Armando Venicassa v. Consolidation Coal Company and Director, Office of Workers' Compensation Programs, United States Department of Labor

137 F.3d 197, 1998 U.S. App. LEXIS 3196, 1998 WL 81617

• Court: Court of Appeals for the Third Circuit
• Decided: February 27, 1998
• Docket: 96-3736
• Status: Published

Opinions

OPINION OF THE COURT

ROTH, Circuit Judge:

Armando Venicassa has filed a Petition for Review from the decision of the Benefits Review Board (“Board”), affirming the denial by the Administrative Law Judge (“ALJ”) of Venicassa’s claim for black lung benefits under the Black Lung Benefits Act, 30 U.S.C. § 901, et. seq. (the “Act”). In an earlier hearing, the ALJ had dismissed United States Steel Corporation, the responsible coal mine operator, designated by the Office of Worker’s Compensation Programs (“OWCP”), and had awarded benefits to Ven-icassa, to be paid by the Black Lung Disability Trust Fund (“Trust Fund”). The Director of the OWCP appealed this decision to the Board. The Board then remanded Venicas-sa’s claim to the OWCP to permit the OWCP to identify a second responsible operator to pay benefits. We must decide whether, after the award on the merits to Venicassa, the Board could vacate that award so that the ALJ might designate a second responsible operator and begin the process all over again.

For the reasons we discuss below, we conclude that the Board erred when it remanded this case for designation of a second responsible operator. We will, therefore, grant the petition for review, vacate the decision of the Board, and remand this case to the Board to reinstate the ALJ’s ruling, granting Venicas-sa’s claim for benefits and ordering the Trust Fund to pay them.¹

We have appellate jurisdiction in this matter pursuant to the Longshoreman’s and Harbor Workers’ Compensation Act, 33 U.S.C. § 902, made applicable to Black Lung Benefits cases by 30 U.S.C. § 932(a). The decision of the Benefits Review Board is a final order under Section 21(e) of the Longshoreman’s and Harbor Workers’ Compensation Act, 33 U.S.C. § 921(c) as incorporated by section 422(a) of the Black Lung Benefits Act, 30 U.S.C. § 932(a).

FACTS AND PROCEDURAL BACKGROUND

This case comes to us with a lengthy procedural history, due in large part to the long delay by the OWCP in processing Venieas-sa’s claim and to the acknowledged error by the OWCP in designating the responsible coal mine operator.²

The petitioner in this case, Armando Venieassa, worked in and around - coal mining operations for 43 years before he retired in 1985. In 1986, he filed a claim with the OWCP for benefits under the Black Lung Benefits Act. Under the Act, benefits are awardable to persons who are totally disabled due to pneumoconiosis, a disease known as “black lung.” The OWCP processed Venicassa’s claim for benefits with the information he supplied. Venicassa indicated clearly on his claim form that his most recent employer was Consolidation Coal Company, for whom he worked from January 1984 until his retirement in August 1985. However, despite being supplied with accurate information, the OWCP erroneously designated United States Steel Corporation (“U.S.Steel”) as the responsible operator.³

Venicassa’s claim was then referred to the Department of Labor’s Office of Administrative Law Judges for a formal hearing. In February 1987, the Director of the OWCP moved to remand the ease for identification of another responsible operator. This motion to remand came 13 months after Venicassa had provided the OWCP with the information to identify the proper responsible operator. In August 1988, prior to the formal hearing on Venicassa’s claim', the ALJ denied the motion to remand.⁴ Citing the Benefits Review Board decision in Crabtree v. Bethlehem, Steel Corp., 7 BLR 1-354 (1984), the ALJ held that due process concerns dictated that the hearing go forward and that, if U.S. Steel was not the responsible operator, it would be dismissed and the Director of the OWCP substituted to defend the claim. At the hearing, Venicassa testified that U.S. Steel had been improperly designated as the responsible operator. The ALJ then dismissed U.S.-Steel and substituted the Director.

