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Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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Document 1

Document 2

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 1 of 47
UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Lewis F. Powell, Jr. United States Courthouse Annex

1100 E. Main Street, Suite 501

Richmond, Virginia 23219-3517

Patricia S. Connor

Clerk

www.ca4.uscourts.gov Telephone

(804) 916-2700

 January 19, 2007

 John Ray Woodrum, Esq.

 OGLETREE, DEAKINS, NASH, SMOAK & STEWART, PC

 5th Floor

 2400 N Street, NW

 Washington, DC 20037

 Margaret Summers Lopez, Esq.

 OGLETREE, DEAKINS, NASH, SMOAK & STEWART, PC

 5th Floor

 2400 N Street, NW

 Washington, DC 20037

 W. Gregory Mott, Esq.

 OGLETREE, DEAKINS, NASH, SMOAK & STEWART, PC

 5th Floor

 2400 N Street, NW

 Washington, DC 20037

 Douglas Kevin Spaulding, Esq.

 REED & SMITH, LLP

 Suite 1100

 1301 K Street, NW

 Washington, DC 20005

 Mary Lou Smith, Esq.

 HOWE, ANDERSON & STEYER, PC

 Suite 620

 815 Connecticut Avenue, NW

 Washington, DC 20006

 Ralph Michael Smith, Esq.

 DECHERT, PRICE & RHOADS

 1775 I Street, NW

 Washington, DC 20006

 Elliott Schulder, Esq.

 COVINGTON & BURLING

 1201 Pennsylvania Avenue, NW

 Washington, DC 20004

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 2 of 47
 Stephen John Pollak, Esq.

 GOODWIN & PROCTER, LLP

 901 New York Avenue, NW

 Washington, DC 20001

 John Townsend Rich, Esq.

 GOODWIN & PROCTER, LLP

 901 New York Avenue, NW

 Washington, DC 20001

 Howard Robert Rubin, Esq.

 SONNENSCHEIN, NATH & ROSENTHAL, LLP

 Suite 600

 1301 K Street, NW

 Washington, DC 20005

 William James Murphy, Esq.

 MURPHY & SHAFFER, LLC

 Suite 1400

 36 South Charles Street

 Baltimore, MD 21201

 Jeffrey A. Clair, Esq.

 U. S. DEPARTMENT OF JUSTICE

 Room 7243

 Civil Division, Appellate Section

 950 Pennsylvania Avenue, NW

 Washington, DC 20530

 Re: 05-1996 A T Massey Coal Co v. Holland

 CA-03-3389-1-RDB

 05-2215 A T Massey Coal Co v. Barnhart

 CA-03-3389-1-RDB

 Dear Counsel:

 Enclosed is a copy of the corrected opinion.

 The short style of the lead case located at the top

 of each page of the opinion has been corrected.

 Yours truly,

 PATRICIA S. CONNOR

 Clerk

 /s/ Diane H. Burke

 By: ________________________

 Deputy Clerk

 Enclosure(s)

 cc: Clerk, U. S. District Court

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 3 of 47
CORRECTED OPINION

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

A. T. MASSEY COAL COMPANY, 

INCORPORATED; ALOE ENERGY

CORPORATION; AMERICAN ELECTRIC

POWER COMPANY, INCORPORATED;

ANDALEX RESOURCES, INCORPORATED;

APOGEE COAL COMPANY; BELLAIRE

CORPORATION; BOLOGNA COAL

COMPANY; BUNCH CONSTRUCTION

COMPANY, INCORPORATED;

CANTERBURY COAL COMPANY;

CARBON INDUSTRIES, INCORPORATED;

CEDAR COAL COMPANY; CENTRAL

OHIO COAL COMPANY; CHARLES J.

MERLO, INCORPORATED; CLEVELANDCLIFFS, INCORPORATED; CLIFFS MINING

COMPANY; COMMERCIAL LAND  No. 05-1996

COMPANY, INCORPORATED;

CONSOLIDATION COAL COMPANY;

CUMBERLAND RIVER COAL COMPANY;

DUKE ENERGY CORPORATION; EASTERN

ASSOCIATED COAL CORPORATION,

LLC; FREEMAN UNITED COAL MINING

COMPANY; G M & W COAL

COMPANY; GATEWAY COAL COMPANY;

GILBERT IMPORTED HARDWOODS,

INCORPORATED; HELVETIA COAL

COMPANY; HOBET MINING,

INCORPORATED; ISLAND CREEK COAL

COMPANY; JERICOL MINING,

INCORPORATED; KANAWHA COAL

COMPANY; KENTUCKY CARBON 

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 4 of 47
CORPORATION; KEYSTONE COAL 

MINING CORPORATION; LAUREL RUN

MINING COMPANY; LYNN LAND

COMPANY; MAPLE MEADOW MINING

COMPANY; MARMON COAL COMPANY;

MASSEY COAL SERVICES,

INCORPORATED; MEADWESTVACO

CORPORATION; MUELLER INDUSTRIES,

INCORPORATED; NACCO INDUSTRIES,

INCORPORATED; NATIONAL BULK

CARRIERS, INCORPORATED; NELL-JEAN

INDUSTRIES, INCORPORATED; NEW

WARWICK MINING COMPANY; NORTH

CAMBRIA FUEL COMPANY,

INCORPORATED; OMAR MINING

COMPANY; PALMER COKING COMPANY;

PEABODY COAL COMPANY, LLC;

PEERLESS EAGLE COAL COMPANY;

PENN POCAHONTAS COAL COMPANY; 

PENNZOIL-QUAKER STATE COMPANY;

PERRY & HYLTON, INCORPORATED;

QUARTO MINING COMPANY; R&B

FALCON DRILLING (INTERNATIONAL &

DEEPWATER), INCORPORATED, LLC;

FOUNDATION AMERICAN COAL

COMPANY, LLC; RAWL SALES AND

PROCESSING COMPANY; RED ASH

SALES COMPANY, INCORPORATED;

ROCHESTER & PITTSBURGH COAL

COMPANY; RUHRKOHLE TRADING

CORPORATION; SAGINAW MINING

COMPANY; SHAWMUT DEVELOPMENT

CORPORATION; SHENANGO

INCORPORATED; SOUTHERN OHIO COAL

COMPANY; STELCO COAL COMPANY;

STELCO USA, INCORPORATED; 

2 MASSEY COAL CO. v. HOLLAND

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 5 of 47
TENNESSEE CONSOLIDATED COAL 

COMPANY; TESONE LAND COMPANY;

THE VALLEY CAMP COAL COMPANY;

TURNER ELKHORN MINING COMPANY;

US NATURAL RESOURCES,

INCORPORATED; UNITED STATES FUEL

COMPANY; UNITED STATES STEEL

CORPORATION; WESTMORELAND COAL

COMPANY; WESTMORELAND COAL

SALES COMPANY; WHEELINGPITTSBURGH STEEL CORPORATION;

WINDSOR COAL COMPANY; AK STEEL

CORPORATION; IKON OFFICE

SOLUTIONS, INCORPORATED, formerly

known as ALCO Standard

Corporation; ADAM EIDEMILLER,

INCORPORATED; ALEX E. PARIS

CONTRACTING COMPANY; 

APPALACHIAN CONSTRUCTION,

INCORPORATED; BEILCHICK BROTHERS;

BENTLEY DEVELOPMENT COMPANY,

INCORPORATED; BLUESTONE COAL

CORPORATION; BOLLMEIER

CONSTRUCTION COMPANY; C&A COAL

COMPANY, INCORPORATED; COAL

STATE CONSTRUCTION COMPANY;

CODELL CONSTRUCTION COMPANY;

DAVE HINKLE ELECTRIC,

INCORPORATED; ELGIN NATIONAL

INDUSTRIES, INCORPORATED; FERRELL

MINE SERVICE, INCORPORATED; FRANK

M. SHEESLEY COMPANY; GAL

CONSTRUCTION, INCORPORATED;

INSPIRATION COAL INCORPORATED;

MITTAL STEEL USA, INCORPORATED; 

MASSEY COAL CO. v. HOLLAND 3

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 6 of 47
STANDARD OIL COMPANY, 

INCORPORATED; L & D,

INCORPORATED; LANDZENDORFER

TRUCKING, INCORPORATED; LONG

BRANCH DEVELOPMENT; LONG

BRANCH ENERGY; MENALLEN COKE

COMPANY OF NEW SALEM; METSO

MINERALS INDUSTRIES, INCORPORATED,

formerly known as Svedala

Industries, Incorporated; OHIO

AMCO, INCORPORATED; PARDEE COAL

COMPANY, INCORPORATED; RIDGE

LAND COMPANY, INCORPORATED; RUSH

RUN COAL COMPANY, INCORPORATED,

now known as Banner Coal & Land

Company; STEEL ERECTORS,

INCORPORATED; TERRA INDUSTRIES,  INCORPORATED; VECELLIO & GROGAN,

INCORPORATED; WELDING

INCORPORATED; WEST VIRGINIA

ELECTRIC CORPORATION; F M C

CORPORATION; PENNSYLVANIA MINES,

LLC; CHISHOLM COAL COMPANY,

Plaintiffs-Appellees,

and

A. J. TAFT COAL COMPANY,

INCORPORATED; ALABAMA ELECTRIC

COOPERATIVE; BORTZ CORPORATION;

BUFFALO MINING COMPANY; COWIN &

COMPANY, INCORPORATED; DRUMMOND

COAL SALES, INCORPORATED; EASTERN

COAL CORPORATION; ELKAY MINING

COMPANY; JEWELL RIDGE COAL 

4 MASSEY COAL CO. v. HOLLAND

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 7 of 47
CORPORATION; KENTLAND-ELKHORN 

COAL CORPORATION; MEADOW RIVER

COAL COMPANY; NORTH CAMBRIA,

INCORPORATED; ON MARINE SERVICES;

PITTSTON COAL GROUP,

INCORPORATED; RANGER FUEL

CORPORATION; REITZ COAL COMPANY;

SEA "B" MINING COMPANY; NORTH

AMERICAN COAL, INCORPORATED;

UNITED STATES STEEL MINING

CORPORATION, LLC; W-P COAL

COMPANY; CENTRAL CAMBRIA

DRILLING COMPANY; KERR-MCGEE

CHEMICAL WORLDWIDE LLC;

LATROBE CONSTRUCTION COMPANY;

CLINCHFIELD COAL COMPANY,  Plaintiffs,

v.

