Boyd & Stevenson Coal Co. v. Director, Office of Workers' Compensation Programs

Filed: July 21, 2005

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 02-1088

BOYD AND STEVENSON COAL COMPANY; OLD REPUBLIC

INSURANCE COMPANY,

Petitioners,

versus

DIRECTOR, OFFICE OF WORKERS’ COMPENSATION

PROGRAMS, UNITED STATES DEPARTMENT OF LABOR;

IRENE SLONE,

Respondents.

O R D E R

The Director has moved that we correct the last two sentences

in the first full paragraph of Part IV of our slip opinion,

appearing on pages 10 and 11 thereof.

We have considered the motion and the responses of the parties

and correct the last two sentences of the said paragraph to read:

Accordingly, the only forms Mrs. Slone was required

to file to receive her widow’s benefits were those

required under 20 C.F.R. §§ 725.304 and 725.305. There

is no time limit on the filing of those forms. 20 C.F.R.

§ 725.308(a). Mrs. Slone filed her claim in April, 1999,

and, there being no time limit on the filing of her

claim, it was timely filed.

-2-

With the concurrences of Judge Wilkinson and Judge Niemeyer.

/s/ H. E. Widener, Jr.

For the Court

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BOYD AND STEVENSON COAL 

COMPANY; OLD REPUBLIC INSURANCE

COMPANY,

Petitioners,

v.

 No. 02-1088

DIRECTOR, OFFICE OF WORKERS’

COMPENSATION PROGRAMS, UNITED

STATES DEPARTMENT OF LABOR; IRENE

SLONE,

Respondents.



On Petition for Review of an Order

of the Benefits Review Board.

(01-202)

Argued: January 21, 2003

Decided: May 13, 2005

Before WIDENER, WILKINSON, and NIEMEYER, Circuit Judges.

Vacated and remanded with instructions by published opinion. Judge

Widener wrote the opinion, in which Judge Wilkinson and Judge Nie-

meyer concurred.

COUNSEL

ARGUED: Mark Elliott Solomons, GREENBERG TRAURIG,

L.L.P., Washington, D.C., for Petitioners. Mark S. Flynn, Senior

2 BOYD AND STEVENSON COAL v. DIRECTOR, OWCP

Appellate Attorney, UNITED STATES DEPARTMENT OF

LABOR, Washington, D.C., for Respondents. ON BRIEF: Laura

Metcoff Klaus, GREENBERG TRAURIG, L.L.P., Washington, D.C.,

for Petitioners. Eugene Scalia, Solicitor of Labor, Allen H. Feldman,

Associate Solicitor for Special Appellate and Supreme Court Litiga-

tion, Nathaniel I. Spiller, Deputy Associate Solicitor, UNITED

STATES DEPARTMENT OF LABOR, Washington, D.C., for

Respondent Director; Joseph E. Wolfe, W. Andrew Delph, Jr.,

WOLFE, WILLIAMS & RUTHERFORD, Norton, Virginia, for

Respondent Slone.

OPINION

WIDENER, Circuit Judge:

Defendants, Boyd & Stevenson Coal Company (Boyd & Steven-

son) and Old Republic Insurance Company (Old Republic), seek

relief from an order of the Department of Labor’s (DOL) Benefits

Review Board holding defendants responsible for the payment of sur-

vivor benefits to a miner’s widow, claimant Mrs. Irene Slone, under

the Black Lung Benefits Act, 30 U.S.C. §§ 901-945. The parties agree

that Mrs. Slone is entitled to survivor benefits. The issue on appeal

is whether Boyd & Stevenson and its insurer, Old Republic, are

responsible for payment of these benefits. Finding that the decision

of the Benefits Review Board is contrary to law, we reverse.

I.

Ezra Slone, claimant’s deceased husband, worked as a coal miner

for Boyd & Stevenson from 1970 to 1974. Old Republic insured Boyd

& Stevenson’s black lung claims. After leaving Boyd & Stevenson,

Slone worked as a coal miner for Viking Mining Corporation

(Viking) from 1974 to 1988. Viking’s insurer for black lung benefit

claims was Rockwood Insurance Company (Rockwood).