To succeed on a claim for black lung benefits, a. claimant must establish that -he suffers from pneumoconiosis and, as a result, is totally disabled. In addition, the claimant must establish that the pneumoconiosis is the result of coal mining. Under the Act, pneumoconiosis may be established by x-ray evidence or by a finding of a physician that the miner suffers from the disease. 30 U.S.C. § 902(f)(1) (1986); 20 C.F.R. § 718.202.

At the hearing, the ALJ concluded that Venicassa’s chest x-rays did' not establish pneumoconicisiS. However, the ALJ also heard five medical éxperts, four of whom diagnosed some form of lung disease related to coal dust exposure. The one physician, who did not find lung disease related to coal exposure, did so without providing his reasoning. The ALJ, therefore, ascribed little weight to that opinion. The ALJ concluded that the weight of medical opinion established the finding of pneumoconiosis. Since Venicassa had at least 10 years of coal mining employment, the ALJ found that Veni-cassa was entitled to the statutory presumption that his pneumoconiosis arose as a result of coal mine employment. 30 U.S.C. § 921(e) (1986). The ALJ credited Venicassa with' 43 years of coal mine employment and found evidence sufficient to establish the existence of pneumoconiosis due to that employment. As a result, on June 23, 1989, the ALJ awarded benefits to Venicassa.

The Director appealed this decision to the Benefits Review Board. In its review of the ALJ’s decision, the Board did not address the merits of the entitlement to benefits. Instead, it vacated the award and remanded the case to the deputy commissioner for determination of another responsible operator. The Board found, it significant- that, the Director had filed the Motion to Remand before a formal hearing had been held. For this reason, the Board held that the due process concerns of relitigating the ease were less compelling than those facing the Crabtree Court.

On remand, the OWCP designated Consolidation Coal as the responsible operator. Venicassa’s benefits were then stopped. In December 1994, a second hearing on Venicas-sa’s eligibility for benefits was held before the same ALJ. Consolidation Coal submitted evidence in addition to that presented at the first hearing. Venicassa submitted only the record of the medical evidence from the first hearing. In addition, Venicassa testified about the deterioration of his health during the more than five years since the initial award of benefits. The physicians, who had presented medical testimony at the first hearing regarding Venicassa’s respiratory problems, did not testify in person at the second hearing.

At the conclusion of the second hearing, the ALJ denied Venieassa’s claim for benefits. Venicassa appealed to the Benefits Review Board on June 23, 1995. On October 22, 1996, the Board issued a final decision, affirming the decision of the ALJ. Venicassa then timely filed his petition for review with this Court.

ANALYSIS

We review decisions of the Benefits Review Board and of the ALJ for errors of law. Lango v. Director, OWCP, 104 F.3d 573, 575 (3d Cir.1997); Kowalchick v. Director, OWCP, 893 F.2d 615, 619 (3d Cir.1990).

The petitioner contends that the Board’s reversal of the award of benefits and its decision to remand this case for the designation of a second responsible operator violated due process and subjected him to substantial prejudice. He argues that to make him relitigate a claim, on which he has already won an award of benefits on the merits, violates due process. He further contends that, under the rationale of the Benefits Review Board in Crabtree, the efficient administration of the Black Lung Benefits Act dictates that the case should not have been remanded and that the Trust Fund should be reinstated as payor.

The Director argues that, although a mistake occurred in the designation of U.S. Steel as the responsible operator at the outset, the Director attempted to correct the mistake with the motion to remand for designation of another responsible operator. The Director further contends that the ALJ’s denial of that motion was in error and that the Trust Fund is not the appropriate payor because ultimately Consolidation Coal was identified as the responsible operator.

We begin our review with an examination of the- regulations, under the Black Lung Benefits Act, which govern the designation of a responsible operator. These regulations provide:

At any time during the processing of a claim under this part, after sufficient evidence has been made available to the deputy commissioner, the deputy commissioner may identify a coal mine operator ... which may be liable for the payment of the claim____ Such identification shall be made as soon after the filing of the claim as the evidence obtained permits____

20 C.F.R. § 725.412(a). The responsible operator is defined as “the operator or other employer with which the individual had the most recent periods of cumulative employment of not less than one (1) year.” 20 C.F.R. § 725.493(a)(1).

