Amicus Curiae Brief — McLaughlin v. Sebben

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Ai. GROUP, et ali,

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JAMES SEBBEN,- et al., |

Respondents.

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AMM McLAveniin, SECRETARY, UNITED STAT

/ DEPARTMENT OF LABOR, e7 al,

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: Py! eo i JAMES SEBBEN, ef ai.

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a MICHAED CAMILLERI

eis Counsel of Record

Mark GORDON

°. NATIONAL COUNCIL ON

COMPENSATION INSURANCE

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RICHARD AOE Soiel New. York, New York 10119

CRAIG BERRINGTON

AMERICAN INSURANCE

ASSOCIATION

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Washing'n, D.C. 20036

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TABLE OF CONTENTS

TABLE OF AUTHORITIES

INTEREST OF AMICI

STATEMENT OF THE CASI

History

Insurance Industry Involvement

SUMMARY OF ARGUMEN]

ARGUMENT

CONGRESS NEITHER REQUIRED NOR

INTENDED TO REQUIRE THE LABOR DE-

PARTMENT TO APPLY THE SSA RULE

THE SSA RULE WOULD DEPRIVE CLAIM

DEFENDANTS OF RIGHTS UNDER THI

ADMINISTRATIVE PROCEDURE ACT AND

OF DUE PROCESS OF LAW

THE REOPENING OF CLOSED CASES IS

BARRED BY THE LONGSHORE ACT AND

BY THr RULE OF RES JUDICATA

CONCLUSION

TABLE OF AUTHORITIES

CASES

Addison v. Holly Hill Fruit Products, Inc., 322 US.

GET CBDBGD cccucecccccccsceseucscovecosssssesssensaaee

American Textile Manufacturers Institute, Inc. v. Don-

ovan, 452 US. GB CESBED .cccecoucovsessnsiaeeeeee

Bennett v. Director, Office of Workers’ Compensation

Programs, 717 F.2d 1167 (7th Cir. 1983) ..............

Bowen V. Citi of New York. 106 S. Ct. 2202 (1986)

Brock v. Roadway Express, Inc., 107 S. Ct. 1740

(1987)

Chevron U.S.A., Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837 (1984) occ eeeeeeeeeeee

Cook v. Director, Office of Workers’ Compensation Pro-

grams, 816 F.2d 1182 (7th Cir. 1987) .............0...

Coughlan v. Director, Office of Workers’ Compensation

Programs, 757 F.2d 966 (8th Cir. 1985) «0.0.0.0...

Crowell v. Benson, 285 U.S. 22 (1932) ........cccececeeeeees

Director, Office of Workers’ Compensation Programs v.

Peabody Coal Co., 554 F.2d 310 (7th Cir. 1977) ..

FCC v. Schreiber, 381 U.S. 279 (1965) ..............eeeeee:

Federated Department Stores, Inc. v. Moitié, 452 US.

994 (ADSI ) ..ccoccccevccecesexscncsessensacnnecsinsennennnaanaa

Haywood v. Secretary of Health and Human Services,

699 F.26 277 (GQ Coe. TSBS) ccccccee-ceeee

Heckler v. Lopez, 463 U.S. 1328 (1983) .......ccceeeeeeees

Heckler v. Ringer, 466 U.S. 602 (1984) «0...

Kyle v. Director, Office of Workers’ Compensation Pro-

grams, 819 F.2d 139 (6th Cir. 1987), petitions for

cert. filed, 56 U.S.L.W. 3643, 3484 (U.S. Dec. 21,

1987) (Nes. 87-1065, S7-1GBD) cccccccsuseccscemumennannnns

Loganyv. Zimmerman Brush Co., 455 U.S. 422 (1982)...

Louisville & Nashville Railroad Co. v. Donovan, 713

F.2d 1243 (6th Cir. 1983), cert. denied, 466 U.S. 936

(1984) i. reececceussuinsesagaseiuenneniaanane

PAGE

,:”

PAGE

Motor Vehicles Manufacturers Association v. State

Farm Mutual Automobile Insurance Co., 463 U.S.

I seemnonnonens 13

Mullins Coal Co. v. Director, Office of Workers’ Com-

pensation Programs, 108 S. Ct. 427 (1987) ........... 8

NLRB vy. United Food & Commercial Workers’ Union,

Ee 13

Northwest Airlines, Inc. v. Transport Workers Union,

ET 20

Pittston Stevedoring Corp. v. Dellaventura, 544 F.2d 35

(2d Cir. 1976), affd sub nom. Northeast Marine

Terminal Co. v. Caputo, 432 U.S. 244 (1977) ....... 22

Strike v. Director, Office of Workers’ Compensation

Programs, 817 F.2d 395 (7th Cir. 1987) ............0.. x

Sulyma vy. Director, Office of Workers’ Compensation

Programs, 827 F.2d 922 (3d Cir. 1987). .................. 9

Taylor v. Peabody Coal Co., 838 F.2d 227 (7th Cir.

1988), petition for cert. filed, 56 U.S.L.W. 3739

(U.S. April 15, 1988) (No. 87-1720). ....... iibiauelipaenes 8

United States v. Fausto, 108 S. Ct. 668 (1988). ........ 22

University of Tennessee vy. Elliott, 106 S. Ct. 3220

EES SD 23

Usery v. Turner Elkhorn Mining Co., 428 US. |

ESTES ST 20,21

Vermont Yankee Nuclear Power Corp. v. Natural Re-

sources Defense Council, Inc., 435 U.S. 519 (1978) 19

Warner Coal Co. v. Director, Office of Workers’ Com-

pensation Programs, 804 F.2d 346 (6th Cir. 1986).. 3

Whitney National Bank v. Bank of New Orleans, 379

a ss secnsseosnesnccors 22

STATUTES AND REGULATIONS:

Administrative Procedure Act, as amended, 5 U.S.C.

§§ 551-559 (1982)

Section 4, 5 U.S.C. § 553 (1982) ....... ee. 7 19

ection 5, 5 U.S.C. § 554 (1982) ............ccccccccoeees 23

I ons. cncccccccncccoeescnseenccneceneesesseceees 18

ND ccc covencusucdesceesenseseccecssnscesecccceses 3,17

5 7

28 U.S.C. § 1361 (1982)

Black Lung Benefits Act of 1972, 86 Stat. 150 (codified

as amended at 30 U.S.C. §§ 901-945 (1982 & Supp

IV 1986))

Section 401(a), 30 U.S.C. § 901(a) (1982)

Section 402(f), 30 U.S.C. § 902(f) (1982)

Section 402(f)(1), 30 U.S.C. § 902(f)(1) (1982)

Section 402(f)(1)(A), 30 U.S.C. § 902(f)(1)

(A) (

1982)

Section 402(f)(1)(C), 30 U.S.C. § 902(f)(1)

1982)

Section 402(f)(1)(D), 30 U.S.C. § 902(f)(1)

(D) (

1982)

Section 402(f)(2), 30 U.S.C. § 902(f) (2) (1982)

Section 402(i), 30 U.S.C. § 902(1) (1982)

Sections 411-415, 30 U.S.C. §§ 921-925 (1982)

Section

(Supp. IV

Section 19, 33 U.S.C. § 919 (1982)

4l l(c),

413(b),

421, 30

422(a),

422(c),

422(h),

422()),

423, 30

423(a),

424, 30

424(a),

426(a),

Section 435, 30 U.S.C. § 945 (1982)

Black Lung Benefits Amendments of 1981, Pub. L. No.

97-119, 95 Stat. 1643

Black Lung Benefits Reform Act of 1977, Pub. L. No.