MICHAEL H. HOLLAND; WILLIAM P.

HOBGOOD; MARTY D. HUDSON;

THOMAS O. S. RAND; ELLIOT A.

SEGAL; CARL E. VAN HORN; GAIL R.

WILENSKY, as Trustees of the United

Mine Workers of America

Combined Benefit Fund,

Defendants-Appellants,

and

JO ANNE B. BARNHART,

COMMISSIONER OF SOCIAL SECURITY,

Defendant. 

MASSEY COAL CO. v. HOLLAND 5

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 8 of 47
A. T. MASSEY COAL COMPANY, 

INCORPORATED; ALOE ENERGY

CORPORATION; AMERICAN ELECTRIC

POWER COMPANY, INCORPORATED;

ANDALEX RESOURCES, INCORPORATED;

APOGEE COAL COMPANY; BELLAIRE

CORPORATION; BOLOGNA COAL

COMPANY; BUNCH CONSTRUCTION

COMPANY, INCORPORATED;

CANTERBURY COAL COMPANY;

CARBON INDUSTRIES, INCORPORATED;

CEDAR COAL COMPANY; CENTRAL

OHIO COAL COMPANY; CHARLES J.

MERLO, INCORPORATED; CLEVELANDCLIFFS, INCORPORATED; CLIFFS MINING

COMPANY; COMMERCIAL LAND

COMPANY, INCORPORATED;  No. 05-2215

CONSOLIDATION COAL COMPANY;

CUMBERLAND RIVER COAL COMPANY;

DUKE ENERGY CORPORATION; EASTERN

ASSOCIATED COAL CORPORATION,

LLC; FREEMAN UNITED COAL MINING

COMPANY; G M & W COAL

COMPANY; GATEWAY COAL COMPANY;

GILBERT IMPORTED HARDWOODS,

INCORPORATED; HELVETIA COAL

COMPANY; HOBET MINING,

INCORPORATED; ISLAND CREEK COAL

COMPANY; JERICOL MINING,

INCORPORATED; KANAWHA COAL

COMPANY; KENTUCKY CARBON

CORPORATION; KEYSTONE COAL

MINING CORPORATION; LAUREL RUN 

6 MASSEY COAL CO. v. HOLLAND

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 9 of 47
MINING COMPANY; LYNN LAND 

COMPANY; MAPLE MEADOW MINING

COMPANY; MARMON COAL COMPANY;

MASSEY COAL SERVICES,

INCORPORATED; MEADWESTVACO

CORPORATION; MUELLER INDUSTRIES,

INCORPORATED; NACCO INDUSTRIES,

INCORPORATED; NATIONAL BULK

CARRIERS, INCORPORATED; NELL-JEAN

INDUSTRIES, INCORPORATED; NEW

WARWICK MINING COMPANY; NORTH

CAMBRIA FUEL COMPANY,

INCORPORATED; OMAR MINING

COMPANY; PALMER COKING COMPANY;

PEABODY COAL COMPANY, LLC;

PEERLESS EAGLE COAL COMPANY;

PENN POCAHONTAS COAL COMPANY;

PENNZOIL-QUAKER STATE COMPANY; 

PERRY & HYLTON, INCORPORATED;

QUARTO MINING COMPANY; R&B

FALCON DRILLING (INTERNATIONAL &

DEEPWATER), INCORPORATED, LLC;

FOUNDATION AMERICAN COAL

COMPANY, LLC; RAWL SALES AND

PROCESSING COMPANY; RED ASH

SALES COMPANY, INCORPORATED;

ROCHESTER & PITTSBURGH COAL

COMPANY; RUHRKOHLE TRADING

CORPORATION; SAGINAW MINING

COMPANY; SHAWMUT DEVELOPMENT

CORPORATION; SHENANGO

INCORPORATED; SOUTHERN OHIO COAL

COMPANY; STELCO COAL COMPANY;

STELCO USA, INCORPORATED; 

MASSEY COAL CO. v. HOLLAND 7

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 10 of 47
TENNESSEE CONSOLIDATED COAL 

COMPANY; TESONE LAND COMPANY;

THE VALLEY CAMP COAL COMPANY;

TURNER ELKHORN MINING COMPANY;

US NATURAL RESOURCES,

INCORPORATED; UNITED STATES FUEL

COMPANY; UNITED STATES STEEL

CORPORATION; WESTMORELAND COAL

COMPANY; WESTMORELAND COAL

SALES COMPANY; WHEELINGPITTSBURGH STEEL CORPORATION;

WINDSOR COAL COMPANY; AK STEEL

CORPORATION; IKON OFFICE

SOLUTIONS, INCORPORATED, formerly

known as ALCO Standard

Corporation; ADAM EIDEMILLER,

INCORPORATED; ALEX E. PARIS

CONTRACTING COMPANY; 

APPALACHIAN CONSTRUCTION,

INCORPORATED; BEILCHICK BROTHERS;

BENTLEY DEVELOPMENT COMPANY,

INCORPORATED; BLUESTONE COAL

CORPORATION; BOLLMEIER

CONSTRUCTION COMPANY; C&A COAL

COMPANY, INCORPORATED; COAL

STATE CONSTRUCTION COMPANY;

CODELL CONSTRUCTION COMPANY;

DAVE HINKLE ELECTRIC,

INCORPORATED; ELGIN NATIONAL

INDUSTRIES, INCORPORATED; FERRELL

MINE SERVICE, INCORPORATED; FRANK

M. SHEESLEY COMPANY; GAL

CONSTRUCTION, INCORPORATED;

INSPIRATION COAL INCORPORATED;

MITTAL STEEL USA, INCORPORATED; 

8 MASSEY COAL CO. v. HOLLAND

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 11 of 47
STANDARD OIL COMPANY, 

INCORPORATED; L & D,

INCORPORATED; LANDZENDORFER

TRUCKING, INCORPORATED; LONG

BRANCH DEVELOPMENT; LONG

BRANCH ENERGY; MENALLEN COKE

COMPANY OF NEW SALEM; METSO

MINERALS INDUSTRIES, INCORPORATED,

formerly known as Svedala

Industries, Incorporated; OHIO

AMCO, INCORPORATED; PARDEE COAL

COMPANY, INCORPORATED; RIDGE

LAND COMPANY, INCORPORATED; RUSH

RUN COAL COMPANY, INCORPORATED,

now known as Banner Coal & Land

Company; STEEL ERECTORS,

INCORPORATED; TERRA INDUSTRIES,  INCORPORATED; VECELLIO & GROGAN,

INCORPORATED; WELDING

INCORPORATED; WEST VIRGINIA

ELECTRIC CORPORATION; F M C

CORPORATION; PENNSYLVANIA MINES,

LLC; CHISHOLM COAL COMPANY,

Plaintiffs-Appellees,

and

A. J. TAFT COAL COMPANY,

INCORPORATED; ALABAMA ELECTRIC

COOPERATIVE; BORTZ CORPORATION;

BUFFALO MINING COMPANY; COWIN &

COMPANY, INCORPORATED; DRUMMOND

COAL SALES, INCORPORATED; EASTERN

COAL CORPORATION; ELKAY MINING

COMPANY; JEWELL RIDGE COAL 

MASSEY COAL CO. v. HOLLAND 9

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 12 of 47
CORPORATION; KENTLAND-ELKHORN 

COAL CORPORATION; MEADOW RIVER

COAL COMPANY; NORTH CAMBRIA,

INCORPORATED; ON MARINE SERVICES;

PITTSTON COAL GROUP,

INCORPORATED; RANGER FUEL

CORPORATION; REITZ COAL COMPANY;

SEA "B" MINING COMPANY; NORTH

AMERICAN COAL, INCORPORATED;

UNITED STATES STEEL MINING

CORPORATION, LLC; W-P COAL

COMPANY; CENTRAL CAMBRIA

DRILLING COMPANY; KERR-MCGEE

CHEMICAL WORLDWIDE LLC;

LATROBE CONSTRUCTION COMPANY;

CLINCHFIELD COAL COMPANY,  Plaintiffs,

v.

JO ANNE B. BARNHART,

COMMISSIONER OF SOCIAL SECURITY,

Defendant-Appellant,

and

MICHAEL H. HOLLAND; WILLIAM P.

HOBGOOD; MARTY D. HUDSON;

THOMAS O. S. RAND; ELLIOT A.

SEGAL; CARL E. VAN HORN; GAIL R.

WILENSKY, as Trustees of the United

Mine Workers of America

Combined Benefit Fund,

Defendants. 

Appeals from the United States District Court

for the District of Maryland, at Baltimore.

Richard D. Bennett, District Judge.

(CA-03-3389-1-RDB)

10 MASSEY COAL CO. v. HOLLAND

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 13 of 47
Argued: September 21, 2006

Decided: December 21, 2006

Opinion header corrected: January 19, 2007

Before NIEMEYER, TRAXLER, and SHEDD, Circuit Judges.

Affirmed by published opinion. Judge Niemeyer wrote the opinion,

in which Judge Shedd joined. Judge Traxler wrote a dissenting opinion. 