It is uncontested that, as of January 1986 when Venicassa first filed his claim, the OWCP had all the evidence necessary to designate the proper responsible operator. However, the Director argues that, under the Act and the applicable regulations, a coal mine operator may be designated as responsible operator for the purposes of defending a claim for Black Lung Benefits “at any time” during the processing of the claim. The Director claims, therefore, that the ALJ improperly refused to remand the case for the designation of a second responsible operator.

The regulations also state, however, that the identification of the responsible operator shall be made “as soon after the filing of the claim as the evidence obtained permits.” For this reason, Venieassa argues that, since from the outset the Director had enough information to name the proper responsible operator, Venieassa should not be penalized for the Director’s failure to do so. Venieassa contends that, because the OWCP did not make a prompt resolution of the responsible operator issue, the ALJ’s decision to go forward with the hearing on the merits was appropriate; to proceed otherwise would have subjected Venieassa to further substantial delay in the processing of his claim.

When the ALJ considered the Director’s motion to remand the case for designation of. another responsible operator, he relied on the decision of the Benefits Review Board in Crabtree. In Crabtree, the Board dismissed Bethlehem Steel as the responsible operator. Instead, however, of remanding the case for identification of another responsible operator, the Board held that the Trust Fund would be liable for benefits because the delay involved in relitigating the claim would offend due process. In Crabtree, the Board concluded that “the Department of Labor is not entitled to a second opportunity to identify another putative responsible operator.” Id. at 1-356-357. fully developed and litigated, can be defeated in subsequent proceedings by a different operator, and not always on the merits. Second, piecemeal litigation obviously is not compatible with the efficient administration of the Act and expeditious processing of claims.

Remand for reconsideration of the operator issue would be tantamount to relit-igating the claim. If the Department identifies another responsible operator, then that operator is entitled to contest the claim, develop its own evidence, request a hearing, etc., until it has exhausted the full gamut of available procedures for adjudicating entitlement. The fact that claimant has established entitlement against employer does not bind any other operator(s) who were not a party to the proceedings. This piecemeal approach encourages two undesirable results. First, a claimant who has established entitlement in the first round of proceedings may lose his award in a later round against another operator. A first finding of entitlement, even though

In view of the aforementioned considerations, the Department must resolve the operator issue in a preliminary proceeding, see 20 C.F.R. § 725.412(d), and/or proceed against all putative responsible operators at every stage of the claims adjudication. Even a separate preliminary proceeding on the operator issue alone is more desirable than fully litigating the claim against each operator individually____ The Trust Fund therefore must assume liability in the absence of any other potentially liable operator.

Id. at 1-357.

The Director contends, however, that Crabtree should, not- have prevented the OWCP from identifying Consolidation Coal as the responsible operator even after the ALJ had awarded benefits payable by the Trust Fund. The Director urges that the critical distinction between Venieassa’s case and the Crabtree decision is that here a motion to remand was filed before the hearing on the merits. Therefore, Crabtree does not apply. The Director contends that remand, at the time that the motion was filed, would have been appropriate under Crabtree because remand would have been prior to litigation of the claim; Crabtree held only that the Director could not wait until after the ALJ had awarded benefits against the Trust Fund before seeking to identify a second responsible operator. Because the motion to remand was filed 18 months before the hearing on the merits and was denied prior to the hearing, the Director claims he did not have an opportunity to ascertain the correct responsible operator.⁵

In resolving the motion to remand in the instant case, the ALJ concluded that the “Director blew it” in failing to name the proper responsible operator. (Appendix .56). For this reason, the ALJ dismissed U.S. Steel and substituted the Trust Fund as the responsible party. The ALJ’s decision places the incentives in the proper place—the Director should have gotten it right the first time. That would not have been an onerous task because, from the outset, the OWCP had in its possession all the information necessary to name the proper responsiblé operator.

