30, 1980 Award of Benefits
became final because neither National Mines nor Old Republic
filed a timely controversion challenging the award within the 30-
day period allowed by 20 C.F.R. § 725.419(a). Section 725.419(d)
provides that:
If no response to a proposed decision and
order is sent to the deputy commissioner
within the period described in paragraph (a)
of this section...the proposed decision and
order shall become a final decision and
order, which is effective upon the expiration
of the applicable 30-day period. Once a
proposed decision and order...becomes final
and effective, all rights to further
proceedings with respect to the claim shall
be considered waived, except as provided in
§725.310.
9
Petitioners assert that Old Republic's letter of controversion
filed in July 1981 and its submission of medical evidence in
September 1981 and June 1983 had no effect on the finality of the
September 30, 1980 Award of Benefits because their failure to
file a controversion within the 30-day period set forth in 20
C.F.R. § 725.419(a) deprived them of standing to submit any
further challenge. In support of this interpretation of events,
they note that the DOL did not accept explicitly as timely filed
either the letter of controversion or any of the medical evidence
submitted in 1981 and 1983.
However, section 725.419(d) clearly contradicts
petitioners' contention that the failure to file a timely
controversion left them without an avenue for further review of
the award. Significantly, section 725.419(d) provides that "all
rights to further proceedings shall be considered waived, except
as provided in § 725.310." (Emphasis added.) Section 725.310
provides that:
Upon his or her own initiative, or upon the
request of any party upon the grounds of a
change in conditions or because of a mistake
in a determination of a fact, the deputy
commissioner may, at any time before one year
from the date of the last payment of
benefits...reconsider the terms of an award
of denial of benefits.
Upon timely request, the deputy commissioner may "issue a new
compensation order which may terminate, continue, reinstate,
increase, or decrease such compensation, or award compensation."
10
33 U.S.C. § 922.0 The deputy commissioner may make such
modification to "render justice under the act." O'Keeffe v.
Aerojet Shipyards, Inc., 404 U.S. 254, 255, 92 S. Ct. 405, 407
(1971).0
The DOL submits that Old Republic's letter of
controversion filed in July 1981 and its later submission of
medical evidence were sufficient to constitute a timely request
for modification. The DOL's assertion that the informal
procedures employed in black lung and longshore cases never have
required the submission of a formal request for modification is
supported by case law. See, e.g., Eifler v. OWCP, 926 F.2d 663,
667 (7th Cir. 1991). Moreover, the July 1981 letter was timely
because it was filed within one year of the last payment of
0
Section 725.310 implements section 22 of the Longshore and
Harbor Workers' Compensation Act, 33 U.S.C. § 922, as
incorporated by 30 U.S.C. § 932(a).
0
Petitioners argue that the filing of a timely controversion is a
prerequisite to a request for modification. They submit that
"[t]o conclude otherwise would mean that employers could
challenge an award of benefits at any time by this or like means
without the need for ever filing formal controversion papers."
Br. at 16. However, this interpretation is at odds with the
plain language of section 725.419(d). Section (d) clearly sets
out 20 C.F.R. § 725.310 as an exception to the waiver occasioned
by a failure to file a timely controversion.
Moreover, our holding does not provide an incentive for
employers to ignore the 30 day requirement of 20 C.F.R.
§725.419(a), because the exercise of section 725.310 authority
is, to some extent, discretionary. There really is no
qualitative difference between these provisions and the Federal
Rules of Civil Procedure, which ordinarily require defendants to
file an answer to the complaint within 20 days, see Fed. R. Civ.
P. 12(a)(1)(A), yet allow default judgment debtors to move for
relief from judgment pursuant to Fed. R. Civ. P. 60(b).
11
benefits to Carroll by the Black Lung Disability Trust Fund in
February 1981.
The DOL reasonably could infer from petitioners'
submission of medical evidence that they sought modification on
the ground of a factual mistake regarding the existence or extent
of Carroll's disability. See Banks v. Chicago Grain Trimmers
Ass'n, 390 U.S. 459, 464-65, 88 S. Ct. 1140, 1144 (1967);
O'Keeffe, 404 U.S. at 254-56, 92 S.Ct. at 406-07 (holding that
the authority to re-open is not limited to any particular type of
facts; the Board may review the very existence of a liability as
well as its extent). See also Metropolitan Stevedore Co. v.
Rambo, 115 S. Ct. 2144, 2147 (1995).