COUNSEL

ARGUED: Jeffrey A. Clair, UNITED STATES DEPARTMENT OF

JUSTICE, Civil Division, Appellate Section, Washington, D.C.; Stephen John Pollak, GOODWIN & PROCTOR, L.L.P., Washington,

D.C., for Appellants. John Ray Woodrum, OGLETREE, DEAKINS,

NASH, SMOAK & STEWART, P.C., Washington, D.C., for Appellees. ON BRIEF: Peter D. Keisler, Assistant Attorney General, Rod

J. Rosenstein, United States Attorney, William Kanter, UNITED

STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Federal Appellant. William J. Murphy, MURPHY & SHAFFER, L.L.C.,

Baltimore, Maryland; Howard R. Rubin, William E. Copley, III,

SONNENSCHEIN, NATH & ROSENTHAL, L.L.P., Washington,

D.C.; John Townsend Rich, GOODWIN & PROCTOR, L.L.P.,

Washington, D.C., for Appellant Trustees of the UMWA Combined

Benefit Fund. Margaret S. Lopez, W. Gregory Mott, OGLETREE,

DEAKINS, NASH, SMOAK & STEWART, P.C., Washington, D.C.;

Mary Lou Smith, Robert J. Weil, HOWE, ANDERSON & STEYER,

P.C., Washington, D.C.; Douglas K. Spaulding, REED SMITH,

L.L.P., Washington, D.C.; Elliott Schulder, COVINGTON & BURLING, Washington, D.C.; R. Michael Smith, DECHERT, L.L.P.,

Washington, D.C., for Appellees. 

MASSEY COAL CO. v. HOLLAND 11

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 14 of 47
OPINION

NIEMEYER, Circuit Judge: 

By enactment of the Coal Industry Retiree Health Benefit Act of

1992 ("the Coal Act"), Congress established a new multiemployer

benefit plan, the United Mine Workers of America Combined Benefit

Fund ("Combined Fund"), to provide health care benefits to retired

coal mine workers. The Combined Fund resulted from the statutorilymandated merger of the 1950 and 1974 Benefit Plans that had been

agreed to, through collective bargaining, by the United Mine Workers

of America ("UMWA") and coal mine operators. It is financed by the

assets of the 1950 and 1974 Benefit Plans, by "premiums" that individual coal mine operators pay to the Combined Fund, and by government benefit plans including Medicare, and it is administered by an

independent Board of Trustees. The Coal Act specifies that the premiums payable by the coal operators to the Combined Fund be determined on a per-beneficiary basis by a formula that (1) begins with the

sum of payments made to all beneficiaries from the 1950 Benefit Plan

and the 1974 Benefit Plan for the plan year July 1, 1991, through June

30, 1992 (the base year); (2) subtracts from that sum the "reimbursements" received from Medicare and other publicly financed programs

for the base year but does not subtract administrative costs; (3)

divides the resulting number by the number of beneficiaries in the

base year; and (4) multiplies the quotient by a cost of living factor.

See 26 U.S.C. § 9704(b)(2).

The parties commenced these actions — the most recent skirmishes

in a long-running fight — to resolve whether "reimbursements" as

used in the formula includes the total payments that Medicare made

to the 1950 and 1974 Benefit Plans for the base year ($182.3 million)

or only the amount that the 1950 and 1974 Funds actually paid out

in Medicare benefits to beneficiaries for the base year ($156.3 million). Interpreting Medicare "reimbursements" to be the $182.3-

million figure results in lower premiums for the coal operators; interpreting "reimbursements" to be the $156.3-million figure results in

higher premiums. 

The district court ruled that "reimbursements" unambiguously

refers to the total payments ($182.3 million) that Medicare made to

12 MASSEY COAL CO. v. HOLLAND

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 15 of 47
the 1950 and 1974 Benefit Plans in the base year, and it declined to

defer under Chevron1 to the contrary interpretation put forth by the

Commissioner of Social Security. See A.T. Massey Coal Co. v.

Barnhart, 381 F. Supp. 2d 469 (D. Md. 2005). 

Agreeing with the district court, we conclude that "reimbursements" is an unambiguous historical term of art used by Congress to

refer to the total reimbursements that Medicare actually made, using

a capitation method, to the 1950 and 1974 Benefit Plans during the

base year.2 We also conclude that because Congress did not delegate

interpretative authority to the Commissioner to construe "reimbursements," her interpretation of "reimbursements" is not entitled to deference under Chevron. See United States v. Mead Corp., 533 U.S. 218

(2001). Accordingly, we affirm. 

I

A

Before enactment of the Coal Act in 1992, more than 100,000

UMWA retirees were receiving benefits under the 1950 and 1974

UMWA Benefit Plans, which were multiemployer benefit plans

established through collective bargaining. By 1988, economic factors

and structural inadequacies in the Plans’ funding mechanisms placed

these plans in financial peril. As coal operators went out of business,

the stream of premiums diminished, leaving the Plans, which promised lifetime benefits to coal miner retirees, insolvent. As the Conference Report issued in connection with the Coal Act observed, "The

need for legislative intervention arose because mounting deficits in

the Plans threatened to curtail the flow of benefits absent a legislative

solution." 138 Cong. Rec. S17,603 (daily ed. Oct. 8, 1992) (conference report). Similarly, a Senate subcommittee conducting hearings in

1Chevron U.S.A. Inc. v. Natural Resources Def. Council, Inc., 467 U.S.

837 (1984). 

2

In reaching this conclusion, we join the Eleventh Circuit’s holding in

National Coal Ass’n v. Chater, 81 F.3d 1077 (11th Cir. 1996), and depart

from the D.C. Circuit’s holding in Holland v. National Mining Ass’n,

309 F.3d 808 (D.C. Cir. 2002), which had created a split between the circuits. 

MASSEY COAL CO. v. HOLLAND 13

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 16 of 47
1991 heard testimony warning that more than 120,000 coal miner

retirees were at risk of not receiving "the benefits they were promised" under the 1950 and 1974 Benefit Plans. Eastern Enterprises v.

Apfel, 524 U.S. 498, 513 (1998). Despite the recognized need for congressional action, the Coal Act bill’s travels were long and tortured

and have been repeatedly described. See, e.g., Barnhart v. Sigmon

Coal Co., 534 U.S. 438, 444-47 (2002); Eastern Enterprises, 524 U.S.

at 511-14; Pittston Co. v. United States, 368 F.3d 385, 390-92 (4th

Cir. 2004). 

The Coal Act created the Combined Fund under the administration

of an independent Board of Trustees selected by representatives of the

UMWA and the coal industry. The Combined Fund was established

by the mandated merger of the 1950 and 1974 Benefit Plans, and its

continued operation is financed by Medicare and other government

benefit plans and by premiums fixed pursuant to a formula set out by

Congress in the Coal Act. 

The responsibilities for administering the Combined Fund are

divided among the Secretary of the Treasury, the Commissioner of

Social Security, and the Board of Trustees, but the roles assigned to

the Secretary of Treasury and the Commissioner of Social Security

are minor. The Secretary of Treasury is given the responsibility of

determining whether there is reasonable cause for a coal operator’s

failure to pay assessed premiums. The Commissioner is given the

responsibility of assigning coal miner retirees to coal mine operators

for the purpose of calculating premiums and of calculating the premium that each operator is required to pay annually. The Board of

Trustees, on the other hand, is given the more comprehensive responsibilities of administering the Fund, collecting the premiums, enrolling beneficiaries in health plans that fulfill the statute’s requirements,

negotiating payment rates with healthcare providers, and suing coal

mine operators for the nonpayment of premiums. See generally Pittston, 368 F.3d at 392. 

At bottom, the Coal Act sought to continue "substantially the

same" benefits to beneficiaries as were provided them under the 1950

and 1974 Benefit Plans. See 26 U.S.C. § 9703(b)(1). Because these

benefits are more comprehensive and include many benefits that otherwise would be provided by Medicare, the benefits provided by the

14 MASSEY COAL CO. v. HOLLAND

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 17 of 47
Combined Fund function as a "supplement" to Medicare. To provide

"one-stop shopping" to beneficiaries, however, the Combined Fund,

in agreement with Medicare, provides the beneficiaries with health

benefits, and Medicare provides the Combined Fund with "reimbursements." This arrangement, while codified by the Coal Act, actually

preexisted it when benefits were being provided by the 1950 and 1974

Benefit Plans.

Before July 1, 1990, Medicare reimbursed the 1950 and 1974 Benefit Plans for Medicare-covered health benefits they provided to coal

miners on a "reasonable-cost basis." This reimbursement was made

on a cash basis, so that the 1950 and 1974 Benefit Plans could seek

reimbursement from Medicare only after the Plans had actually paid

out benefits to the beneficiaries. This required an ongoing and complex administrative process that gave rise to numerous disputes

between Medicare and the Plans. 

By an agreement between Medicare and the 1950 and 1974 Benefit

Plans, dated September 25, 1990, the parties resolved these pre-1990

disputes, which were up to five years old, and agreed to a new, more

efficient method of reimbursement consisting of fixed forwardlooking payments based on historical data — a capitation-based

method of reimbursement. The capitation-based reimbursement was

grounded in accrual accounting, as authorized by Medicare regulations. As the 1990 agreement related, "The parties agree that a number of advantages over the current [reasonable-cost methodology]

should result from the adoption by the parties of a capitated method

for determining payments to be made to the [1950 and 1974] Funds

for the Medicare-covered costs of its members." The agreement

explained the "capitation method" for reimbursement as follows:

The payment for cost year 1991 will be $141.87 per member

per month. This amount is based on the Fund’s most recent

(1990) cost report, with a UCR adjustment of 9.9 percent

(determined in accordance with the most recent data now

available to [Medicare]), updated by [Medicare’s] actuarial

estimate of the increase in costs for 1991. The payment rate

includes administrative costs at the current (1990) amount,

$14.71 per member per month, and payment of $127.15 for

medical costs. 