Ezra Slone filed a claim for black lung benefits in 1989, and on

February 14, 1990, an ALJ issued a decision awarding Ezra Slone

benefits. Viking, as Slone’s most recent coal mining employer, was

BOYD AND STEVENSON COAL v. DIRECTOR, OWCP 3

designated as the responsible operator along with its insurer, Rock-

wood. However, previously, on June 1, 1989, Viking had been "auto-

matically terminated" as a corporation for failing to file annual reports

with the Commonwealth of Virginia. Nevertheless, Viking’s insurer,

Rockwood, remained in existence. Rockwood, therefore, assumed

responsibility for covering Viking employees’ black lung claims and

began making benefit payments to Ezra Slone.

On August 26, 1991, a Pennsylvania court declared Rockwood

insolvent, dissolved its corporate existence, and directed the insurance

commissioner of Pennsylvania to liquidate Rockwood. Notice was

given requiring all claims against Rockwood to be filed with the liqui-

dator by August 26, 1992. Following Rockwood’s insolvency and

pursuant to Virginia Code Annotated sections 38.2-1600 and 38.2-

1606, the Virginia Property and Casualty Insurance Guarantee Asso-

ciation (VPCIGA) assumed responsibility for insurance claims

against the now insolvent Rockwood and took up payment of Ezra

Slone’s black lung benefits until his death on March 25, 1999.

After Ezra Slone’s death, his widow and only dependent under the

Black Lung Act, Mrs. Irene Slone, filed a claim in April 1999 for sur-

vivor benefits. The Office of Workers’ Compensation Programs

(OWCP) approved the award of benefits to Mrs. Slone and initially

designated Viking as the potentially responsible operator on the

claim. After discovering Viking’s termination as a corporation and

Rockwood’s insolvency, the Director turned to VPCIGA for payment

of benefits. Pursuant to a letter dated June 29, 1999, VPCIGA denied

that it was responsible for payment of Mrs. Slone’s survivor benefits

because "[a]ll claims [against Rockwood] must have been filed by

August 26, 1992."

The Director accepted VPCIGA’s argument and designated the

next most recent employer, Boyd & Stevenson, as the operator

responsible for payment of Mrs. Slone’s benefits. Boyd & Stevenson

and Old Republic contested liability and the case was transferred to

the Office of Administrative Law Judges for hearing.1

1

Mrs. Slone’s entitlement to benefits is not at issue in this case. While

Boyd & Stevenson initially opposed Mrs. Slone’s entitlement to benefits,

by a letter dated May 5, 2000, and during the ALJ hearing held on May

12, 2000, Boyd & Stevenson conceded that Mrs. Slone was entitled to

survivor benefits.

4 BOYD AND STEVENSON COAL v. DIRECTOR, OWCP

After a hearing and pursuant to a written order issued September

29, 2000, the ALJ awarded Mrs. Slone benefits and designated Boyd

& Stevenson as the responsible operator pursuant to 20 C.F.R.

§ 725.492(a)(4) (1999). The ALJ determined that because the evi-

dence showed that Viking had been dissolved more than eleven years

prior to the hearing and Rockwood had been liquidated in 1991,

Viking and Rockwood were not currently "capable of assuming [ ]

liability for the payment of continuing benefits," and therefore Viking

did not meet the definition of responsible operator under 20 C.F.R.

§ 725.492(a)(4) (1999). The ALJ also concluded that because

Viking’s officers had complied with regulations requiring them to

obtain and keep insurance while the company was in operation, the

officers were not liable individually for payment of benefits. See 20

C.F.R. §§ 725.492(a)(4), 725.495(a) (1999). The ALJ accepted, with-

out discussion, the Director’s position that VPCIGA’s August 26,

1992, deadline applied to Mrs. Slone’s claim for survivor benefits.

On appeal, the Benefits Review Board affirmed the decision of the

ALJ. With respect to defendants’ contention that VPCIGA was

responsible for the payment of Mrs. Slone’s benefits, the Board con-

cluded that VPCIGA "is a statutorily established method of providing

prompt payment of covered claims that result from the insolvency of

an insurer" and because Mrs. Slone’s claim was filed after August 26,

1992, VPCIGA "was not legally obligated by the BLBA or state stat-

ute to provide insurance coverage to the claimant based on her 1999

survivor’s claim."

On January 18, 2002, Boyd & Stevenson and Old Republic filed

with this court a petition for review of the Benefits Review Board’s

final decision affirming the ALJ’s order.

II.