The Director, however, argues that the plain language of the regulations allows for the designation of a responsible operator “at any time” during the processing of the claim. Therefore the OWCP should be allowed to rectify its mistake. The Director relies, on the Sixth Circuit’s decision in Director, O.W.C.P. v. Oglebay Norton Company, 877 F.2d 1300 (6th Cir.1989).

Although we have not decided a ease involving the failure of the OWCP to correctly name the responsible operator 'in the first instance, Oglebay addresses such a situation in a black lung, widow’s benefits case. In Oglebay, the court considered the identification of a responsible operator nearly ten years after the claim was filed. The Director appealed a decision of the Benefits Review Board which had dismissed the company as responsible operator. The Sixth Circuit held that the identification of the company as “responsible operator” nearly ten years after the claim was filed was valid and that the transfer of liability to the Fund was improper. In reaching this conclusion, the Sixth Circuit interpreted the regulation, governing the identification of the responsible operator (20 C.F.R. § 725.412(a)). The Court noted that the regulation permits identification of the responsible operator at any time during the processing of the claim. In addition, the Sixth Circuit found the transfer of liability to the Trust Fund to be improper when there is an affirmative identification of a responsible operator. Oglebay, 877 F.2d at 1304. The court reasoned that neither the applicable statutes nor regulations indicated that identification of the responsible operator should be disregarded merely because it was inefficiently reached; the operator would not be substantially prejudiced in defending the matter on its merits.

The Director asks us to disregard Crabtree and follow the Sixth Circuit’s reasoning in Oglebay. We aré not, however, bound by Oglebay. Moreover, the instant case is easily distinguishable from Oglebay. First, Ogle-bay involved a dispute between the OWCP and the responsible operator. The case before us involves a dispute between the claimant, the Director, and the putative responsible operator. Second, in Oglebay the ALJ decided to remand the case for determination of another responsible operator prior to holding a hearing on the merits. In the instant case, the decision to remand was made after a formal hearing on the merits and after the ALJ had awarded benefits. In other words, the Crabtree concerns about due process and piecemeal litigation—relied on by the ALJ in denying the motion to remand—are greater in the instant case than were those faced by the court in Oglebay.

Moreover, there is another important distinction between this ease and Oglebay. The Oglebay court reasoned that inefficient identification of the responsible operator does not invalidate that identification. In our case, however, the Director had before it all the relevant information necessary to designate the proper responsible operator—but failed to do so. The OWCP’s failure here is more than mere inefficiency. Indeed, this failure penalized Venicassa, who had already litigated the case on the merits and won. It also penalized Consolidation Coal, which had to litigate a 10 year old claim.

The Director contends, however, that, because the motion to remand was made prior to litigation of the claim on the merits, remand and designation of a responsible operator were appropriate and did not raise due process concerns. Consolidation Coal argues, on the other hand, that the critical issue here is not the timing of the motion to remand but the timing of the identification of the responsible operator. To resolve this dispute, we must go back to the language of the regulation.

The regulation allows for the designation of a responsible operator “at any time.” Thus, the Director asserts that, upon receiving the motion to remand, the ALJ should have allowed the designation of a second responsible operator. The Director argues that, while the OWCP clearly erred in failing to identify Consolidation Coal as the responsible operator at the outset, the ALJ erred in denying the motion to remand the ease in order to correct the problem. The Director contends that the Act gives the OWCP sole responsibility for identifying the responsible operator who may be liable for payment of benefits. 20 C.F.R. §§ 725.410(b), 725.412. The Director relies on the regulatory language which provides for designation of a responsible operator “at any time during the processing of a claim” and contends that a claim is still being “processed” even after it is referred to the ALJ for a hearing.

While the regulation clearly states that the designation of the responsible operator may be made “at any time,” the language of the regulation triggers the process by providing that the designation be made “after sufficient evidence has been made available to the deputy commissioner.” The regulation then further limits the process by providing that the designation “shall be made as soon after the filing of the claim as evidence obtained permits.” 20 C.F.R. § 725.412(a). The focus of the regulation is clearly on the swift and accurate designation of the responsible operator so that the claim may be resolved through the presentation of evidence to the fact finder by the appropriate parties.