MASSEY COAL CO. v. HOLLAND 15

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The September 25, 1990 agreement was formalized in a three-year

contract dated January 13, 1992, that ran from July 1, 1990, through

June 30, 1993. 

This arrangement for "reimbursement" of the 1950 and 1974 Benefit Plans by Medicare was the arrangement for reimbursements that

was in place in 1992, when the Coal Act was enacted, and had been

in place since 1990. And Congress was aware of the arrangement.

The Coal Commission Report, which had been prepared at the request

of the Secretary of Labor and was placed in the Congressional

Record, stated:

Under a special arrangement with Medicare, beneficiaries

are provided "one-stop shopping." The [1950 and 1974]

Funds perform administrative services for beneficiaries and

pay providers for care. In turn, the Funds receive reimbursement from Medicare, both for the costs of health services

and for the overhead costs of administration. 

Sec’y of Labor’s Advisory Comm’n on United Mine Workers of Am.

Retiree Health Benefits, Coal Commission Report on Health Benefits

of Retired Coal Miners: Hearing Before the Subcommittee on Medicare & Long Term Care of the Senate Committee on Finance, 102d

Cong. 197 (1990) (text of report) (hereafter "Coal Commission

Report"). After describing the disputes that had arisen between Medicare and the 1950 and 1974 Benefit Plans because of the earlier

reasonable-cost reimbursement methodology, the Report describes

how the Plans and Medicare resolved their disputes and moved to prevent them in the future by using a capitation-based reimbursement

methodology. 

Thus, when in 1992 the Coal Act describes how premiums payable

by coal operators are to be calculated, it refers to the actual arrangement in effect for the 1991 plan year. Under the Coal Act, each coal

operator is required to pay the Combined Fund an annual premium

computed by the Commissioner as follows:

The Commissioner of Social Security shall calculate a per

beneficiary premium for each plan year beginning on or

after February 1, 1993, which is equal to the sum of — 

16 MASSEY COAL CO. v. HOLLAND

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(A) the amount determined by dividing — 

(i) the aggregate amount of payments from the

1950 UMWA Benefit Plan and the 1974 UMWA

Benefit Plan for health benefits (less reimbursements but including administrative costs) for the

plan year beginning July 1, 1991, for all individuals covered under such plans for such plan year, by

(ii) the number of such individuals, plus 

(B) the amount determined under subparagraph (A) multiplied by the percentage (if any) by which the medical component of the Consumer Price Index for the calendar year in

which the plan year begins exceeds such component for

1992.

26 U.S.C. § 9704(b)(2) (emphasis added). And for the plan year

beginning July 1, 1991, Medicare paid the Plans $182.3 million in

reimbursements under a capitation-based method of reimbursement.

B

After enactment of the Coal Act and during the Combined Fund’s

inaugural year, staffers in the Department of Health and Human Services gave Secretary Donna Shalala a memorandum, dated October 1,

1993, presenting her a question about her administrative responsibility under the Coal Act: "How should the Coal Industry Retiree Health

Benefit (Coal Act) premium be determined?" The memorandum correctly related the history of the reimbursement methods that had been

employed by Medicare — the reasonable-cost methodology that preceded July 1, 1990, and the capitation-based reimbursement policy

that existed since July 1, 1990. But it failed to recite the Coal Act’s

reference to "reimbursements for the plan year beginning July 1,

1991." Rather, the memorandum noted that under an actual-cost basis

of reimbursement, the Combined Fund would have received $26 million less from Medicare (and thus more from the coal mine operators)

than it actually did receive in 1991 under the capitation-based method

of reimbursement ($156.3 million versus $182.3 million). The memoMASSEY COAL CO. v. HOLLAND 17

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randum then questioned "how this $26 million [the difference

between the two numbers] is to be treated for purposes of determining

the per beneficiary premium under the Coal Act of 1992." The author

of the memorandum gave the Secretary two choices, stated as follows:

1. Set the fee based on defining "reimbursement" as the

amount the Combined Fund paid on a fee-for-service

arrangement. (This option results in more money to the

Combined Fund.)

or

2. Set the fee based on defining "reimbursement" as the

Medicare capitated payments received by the Fund.

(This option results in less money to the Combined

Fund.) 

The Secretary was provided two signature lines, one labeled Option

1 and the other labeled Option 2; she signed Option 1 (the "more

money" option). By this stroke, the Secretary used a definition of "reimbursement" that harkened back to the type of reimbursements that

Medicare had used before 1990, and not the type that Medicare had

used "for the plan year beginning July 1, 1991," as required by the

Coal Act. 

In response to the Secretary’s decision, the National Coal Association and eight coal operators sued the Secretary in the Northern District of Alabama, contending that the premiums they were required to

pay to the Combined Fund reflected an interpretation of "reimbursements" contrary to the term’s unambiguous meaning in the Coal Act.

The coal industry argued that "reimbursements" referred to the

amount of reimbursements that Medicare actually paid for the plan

year beginning July 1, 1991, which was $182.3 million. The district

court agreed and held that the Secretary’s 1993 interpretation of reimbursements contradicted the term’s unambiguous meaning in the statute and ordered the Secretary to recalculate the premium using the

actual amount that the 1950 and 1974 Benefit Plans had received as

reimbursements from Medicare in the base year of 1991, i.e. $182.3

million. See Nat’l Coal Ass’n v. Shalala, No. CV 94-H-780-S, 1995

18 MASSEY COAL CO. v. HOLLAND

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U.S. Dist. LEXIS 21116 (N.D. Ala. June 2, 1995), amended by 1995

U.S. Dist. LEXIS 21125 (N.D. Ala. July 20, 1995). The district court

reasoned:

Compelling evidence of the plain meaning of the statute and

Congress’ intent in using the term reimbursement is found

in the fact that the capitation agreement between the Secretary and the UMWA Plans had been in effect for over two

years before the Act was passed. . . . It is clear that before

the passage of the Act, the Secretary was using and referring

to the term "reimbursement" in what can be categorized only

as its plain and ordinary meaning. . . . The Secretary’s argument that the plain meaning of the term reimbursement

means something other than how she has been and continues

to use this term in the capitation is wholly circular and

somewhat imprudent.

Id. at *13-15. The Eleventh Circuit affirmed. Nat’l Coal Ass’n v.

Chater, 81 F.3d 1077 (11th Cir. 1996). 

After the Alabama decision, the Commissioner of Social Security,

who was now substituted by statute for the Secretary of Health and

Human Services to calculate the premiums, reversed the Secretary’s

decision, construing "reimbursements" to refer to the capitation-based

method used in 1991. And, rather than modify the interpretation for

just the eight coal companies formally bound by the Alabama judgment, the Commissioner decided, by letter dated July 28, 1995 ("1995

decision"), to lower the premiums for all coal operators nationwide

by switching to the capitation-based definition of reimbursements.

In response to the Commissioner’s 1995 decision, the Trustees of

the Combined Fund filed suit in the District of Columbia, arguing that

the Commissioner’s reversal of policy misinterpreted the Coal Act

and was arbitrary and capricious under the Administrative Procedure

Act. The district court agreed. Holland v. Apfel, No. 96-01744 (CKK),

2000 U.S. Dist. LEXIS 6134 (D.D.C. Feb. 25, 2000). On appeal, the

D.C. Circuit held that the term "reimbursements" as used in the Coal

Act was ambiguous and that it could mean either reimbursements

made on an actual-cost basis or reimbursements made on the capitation basis actually employed in 1991. See Holland v. Nat’l Mining

MASSEY COAL CO. v. HOLLAND 19

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Ass’n, 309 F.3d 808 (D.C. Cir. 2002). In reaching this conclusion, the

court relied exclusively on dictionary definitions of "reimbursement."

Id. at 816. The D.C. Circuit accordingly vacated the district court and

Commissioner’s decisions and remanded the case to the Commissioner to explain why the Social Security Administration had, in

1995, adopted the capitation-based definition nationwide, when it was

only obliged to do so for the eight coal operators involved in the Alabama litigation. The court noted that if the Commissioner had felt

constrained by the Eleventh Circuit’s ruling in National Coal Ass’n,

then no deference was due her 1995 decision, since she was simply

acting as an agent of another court. But if the Commissioner had

made the choice voluntarily, then deference might be due under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S.

837 (1984). 

In response to the D.C. Circuit’s decision, the Commissioner sent

a letter, dated June 10, 2003, to the Trustees of the Combined Fund,

stating that the Social Security Administration could not figure out

why, in 1995, the Commissioner had adopted the capitation-based

approach nationwide. The Commissioner again reversed the agency’s

position. She restricted the Eleventh Circuit’s ruling to only those

coal operators who were parties to that case, allowing them to pay a

lower premium as calculated by using the capitation-based definition

of "reimbursements." All other coal operators, however, would be

required to pay the higher premium rate, consistent with the actual

cost-based definition of "reimbursements" — the same definition

adopted by the Secretary of Health and Human Services in October

1993. The Commissioner’s June 10, 2003 letter, which is the Commissioner’s current position, reads in pertinent part:

While we are unable to establish the rationale for our decision in the past to apply the Eleventh Circuit’s interpretation

on a nation-wide basis, we believe that it is now appropriate

to adopt a different approach in light of recent litigation and

the current financial condition of the Fund. The recent D.C.