92-239, 92 Stat. 11

30 U.S.C. § 1257 (1982)

Longshore Act, as amended, 33 U.S.C. §§ 901-952

1986)

30 U.S.C. § 921(c) (1982)

30 U.S.C. § 923(b) (1982)

U.S.C. § 931 (1982)

30 U.S.C. § 932(a)

30 U.S.C. § 932(c)

30 U.S.C. § 932(h)

30 U.S.C. § 932(j)

U.S.C. § 933 (1982)

30 U.S.C. § 933(a) (1982)

U.S.C. § 934 (1982)

30 U.S.C. § 934(a) (1982)

30 U.S.C. § 936(a) (1982)

passim

13,19

passim

Section 19(d), 33 U.S.C. §919(d) (1982)

21, 33 U.S.C. § 921 (1982)

Section

Section 21(a), 33 U.S.C

Section 21(c), 33

Section 21(e), 33 U.S.C

U.S.C. § 1321(d) (1982)

U.S.C. § 1321(p) (1982)

U.S.C. § 351 (1982)

U.S.C. § 405 (1982)

42 U.S.C. § 423(d) (1982)

L 8

L S

§ 921(a) (1982)

§ 921(c) (1982)

—

47 47 LY

> 921 (e) (1982)

S.C. § 2210 (1982)

S.C. § 5154 (1982)

42 U.S.C. § 5172 (1982)

Omnibus Budget Reconciliation Act of 1987, Pub. |

No. 99-203, § 10503 ........

Consolidated Omnibus Budget Si eniilllaeten Act of

1985, Pub. L. No. 99-272, § 13203(a), (d), 100 Stat

I I ce ee aa er

Federal Coal Mine Health and Safety Act of 1969, 83

eta PONE sicacuiakdediiadie reiddaaiierbaetinesnmiecseasia —

Rules of the Supreme Court, Rule 36.1 ....00.00..0cc00c8.

ee | OL yy nee nnEEN

Social Security Administration Regulations

20 C.F.R. Part 404, subpart P, app. | (1987)

20 C.F.R. § 410.490 (1987) coccccccccccccccceceseseevevesve

BD C.F. § SID AIOCD) C1SST) ..2-<cccccccsccescesesses.

BO CR. GOT MED COFGT) vccccsccccessvccvsceeseesse:

Department of Labor Regulations

20 C.F.R. § 725.360(a)(4) (1987) oo...

20 C.F.R. Part 726 (1987) ccccccccccccscscssssesesseeseseeee,

20 C.F.R. § 726.203 (1987) cccccccccccsecseeceeeesee ea

20 C.F.R. § 727.203 (1987) cccccccccccsccsecseseesesvesveee.

20 C.F.R. § 727.203(b) (1987) cocccccccceeseeeeeeees

OR I, Oe CD iesieicccdebbierrvnsinoinecsaccncessin’s |

4,5,23

passim

8,21

43 Fed. Reg. 36,825-26 (1978)

LEGISLATIVE MATERIALS:

S. 1538, 95th Cong., Ist Sess. (1977)

H.R. 4544, 95th Cong., Ist Sess. (1977)

H.R. 770, 94th Cong., Ist Sess. (1975)

H.R. Rep. No. 1410, 96th Cong., 2d Sess. (1980)

H.R. Rep. No. 864, 95th Cong., 2d Sess. (1978)

S. Rep. No. 743, 92d Cong., 2d Sess. (1972)

Problems Relating to the Insolvency of the Black Lung

Disability Trust Fund: Hearings Before the Sub-

comm. on Oversight of the House Comm. on Ways

and Means, 97th Cong., Ist Sess. (1981)...

Oversight of the Administration of the Black Lung Pro-

gram, 1977: Hearings Before the Subcomm. on Labor

of the Senate Comm. on Human Resources, 95th

RE. BE Bs ETD. ccheseccctincsenmnincrnetanisenenniincenines

Black Lung Benefits Provisions of the Federal Coal

Mine Health and Safety Act: Hearing Before the

House Comm. on Education and Labor, 95th Cong.,

Dg | a Re ee nn mC a

Hearings on H.R. 10760 and S. 3183 Before the Sub-

comm. on Labor of the Senate Comm. on Labor and

Public Welfare, 94th Cong., 2d Sess. 479-81 (1976)..

House Comm. on Ways and Means, Subcomm. on Over-

sight, Report and Recommendations on Black Lung

Disability Trust Fund, 97th Cong., Ist Sess. (Comm.

I SHUUIIERTD acincsiccisicsscnesssenmcanicicdsnnidadiamianageintnndindinnininnsen

House Comm. on Education and Labor, Black Lung

Benefits Reform Act and Black Lung Benefits Reve-

nue Act of 1977, 96th Cong., Ist Sess. (Comm. Print

SII dansciaiicnleinhnandhtiicstiniiaahetstieeasdebaatsanniagiainenbeiinadentnes

ee A Is CIE CIID. bicecscttniccedsinnocmacncevevtnsemness

a SE UD UPI | eciccinvitcendctnsncensidcterntevencsiinanaitice

Vil

BBW COM, TOG. SESE CEDTOD cceccccccccccccecccccccncconssccscessess

MISCELLANEOUS:

Comptroller General of the United States, Report to the

Congress: Legislation Allows Black Lung Benefits to

be Awarded Without Adequate Evidence of Disabili-

A I eahetsdireeletinbutealecnheDicassieeieicccindate iat cata,

Nelson, Black Lung: A Study of Disability Compensa-

tion Policy Formation (1985) ....ccccccccccccecssssesseeceeeees

Restatement (Second) of Judgments § 83 (1982) .....

United States Department of Labor, /980 Annual Re-

port on Administration of the Black Lung Benefits

I ee TTT Giihsdecadcapidadsaaiibicciaiaanigted ea

Solomons, A Critical Analysis of the Legislative Histo-

ry Surrounding the Black Lung Interim Presumption

and a Survey of its Unresolved Issues, 83 W. Va. L.

| RE eee Oe

Letter from Representatives Perkins, Dent and Simon to

Robert B. Dorsey, U.S. Department of Labor (May

Eg ERR RESO CR a op TS Se

6,15

Nos. 87-821, 87-827 and 87-1095

IN THE

Supreme Court of the United States

OCTOBER TERM 1987

PITTSTON COAL GROUP, et al.,

Petitioners,

Vv.

JAMES SEBBEN, et ai.,

Respondents.

ANN MCLAUGHLIN, SECRETARY, UNITED STATES DEPART-

MENT OF LABOR, et al.,

Petitioners,

Vv.

JAMES SEBBEN, et al.,

Respondents.

DIRECTOR, OFFICE OF WORKERS’ COMPENSATION

PROGRAMS,

Petitioners,

Vv.

CHARLIE BROYLES, et al.,

Respondents.

BRIEF AMICI CURIAE OF THE NATIONAL COUNCIL ON

COMPENSATION INSURANCE, THE AMERICAN INSUR-

ANCE ASSOCIATION, THE ALLIANCE OF AMERICAN

INSURERS AND THE NATIONAL ASSOCIATION OF INDE-

PENDENT INSURERS

Amici curiae,’ the American Insurance Association, Alliance

of American Insurers, National Association of Independent

Insurers and the National Council on Compensation Insurance,

respectfully request that the decision of the United States Court

of Appeals for the Eighth Circuit entered on March 25, 1987, and

| In accordance with Rule 36.1, the written consen: of the Pittston Coal

Group, et al., the Solicitor General, James Sebben, er a/., and Charlie Broyles,

et al., are submitted herewith

the decision of the United States Court of Appeals for the Fourth

Circuit entered on July 31, 1987, be reversed by this Court.

