Amicus Curiae Brief — Director, Office of Workers' Compensation Programs v. Broyles

No. 87-1095

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

> .

DirtecTorR, Orrick OF WORKERS COMPENSATION PRO

GRAMS, LNITED STATES DEPARTMENT OF LABOR,

Petitioner,

Vv.

CHARLIE BROYLES, ef al.

Respondents

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF AMICI CURIAE OF THE NATIONAL COAL ASSOCI-

ATION, THE AMERICAN INSURANCE ASSOCIATION,

THE NATIONAL COUNCIL ON COMPENSATION INSUR-

ANCE, THE PITTSTON COAL GROUP, THE BARNES &

TUCKER COMPANY, THE ISLAND CREEK COAL COM-

PANY, THE CONSOLIDATION COAL COMPANY, THE OLD

REPUBLIC INSURANCE COMPANY, AND THE PENN-

SYLVANIA NATIONAL INSURANCE GROUP

Mark E. SOLOMONS

Counsel of Record

Arter & Hadden

Suite 400

1919 Pennsylvania Avenue, N.W.

Washington, D.C. 20006

(202) 775-7154

TABLE OF CONTENTS

PAG

TABLE OF AL THORITIES 1

INTEREST OF AMICI CURIAE

ARGUMENT 5

CONCLUSION 6

TABLE OF AUTHORITIES

PAGI

Cases:

Broyles vy. Director, Office ef Workers’ Compensation

Programs, 824 F.2d 832(4th Cir, 1987) oo 4

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

grams, 816 F.2d 1182 (7th Cir. 1987) oe 4

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

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

cert. filed sub nom. Director, Office of Workers’ Com-

pensation Programs v. Kyle, 56 U.S.L.W. 3463

(U.S. Dee. 21, 1987) (No. 87-1045) and Nationa!

Council on Compensation Insurance v. Kyle, 56

LS.L.W. 3484 (U.S. Dee. 21, 1987) (No. 87-1065) .. 5

Mullins Coal Co., Inc. of Virginia v. Director, Office of

Workers’ Compensation Programs, \O8 S, Ct. 427

tii ee eosveecesonoseusenseedonesoaneonessenenneeniaanann 4

Pittston Coal Group v. Sebben, cert. granted, 56

U.S.L.W. 3555 (U.S. Feb. 22, 1988) (Nos. 87-821

BOG BTBIT) cccccccccvcceversescccvcceescecsnensepneneenaaanannan 1.3.5

Statutes and Regulations:

26 U.S.C. GOE2E CIGBBD ccccccccooncccccsnnnnee seedaanial 3

26 U.S.C. § OSOE CIOBG) ccccsvocccscecscsnsesccenssenennmninnel 3

Black Lung Benefits Act, 30 U.S.C. $§ 901-945 (1986) .. 2

6 422, 30 U.S.C. 5 932 CEGEBD seccocsesrccsersessteenen 3

B 423, 30 U.S.C. § O33 (IGBBD ccccccccccsesssssnacsnsanenns 3

8 424, 30 U.S.C. 6 O36 CIGGB) cccccecscrcscsesessetsnvven 3

§ 424(a)(4), 30 US.C.§ 934(a)(4) (1986) o.. 3

§ 424(a)(5), 30 US.C.§ 934(a)05) C1986) o. 3

Rules of the U.S. Supreme Court, Rule 36.1 ............ |

20 C.F.R. 8 4IO.408 COGBT) .orcccccroccrssscsccsscsvnmnnennene 3.4.5

20 C.F... Part 7H (UGB) cecccccccsescocccscsnescsssenenne 2

ill

PAGE

NE EM EDD cisccsvcesesscscssseseresevensoeeseseses 3.4

ee Ce CRUE) cccccevscsessscscosseserseseseess 4

Miscellaneous:

U.S. Department of Labor, /980 Annual Report on

Administration of the Black Lung Benefits Act

os nenawcnsencotsesccorevee 4

No. 87-1095

————

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

>

DIRECTOR, OFFICE OF WORKERS’ COMPENSATION PRO-

GRAMS, UNITED STATES DEPARTMENT OF LABOR,

Petitioner,

7,

CHARLIE BROYLES, et a/..

Respondents.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

a

BRIEF AMICI CURIAE OF THE NATIONAL COAL ASSOCI-

ATION, THE AMERICAN INSURANCE ASSOCIATION,

THE NATIONAL COUNCIL ON COMPENSATION INSUR-

ANCE, THE PITTSTON COAL GROUP, THE BARNES &

TUCKER COMPANY, THE ISLAND CREEK COAL COM-

PANY, THE CONSOLIDATION COAL COMPANY, THE OLD

REPUBLIC INSURANCE COMPANY, AND THE PENN-

SYLVANIA NATIONAL INSURANCE GROUP

Amici curiae,’ respectfully sumit that the Petition for Writ of

Certiorari to review the judgment and opinion of the United

States Court of Appeals for the Fourth Circuit filed in this pro-

ceeding on July 31, 1987 should be held in abeyance pending the

disposition of Pittston Coal Group v. Sebben, Nos. 87-821 and

87-827.