Circuit opinion in Holland made clear that we were not

required to apply the holding of the Eleventh Circuit to coal

operators who were not parties to the National Coal litigation. Moreover, while considerations of fairness and uniformity remain important, the Fund’s worsening financial

20 MASSEY COAL CO. v. HOLLAND

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condition makes it essential that the Fund be afforded all the

premium revenues contemplated by the Coal Act.

Accordingly, for the determination letter for the plan year

beginning October 1, 2003, we intend to provide two perbeneficiary premium calculations [actual cost-based and

capitation-based]. . . . We believe that this interpretation is

consistent with the text and structure of the Coal Act as a

whole and represents a permissible construction of the statute’s plain language and of the term "reimbursement." . . .

The Agency believes that implementation of the Eleventh

Circuit’s decision in this manner, which enhances the financial viability of the UMWA Combined Benefit Fund, is consistent with the Coal Act’s stated purpose of stabilizing plan

funding and allowing for the provision of health care benefits to retired coal miners and their dependents. 

Reacting to the government’s second reversal in its interpretation

of "reimbursements," as used in the Coal Act, the coal mine operators

again filed suit in the Northern District of Alabama. The Trustees of

the Combined Fund responded with their own suit in the District

Court for the District of Columbia. Both actions were transferred to

the District of Maryland. A.J. Taft Coal Co. v. Barnhart, 291 F. Supp.

2d 1290 (N.D. Ala. 2003); Holland v. A.T. Massey Coal Co., 360 F.

Supp. 2d 72 (D.D.C. 2004). 

After consolidating the actions, the district court in Maryland

granted summary judgment to the coal operators. The court concluded

that the term "reimbursements" as used in 26 U.S.C. § 9704(b)(2) is

unambiguous and refers to the amounts Medicare actually paid to the

1950 and 1974 Benefit Plans, not just the expenses incurred by the

1950 and 1974 Benefit Plans in providing Medicare benefits to beneficiaries. The district court also held that the Commissioner’s June 10,

2003 letter did not merit Chevron deference. Giving some respect to

the agency’s decision, citing Mead, 533 U.S. at 234-35, the district

court concluded nonetheless that the Commissioner’s decision was

unreasonable, arbitrary, and capricious. A.T. Massey Coal Co., Inc. v.

Barnhart, 381 F. Supp. 2d 469 (D. Md. 2005). 

MASSEY COAL CO. v. HOLLAND 21

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From the district court’s judgment, the Trustees of the Combined

Fund and the Commissioner of Social Security (hereafter collectively

"the Commissioner") filed this appeal. 

II

The Commissioner contends that her June 10, 2003 letter interpreting "reimbursements" as used in 26 U.S.C. § 9704(b)(2) is "consistent

with the plain language of the statute." To determine the plain meaning, she relies on dictionary definitions, arguing that a reimbursement

"connotes, not total revenues or receipts, but only those payments that

are necessary to indemnify or repay a party for its expenditures." She

asserts that this meaning is "precisely the meaning adopted by [her

2003 decision]." Thus, in defining "reimbursements," the Commissioner distinguishes "payments" made by Medicare to the 1950 and

1974 Benefit Plans from "reimbursements" for amounts paid by the

plans to beneficiaries, concluding that the Coal Act refers to the latter

in § 9704(b)(2). 

The Commissioner also argues that her interpretation "best furthers

Congress’ express intent to protect the financial stability of health

benefits for coal miner retirees and to ensure that these benefits are

privately funded." She points to an announced policy of the Coal Act

to "provide for the continuation of a privately financed self-sufficient

program for the delivery of health care benefits to the beneficiaries

of such plans." Coal Act, Pub. L. No. 102-486, § 19142(b)(3), 106

Stat. 3036, 3037 (1992) (emphasis added). 

The coal operators contend, also using dictionary definitions, that

"reimbursements" is an unambiguous term that refers to Medicare’s

payments to the 1950 and 1974 Benefit Plans "without regard to how

precisely [the payments] may approximate the costs being reimbursed." In addition, the coal operators argue that documents prepared

for and contemporaneous with the enactment of the Coal Act used

"‘reimbursements’ to refer to the total amount of payments computed

on a capitation basis." In particular, they point to the Coal Commission Report, which was "the seminal document in the deliberations

that led to the Coal Act" and which demonstrates that "reimbursements" referred to the capitation method of reimbursement that was

22 MASSEY COAL CO. v. HOLLAND

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in place for the 1991 plan year, pursuant to the agreement between

Medicare and the 1950 and 1974 Benefit Plans. 

At the outset, we do not deny that in the abstract, the word "reimbursements" can have several meanings, as demonstrated by the dictionary definitions advanced by the parties. In a common usage, we

understand that a traveling salesman may be "reimbursed" for travel

expenses on either an actual cost basis or on a per diem basis and that

both methods are understood to be forms of reimbursement, even

though a per diem basis will not perfectly track the salesman’s

expenses. See, e.g., Worldwide Labor Support of Miss., Inc. v. United

States, 312 F.3d 712, 714-15 (5th Cir. 2002)(using "reimbursement"

to refer to living expenses paid on a per diem basis). Likewise, the

Medicare Act has authorized two different forms of reimbursement —

reimbursement based on reasonable costs actually incurred and reimbursement based on prospectively assessed risks. See Good Samaritan

Hosp. v. Shalala, 508 U.S. 402, 406 n.3 (1993) (noting that Medicare

had, for practical reasons, changed its form of reimbursements to hospitals from a reasonable-cost basis to a fixed-amount prospective

basis); Dist. Mem’l Hosp. of Southwestern N.C. v. Thompson, 364

F.3d 513, 515 (4th Cir. 2004) (same). 

But the Coal Act is not agnostic to these varying meanings. "Reimbursements" as used in 26 U.S.C. § 9704(b)(2) has a statutory context

and historical context, and both reveal a uniform and precise meaning

of the term. See Brown v. Gardner, 513 U.S. 115, 118 (1994)

("Ambiguity is a creature not of definitional possibilities but of statutory context") (citation omitted). 

A

Turning first to the statutory context, the Coal Act notes on its face

that it was enacted to protect the health benefits that the 1950 and

1974 Benefit Plans had promised to coal mine retirees for life but

which had been placed at risk by the demise of coal companies and

the imposition of the large cost of benefits on the remaining but dwindling number of signatories to the Plans. See Coal Act, Pub. L. No.

102-486, § 19142, 106 Stat. 3036, 3037 (1992); 26 U.S.C.

§ 9703(b)(1). Thus, at the beginning of the Coal Act, Congress

announced its policy "for the continuation of a privately financed

MASSEY COAL CO. v. HOLLAND 23

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self-sufficient program for the delivery of healthcare benefits" to the

beneficiaries of the 1950 and 1974 Benefit Plans. To that end, the

Coal Act retained the terms of the 1950 and 1974 Benefit Plans but

merged their assets into a Combined Fund. See id. § 9702(a). It also

charged the Combined Fund with the duty of providing healthcare

services to the beneficiaries that were "substantially the same as (and

subject to the same limitations of) coverage provided under the 1950

UMWA Benefit Plan and the 1974 UMWA Benefit Plan as of January 1, 1992." Id. § 9703(b)(1). To stabilize the financing of benefits,

the Coal Act denied coal operators and "related companies" an easy

exit from the responsibilities that the coal operators undertook when

they subscribed to the 1950 and 1974 Benefit Plans. See generally id.

§ 9706 (requiring allocation of defunct coal operators’ beneficiaries

to related companies). 

As the historically established benefits were continued under the

Coal Act, so also was the historically established method of funding

them through premiums paid by the coal operators. Thus, the Coal

Act’s formula in § 9704(b)(2) is historically based, and the Act

explicitly instructed that the formula use figures as they existed in

1991, the last full year before the effective date of the Act: The premium was to be calculated by taking the aggregate of historical payments for benefits made by the 1950 and 1974 Benefit Plans for the

1991 plan year; subtracting from that sum the historical reimbursements received by the Plans from Medicare for the 1991 plan year;

dividing the resulting sum by the historical number of beneficiaries

in the 1991 plan year; and applying a cost of living factor to that sum

each year thereafter. See 26 U.S.C. § 9704(b)(2). The premiums thus

calculated equaled the per-beneficiary premium paid in fact in 1991

by the coal operators to the antecedent plans, subject to a cost-ofliving adjustment. The Coal Act makes this clear by specifying "payments" and "reimbursements" that were made "for the plan year

beginning July 1, 1991." Id. § 9704(b)(2)(a)(i) (emphasis added). The

payments and reimbursements were not amounts subject to future

determination. Rather, the Coal Act refers to amounts that were actually transferred during the plan year 1991 as the basis for the premium

computation. In this sense, therefore, the payments and reimbursements referred to in § 9704(b)(2) are historical events that had

occurred and thus were subject to conclusive determination shortly

after the Coal Act was enacted.

24 MASSEY COAL CO. v. HOLLAND

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An examination of the books and records of the 1950 and 1974

Benefit Plans actually discloses those numbers and how they were

determined. Their financial statements include the following explanation of the numbers:

On September 25, 1990, the Trust entered into an agreement

with [Medicare] which settled claims for fiscal years

through 1990; however, the cost reports for fiscal years

1988, 1989, 1990 are still subject to routine audit and adjustments, if any. . . . In accordance with this agreement, effective July 1, 1990, the Trust is being reimbursed on a

capitation basis for Medicare Part B benefits and for administrative costs. The capitation agreement requires [Medicare]

to make monthly payments based on the number of Medicare eligible beneficiaries. 

(Emphasis added). 

The parties agree that the reimbursement amounts that Medicare

paid historically — in the plan year 1991 — to the 1950 and 1974

Benefit Funds was $182.3 million.