INTEREST OF AMICI

The American Insurance Association (“AIA”), the Alliance of

American Insurers (“Alliance”) and the National Association of

Independent Insurers (“NAII”) are separate, independent, not-

for-profit insurance industry trade associations. Their collective

membership includes more than 850 insurance companies and

their subsidiaries. Member companies write more than 85% of

the premium dollar volume of workers’ compensation insurance

coverages sold in the United States. Members within each asso-

ciation directly provide coverage to coal mine operators for claim

liabilities arising under the Black Lung Benefits Act, as amended,

30 U.S.C. §§ 901-945 (1982) (the “Act”).

AIA, Alliance and NAII member companies also provide a

wide variety of property-casualty and general liability lines of

insurance to commercial enterprisés throughout the United

States. These amici represent the interests of their members in

matters of special concern to the commercial liability insurance

industry. Many AIA, Alliance and NAII members have a direct

substantial economic stake in the outcome of this litigation. Per-

haps, even more importantly, the circumstances that give rise to

these appeals pose difficult and troubling questions that go to the

very heart of the ability of the insurance industry to respond in the

future to commercial insurance risks created by the Congress and

federal agencies.

The National Council on Compensation Insurance (“NCCI”)

is the largest not-for-profit workers’ compensation insurance ser-

vice organization in the United States. Its membership includes

more than 700 insurance companies and competitive staie insur-

ance funds that provide workers’ compensation insurance cover-

age to employers throughout most of the United States. In

thirty-five states, including most major coal mining states, NCCI

collects data and develops premium rates and rating plans for

workers’ compensation insurance. NCCI also manages various

workers’ compensation assigned risk plans and the National

Workers’ Compensation Reinsurance Pool (the “Pool”). Pool

members reinsure among themselves several categories of risk

that arise under the Act. In particular, the Pool is the only

commercial vehicle available to small or high-risk mine operators

that are unable to qualify to self-insure their federal black lung

liabilities under U.S. Department of Labor regulations, 20 C.F.R.

Part 726 (1987), or to purchase direct coverage from a state fund

or insurance carrier. Most of NCCI’s members and many AIA,

Alliance and NAII members participate in the Pool and are

individually liable to the Pool for losses or payouts on claims that

exceed the ability of the Pool to make payments from insurance

premiums collected. Historically, 15% to 20% of all federal

claim liabilities are insured or reinsured by the Pool. Approxi-

mately 50% of federal black hing liabilities that may be allocated

to an individual mine owner are commercially insured.2 The

companies and competitive state insurance funds represented by

all amici account for more than 98% of the premium dollar vol-

ume of all U.S. workers’ compensation coverages, including those

available under the federal black lung program.

In black lung claims the insurer is a party to the litigation and,

as such, participates directly on behalf of its insured. 20 C.F.R.

§ 725.360(a) (4); Warner Coal Co. v. Director, Office of Work-

ers’ Compensation Programs, 804 F.2d 346 (6th Cir. 1986). In

this capacity, the insurance carrier hires defense counsel and

bears the cost of claim litigation and administration.

The commercial liability insurance industry has a direct,

immediate and substantial interest in the outcome of this

litigation.

2. Liability arising out of claims in which the miner was last employed prior

to January |, 1970, and certain uninsured liabilities are paid by the Black Lung

Disability Trust Fund. 30 U.S.C. § 934(a). The Trust Fund is financed by a

producer tax on coal. 26 U.S.C. § 4121

STATEMENT OF THE CASE

A. History

In 1969, Congress enacted the Federal Coal Mine Health and

Safety Act of 1969, 83 Stat. 792, to improve safety conditions in

U.S. coal mines and reduce the exposure of coal miners to hazard-

ous dust produced in mining operations. In response to a gener-

ally correct perception that miners affected by coal-dust related

disease (“pneumoconiosis” or “black lung” disease) had been

unable to obtain benefits under state workers’ compensation laws,

the 1969 Act also included among its provisions a separate Title

IV to establish a temporary’ federally financed black lung remedy

for miners and their families.

The program contemplated an open filing season for claims

terminating on December 31, 1972, and the eventual correction

of inadequacies in state workers’ compensation laws. 83 Stat.

795. During the initial period, claims were to be filed with,

adjudicated and paid by the Secretary of Health, Education and

Welfare, employing the resources of the Social Security Adminis-

tration (“SSA”). Benefits awarded were to be paid by the U.S.

Treasury, and claims were to be decided under the eligibility rules

and adjudication procedures of sections 205 and 223(d) of the

Social Security Act, 42 U.S.C. §§ 405, 423(d), incorporated by

reference into 30 U.S.C. §§ 902(f), 923(b). The SSA portion of

the program was called “Part B.” 30 U.S.C. §§ 921-925.

After the termination of Part B, it was anticipated that all new

claims would be filed under applicable state workers’ compensa-

tion laws. Jd. § 931. In recognition of the possibility that all

states might not have had an adequate state law in place by 1972,

the original Act contemplated the extension of the federal pro-

gram to 1976. It provided that a miner residing in a state not

having an adequate workers’ compensation law could file a claim

with the Secretary of Labor under a new program called “Part

C.” Part C claims were to be filed with the Secretary of Labor

and adjudicated under the adversarial litigation provisions of the

3. The original program was to expire in its entirety on December 30, 1976

83 Stat. 796

Longshoremen’s and Harbor Workers’ Compensation Act, 33

U.S.C. §§ 901-952, incorporated by reference into 30 U.S.C.

§ 932(a). Part C claims were to be funded by mine owners.

Mine owners were directed either to self-insure this risk or

purchase commercial insurance. 30 U.S.C. § 933.

The original black lung Act contained four eligibility rules: (1)

total disability was to be determined on the basis of medical

criteria not more restrictive than those applied under 42 U.S.C.

§ 423(d); (2) an occupational cause could be rebuttably pre-

sumed if a miner with ten or more years of exposure had pneumo-

coniosis; (3) death due to pneumoconiosis could be rebuttably

presumed if the miner had ten years of exposure and died due toa

respiratory disease; and (4) a mandatory inference required the

payment of benefits to any miner suffering from the most

advanced stage of black lung disease. 30 U.S.C. §§ 921(c),

923(b). These provisions applied to both Part B and Part C

claims. 83 Stat. 797.

In 1972, Congress amended the law in several respects. Black

Lung Benefits Act of 1972, 86 Stat. 150. The most significant

thing that happened in the 1972 legislative process produced no

Statutory amendment. Rather, in a Senate Report, SSA was

directed to write regulations containing “interim evidentiary rules

and disability evaluation criteria” to ensure the prompt process-

ing and payment of SSA claims. S. Rep. No. 743, 92d Cong., 2d

Sess. 16, reprinted in 1972 U.S. Code Cong. & Admin. News

2305, 2322-23. Whatever the Senate Committee meant by this

is not on the public record, but in hindsight it is apparent that

several key members of Congress simply wanted SSA to pay most

claims whatever their merits. See Nelson, Black Lung: A Study

of Disability Compensation Policy Formation 92 (1985) (not-

ing, “SSA officials working closely with the members of the Com-

mittee staff developed a strategy for implementing the

amendments that would allow SSA to pay most of the claims.

The essential element of that strategy was some seemingly innoc-

uous language added to the committee report.” ).

In response, SSA published a rule popularly known as the

“interim presumption.” It could not be applied to Labor Depart-

ment claims. 20 C.F.R. § 410.490 (1987). After a brief com-

ment period, SSA began to apply the rule. The rule itself was

designed without input from SSA’s medical staff and imple-

mented without public input. Since it had no application to mine

owners and reflected only the private arrangements between SSA

and its congressional overseers, the implementation of the rule

went largely unnoticed. To this day, there is no way of knowing

how SSA applied its rule.” The language of section 410.490 is

duplicative and ambiguous and all that is certain is that it pro-

duced awards. It is not surprising that in congressional hearings

from 1973 to 1975 the Labor Department noted that the inappli-

cability of section 410.490 was a major reason why Labor was

unable to approve as many claims as had SSA. See Oversight of

the Administration of the Black Lung Program, 1977: Hearings

Before the Subcomm. on Labor of the Senate Comm. on Human

Resources, 95th Cong., Ist Sess. 49 (1977).