INTEREST OF AMICI CURIAE

The National Coal Association (hereinafter “NCA”) is a

trade association comprising approximately 200 members.

!. Inaccordance with Rule 36.1, the written consent of the Solicitor General

and Charlie Broyles, et al. are submitted herewith

“

i)

NCA members are directly or indirectly responsible for about 90

percent of the nation’s coal production. In addition to coal pro-

ducing companies, NCA’s membership includes coal brokers,

equipment suppliers, coal transporters, consultants, electric utili-

ties, and resource developers.

The American Insurance Association (hereinafter “ALA” )

an independent, not-for-profit insurance industry trade associa-

tion whose membership includes approximately 200 property-

casualty insurance companies and their subsidiaries. AIA pro-

vides a variety of services to its members and, from time to time.

represents their collective interests in the course of litigation of

special significance.

The National Council on Compensation Insurance (herein-

after "NCCI”) is the largest not-for-profit workers’ compensa-

tion insurance service organization in the United States. Its

membership includes over seven hundred insurance companies

and competitive state insurance funds that provide workers’ com-

pensation insurance coverage to employers throughout the United

States. In thirty-five states, including most major coal mining

states, NCCT proposes and administers premium rates and rating

plans for workers’ compensation insurance. NCCI also manages

the National Workers’ Compensation Reinsurance Pool (herein-

after the “Pool”). The Pool reinsures several categories of risk

that arise under the federal Black Lung Benefits Act, 30 U.S.C.

$§ 901-945 (1986) (hereinafter the “Act™). The Pool is the

only commercial insuring vehicle available to small and 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 an insurance carrier. NCCI’s members and many

AIA 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 col-

lected. Historically, from 15-20% of all federal claim liabilities

are insured or reinsured by the Pool.

The Pittston Coal Group, the Barnes & Tucker Company, the

Island Creek Coal Company, the Consolidation Coal Company,

the Old Republic Insurance Company, and the Pennsylvania

National Insurance Group’ are the petitioners in Pittston Coal

Group Vv. Sebben, cert. granted, 56 U.S.L.W. 3555 (U.S. Feb. 22

1987) (No. 87-821). The question presented in the Govern-

ment’s petition for certiorari here is among those presented by the

petitioners in Pittston Coal Group—Prttster-andts-co- petition-

ers are individual mine operators and commercial insurance car-

riers, each of which has substantial liability for claims arising

under the Act.

Mine operators and their insurers directly or indirectly bear the

burden for the payment of all benefits awarded under the Depart-

ment of Labor administered portions of the Act, 30 U.S.C.

§§ 932, 933, 934, the cost of administration of the black lung

program, 30 U.S.C. § 934(a)(5), and the payment of interest on

the debt accrued by the Black Lung Disability Trust Fund, 30

U.S.C. § 934(a)(4).

Black lung claims filed with the Secretary of Labor prior to

April 1, 1980 were and continue to be subject to adjudication

under an eligibility rule called the “interim presumption.” The

Secretary of Labor's interim presumption is published at 20

C.F.R. § 727.203 (1987). Black lung claims adjudicated by the

Social Security Administration (hereinafter “SSA”) were con-

sidered under another version-of the interim presumption pub-

lished at 20 C.F.R. § 410.490 (1987). The two presumptions

ditfer in certain respects, and some (but not all) claimants will be

2. The Pittston Coal Group s a wholly-owned subsidiary of the Pittston

Companies: the Island Creek Coal Company is a wholly-owned subsidiary of the

Occidental Petroleum Corporation: the Consolidation Coal Company ts a

wholly-owned subsidiary of the F.1. duPont de Nemours & Company: and the

Old Republic Insurance Company ts a wholly-owned subsidiors of the Old

Republic International Corporation. The Barnes & Tucker Company and the

Pennsylvania National Insurance Group are independent entities.

3. The insurance industry parties are responsible for the payment of

incurred losses on individual claims only. The mine owners are responsible for

the payment of individual claims not covered by insurance and tor funding the

Black Lung Disability Trust Fund, 26 U.S.C. §§ 4121, 9501

4

more likely to obtain an award of benefits under the SSA rule.

Several circuits, including the Fourth Circuit in this case, have

held that the SSA rule must apply in Labor Department claims if

such application produces a more favorable result for the claim-

ant. See Broyles v. Director, Office of Workers’ Compensation

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

Section 410.490 differs from section 727.203 in two significant

respects: (1) Section 410.490 may be invoked by a miner, with

fewer than ten years of coal mine exposure, where chest x-rays are

positive for black lung disease, while section 727.203 requires ten

years of mine work for its invocation; and (2) For a miner who

has died or is permanently disabled from any cause, occupational

or not, section 410.490 may be irrebuttable. Broyles v. Director,

Office of Workers’ Compensation Programs, 824 F.2d at 329. It

also appears to be irrebuttable even if the miner does not have

black Jung disease. Cook v. Director, Office of Workers’ Com-

pensation Programs, 816 F.2d 1182, 1184 (7th Cir. 1987). Sec-

tion 727.203 is rebuttable by proof that the miner does not have

black lung disease or was not disabled by a health impairment

related to coal dust exposure. 20 C.F.R. § 727.203(b).