Thus, when the Coal Act merged the 1950 and 1974 Benefit Plans

and specified the computation of premiums based on historical numbers relating to the merged Plans, the formula was nothing more than

a recapitulation of what had occurred financially in the 1991 plan

year, before the Coal Act was enacted. The reference in 26 U.S.C.

§ 9704(b)(2) to payments made by the 1950 Benefit Plan for the 1991

plan year; the reference to the payments made by the 1974 Benefit

Plan for the 1991 plan year; the reference to the number of beneficiaries in the 1991 plan year; and the reference to reimbursements

received by the 1950 and 1970 Benefit Plans in the 1991 plan year

were all specific historical numbers, requiring no complicated derivation. In computing the premium, the Commissioner had only to collect those numbers and perform the arithmetic. To that end, the

Combined Fund was required to provide the Commissioner with the

numbers. See id. § 9704(h). 

On this basis, we readily conclude that the reference to "reimbursements" in § 9704(b)(2) is an unambiguous reference to the capitationMASSEY COAL CO. v. HOLLAND 25

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based reimbursements actually made by Medicare during the plan

year beginning July 1, 1991, and, therefore, is impervious to the Commissioner’s post-hoc reconstruction of the term using dictionaries. 

B

Our analysis of the statutory context of the term "reimbursements"

is reinforced by the contemporaneous historical and legislative context in which the Coal Act was enacted. This history shows that the

method of reimbursement adopted from the reimbursements made in

plan year 1991 was a purposeful act, of which the relevant actors

were aware and which Congress incorporated by reference in the Coal

Act. 

Under the reasonable-cost reimbursement method that Medicare

and the 1950 and 1974 Benefit Plans used before 1990, disputes arose

relating to the timing of when the Plans actually made payments to

beneficiaries and the timing of when those costs became reimbursable. To resolve those disputes and foreclose them in the future, as

well as to avoid the expensive auditing that attended the disputes,

Medicare and the 1950 and 1974 Benefit Plans agreed to an alternative, but still authorized, form of reimbursement using a capitation

approach. In the agreement, dated September 25, 1990, Medicare and

the 1950 and 1974 Benefit Plans explicitly referred to the capitation

approach as the new method of "reimbursement" that they would follow in the future. That agreement provides in relevant part: 

I. Reimbursement 

Pursuant to waivers . . . the [Plans] will be reimbursed on a risk-based capitated payment basis for

a period of 3 years. . . . 

* * *

No reimbursement will be made to the [Plans] for

covered Part A and Part B services furnished by a

provider of services to which payment will otherwise be made.

26 MASSEY COAL CO. v. HOLLAND

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* * *

II. HCPP [Medicare]

A. The HCPP agrees to comply with the requirements for participation and reimbursement as

specified in Subpart D of the regulations . . .

and program instructions, exempting those

regulations . . . enabling reimbursement on a

capitated basis. 

* * *

IV. Termination or Non-renewal of Agreement

B. If the [Plans] determine[ ] that . . . [they] cannot continue to be reimbursed on a risk-based

capitated payment basis, the [Plans] may terminate the agreement . . . . 

At the time the Coal Act was enacted in 1992, Medicare and the 1950

and 1974 Benefit Plans were operating under this reimbursement

arrangement, and the actual reimbursements made by Medicare to the

Plans in the plan year 1991 followed the capitation approach and

amounted to $182.3 million.

In addition to the preexisting agreement, the Coal Commission

Report, which led to the enactment of the Coal Act, describes Medicare’s capitation payments as "reimbursements." The Report says:

During the Commissions deliberations, in late September of

1990, the [1950 and 1974] Funds and Medicare resolved the

reimbursement dispute in the context of moving toward a

capitated reimbursement arrangement for FY 1991 and the

future. 

Coal Commission Report 198. The Coal Commission Report included

the following definition of "capitated reimbursement":

MASSEY COAL CO. v. HOLLAND 27

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An arrangement under which a health care provider receives

a prospectively determined payment for services provided to

patients. The advantage of a capitated reimbursement

arrangement is that it creates incentives which may result in

reduction in the amount of inappropriate and excessive services provided. 

Id. at 251. Further, the Report, celebrating the benefits of a capitation

approach, stated "[c]apitation reimbursement offers better incentives

for cost savings and simplified reimbursement methodology. Capitation reimbursement has the advantage of providing prompt and predictable reimbursement to the Funds, enabling them to strike better

bargains with providers." Id. at 199. 

There is yet more evidence of the contextual understanding of "reimbursements" as used in the Coal Act. As already noted above, the

annual reports of the 1950 Benefit Plan and the 1974 Benefit Plan for

the 1991 plan year, the last full year before the Coal Act was enacted,

refer to the capitated Medicare payments as "reimbursements": "In

accordance with [the September 25, 1990 agreement] effective July

1, 1990, the Trust is being reimbursed on a capitation basis for Medicare Part B benefits and for administrative costs." Moreover, the

Combined Fund in its own disclosures, made immediately after the

Coal Act was passed, referred to Medicare’s payments as "reimbursements":

[The Combined Fund] is entitled to reimbursement under a

capitation agreement for those medical costs. . . . These

reimbursements have been accrued and recorded. 

* * *

Medicare reimbursements are paid monthly on a capitation

basis, with the monthly capitation rate adjusted annually. 

(Emphasis added). 

And this contextual evidence continues even to the year of Secretary Shalala’s 1993 decision. In an internal memorandum written to

28 MASSEY COAL CO. v. HOLLAND

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the Board of Trustees in 1993, the Director of Operations of the Combined Fund reported on the Fund’s performance under the capitation

method of reimbursement: "Table I compares the total Funds’ quarterly . . . reimbursable medical and administrative cost per capita

. . . to the negotiated capitation reimbursement rate." (Emphasis

added). The same memorandum directly compares the "Actual Medicare Part B Expense" with the "Capitation Reimbursement," describing the very figures at issue in this case. The $182.3 million is

described as the "HCFA [Medicare] Reimbursement." The $156.3

million is described as the "Total Net Expense FY 92." 

Nowhere in the historical record does anyone use "reimbursements" to mean what the Commissioner now says it means. When the

term "reimbursements" was used, it always referred to the total payments made by Medicare to the 1950 and 1974 Benefit Plans or to the

Combined Fund, not the "total net expense" they incurred in providing benefits to beneficiaries or what Medicare would have paid using

a reasonable cost-based reimbursement method. 

C

The Commissioner fails in this appeal to address the statutory and

historical context of the word "reimbursements"; Secretary Shalala

failed to do so in her 1993 decision; and the Commissioner failed to

do so in her 2003 decision. Yet the Coal Act requires this consideration because its formula is based on what happened in the 1991 plan

year.

The Commissioner’s arguments are made almost entirely in the

abstract, relying on dictionary definitions and failing to take into

account the contextual use of the term "reimbursements." Yet, in

using dictionary definitions, the Commissioner’s arguments are

divorced not only from the 1991 context but even from the context

that existed before the 1990 agreement between Medicare and the

1950 and 1974 Funds. For example, she invokes various dictionary

definitions to support the obvious proposition that "reimbursements"

refers to a payment commensurate with monies paid out. But she does

not elaborate on how close the connection between the outflow and

the income must be. Focusing more precisely on her argument, she

asserts that her interpretation rests "not on aggregate payments made

MASSEY COAL CO. v. HOLLAND 29

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by Medicare to the UMWA plans, but on the portion of those payments necessary to ‘indemnify’ or ‘repay’ the plans for the sum those

plans expended in providing Medicare benefits to plan beneficiaries."

This "indemnification" notion, however, does not fit the context

either. Medicare never paid the plans the actual costs incurred on

Medicare’s behalf, even before the 1990 agreement. Rather, the actual

costs were always adjusted downward by as much as 9.9% to yield

the "reasonable costs." Thus, before the 1990 agreement, Medicare

reimbursed the 1950 and 1974 Benefit Plans only to the extent that

their tracked expenditures were "reasonable," that is, similar to the

costs of other health benefit plans. Thus, even under the reasonablecost reimbursement method that Medicare employed before 1990,

Medicare did not reimburse in the sense that it was "indemnifying."

The Commissioner also contends that because the computation set

forth in 26 U.S.C. § 9704(b)(2) establishes a base level of premium

for future years, to be adjusted only for the medical component of the

consumer price index, the difference between capitation reimbursement and reasonable-cost reimbursement is a "multi-million dollar

mistake" in favor of the coal operators, which must be corrected, citing Regions Hospital v. Shalala, 522 U.S. 448 (1998). In Regions, the

Supreme Court approved the Secretary’s adoption of a reaudit rule in

order to correct some erroneously reimbursed costs under the Medicare Act. In this case, however, there was no error in the form of

reimbursement because Medicare intentionally adopted and correctly

calculated the capitation method. Both Medicare and the 1950 and

1974 Benefit Plans considered the capitation method to be superior to

the reasonable cost-based method, not a "mistake." This was so for

several reasons. 

First, the capitation-based method of reimbursement saved administrative and negotiation costs because it paid the 1950 and 1974 Benefit Plans based on historical averages instead of on the retroactive

calculations of costs that had led to long-running disputes, plaguing

the relationship between the parties over the years. 

Second, the capitation methodology improved the incentive for the

1950 and 1974 Funds to economize on healthcare costs. Under the

"reasonable cost" reimbursement method, the Benefit Plans had an

incentive to save only enough to make their costs "reasonable," which

30 MASSEY COAL CO. v. HOLLAND

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meant in line with the average for other Medicare-reimbursed plans.

Even though that reimbursement method was better than a one-forone indemnification form of reimbursement — which encourages

heedless spending — the reasonable-cost method still left plenty of

room for overspending. The capitation method created incentives for

the 1950 and 1974 Benefit Plans to treat Medicare dollars as their

own because any money left over from the capitation payment during

one year would stay with the Plans "to offset future costs." 