On review, Boyd and Stevenson and its insurer, Old Republic,

advance two arguments for why the decision of the Benefits Review

Board was in error. First, they maintain that federal law requires all

insurers and reinsurers to assume full liability for black lung benefits

claim payments, and therefore that the BLBA preempts contrary state

laws which limit reinsurers’ liability through under-inclusive filing

deadlines. Second, defendants argue that even if Rockwood and

BOYD AND STEVENSON COAL v. DIRECTOR, OWCP 5

VPCIGA are not responsible for payment of Mrs. Slone’s claim, the

Director, in accordance with Dir., Office of Workers’ Compensation

Programs v. Trace Fork Coal Co., 67 F.3d 503, 507 (4th Cir. 1995),

failed to investigate whether Viking, through an undiscovered succes-

sor or through Viking’s former officers in their individual capacity,

had the ability to pay survivor benefits. And Mrs. Slone raises another

point addressed in her briefs: Whether Virginia law allows VPCIGA

to deny benefit payments to Mrs. Slone based on VPCIGA’s position

that her claim was not timely filed and whether Mrs. Slone’s claim

is separate and distinct from her husband’s original claim.

In reviewing a decision of the Benefits Review Board, our review

is governed by the same standard the Board applies when reviewing

an ALJ’s decision. Walker v. Dir., Office of Workers’ Compensation

Programs, 927 F.2d 181, 183 (4th Cir. 1991). Factual determination

will be upheld if the record contains "substantial evidence" supporting

the ALJ’s decision. Walker, 927 F.2d at 183. We review conclusions

of law de novo. Walker, 927 F.2d at 183.

We need not, and do not, determine whether federal law preempts

Virginia law; or whether the Director failed to properly investigate

whether Viking had the ability to pay Mrs. Slone’s survivor’s claim

through a successor or its corporate officers; or even whether Old

Republic is the responsible operator under the Black Lung Act.

Rather, our review of the applicable contract provisions and principles

of insurance law leads us to conclude that VPCIGA is obligated by

Virginia law to pay Mrs. Slone’s survivor’s claim.

III.

The Virginia General Assembly created VPCIGA to "provide

prompt payment of covered claims to reduce financial loss to claim-

ants or policyholders resulting from the insolvency of an insurer." Va.

Code Ann. § 38.2-1600. The General Assembly directs that the provi-

sions governing VPCIGA shall be "liberally construed to effect the

purpose under § 38.2-1600." Va. Code Ann. § 38.2-1602. VPCIGA is

obligated to pay a "covered claim" for policies issued by an insolvent

insurer. Va. Code Ann. § 38.2-1606(A)(1). A "covered claim" is

defined as

6 BOYD AND STEVENSON COAL v. DIRECTOR, OWCP

an unpaid claim, including one for unearned premiums, sub-

mitted by a claimant, which arises out of and is within the

coverage and is subject to the applicable limits of a policy

covered by this chapter and issued by an insurer who has

been declared to be an insolvent insurer.

Va. Code Ann. § 38.2-1603.

While plaintiff’s claim for survivor benefits clearly falls within this

definition, VPCIGA seeks to limit its liability through statutory lan-

guage stating:

a covered claim shall not include any claim filed with the

Guaranty Association after the final date set by the court for

the filing of claims against the liquidator or receiver of an

insolvent insurer.

Va. Code Ann. § 38.2-1606-A.1.b.

The statutory notice sent by the liquidator to persons insured fol-

lowing Rockwood’s insolvency states as follows:

Filing of Claims:

If you are a claimant of Rockwood and are currently receiv-

ing workers compensation benefits, you need not file a proof

of claim form with the liquidator. All known claims will be

forwarded directly to the proper association for handling.

Please note that the association may require you to complete

certain forms in order to continue your benefits. Any sub-

missions for new claims should be presented to the statutory

liquidator.

(emphasis in original). The notice continues on the next page stating:

Filing of Claims:

If you are an insured or claimant, and you wish to file a

claim for monies owed to you by Rockwood, you must file

BOYD AND STEVENSON COAL v. DIRECTOR, OWCP 7

a Proof of Claim form with the Statutory Liquidator not later

than 8/26/92. If you fail to file a proof of claim by this date,

your claim may not be considered as a valid claim against

the Estate. A proof of claim is enclosed.

Instructions for the completion of this form are attached to

the Proof of Claim.

The DOL maintains that Mrs. Slone’s claim for survivor benefits

is a separate and distinct claim from her husband’s original claim, and

therefore because she did not file a claim for survivor benefits until

April 1999, her claim was filed "after the final date set by the court

for filing of claims against the liquidator or receiver of an insolvent

insurer" and is time-barred. Because principles of insurance law and

the rules of statutory interpretation conflict with VPCIGA’s interpre-

tation, we conclude that Mrs. Slone’s claim was timely filed because

her claim is derivative of her husband’s claim which was filed before

the August 26, 1992, deadline.