Amici believe that the decision of the Fourth Circuit, if applied

to still pending claims‘ subject to adjudication under the interim

presumption, effectively deprives amici of fundamental defensive

rights to contest non-meritorious claims. Further, the decision of

the Fourth Circuit will, without doubt, require the payment of

benefits directly or indirectly by amici to several thousand claim-

ants not properly within the contemplation of the Act, at a cost

averaging from $118,315.88 to $185,659.69 per claim. U.S.

Department of Labor, /980 Annual Report on Administration of

the Black Lung Benefits Act 32 (1981). This liability is both

unfunded and unanticipated. The imposition of this liability on

4. In Mullins Coal Co. Inc. of Virginia v. Director, Office of Workers’

Compensation Programs, 108 S. Ct. 427, 430 (1987), this Court observed that

there are about 10,000 still pending claims to be decided under the interim

presumption. While the volume has probably decreased to some extent since

bricting in Mu/lins, the number of claims in this category remains significant.

5

the affected industries will disrupt federal benefit furding mecha-

nisms well into the twenty-first century, and is not and never will

be affordable for many smaller mine owners and insurers.

Liability for the payment of benefits to miners who do not have

black lung disease or are not disabled by it, should not be properly

imposed on amici in the guise of a black lung disability compensa-

tion benefit. Congress did not intend this result and the Secre-

tary of Labor’s regulations are properly designed to preclude it.

The Fourth Circuit's decision to the contrary departs from reason

and is a matter of immediate and substantial concern to amici.

ARGUMENT

On February 22, 1988, this Court granted the petitions for

certiorari in and consolidated Pittston Coal Group v. Sebben and

McLaughlin v. Sebben, 56 U.S.L.W. 3555 (U.S. Feb. 22, 1987)

(Nos. 87-821 and 87-827). Among the questions presented in

Pittston Coal Group is whether the Secretary of Labor’s interim

presumption, to the extent that it differs from section 410.490, is

consistent with the Act. A resolution of this question in Pittsion

Coal Group disposes of the instant case.’ On the assumption that

8. Pittston Coal Group addresses the retroactive application of section

410.490 to previously denied and closed cases. The instant case addresses

application of section 410.490 in pending claims. This distinction should have

no direct relevance to a resolution of the question. It is noted that there are

important issues presented in Pittston Coal Group that are, at least hypotheti-

cally. dispositive of Pittston but not this case: however, from amici’s perspective.

Pittston is the preferred vehicle because on!y it affords the Court a setting within

which the underlying problem may be resolved in all of its dimensions and only it

affords all affected industries the opportunity to fully participate as parties and

frame the issues in this matter of such substantial importance. Until this Court

accepted Pittston Coal Group for plenary review, mine operators and their

insurers had been deprived of the right to be heard in a timely way on the section

410.490 question.

Two additional petitions for certiorari raising the section 410.490 question

have been filed in Director, Office of Workers’ Compensation Programs v. Kyle,

56 UL S.L.W. 3463 (US. Dec. 21, 1987) (No. 87-1045) and National Council

on Compensation Insurance v. Kyle, 56 U.S.L.W. 3484 (U.S. Dec. 21, 1987)

(No. 87-1065). The petitions for certiorari in Av/e present potential problems

that this Court need not address as their resolution will not advance the orderly

disposition of the key issues presented. Otherwise, Av/e replicates the instant

case in most respects, and it too should be resolved by Pittston Coal Group

6

Pittston Coal Group should resolve the section 410.490 issue,

amici suggest that the convenience of the Court and the several

parties involved is best served by holding this petition for certio-

rari in abeyance pending resolution of Pittston Coal Group. \n

the alternative, amici urge the Court to grant certiorari in this

cuse.

The merits of the petition in this case, are fully detailed by the

Solicitor General and by Pittston and its co-petitioners in Pittston

Coal Group. Their reiteration here serves no purpose.

CONCLUSION

Amici ask the Court to hold the petition for certiorari in abey-

ance pending the disposition of Pittston Coal Group.

Respectfully submitted,

/s/ Mark FE. SOLOMONS

60666660666 Ob COCSSOOSSESSEEOSOS ESS EOE H ECE EHES OSES SENS

Arce \ RR. PRENTY Mark E. SOLOMONS

Jackson, Kelly. Holt Counsel of Record

& O'Farrell Arter & Hadden

1600 Laidley Tower Suite 400 4

P.O. Box $53 1919 Pennsylvania Avenue, N.W.

Charleston, WV 25322 Washington, D.C. 20006

v7) S_ <

Joun J. BAGNATO (202) 775-7154

Spence, Custer, Saylor,

Wolfe & Rose

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Johnstown, PA 15907