The parties explicitly identified this reasoning as part of the basis

for adopting a capitation-based method of reimbursement in 1990,

and it was reported in all of the contextual documents. Accordingly,

when Congress referred to "reimbursements" that were actually made

during the 1991 plan year, it referred not to a "mistaken" reimbursement plan but to an alternative reimbursement plan that the relevant

parties thought would be more efficient. Congress’ incorporation of

the capitation reimbursement method in § 9704(b)(2) was intentional

and not a "mistake." The clear expectation was that the capitation

method would continue as an improvement over the reasonable-cost

method and would not result in Combined Fund shortfalls. 

Finally, the Commissioner argues at a general level that using the

higher reimbursement figure will starve the Combined Fund of premiums, potentially resulting in reduced health benefits to retired coal

miners — precisely the outcome that the Coal Act was intended to

avoid. If such an outcome does emerge, however, it will only be

because the inflation factor specified by Congress in the Coal Act or

Medicare’s reimbursements have proved insufficient to stay abreast of

the rising costs of providing the benefits specified in the 1950 and

1974 Benefit Plans. See 26 U.S.C. § 9703(b)(1). The Act does not

grant the Commissioner authority to change the formula, and ongoing

problems undoubtedly will prompt either the coal operators, the

UMWA, or both to return to Congress. 

For all of these reasons, we readily conclude that the reference in

§ 9704(b)(2) to "reimbursements" made for the plan year 1991 is

unambiguous and refers to those payments made by Medicare to the

1950 and 1974 Benefit Plans for the plan year 1991 in the amount of

$182.3 million. 

MASSEY COAL CO. v. HOLLAND 31

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III

The Commissioner argues, in addition to her position that her interpretation of "reimbursements" is "fully consistent with well-settled

usage and the primary definition of the term," that Congress "impliedly delegated authority" to her to construe the term and that therefore we must defer to her interpretation and determine only whether

her interpretation is "based on a permissible construction of the statute." Chevron, 467 U.S. at 842-43. Her reliance on Chevron to give

weight to her interpretation, however, is misplaced. 

While Chevron analysis often results in affording deference to

agency interpretations of statutes, that deference is limited to circumstances where (1) Congress has given the agency authority to make

rules carrying the force of law and (2) the agency’s interpretation is

rendered in the exercise of that authority. See United States v. Mead

Corp., 533 U.S. 218, 226-27 (2001). More precisely, Mead refined

the standard for deference, describing the type of agency action

deserving of Chevron deference this way:

We hold that administrative implementation of a particular

statutory provision qualifies for Chevron deference when it

appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the

agency interpretation claiming deference was promulgated

in the exercise of that authority. Delegation of such authority may be shown in a variety of ways, as by an agency’s

power to engage in adjudication or notice-and-comment

rulemaking, or by some other indication of a comparable

congressional intent. 

Id. Thus, the Court in Mead observed that even though agencies

charged with applying statutes will make "all sorts of interpretive

choices," "not all of those choices bind judges to follow them." Id. at

227. 

Before according deference to an agency interpretation, the agency

must therefore demonstrate that Congress delegated authority to the

agency to make such an interpretation, and we look for an explicit or

implicit grant of interpretive power from Congress to the agency. If

32 MASSEY COAL CO. v. HOLLAND

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the grant is not explicit, "it can still be apparent from the agency’s

generally conferred authority and other statutory circumstances that

Congress would expect the agency to be able to speak with the force

of law when it addresses ambiguity in the statute or fills a space in

the enacted law." Mead, 533 U.S. at 229. If there is no such grant,

however, explicit or implicit, binding interpretive authority rests only

with the courts. See Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177

(1803). 

In determining whether Congress has implicitly delegated authority

to an agency, courts must examine the whole statute to determine

whether a congressional intent to delegate can reasonably be inferred.

See Mead, 533 U.S. at 229. If the agency’s decision and the processes

authorized to make that decision resemble legislative decisions and

legislative processes, the agency stands in the shoes of Congress, and

its decisions carry the force of law. For instance, formal procedures,

such as notice-and-comment rulemaking, provide clear evidence that

the agency stands in the shoes of Congress and deserves deference.

Id. at 229-30. But there can be delegation without such formal procedures so their absence is not conclusive. See Barnhart v. Walton, 535

U.S. 212, 222 (2002). 

We do not undertake to describe all of the possible forms that a

congressional grant of interpretive authority might take. But when the

responsibility given to the agency does not present any of the normal

indicia of a legislative-type determination — i.e. those of weighing

conflicting policies, considering adversarial viewpoints, promulgating

forward-looking rules of general applicability — we can usually

assume that Congress did not delegate interpretive authority to the

agency. An agency may try to create the appearance of delegation

through the use of legislative-type processes, but this, of course, does

not create delegation where none exists. Following a more sophisticated process might garner more judicial respect, but delegation must

appear from the statute itself, not from the agency’s actions. See Walton, 533 U.S. at 222. 

If we conclude that Congress has delegated authority to the agency

to make rules carrying the force of law, then we proceed to the traditional two-step Chevron analysis. "[I]f the intent of Congress is clear

[with respect to the matter that the agency has interpreted], that is the

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end of the matter; for the Court, as well as the agency, must give

effect to the unambiguously expressed intent of Congress." Chevron,

467 U.S. at 842-43. But "if the statute is silent or ambiguous with

respect to the specific issue, the question for the court is whether the

agency’s answer is based on a permissible construction of the statute."

Id. at 843. We will overturn unreasonable agency decisions because

we presume that Congress does not authorize unreasonable statutory

constructions. At bottom, however, a court "may not substitute its

own construction of a statutory provision for a reasonable interpretation made by the administrator of the agency." Id. at 844. 

On the other hand, when we determine that no delegation can be

implied, as when the task of the agency is merely to perform a ministerial calculation or to issue a document whose contents are dictated

in detail by the statute, we do not afford the agency the type of deference we otherwise would afford if the agency acted by delegation in

Congress’ stead. For those kinds of tasks, Congress has already spoken and its words are cast. The opinions of agencies pursuant to such

provisions do not carry the imprimatur of delegation. Even though the

task may require the agency to make interpretive decisions, produce

a binding rule, or issue a mandate in its field of expertise, we need

not yield because there is no predicate delegation as required by

Mead. 

In the case at hand, section 9704(b)(2) gave the Commissioner the

responsibility of "calculating" the per-beneficiary premium that the

coal operators must pay to finance the Combined Fund. The authorization to calculate the premium, however, did not include a delegation

of authority to set the premium so that the fund would be "well

financed" or "viable." To the contrary, Congress specifically laid out

the formula for the calculation that the Commissioner had to perform

and delegated only the ministerial task of making the calculation. 

Moreover, looking to the statute as a whole, the Coal Act does not

generally confer anything but ministerial responsibilities on the Commissioner. The Coal Act gives the Commissioner exactly one other

function, that of assigning beneficiaries to coal operators for the purpose of determining the particular coal operator’s annual premium.

See 26 U.S.C. § 9706(a). And again, the assignment of eligible beneficiaries does not afford the Commissioner discretion to achieve a par34 MASSEY COAL CO. v. HOLLAND

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 37 of 47
ticular end. Rather, it must be accomplished according to a strict

algorithm set forth in § 9706(a). Each of the two functions conferred

on the Commissioner is thus described by Congress in elaborate

detail. 

In calculating the premiums, the Commissioner need only assemble

the actual historical figures and perform the necessary arithmetic. The

figures are not described in conceptual terms such as "reasonable

reimbursements" or "appropriate expenditures." Rather, the Commissioner must recognize the historical facts and apply them — that is

where her authority begins and ends. See id. § 9704(b)(2); see also id.

§ 9704(h) (referring to the Commissioner’s obligation to "compute"

the premium). And in assigning beneficiaries to coal operators for

payment of premiums, the Commissioner again acts strictly pursuant

to the statutory provision, which provides a clear, rote order of assignment, that the Commissioner may not alter for policy reasons. See

Barnhart v. Sigmon Coal Co., 534 U.S. 438, 461 (2002). 

The absence of delegation to the Commissioner becomes even

clearer when one compares her duties with those of the Board of

Trustees. The Trustees are uniquely suited to make policy decisions,

since their composition reflects the structural compromise embodied

in the Coal Act. The coal industry appoints two members; the UMWA

appoints two members; and those four appoint the remaining three

members. See 26 U.S.C. § 9702(b)(1). For this reason, the Trustees

have all of the policymaking powers under the Act. See, e.g., id.

§ 9703(b)(1) (requiring Trustees to provide "to the maximum extent

feasible" substantially the same coverage as were provided by the

prior plans); id. § 9703(b)(2) (authorizing Trustees to "negotiate payment rates with the healthcare services plans . . . which vary as necessary" to provide uniform benefits in geographical areas); id.

§ 9704(b)(3) (authorizing Trustees — significantly not the Commissioner — to adjust the premium to compensate for reduction of Medicare payments). 

The contrast between the Commissioner’s wholly ministerial functions and the wide policymaking berth given to the Trustees could not

be more stark. The structure of the statute refutes any claim that Congress delegated interpretive authority to the Commissioner of Social

Security because on all matters requiring policy judgment the TrustMASSEY COAL CO. v. HOLLAND 35

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 38 of 47
ees, not the Commissioner, have Congress’ blessing to exercise judgment on its behalf. 