When in the late 1970s it was resolved again to amend the Act,

the House of Representatives settled upon several amendments

that would have changed the character of the Labor program to

make it more like SSA’s, and to facilitate results in claim deter-

minations that approximated SSA’s experience. The House had

been told that SSA’s presumption could not be constitutionally

applied in litigated claims involving mine owners." To overcome

4. Black Lung Benefits Provisions of the Federal Coal Mine Health and

Safety Act: Hearings Before the House Comm. on Education and Labor, 95th

Cong., Ist Sess. 274-75 (1977) (testimony of Dr. Harold |. Passes, Former

Acting Chief Medical Officer, Bureau of Hearings and Appeais, Social Security

Administration )

§. See Solomons, A Critical Analysis of the Legislative History Surround

ing the Black Lung Interim Presumption and a Survey of its Unresolved Issues

83 W. Va. L. Rev. 869, 897 (1981) (observing “it must be understood that the

SSA and Labor vers‘ons [of the interim presumption | can be contrasted in

the hypothetical only. An attempt at explaining how SSA applied the interim

presumption would be to engage in speculation, at best.” )

6. See H.R. Rep. No. 770, 94th Cong., 2d Sess. (1975), reprinted in House

Comm. on Education and Labor, 96th Cong., Ist. Sess., Black Lung Benefits

this obstacle and to implement still further liberalizations of enti-

tlemcnt rules of questionable scientific merit, the House enacted a

bill that would have eliminated mine owners’ rights to contest

claims yet retaining their obligation to finance benefits. This

scheme would have created several new “irrebuttable” presump-

tions, would have left SSA with sole authority to write eligibility

regulations, and would have required application of “criteria” no

more restrictive than SSA’s, as a last resort, in the consideration

of Part C claims. H.R. 4544, 95th Cong., Ist Sess. §§ 2, 8, 9

(1977).

The Senate took a more moderate course that retained the

essential characteristics of Part C as a workers’ compensation

program, eschewed the extravagant eligibility rules proposed by

the House, and directed the Secretary of Labor to write medically

sound eligibility rules. S. 1538, 95th Cong., Ist Sess. (1977).

Although the final bill conformed for the most part to the Senate

proposal, the compromise reached retained two key House provi-

sions. All previously denied claimants were to have their claims

reviewed either automatically (Part C claims) or at the claim-

ant’s option (Part B claims), and criteria no more restrictive than

those applied before July 1, 1973, by SSA were to apply under

Labor Department rules to all reviewed claims and a limited

category of new claims. 30 U.S.C. §§ 902(f)(2), 945.

In keeping with this directive, Labor promulgated its version of

the interim presumption. 20 C.F.R. § 727.203 (1987). Labor's

rule differs from SSA’s. Both rules establish a rebuttable pre-

sumption of eligibility for benefits under the Act. The Labor

presumption is more easily invoked in most cases, except that a

miner with less than ten years of coal mine employment and

positive x-ray evidence is permitted to invoke SSA’s rule but not

Labor's. Labor’s presumption is rebuttable but, according to the

circuits, SSA’s is not generally rebuttable. Section 410.490 is

rebutted only if the miner “is either doing or capable of doing his

usual coal mine work” whether or not the inability to work is

Reform Act and Black Lung Benefits Revenue Act of 1977 (Comm. Print

1979)

black-lung related. Broyles v. Director, Office of Workers’ Com-

pensation Programs, 824 F.2d 327, 329 (4th Cir. 1987), cert.

granted, 108 S. Ct. 1288 (1988). “Section 410.490 cannot be

rebutted by medical evidence.” Cook v. Director, Office of

Workers’ Compensation Programs, 816 F.2d 1182, 1185 (7th

Cir. 1987). By contrast, the Labor Department’s presumption

may be rebutted by the defendant if the relevant medical proof

establishes that the miner is not totally disabled by, or does not

suffer from, or did not die due to black lung disease. 20 C.F.R.

§ 727.203(b); see Mullins Coal Co. v. Director, Office of Work-

ers’ Compensation Programs, 108 S. Ct. 427, 432 (1987). Sec-

tion 410.490, as it has been interpreted, provides benefits whether

Or not a miner’s absence from the workplace is caused by black

lung disease, and in some instances, whether or not the miner

actually suffers from this occupational disease. See Cook, 816

F.2d at 1185; compare 20 C.F.R. §410.490(c) with id.

§ 727.203(b).

These differences notwithstanding, Labor obtained pre-publi-

cation clearance for its rules from the leadership of the House

Committee on Education and Labor that had so aggressively

pursued an SSA-like entitlement scheme. See Letter from Rep-

resentatives Perkins, Dent and Simon to Robert B. Dorsey, U.S.

Department of Labor (May 25, 1978). The Labor rules were

published for comment and promulgated without change in

August 1978. 43 Fed. Reg. 36,825-26 (1978). From the begin-

ning, section 727.203 was consistently applied by the Labor

Department to require ten years of coal mine employment for its

invocation and to permit the rebuttal of presumed facts.

The series of cases that resulted in these appeals questions

whether Labor was authorized to write a rule that did not produce

the same result as section 410.490. In Broyles, the Fourth Cir-

cuit held that Labor was not so authorized and the court directed

the Secretary to apply section 410.490 in pending Labor Depart-

ment claims.’ 824 F.2d at 329. In Coughlan v. Director, Office

The Seventh Circuit disagreed with the Fourth Circuit’s conclusion, find-

ing the Labor rule valid. Strike v. Director, Office of Workers’ Compensation

Programs, 817 F.2d 395 (7th Cir. 1987); Tavlor v. Peabody Coal Co., 838 F.2d

of Workers’ Compensation Programs, 757 F.2d 966 (8th Cir.

1985), the Eighth Circuit had reached the same conclusion as the

Fourth Circuit. Then, in Sebben v. Brock, the Eighth Circuit

ordered the Secretary of Labor to reopen and readjudicate under

the SSA rule all of the claims subject to an interim presumption

that were previously denied by Labor.

Available data indicate that 155,000 claims are potentially

affected by the decision in Sebben, of which 94,000 involve miners

with fewer than ten years of coal mine employment.” Insurance

industry actuaries estimate that the combined effect of Sebben

and Broyles will add from three billion dollars to six billion

dollars or more to the aggregate liability of the Black Lung

Disability Trust Fund, employers and their insurance carriers.”

The cost of readjudication would range from two hundred million

to four hundred million dollars.