Because the OWCP did not make a timely designation of the proper responsible operator, nor did it even make a timely attempt to correct its misdesignation or to add Consolidation Coal as a potential responsible operator, we conclude that the ALJ at the first hearing correctly designated the Trust Fund as the defending party.⁶

Moreover, this result is consistent with the purpose behind the establishment of the Trust Fund. The Trust Fund was established by the Black Lung Benefits Revenue Act of 1977 “to provide a more effective means of transferring the responsibility for the payment of benefits from the Federal government to the coal industry____” 20 C.F.R. § 725.490(a). The Black Lung Benefits Revenue Act of 1977, (Pub. Law 95-227) (92 Stat. 11) (1978 U.S.C.C.A.N.) (codified at 30 U.S.C. § 934a). The fund is financed by the coal industry through an excise tax on the sale of coal. 26 U.S.C. § 9501.

The Director argues that the Trust Fund should not be liable in. this instance because the Trust Fund was created to assume liability for benefits in the event that no responsible operator could be found. The statute provides that the Trust Fund is available for the payment of benefits in any case in which the Secretary determines that “there is no operator who is required to secure the payment of such benefits.” 26 U.S.C. § 9501(d)(1)(B).⁷

In order to support its argument that the Trust Fund should be liable only in the absence of an identifiable responsible operator, the Director emphasizes a portion of the Act’s legislative history which states that Congress intended to ensure that individual coal operators, rather than the Trust Fund, would be liable for claims.⁸ The Sixth Circuit relied on these statements in holding that, where a responsible operator has been identified, the transfer of liability to the Trust Fund is improper. Oglebay, 877 F.2d at 1304.

However, investigation into the legislative history indicates that Congress did not contemplate the situation before us. Indeed, the Trust Fund’s architects were motivated by a desire to curb the ability of coal mine operators to transfer assets in order to sidestep liability as responsible operators.

At the time of the Trust Fund’s creation, its drafters were cognizant of the structural changes in the coal industry which resulted in the consolidation of numerous coal companies and the disappearance of others. They were particularly conscious of the impact of these changes on future claimants and of their effect on the responsibility of successor and former operators.⁹

During the last two decades, the coal industry has undergone major structural changes. Of the 50 largest coal companies, 29 have become captive of other industries ... In most instances, these acquisitions transferred intact the ownership of the mines and operations of existing eoal producers to the larger and more diversified parent corporations.... It was originally the intent of Congress that such entities should bear the liability for black lung diseases arising out of employment in their mines....

S. Rep. 209, at 9.

Thus, while the Act evidences an intent that individual coal mine operators, rather than the Trust Fund, assume liability for the payment of black lung benefits, the rationale behind this determination is the protection of claimants from the denial of benefits due to the disappearance of any responsible operator. Here, because- of the failure of the OWCP to identify the responsible operator “as soon after the filing of the claim as the evidence obtained permits,” it is the claimant who will suffer unless the Trust Fund assumes responsibility for payment of the benefits. This result will protect the claimant, which is the purpose of the Act.

CONCLUSION

The Black Lung Benefits Act was enacted in order to ensure benefits for coal miners who have been totally disabled due to black lung disease as a result of their work in coal mines. Despite possessing accurate information regarding Venicassa’s employment history, the Office' of Worker’s Compensation Programs failed to designate the proper responsible operator to defend the claim. As a result of this failure, the Benefits Review Board ruled that Venicassa had to relitigate his claim. We conclude, however, that the OWCP’s failure to make a timely designation of the proper responsible operator should not have jeopardized the award of benefits which had been made to Venicassa. We will, therefore, grant the petition for review, vacate the decision of the Benefit’s Review Board, and remand this case for reinstatement of the June 23, 1989, order and award of the Administrative Law Judge.

1 . We are also asked to decide whether the ALJ’s determination at a second hearing, denying benefits, was supported by substantial evidence. Ven-icassa submits that the denial of benefits by the ALJ on remand was irrational because the ALJ relied on the same medical evidence that he had relied on to make the initial award of benefits. Because of our decision on the second designation issue, we do not need to reach this question.