A principal problem with the DOL and VPCIGA’s argument is that

it creates a condition impossible for Mrs. Slone to perform. Mrs.

Slone’s husband did not die until March 25, 1999, and therefore, the

position advanced by the DOL and VPCIGA would have required

Mrs. Slone to file a claim for survivor benefits in 1992, prior to her

husband’s death and before her derivative right to benefits as a survi-

vor of Ezra Slone had accrued. Thus, filing a claim for benefits prior

to 1992 was a condition impossible for Mrs. Slone to fulfil. The gen-

eral rule of insurance law dictates that conditions precedent which are

impossible of performance are ineffectual and void. Insurance Law

and Practice, Appleman, 1981, § 7005; Couch on Insurance 3d,

§ 83:26; see generally Daburlos v. Commercial Ins. Co., 381 F. Supp.

393, 400 (E.D. Pa. 1974); Strauther v. Gen. Am. Life Ins. Co., 141

S.W.2d 128, 130 (Mo. Ct. App. 1940). Accordingly, we reject DOL

and VPCIGA’s argument that either an insurance contract or a court

order created a duty impossible for Mrs. Slone to perform. For court

orders, see generally Maggio v. Zeitz, 333 U.S. 56, 69 (1948) ("Every

precaution should be taken that orders issue, in turnover as in other

proceedings, only after legal grounds are shown and only when it

appears that obedience is within the power of the party being coerced

by the order.").

8 BOYD AND STEVENSON COAL v. DIRECTOR, OWCP

It is a general principle of contract law that exclusionary language

in a contract will be construed against an insurer. In American Reli-

ance, the Supreme Court of Virginia summarized the law of exclu-

sionary insurance provisions as follows:

Exclusionary language in an insurance policy will be con-

strued most strongly against the insurer and the burden is

upon the insurer to prove that an exclusion applies. Johnson

v. Insurance Co. of North America, 232 Va. 340, 345, 350

S.E.2d 616, 619 (1986). Reasonable exclusions not in con-

flict with statute will be enforced, but it is incumbent upon

the insurer to employ exclusionary language that is clear and

unambiguous. State Farm Mutual Ins. Co. v. Gandy, 238

Va. 257, 261, 383 S.E.2d 717, 719 (1989). An ambiguity, if

one exists, must be found on the face of the policy. Nation-

wide Mutual Ins. Co. v. Wenger, 222 Va. 263, 268, 278

S.E.2d 874, 877 (1981). And, language is ambiguous when

it may be understood in more than one way or when it refers

to two or more things at the same time. Lincoln National

Life Ins. Co. v. Commonwealth Container Corp., 229 Va.

132, 136-37, 327 S.E.2d 98, 101 (1985). Finally, doubtful,

ambiguous language in an insurance policy will be given an

interpretation which grants coverage, rather than one which

withholds it. St. Paul Ins. v. Nusbaum & Co., 227 Va. 407,

411, 316 S.E.2d 734, 736 (1984).

Am. Reliance Ins. Co. v. Mitchell, 385 S.E.2d 583, 585 (Va. 1989).

The notice provision sent to Rockwood claimants after Rock-

wood’s termination is capable of two interpretations, whether Mrs.

Slone’s claim is a separate claim or is derivative of the claim of her

husband. DOL and VPCIGA assert that the miner’s claim and survi-

vor’s claim are two separate and distinct claims because more than

one person receives benefits. Given the Virginia Supreme Court’s

Mitchell directive that exclusionary language is to be construed in

favor of granting coverage, we agree with Mrs. Slone and decline to

adopt the DOL and VPCIGA’s narrow and exclusionary interpretation

of her claim.

BOYD AND STEVENSON COAL v. DIRECTOR, OWCP 9

The notice provision does not require persons currently receiving

benefits to refile their claim because the claim is already known and

can be forwarded to VPCIGA for handling.

If you are a claimant of Rockwood and are currently receiv-

ing workers compensation benefits, you need not file a proof

of claim form with the liquidator. All known claims will be

forwarded directly to the proper association for handling.

Please note that the association may require you to complete

certain forms in order to continue your benefits. (emphasis

in original).