227 (7th Cir. 1988), petition for cert. filed, 56 U.S.L.W. 3739 (U.S. April 15,

1988) (No. 87-1720). The Third Circuit finds the Labor rule invalid. Su/yma

v. Director, Office of Workers’ Compensation Programs, 827 F.2d 922 (3d Cir

1987). The Sixth Circuit agrees that the Labor ten-year rule is invalid, but

permits rebuttal by the Labor formula. Kyle v. Director, Office of Workers’

Compensation Programs, 819 F.2d 139 (6th Cir. 1987), petitions for cert. filed,

56 U.S.L.W. 3643, 3484 (U.S. Dec. 21, 1987) (Nos. 87-1045, 87-1065)

8. See Petition for a Writ of Certiorari filed by the Solicitor General in No

87-827 at 11; Problems Relating to the Insolvency of the Black Lung Disability

Trust Fund: Hearings Before the Subcomm. on Oversight of the House Comm

on Ways and Means, 97th Cong., Ist Sess. 7, 102, 186 (1981) (prepared

statements of Morton E. Henig, U.S. General Accounting Office, Sam Church,

Jr., President, United Mine Workers of America, and Charles Coakley, AIA)

9. The rationale for this conclusion includes a number of variables. The

non-rebuttability of section 410.490 is a major factor. The inability or unwill-

ingness of the Department of Labor to vigorously defend claims is another. See

Comptroller General of the United States, Report to the Congress: Legislation

Authorized Benefits Without Adequate Evidence of Black Lung or Disability

(1982). There are many others as well, including the fact that each reopened

claim would involve a new trial with new evidence and a much older miner

Since pulmonary capabilities diminish with age, many claimants would be able

to establish the interim presumption simply by having grown older. See supra

note 4 (testimony of Dr. Harold |. Passes)

B. Insurance Industry Involvement

Insurance carriers called upon to underwrite the federal black

lung risk have always faced difficult challenges. The coal indus-

try, unlike some other major industrial sectors of the economy, is

composed of thousands of mostly small producers. Most of these

companies would have no financial ability to pay or even defend a

single claim, the cost of which averages from $118,315.88 for a

claimant without dependents to $185,659.69 for a married miner.

Costs can go much higher. See U.S. Dep't of Labor, /980

Annual Report on Administration of the Black Lung Benefits Act

32 (1981).

Workers’ compensation insurance, unlike most commercial

lines, cannot limit the maximum liability of the carrier. If a

carrier offers workers’ compensation coverage, it must provide

full coverage for the insured employer's statutory workers’ com-

pensation liability, come what may, in order for the employer to

comply with mandatory insurance requirements imposed by state

workers’ compensation laws.'° Under laws regulating the busi-

ness of insurance, retroactive adjustment of workers’ compensa-

tion premium rates to cover losses generated by the insurance

carriers’ miscalculations of the cost of a risk is impossible. The

entire estimated cost of insuring a risk is fixed at the time a policy

is sold and, when an occupational disease claim is filed, it attaches

to the policy in effect at the time of the worker’s last employment.

See 20 C.F.R. § 726.203. Premiums collected for that policy

must cover all claims attributable to that policy. Premiums

charged for policies in future years are not and cannot be calcu-

lated to pay the cost of previously incurred claims.

For these reasons, workers’ compensation insurance premium

ratemaking has evolved into an exacting science. Predictability,

certainty, and a careful evaluation of potential risks are critical

features of this very complex process. Pooling arrangements,

10. State insurance officials regulate insurance premium rates and policy

provisions. In workers’ compensation lines of coverage, the carrier must pro-

vide full coverage for all insured employers. The Act contemplates the regula-

tion of rates and coverages for the federal program by state agencies. 30 U.S.¢

§ 933(a)

like the National Workers’ Compensation Reinsurance Pool, are

essential to accommodate otherwise uninsurable employers. To

avoid catastrophic unfunded losses, industry specialists devote

great care to reach an understanding of the nature of the risk to

be insured. Sometimes errors are made, and the carriers and

pools are answerable when that occurs.'’ That is to be expected

and is simply a reality of the insurance business.

What makes this case different, and the result that would flow

from Sebben exceptionally inequitable, is that the workers’ com-

pensation insurance industry was not asked to, did not, and would

not have insured the risk created by the SSA presumption. That

risk has little or no relationship to total disability or death due to

black lung disease. The SSA provision, by its plain language,

compensates unemployment, disabilities whatever their cause,

retirement and old age. The workers’ compensation insurance

industry wrote no policies, collected no premium and had no basis

on which to ascertain that, in writing a workers’ compensation

insurance policy covering mine owners, it was insuring the life

and health of all coal miners. If Sebben and Broyles are correct,

this industry, the coal industry, the Department of Labor, energy

and insurance consumers and probably most of the members of

Congress itself have been the victims of an atrocious delusion.

SUMMARY OF ARGUMENT

The decisions of the Fourth and Eighth Circuits operate in

concert to redesign the fundamental concept of the Department

of Labor’s black lung program. Together they require the insur-

ance industry, and to a much larger degree, the coal industry, to

fund benefits to coal miners that are in no way justified. The

benefits are called “black lung” benefits, but even a cursory

review of the two regulations at issue, the SSA rule and the Labor

rule, reveals that the latter may involve compensation for black

lung disease, but the SSA rule does not.

11. Iferrors are made in favor of the industry, future rate calculations must

reflect an appropriate adjustment.

—————

We believe that Congress intended this important difference

between the two programs. But the words used to convey this

intent in the statute and its legislative history lack precision. The

legislative context is ambiguous, perhaps by design. In attempt-

ing to structure a black lung workers’ compensation program in

keeping with Congress’s intent, the Department of Labor devel-

oped an eligibility regulation in section 727.203 that is likely to be

the most plaintiff-favorable-burden-of-proof-shifting vehicle ever

doing so, Labor opted to maintain some scientific validity in its

standard and permitted claim defendants the opportunity to pre-

vail in a non-meritorious claim. The Secretary of Labor’s per-

ception of the agency’s mission is entitled to deference, and the

agency’s rule should be sustained. Section 410.490 is a private

rule with a hidden purpose and has no place in the Part C black

lung program. Under the SSA rule, proven facts do not produce

a factually true inference of a claimant’s right to benefits, and

presumed facts are essentially irrebuttable. Section 410.490 vio-

lates the Due Process Clause of the Fifth Amendment to the

United States Constitution for this reason.

The Eighth Circuit’s decision mandating the relitigation of tens

of thousands of closed cases is not authorized by any source of

law. The Longshore Act precludes the exercise of jurisdiction

over claims outside of prescribed statutory procedures. Long-

shore procedures are preemptive and the pursuit of the remedies

they provide is mandated for any party seeking relief from a black

lung claim determination. The procedures reflect the principle of

res judicata, and res judicata applies to completed adjudications

in black lung claims, including those claims in the Sebben group.

The decisions below will so enormously disrupt the continua-

tion of this important federal program and produce such com-

pletely unjustified liabilities for the insurance industry and the

coal industry that they must be reversed. In both Sebben and

Broyles, the circuits have committed error in need of expeditious

correction.

ARGUMENT

CONGRESS NEITHER REQUIRED NOR INTENDED TO

REQUIRE THE LABOR DEPARTMENT TO APPLY

THE SSA RULE

This case turns on the validity of the Department of Labor’s

regulation. If in requiring ten years of employment and permit-

ting rebuttal in 20 C.F.R. § 727.203, the Secretary of Labor

acted reasonably and in accord with the Act, the inquiry in these

cases is fully answered. See Motor Vehicles Mfrs. Ass'nv. State

Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). To sustain

the rule, the agency must articulate its reasons for acting as it did.

If these reasons are consistent with the Act and in accord with its

purposes and if the result is not arbitrary, the rule is valid. See

NLRB vy. United Food & Commercial Workers Union, 108 S. Ct.

413, 421 (1987). Where ambiguity deprives the statutory lan-

guage of undeniable meaning, this Court typically defers to the

agency’s interpretation, so long as the interpretation is permissi-

ble and does not lead to an arbitrary and capricious result. Chev-

ron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467

U.S. 837, 842-43 (1984).

Here, both courts below began and ended their analyses with

the term “criteria” in section 402(f)(2) of the Act, 30 U.S.C.

§ 902(f)(2), finding in it an unambiguous intent on the part of

Congress to require Labor to apply the SSA rule. The Depart-

ment of Labor has consistently interpreted “criteria,” in its statu-

tory context, to have a more limited meaning. Although the

plain meaning of the term is large and |oose, there are indications

in the statute and legislative history that it had a fairly specific

meaning for congressional drafters, which was properly ascer-

tained by the Secretary of Labor.