2 . Unfortunately, the OWCP’s failure to designate the proper responsible operator at the outset has exacerbated a problem all too familiar to us. We have confronted a disturbing record of delay in processing claims for black lung benefits in prior cases. See Kowalchick v. Director, OWCP, 893 F.2d 615 (3d Cir.1990) (Benefits awarded 17 years after the initial claim was filed); Lango v. Director, OWCP, 104 F.3d 573 (3d Cir.1997) (noting long delay in processing claim for benefits).

3 . Venicassa indicated on his claim form that he was employed by U.S. Steel from 1942 until January 1984. The regulations define "responsible operator” as “the operator or other employer with which the miner-had the most recent periods of cumulative employment of not less than one (1) year ...” 20 C.F.R. § 725.493(a)(1).

4 . The record reflects that the ALJ, who ruled on the remand motion in August 1988; did not receive the case until May or June of that year even though the case was referred to the Office- of Administrative Law Judges in September of the previous year. Appendix 56-57.

5 . In making this argument, the Director also relies on Director, OWCP v. Trace Fork Coal Company, 67 F.3d 503 (4th Cir.1995). However, Trace Fork does not in fact support the Director’s position. In Trace Fork, the ALJ dismissed the coal company as responsible operator, refusing to remand the case for the designation of another responsible operator, and then named the Trust Fund as payor. The ALJ awarded benefits and the Director appealed the ALJ’s finding that the Trust Fund was liable. The Benefits Review Board affirmed the ALJ’s ruling. The Fourth Circuit held that dismissal of Trace Fork as responsible operator was proper and affirmed the refusal to remand for the naming of another responsible operator. The Board and the Fourth Circuit based their decisions on Crabtree and on the holding in that case that the Director must resolve the responsible operator issue in a preliminary proceeding or else proceed against all potential operators at each stage of the adjudication in order to avoid piecemeal litigation and due process concerns. The Trace Fork court found that to remand the case would allow a second operator to challenge the claimant's entitlement to benefits. The court concluded, “We are unwilling .to potentially upset .the finding that [claimant] is entitled to benefits, a matter already fully litigated on the merits. The Director had full opportunity, and even a motion, to ascertain the responsible operator as a preliminary matter, but simply refused.” Trace Fork, 67 F.3d at 508.

6 . Contrary to the approach of the petitioner, and to the views expressed in the dissent, we do not ground our decision on due process considerations.

7 . The provision reads that the Trust Fund shall be liable for the payment of benefits in any case in which the Secretary determines that:

(a) the operator liable for the payment of such benefits—

(i) has not commenced payment of - such benefits within 30 days after the date of an initial determination of eligibility by the Secretary, or

(ii) has not made a payment within 30 days after the payment is due,

(b) there is no operator who is required to secure payment of such benefits, ...

26 U.S.C. § 9501(d) (emphasis added).

8 . "It is further the intention of this section, with respect to claims related to which the miner worked on or after January 1, 1970, to ensure that individual coal operators rather than the trust fund bear the liability for claims arising out of such operator’s mines, to the maximum extent feasible.” S. Rep. 209, 95th Cong., 1st Sess. 9 (1977), reprinted in House Comm. On Educ. And Labor, 96th Cong., Black Lung Benefits Reform Act and Black Lung Benefits Revenue. Act of 1977, 612 (Comm. Print 1979). See also Old Ben Coal Co. v. Luker, 826 F.2d 688, 693 (7th Cir.1987).

9 . "When the black lung benefits provisions of the Federal Coal Mine Health and Safety Act of 1969 • were first enacted, it was the expectation of Congress that after the Federally financed portion of the program terminated, individual coal mine operators would assume the liability for benefits either under an approved state workers’ compensation program or under Part C of the Federal Act. In order to facilitate assessment of liability against coal mine operators, Section 422(1) prohibited the avoidance of such liability by coal mine operators through the mechanism of a post enactment transfer of assets____” S. Rep. 209 at 8.