Similarly, a survivor’s claim arises out of the same injury as a miner’s

claim and therefore both VPCIGA and Rockwood knew that once the

miner died, the payments would not necessarily cease, but instead that

the claim would continue if the miner had a surviving spouse or

dependent. Because survivor’s claims arise out of the same facts and

are derivative of the original claim, they are not new claims for bene-

fits and thus should be considered timely if the miner’s original claim

is timely filed. As Mrs. Slone was not making a new claim for benefits,2

she was not required to file a separate claim to meet the August 1992

deadline.3

In this respect, this case is distinguishable from the Virginia Court

of Appeals decision in Uninsured Employer’s Fund v. Mounts, 484

S.E.2d 140 (Va. Ct. App. 1997). The Mounts claimant, a former coal

2

Nothing in the BLBA or the Virginia statute creating VPCIGA

requires us to treat the miner’s claim and the survivor’s claim as separate

entities. We decline to accept the DOL’s argument and instead adopt a

position which recognizes the realities of insurance law and brings the

facts of this case "into conformity with reason and common sense." Rog-

ers v. Tennessee, 532 U.S. 451, 467, 121 S. Ct. 1693, 149 L. Ed. 2d 697

(2001).

3

This is not to say that the surviving spouse or dependent does not

have to prove that she is entitled to survivor benefits. The terms of the

notice provision recognize VPCIGA may require Mrs. Slone to complete

additional forms after Ezra Slone’s death to establish that she is eligible

for benefits. Additional qualification requirements, however, do not

make this a new claim.

10 BOYD AND STEVENSON COAL v. DIRECTOR, OWCP

miner employee, discovered he had pneumoconiosis after the deadline

for making claims to Rockwood’s liquidator had passed. Mounts, 484

S.E.2d at 142. Because the claim was filed after the deadline, the Vir-

ginia Supreme Court held that VPCIGA was not obligated to pay ben-

efits under the statute. Mounts, 484 S.E.2d at 144-45. In this case, to

the contrary, Slone’s original claim was filed before the deadline, and

unlike the claimant in Mounts, VPCIGA knew that Mr. Slone was

receiving benefits on his claim prior to the August 1992 deadline.

VPCIGA also knew that the same essential facts establishing the

miner’s claims would support any derivative survivor’s claim after his

death. To allow VPCIGA to bar recovery by creating a technical

defense impossible for Mrs. Slone to comply with is contrary to prin-

ciples of insurance law and justice. Accordingly, we adopt an inter-

pretation which recognizes that a survivor’s claim is part of a miner’s

original claim for filing purposes, and thus we are of opinion that

Mounts does not bar recovery.

Finally, we are mindful of the Virginia General Assembly’s direc-

tive that the Act creating VPCIGA "be liberally construed" to "pro-

vide prompt payment of covered claims [in order] to reduce financial

loss to claimants or policyholders resulting from the insolvency of an

insurer." Va. Code Ann. §§ 38.2-1602, -1604. We do not believe that

the General Assembly intended for VPCIGA to deny payment of sur-

vivor’s claims based on conditions impossible for the surviving

spouse to perform.

IV.

Our decision is also supported on an entirely independent basis

which we hold is applicable here. That basis is that the statutory

notice given did not require Mrs. Slone to file her claim. As noted

supra, the notice, which is quoted here at p.6, stated that "[i]f you . . .

are currently receiving workers compensation benefits, you need not

file a proof of claim form with the liquidator." (emphasis in original)

At the time this notice was sent, Mr. Slone was receiving black lung

benefits from Rockwood, which, under 20 C.F.R. § 726.203, are

included in the general term "workmen’s compensation." The Slones

therefore were not required to file a proof of claim under the plain

language of the notice. Accordingly, the only forms Mrs. Slone was

required to file to receive her widow’s benefits were those required

BOYD AND STEVENSON COAL v. DIRECTOR, OWCP 11

under 20 C.F.R. § § 725.304 and 725.305. There is no time limit on

the filing of those forms. 20 C.F.R. § 725.308(a). Mrs. Slone filed

her claim in April, 1999, and, there being no time limit on the filing

of her claim, it was timely filed.

Accordingly, the judgment of the Benefits Review Board is vacated

and the case is remanded to the Board with instructions to enter its

order designating VPCIGA as the insurer responsible for payment of

Mrs. Slone’s survivor benefits.

The Petition for Review is granted and the case is remanded with

instructions.

VACATED AND REMANDED

WITH INSTRUCTIONS