All related sections of the Act should be interpreted as a part of

an harmonious whole. See Addison v. Holly Hill Fruit Prods.,

Inc., 322 U.S. 607, 614-17 (1944). The Act, as a whole, gives

the Secretary of Labor broad regulatory authority to define the

elements of entitlement to benefits. 30 U.S.C. §§ 902(f)(1),

932(c), (h), 936(a). Section 902(f) addresses only those stan-

dards that relate to the definition of “total disability,” and within

that limited context the SSA rule permits an inference of “total

disability” if the specified medical criteria are met, i.e., positive x-

ray, autopsy, or biopsy evidence dem®nstrating occupational

pneumoconiosis or ventilatory test results at a specified level. 20

C.F.R. § 410.490(b). Whether an x-ray, autopsy or biopsy actu-

ally shows pneumoconiosis is not related to the issue of total

disability. It is a mixed question of causation that requires the

expert interpretation of medical tests. The Secretary is indepen-

dently authorized to regulate concerning causation in 30 U.S.C.

§ 932(h) and to regulate concerning medical tests in 30 U.S.C.

§§ 902(f)(1)(D) and 923(b).. Whether this separate regula-

tory authority is overridden by section 902(f)(2) is ambiguous.

The term “criteria” itself is also used at two other places in

section 902(f). Section 902(f)(1)(C) employs similar lan-

guage to that used in section 902(f)(2): “regulations shall not

provide more restrictive criteria than those applicable under sec-

tion 223(d) of the Social Security Act.” 30 U.S.C.

§ 902(f)(1)(C). Typically, SSA disability “criteria” consist of

listings of medical test results giving rise to an implication of total

disability. See 20 C.F.R. Part 404, subpart P, app. | (1987).

Also, 30 U.S.C. § 902(f)(1)(D) uses the term “criteria” to refer

to “medical tests.”

It is also significant that the plain language of section 410.490

is inconsistent with several provisions of the Act. Section 401 (a)

of the Act states that the purpose of the Act is to provide benefits

for total disability or death due to pneumoconiosis. 30 U.S.C.

§901(a). Section 410.490 provides benefits far beyond that

premise. Section 413(b) of the Act requires the consideration of

all relevant medical evidence in claim litigation. 30 U.S.C.

§ 923(b). Section 410.490 renders such evidence irrelevant.

Section 402(f)(1)(A) of the Act directs the Secretary of Labor

to define “total disability” to permit an award only when “pneu-

moconiosis” prevents the miner from working. 30 U.S.C.

§ 902(f)(1)(A). Section 410.490 makes pneumoconiosis irrele-

vant to the miner’s eligibility in many cases.

These references demonstrate in this exceptionally complex

regulatory environment that the mandate of section 902(f) (2) is

less than crystal clear. For this reason, and perhaps more impor-

tantly because of the exceptional controversy that characterized

the debate over the interim presumy ‘ion, consultation with exter-

nal authorities, including the legislative and regulatory history of

the matter, is compelled.

If Congress meant in section 902(f)(2) that the Secretary of

Labor was to repromulgate the SSA regulation or adopt all of its

provisions as a starting point, it chose very curious language to

convey that message. What is more likely is that the Secretary of

Labor was given a mandate to regulate in light of a broadly

defined set of congressional expectations, and was aware that the

regulations would be informally reviewed by the most interested

members of Congress before publication.”

As an academic exercise in interpretation, the legislative his-

tory and circumstances surrounding publication of the Labor rule

present many difficulties. Enlightenment and clarity are elusive.

The Solicitor General and the parties will surely survey the many

legislative references and extract meaning from them. All that

seems certain is that the Secretary of Labor was to write a sepa-

rate rule and that the Secretary was compelled to include within

that rule provisions allowing rebuttal. H.R. Rep. No. 864, 95th

Cong., 2d Sess. 13, 16, reprinted in 1978 U.S. Code Cong. &

Admin. News 309; 124 Cong. Rec. 2333, 3426, 3431 (1978). It

was also understood that Labor was authorized to depart from the

SSA usages to some significant degree. Jd. Whether Labor's

departure, particularly with respect to the ten-year x-ray invoca-

tion standard," overstepped the Act or the bounds of reasen is not

12. That this procedure was followed is well documented. See Solomons,

supra note 5, at 896-97 & n.138; Letter from Representatives Perkins, Dent and

Simon to Robert B. Dorsey, supra p.8.

13. On the matter of rebuttability, all sources of authority point to the

conclusion that Labor was required to permit rebuttal of presumed facts.

Although Broyles holds to the contrary, its holding is devoid of rationale, and

there is none.

an answerable question within the language of the Act or the

legislative history.

In this setting, judicial deference is required if Labor is able to

explain its decision. Labor asserts that the word “criteria” in

section 902(f)(2) means only medical criteria as distinct from

“evidentiary standards.” Additionally, miners with fewer than

ten years of exposure do not; as a medical matter, contract disa-

bling black lung disease and it is unreasonable to so presume.

Perhaps the ten-year standard was employed to screen in the

claimants most likely to be deserving and to impose a higher

standard of proof on the others. Perhaps Congress left to the

Secretary the discretion to compromise the demands of those few

members of Congress with a “pay everybody” philosophy with the

more moderate views of other members. Certainly, the Secre-

tary’s duty to factor in the rights of claim defendants also played

a role.

In the aggregate, these reasons support the Secretary’s exerciss

of discretion and validity of the rule. The deference equation

requires no more, and here a traditional inquiry sustains the rule.

See American Textile Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490,

514 (1981).

The insurance industry's contribution to this debate arises from

our long-standing perception that Congress and the Department

of Labor harbored no intent to lure the industry into writing

insurance coverage for an uninsurable risk. Total disability or

death due to black lung disease is an insurable risk. The unem-

ployment, general disability, retirement or death of coal miners.

within the guise of a workers’ compensation program, is not. The

history of the insurance industry's involvement demonstrates spe-

cial concern for insurability and strongly supports the Govern-

ment’s understanding that in designing section 727.203, the

agency was required to preserve some measure of fairness for the

private parties involved.

Mine owners are required to obtain adequate insurance cover-

age, 30 U.S.C. § 933, but the insurance industry is not required to

sell it. In 1973, when the insurance industry was approached by

the Department of Labor and asked to provide coverage for fed-

eral liabilities, many in the industry felt that the risk they were

invited to underwrite was either unacceptable or that coverage

could not be affordably provided.'* Given repeated assurances by

the Department and Congress during the period from 1973 to the

present day that the black lung claims process would, notwith-

standing a uniquely generous entitlement scheme, preserve both

fairness and predictability in claims adjudications, the insurance

industry provided coverage at affordable rates.

Following liberalizations of entitlement rules in the Black Lung

Benefits Reform Act of 1977, Pub. L. No. 95-239, 92 Stat. 95,

and largely because of section 727.203, it became clear that

earlier funding assumptions were no longer viable and would

produce catastrophic unfunded and unanticipated losses for the

industry and mine owners. In response, the insurance industry,

the Labor Department, mine owners, representatives of workers

and claimants, and Congress worked together to revise the Black

Lung Program and its funding mechanisms to restore equilib-

rium.'> House Comm. on Ways and Means, Subcomm. on Over-

sight, Report and Recommendations on Black Lung Disability

Trust Fund, 97th Cong., Ist Sess. 16, 30 (Comm. Print 1981);

see also H.R. Rep. No. 1410, 96th Cong., 2d Sess. 2-3 (1980)

(“[T]he 1977 Amendments were unfair in imposing ... this

14. Hearings on H.R. 10760 and S. 3183 Before the Subcomm. on Labor of

the Senate Comm. on Labor and Public Welfare, 94th Cong., 2d Sess. 479-5!