Moreover, petitioners' letters of inquiry dated
September 24, 1986, July 6, 1987, and June 1, 1989, which assert
that Old Republic did not receive service of the Notice of
Initial Finding, provided an additional ground for modification
if viewed in conjunction with their earlier letter of
controversion. Two courts of appeal have held that under the
Black Lung Act and regulations the operator's insurance carrier
is subject to liability in black lung benefits proceedings and,
therefore, is entitled to notice as a party to the litigation.
Tazco, Inc. v. Director, OWCP, 895 F.2d 949, 950 (4th Cir.
1990)0; Warner Coal Co. v. Director, OWCP, 804 F.2d 346, 347 (6th
Cir. 1989). The Warner Coal court noted that the Act and
0
The Tazco court explicitly rejected the theory that notice
provided to the coal mine operator constitutionally may be
"imputed" to the carrier. Tazco, 895 F.2d at 951.
12
regulations do not contemplate limiting the carrier's exposure to
indemnifying an operator found liable for payments of benefits.0
Warner Coal, 804 F.2d at 347. Instead, because the carrier is
subject to liability on the claim, due process requires that it
be given adequate notice and an opportunity to defend on the
question of its direct liability to the claimant. Id. See also
Tazco, 895 F.2d at 953 (holding that failure to notify the
carrier required vacation of default award and requiring DOL to
provide insurance carrier and the operator with an opportunity to
contest the merits of the claim). Consequently, the DOL's
rescission in this case of its September 30, 1980 Award and offer
of a new hearing are in accord with the Tazco court's approach.
That being the case, the DOL generally is entitled to use the
modification procedures set out in 33 U.S.C. § 922 to remedy a
failure to notify the appropriate insurance carrier. See
Claudill Constr. Co. v. Abner, 878 F.2d 179, 181 (6th Cir. 1989).
Petitioners attempt to avoid these principles by
alleging that the statement in the various letters of inquiry
that Old Republic had not received the Notice of the Initial
Finding is erroneous. Petitioners reason that their action to
controvert the determination of liability in 1981 shows that Old
0
As the Tazco court explained, "[o]nce a carrier has reported
the issuance of a policy, as mandated by the regulations, the
insurer is fully liable for the obligations of the operator....
The carrier is required to discharge the statutory and regulatory
duties imposed on the employer, thus stepping into his
shoes....Moreover, unlike an indemnification policy, the Black
Lung Benefits scheme contemplates that the insurer, as a party,
may be liable in the original claims proceeding." Tazco, 895
F.2d at 951-52 (citations omitted).
13
Republic had notice of Carroll's claim approximately five years
before the first letter of inquiry was written. Petitioners fail
to acknowledge that the significance of DOL's failure to provide
Old Republic with service is that Old Republic thereby was
deprived of the opportunity to file a timely challenge to the
DOL's initial findings and receive a hearing at which it could
contest them. Old Republic's subsequent awareness of the
liability determination does not remedy the DOL's failure to
serve it because Old Republic was left without an opportunity to
contest the initial liability determination. Consequently,
because the allegation that Old Republic had not been served
properly raises the possibility of a violation of its due process
rights, the DOL reasonably could treat Old Republic's submissions
as a request for time to file a timely controversion.
In sum, we conclude that 33 U.S.C. § 922 authorizes the
DOL to reopen an otherwise final award to "render justice under
the act." O'Keeffe, 404 U.S. at 255, 92 S.Ct. at 407. Of
course, there was an inexplicable lengthy delay in these
proceedings between the time of petitioners' request for
modification and the DOL's action, and petitioners spend much
time in their brief arguing that the delay was improper and
therefore the subsequent modification procedures failed to toll
the statute of limitations. But the reasons for that delay are
not before us.0 We rule only that the statute of limitations
0
The DOL certainly can be faulted for failing to respond to
petitioners' inquiries in a timely manner. The DOL offers no
explanation for its failure to take any action on this claim
between its September 30, 1980 Award of Benefits and its
14
relied on by petitioners is inapplicable to these proceedings,
that the DOL had the authority to construe petitioners' letters
as requests for modification proceedings, and that the reasons
stated in those letters provided legitimate substantive bases for
rescinding an otherwise final award. Nonetheless, as the DOL
points out in its brief, "as a general rule, the mere existence
of modification proceedings does not affect the finality of an
existing award of compensation." Br. at 24. Thus, it
acknowledges that "the Department cannot initiate modification
simply to obtain a new date for the commencement of the six-year
statute of limitations." Id. Whether the modification procedure
tolled the statute of limitations will be a question before a
district court in an enforcement proceeding, if one is brought,
and we do not rule on it.
III. CONCLUSION
For the foregoing reasons, we will deny the petition
for review.
August 14, 1989 Order to Show Cause, despite petitioner's
controversion letter.
15