(1976).

15. This cooperative effort produced the Black Lung Benefits Revenue Act

of 1981 and the Black Lung Benefits Amendments of 1981, Pub. L. No. 97-119

95 Stat. 1635. But even this substantial effort proved insufficient to ensure

adequate funding for the program. In 1985 and again in 1987, Congress found

it necessary to enact additional fiscal relief for the Black Lung Disability Trust

Fund by raising and then extending the producers tax on coal that provides

revenue for the payment of claims by the Fund. 26 U.S.C. §§ 4121, 9501;

Consolidated Omnibus Budget Reconciliation Act of 1985, Pub. L. No. 99-272,

§ 13203(a), (d), 100 Stat. 312, 313 (1986); Omnibus Budget Reconciliation

Act of 1987. Pub. L. No. 100-203, § 10503 (1987). The Fund pays benefits tn

those cases in which no mine operator or insurer can be found individually liable

30 U.S.C. § 934. The Fund is currently more than $3 billion in debt to the LS

Treasury, having borrowed this amount to make up the difference between coa!

tax revenues and benefit payment obligations

————aw

retroactive liability.... [T]he combined effect of the 1977 law

requiring the automatic review of old (federal) claims, under new

liberalized eligibility criteria, and of directing that those

approved be paid by coal operators—either directly or through

the Trust Fund—has produced a harsh result on operators (and

their commercial insurers) who had no reason to anticipate that

they would be held directly liable.”).

The partnership between Congress, many federal agencies and

the commercial liability insurance industry is pervasive. This

industry is called upon frequently to assist Congress in the imple-

mentation of national policies by providing private parties the

insurance coverage they need to be in compliance with federal

laws."* In order for this partnership to be maintained, there must

be an acceptable level of predictability and stability in the risks

Congress creates. The partnership cannot survive if the industry

is considered merely an adjunct to the Federal Treasury whenever

Congress decides to be more generous, but does not want to pay

the cost of its largess. Congress is well aware of this fact. It is

unimaginable that Congress would, in the black lung program,

ask the insurance industry to fund a compensation scheme based

on the SSA presumption. It is equally improbable that Congress

would do so without clearly expressing such intent.

When Congress liberalized the Act in 1978, most of the claims

here in question were already insured under preexisting insurance

policies. Those policies provided coverage only for total disabil-

ity or death due to black lung disease and they cannot be rewrit-

ten. There is no proof that the 1978 amendments would rewrite

these policies to require payment for unexpected and unknown

risks wholly divorced from the stated purpose of the Black Lung

Act. See 30 U.S.C. § 901(a) (“It is, therefore, the purpose of

this title to provide benefits, in cooperation with the states, to coal

16. Just a few examples are the Longshore Act, 33 U.S.C. § 932: the Price-

Anderson Act, 42 U.S.C. § 2210 (nuclear plant accidents); 42 U.S.C. §§ 5154,

5172 (nuclear disaster relief); 7 U.S.C. § 1503 (crop insurance); 33 U.S.

§ 1321(d), (p) (maritime disasters); 30 U.S.C. § 1257 (surface coal mining

operations); 41 U.S.C. § 351 (government contractors); 46 C.F.R. § 540.20

(1987) (cruise ships); 14 C.F.R. Part 205 (1987) (air carriers)

miners who are totally disabled due to pneumoconiosis, and to the

surviving dependents of miners whose death was due to such

disease... .”)

In sum, there are many sound reasons why the Secretary of

Labor constructed section 727.203 as he did, not the least of

which is that the benefit-funding mechanisms available and the

rights of claim defendants deserved protection.

THE SSA RULE WOULD DEPRIVE CLAIM

DEFENDANTS OF RIGHTS UNDER THE

ADMINISTRATIVE PROCEDURE ACT

AND OF DUE PROCESS OF LAW

The Black Lung Benefits Act provides that the regulations of

the Secretary of Labor “shall be issued in conformity with” 5

U.S.C. § 553. 30 U.S.C. § 936(a). Only the Secretary of

Labor is authorized to promulgate regulations governing the con-

sideration or disposition of claims adjudicated by the Department

of Labor. /d.; see id. §§ 902(f)(1), 932(h). Section 410.490

Labor was neither published by the Secretary of Labor nor was it

ever placed in the public domain for participation and comment

as a rule affecting the rights of private parties. No argument can

be made that any interim presumption is merely a statement of

agency policy or that it fits any of the exceptions to 5 U.S.C.

§ 553.

Neither court below had authority to promulgate section

410.490 for Labor Department claims. The procedures set forth

in 5 U.S.C. § 553 are there to protect members of the public from

arbitrary rulemaking practices and to ensure that rules adopted

by an agency reflect a proper and careful deliberation of compet-

ing views. See Vermont Yankee Nuclear Power Corp. v. Natural

Resources Defense Council, Inc., 435 U.S. 519, 525 (1978); FCC

v. Schreiber, 381 U.S. 279, 290-92 (1965). The courts may not

simply step in to accomplish what the agency is prohibited from

doing. See Heckler v. Lopez, 463 U.S. 1328, 1333-34 (1983);

Northwest Airlines, Inc. v. Transport Workers Union, 451 U.S.

77, 97 (1981).

Yet, this is precisely what the Fourth Circuit and the Eighth

Circuit have done. It is not valid rulemaking and should not be

sustained by this Court."

Economic regulatory legislation will rarely succumb to chal-

lenge under the Due Process Clause. This Court has afforded

Congress considerable leeway in regulating our national eco-

nomic life. Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15

(1976). But if, in fact, 30 U.S.C. § 902(f)(2) requires applica-

tion of the SSA regulation to the private liability of mine owners

and their insurers, the minimal rationality required by the Due

Process Clause is hard to find. The right to a fair hearing com-

pelled by the Due Process Clause is similarly difficult to discern.

Section 410.490 is, from everything that is apparent, designed

to require the payment of black lung benefits to coal miners and

their families whether or not the miner has black lung disease or

any disability from that disease. See Comptroller Gen. of the

United States, Report to the Congress: Legislation Allows Black

Lung Benefits to be Awarded Without Adequate Evidence of

Disability 8 (1980) (reporting that “in 88.5% of the [SSA]

cases, medical evidence was not adequate to establish disability or

death from black lung”). Section 410.490 erects a mandatory

inference that the miner is totally disabled or died due to black

lung disease on the basis of proof that is barely connected to either

ultimate fact, if it is connected at all. See supra pp. 5-6.

The mine owner or its insurer is afforded a right to a hearing,

but at that hearing cannot prevail by proving the falsity of pre-

sumed facts. The plain language of section 410.490 so provides,

and the courts have been assiduous in acknowledging the excep-

tionally limited rebuttal possibilities provided. 20 C.F.R.

17. Were this Court to agree that section 727.203 is unduly restrictive and

remand the matter to the Labor Department for rulemaking, a curious phenom-

enon would ensue. Ina rulemaking proceeding, the Department will not be able

to make a credible record supporting its adoption of section 410.490. The

simple truth is that proof of invocation of section 410.490 cannot support the

inference of ultimate fact it mandates. A subsequent challenge to section

410.490 would prove the rule to be arbitrary and capricious.

§ 410.490(c); Broyles, 824 F.2d at 329; Haywood v. Secretary of

HHS, 699 F.2d 277, 283 (6th Cir. 1983) (both noting that

section 410.490 may be rebutted only by proof that the miner is

working or able to work). Section 410.490 provides no method

of rebuttal at all if the miner is deceased. Thus, the survivor of a

deceased miner who had perfectly normal ventilatory test results

(see supra p. 6) is accorded a mandatory inference that death

was due to pneumoconiosis and automatic entitlement to benefits

under section 410.490. Again, the plain language of section

410.490 so provides. 20 C.F.R. § 410.490(c).

There is no rationality here. Application of section 410.490

would be a taking of the property of mine owners and insurers

without due process of law.'* It would be an outright sham and

should not be tolerated under the Constitution. “[T]he Due

Process Clause grants the aggrieved party the opportunity to

present his case and have its merits fairly judged.” Logan v.

Zimmerman Brick Co., 455 U.S. 422, 433 (1982); see also Brock

v. Roadway Express, Inc., 107 S. Ct. 1740, 1749 (1987). Sec-

tion 410.490 clearly abridges these rights.

III.

THE REOPENING OF CLOSED CASES IS BARRED BY

THE LONGSHORE ACT AND BY THE RULE

OF RES JUDICATA

Longshore Act procedures govern the adjudication of Depart-

ment of Labor black lung claims. 33 U.S.C. §§ 919, 921, incor-

porated by reference into 30 U.S.C. § 932(a); Director, Office of

Workers’ Compensation Programs v. Peabody Coal Co., 554

F.2d 310 (7th Cir. 1977). Longshore Act procedures are exclu-

sive, and the time limits fixed by the provisions of the Longshore

Act for the pursuit of both administrative and judicial remedies

18. For insurers, section 410.490 would have the additional impact of retro-

actively rewriting the insurance contracts entered into with mine owners. These

contracts provided no coverage for non-occupational conditions or disabilities.

This feature of section 410.490 casts further doubt on the constitutional validity

of the SSA rule if applied in Part C cases. See Usery v. Turner Elkhorn Mining

Co., 428 U.S. at 16-17

——————

””’

are jurisdictional. 33 U.S.C. §921(a),(c). Crowell v. Benson,

285 U.S. 22, 49-53 (1932); Louisville & N. R.R. Co. v. Donovan,

713 F.2d 1243 (6th Cir. 1983), cert. denied, 466 U.S. 936

(1984); Bennett v. Director, Office of Workers’ Compensation

Programs, 717 F.2d 1167 (7th Cir. 1983); Pittston Stevedoring

Corp. v. Dellaventura, 544 F.2d 35 (2d Cir. 1976), aff'd on other

grounds sub nom. Northeast Marine Terminal Co. v. Caputo,

432 U.S. 244 (1977).

The Longshore Act requires reversal of the Eighth Circuit's

decision in Sebben. Where Congress establishes a comprehen-

sive procedure for the adjudication of a particular class of cases,

“those procedures are to be exclusive.” Whitney Nat'l Bank v.

Bank of New Orleans, 379 U.S. 411, 422 (1965); cf. United

States v. Fausto, 108 S. Ct. 668, 675 (1988) (Congress may

withdraw the right to judicial review of administrative action).

Longshore Act procedures are comprehensive and exclusive.

Section 21(e) of the Longshore Act provides that proceedings for

the consideration of a denied claim “shall not be instituted other-

wise than as provided in” the Longshore Act. 33 U.S.C. 921(e).

The Sebben plaintiffs’* seek to bypass this prohibition. There

is no showing that pursuit of the statutory remedies provided

would have been futile, and indeed the circuit court decisions now

before this Court demonstrate that the pursuit of statutory reme-

dies would not have been futile. No argument can be made that

this dispute over interim presumptions in any way involves the

constitutional rights of black lung claimants. No claim can be

made that the identity of the correct eligibility standard is beyond

the jurisdictional purview of the Benefits Review Board or cer-

tainly the circuit courts. The Longshore Act unambiguously

provides that there is only one way to adjudicate black lung

claims, and that avenue prohibits alternative access to the district

19. Many within the putative Sebben class, including the class representa-

tives, failed to exhaust their administrative remedies. This failure generally

precludes the exercise of mandamus jurisdiction under 28 U.S.C. § 1361 by the

district courts in a collateral action. Heckler v. Ringer, 466 U.S. 602, 616

(1984)

courts.*” Were that not the case, the rule of res judicata is still

properly applied in this administrative setting.

This Court has observed that the application of res judicata in

civil litigation is not a matter of discretion for the federal courts.

“There is simply ‘no principle of law or equity which sanctions the

rejection by a federal court of the salutary principle of res judi-

cata."” Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394,

401-02 (1981) (citation omitted). In an administrative setting

the rule of res judicata should be applied where the agency acts in

a judicial capacity and the parties have had a fair chance to

litigate. University of Tenn. v. Elliott, 106 S. Ct. 3220, 3226

(1986); see also Restatement (Second) of Judgments § 83, at

269 (1982). Where the rights of private parties are litigated ina

proceeding governed by the Administrative Procedure Act, 5

U.S.C. § 554, incorporated by reference into 33 U.S.C. § 919(d),

application of res judicata is particularly appropriate.

Black lung claim adjudications have all of the essential attrib-

utes of a civil trial for damages. It is difficult to discern a reason

why res judicata should not apply. From the insurance industry's

perspective, res judicata and finality are key elements of a fair

hearing. Without these features, predictability and thus insura-

bility become elusive. The insurance industry, including state

insurance funds, cannot be expected to participate in the funding

or financial management of open-ended federal welfare or entitle-

ment programs, and there is no indication that Congress intended

it to do so in the Part C portion of the black lung program. When

Congress reopened previously denied claims in the 1977 amend-

ments to the Act, it also transferred all liability for claims predi-

cated upon coal mine employment terminating before January |,

1970, to the Black Lung Disability Trust Fund, thus mitigating

the inherent unfairness of once waiving res judicata. Compare

30 U.S.C. § 932(c) with 83 Stat. 796. When the 1978 funding

formulation proved unfair, Congress again corrected funding

20. This also precludes the Eighth Circuit's reliance on 28 U.S.C. § 1361 as

a jurisdictional predicate for action

inequities. 30 U.S.C. § § 902(1),932(j).’ The Eighth Circuit

has no capability of funding its decision, and it does not share

Congress's power to waive finality whenever the court perceives

that equities so require. Res judicata applies to protect the rights

of all parties, and its application is essential here.

The Eighth Circuit’s reliance on Bowen v. City of New York,

106 S. Ct. 2202 (1986), is not justified. The result in Bowen

draws rationale from specific provisions of the Social Security Act

permitting a waiver of time limitations and from the exception-

ally unfair actions of SSA in deciding cases under a secret rule.

Neither feature of Bowen is even arguably present in this case.

The Longshore Act permits no waiver of time limitations and

there was nothing hidden in Labor’s application of its regula-

tion. Bowen speaks not at all to the application of res judicata

in the instant setting.

21. These corrections, of course, only shift liability to the coal industry as a

whole, which must fund the added obligations of the Trust Fund

22. If anything was clandestine, it was SSA’s development of section

410.490. If any precedent can be drawn from Bowen for application in this

case, it is that the private arrangement between SSA and congressional staff that

generated section 410.490 invalidates any application of that rule to the detri-

ment of private parties

CONCLUSION

For these reasons, the decision of the Fourth Circuit and the

decision of the Eighth Circuit must be reversed.

Respectfully submitted,

JOHN NANGLEI MICHAEL CAMILLERI

NATIONAL ASSOCIATION Of Counsel of Record

INDEPENDENT INSURERS MARK GORDON

2600 River Road NATIONAL COUNCIL ON

Des Plaines, Illinois 60518 COMPENSATION

INSURANCE

RICHARD E. GOODMAN One Penn Plaza

ALLIANCE OF AMERICAN New York, New York 10119

INSURERS

1501 Woodfield Road CRAIG BERRINGTON

Suite 400 West AMERICAN INSURANCI

Schaumberg, Illinois 60195- ASSOCIATION

4980 Suite 1000

1130 Connecticut Avenue, N.W.

Washington, D.C. 20036

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