The Commissioner has cited Holland v. Pardee Coal Co., 269 F.3d

424 (4th Cir. 2001), and Pittston Co. v. United States, 368 F.3d 385

(4th Cir. 2003), as cases where we have given her Chevron deference

under the Coal Act. These cases, however, provide the Commissioner

with little or no assistance. Pardee only noted that "if deference were

warranted, it would have no impact on the resolution of this case." Id.

at 431 n.8 (emphasis added). It did not conclude that Chevron deference was appropriate. Similarly, Pittston provides little comfort

because it involved a gap in the assignment-of-beneficiaries provision

created when the Supreme Court found a portion of that provision

unconstitutional. 368 F.3d at 392. Once that gap was created, the

agency was left with an open policy space, which was the quintessence of legislative-type action to which Chevron deference was due.

Id. at 402-03. Of course no such gap has been created by Congress

or, indeed, the Supreme Court, in the formula for calculating the premiums to be charged coal operators. 

IV

Even though Chevron deference is inapplicable to the Commissioner’s position, the Commissioner still claims that her determination is

entitled to some respect notwithstanding her limited role under the

Coal Act. See Skidmore v. Swift & Co., 323 U.S. 134 (1944). As the

Supreme Court stated in Skidmore:

[O]pinions of the Administrator under this Act, while not

controlling upon the courts by reason of their authority, do

constitute a body of experience and informed judgment to

which courts and litigants may properly resort for guidance.

The weight of such a judgment in a particular case will

depend upon the thoroughness evident in its consideration,

the validity of its reasoning, its consistency with earlier and

later pronouncements, and all those factors which give it

power to persuade, if lacking power to control.

Id. at 140. 

36 MASSEY COAL CO. v. HOLLAND

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Yet, in twice calculating premiums under 26 U.S.C. § 9704(b)(2),

the Social Security Administration has, without conducting a review

of the Coal Act and its contexts, developed virtually no experience

that might be considered a "body of experience and informed judgment to which courts and litigants may properly resort for guidance."

The Commissioner’s ipse-dixit declaration in her June 10, 2003 letter

defining how "reimbursements" is used in § 9704(b)(2) is simply

unsupportable and therefore due no respect under Skidmore.

In her 2003 letter, the Commissioner reconsidered the 1996 premium decision made by her predecessor in light of the D.C. Circuit’s

opinion in Holland v. National Mining Ass’n, 309 F.3d 808 (D.C. Cir.

2002). That decision pointed out that the Eleventh Circuit decision in

National Coal Ass’n v. Chater, 81 F.3d 1077 (11th Cir. 1993), bound

the Commissioner only with respect to the eight coal operators who

were parties to that litigation and that the Commissioner could have,

though need not have, adopted a different rule with respect to the

remaining coal operators for their contributions to the Combined

Fund. 309 F.3d at 816-17. But the Commissioner was not free to

evade the unambiguous text of the Coal Act. 

The Commissioner considered the D.C. Circuit’s ambiguous mandate and elected to reverse course from the policy of the preceding

eight years, except with respect to the coal operators who were party

to the National Coal Ass’n case. She gave two reasons: (1) a generic

proclamation that the new policy was consistent with the Coal Act

and (2) a concern for the "financial viability" of the Combined Fund.

In essence, the Commissioner’s rationale for her decision was a naked

desire to direct extra money to the Combined Fund by recalculating

the premiums, and the Act, she concluded, let her get away with it.

But, despite a decade of litigation in two district courts and two courts

of appeal in which all possible meanings of the word "reimbursements" were considered in exhaustive detail, the Commissioner never

made even a passing attempt to justify her decision under the statute.

Nor are the financial difficulties of the Combined Fund articulated in

the 2003 letter, so that even her impermissible, asserted rationale

lacks support. The contributors to the Combined Fund, who were

expected to spend $70 million in retroactive premiums and more

going forward, rightly concluded that they deserved a better analysis.

MASSEY COAL CO. v. HOLLAND 37

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The Commissioner’s 2003 decision fails each of the prerequisites

for Skidmore respect. Virtually no reasoned consideration appears on

the face of the decision; none has appeared from the depositions

attendant to this litigation; and what reasoning does appear is invalid.

Congress did not charge the Commissioner with ensuring the financial viability of the Combined Fund. Her job was to calculate the formula established by Congress by using actual historical figures. In

performing her job, she was bound to obey the words of Congress and

to determine, through a reasoned analysis, what those words fairly

meant. No evidence of such an effort appears. 

Additionally, the emphasis on the wealth of the Combined Fund

suggests an improper understanding of the Commissioner’s role. As

we described earlier, the structure of the Coal Act grants the Trustees

policymaking authority to administer the Combined Fund. The Trustees, who represent both the coal industry and the coal miners, constitute a quasi-legislative body, well-situated to weigh the Coal Act’s

competing policies. The Commissioner, on the other hand, has no

policymaking authority. Her duties are tightly circumscribed — in

this case — to calculate certain numbers in a mechanical fashion. By

taking sides in the dispute between the coal operators and the

UMWA, the Commissioner abandoned neutrality and any legitimate

claim to judicial respect under Skidmore. 

Finally, the inconsistency of the Commissioner’s positions over the

years destroys any residual legitimacy. The policy history in this case

has a certain tidal quality. In 1993, the Secretary of Health and

Human Services opted for an actual-costs interpretation of "reimbursements" that gave the Combined Fund the most money, without

regard to what Congress specified. Three years later, the Commissioner of Social Security reversed that interpretation and followed the

Eleventh Circuit’s decision in National Coal Ass’n. Nine years later,

after the D.C. Circuit’s decision in Holland, the Commissioner yet

again reversed her position. While the Commissioner’s openmindedness might in some contexts be considered admirable, we

would not yield to such undulations in interpreting a statute, even

were we uncertain as to the statutory meaning. See Pauley v. Beth

Energy Mines, Inc., 501 U.S. 680, 698 (1991) ("[T]he case for judicial

deference is less compelling with respect to agency positions that are

inconsistent with previously held views"); Watt v. Alaska, 451 U.S.

38 MASSEY COAL CO. v. HOLLAND

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259, 272-73 (1981) (noting that inconsistent interpretations garner

"considerably less deference"). 

The judgment of the district court is accordingly 

AFFIRMED.

TRAXLER, Circuit Judge, dissenting: 

Respectfully, I agree with the Court of Appeals for the District of

Columbia Circuit that the term "reimbursements," a component of the

"per beneficiary premium" formula prescribed by the Coal Act in

§ 9704(b)(2), is not clear and unambiguous. See Holland v. National

Mining Ass’n, 309 F.3d 808, 816 (D.C. Cir. 2002). Although I am

inclined to agree that the Commissioner’s interpretation is not entitled

to deference under the framework of Chevron, U.S.A., Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837 (1984), I would nevertheless sustain the Commissioner’s use of an actual-cost basis for

reimbursements in determining the per beneficiary premium to be

paid by coal companies ("coal operators"), rather than the riskcapitation basis which resulted in a $25.5 million windfall of sorts to

the coal operators. Accordingly, I would reverse the decision of the

district court. 

The Coal Act, in order to finance benefits provided by the Combined Fund, mandates the payment of an annual premium by each

coal operator. See 26 U.S.C. § 9704(a). One component of this annual

premium is a "health benefit premium," 26 U.S.C. § 9704(a)(1),

which is determined by multiplying a standard "per beneficiary premium" by "the number of eligible beneficiaries assigned [by the Commissioner] to [a given coal] operator under section 9706," 26 U.S.C.

§ 9704(b)(1). 

In turn, the "per beneficiary premium" is calculated annually by the

Commissioner according to a statutorily prescribed formula. See 26

U.S.C. § 9704(b)(2). In simple terms, the per beneficiary premium

reflects the average cost to the UMWA Benefit Plans of health benefits for an individual beneficiary during the Coal Act’s "base year" —

1991, the final year before the 1950 and 1974 Benefit Plans merged

MASSEY COAL CO. v. HOLLAND 39

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 42 of 47
under the Coal Act to become the Combined Fund. See 26 U.S.C.

§ 9704(b)(2)(A); Holland, 309 F.3d at 811.*

Significantly, the statutory formula for determining this average

cost of individual health benefits during the 1991 base year excludes

"reimbursements" from the calculation: The per beneficiary premium

is "the aggregate amount of payments from the 1950 UMWA Benefit

Plan and the 1974 UMWA Benefit Plan for health benefits (less reimbursements but including administrative costs) for the plan year

beginning July 1, 1991, for all individuals covered under such plans

for such plan year," divided by the number of eligible beneficiaries

that year. See 26 U.S.C. § 9704(b)(2)(A)(i) and (ii) (emphasis added).

The treatment of "reimbursements" ensures that the baseline per beneficiary premium reflects the average cost of only those benefits covered by the UMWA Benefit Plans. To avoid overlap with federal

benefit programs, the UMWA Benefit Plans did not provide benefits

for services covered by such programs — most notably Medicare. See

National Coal Ass’n v. Chater, 81 F.3d 1077, 1079 (11th Cir. 1996)

(per curiam). For the convenience of the beneficiaries of the UMWA

Benefit Plans, however, the Plans followed an administrative practice

of paying health care providers for all services rendered, even if such

services were covered by Medicare or another government program

and not by the UMWA Benefit Plans. The Plans then sought repayment for any such services, thus relieving the individual beneficiaries

of the burden of seeking payment from multiple benefit plans. See

Holland, 309 F.3d at 811; National Coal Ass’n, 81 F.3d at 1079.

Thus, the formula set forth in section 9704(b)(2) is designed so that

Medicare and other government benefits not covered by the UMWA

Benefit Plans would not skew the average cost of UMWA benefits

during the base year as a result of the Plans’ efficient administrative

practices. 

The parties’ competing interpretations of "reimbursements" are

rooted in the pre-Coal Act administrative practices of the UMWA

Benefit Plans. Prior to 1990, the UMWA Benefit Plans presented

claims for reimbursement based on covered Medicare services actu-

*The Coal Act directs the Commissioner to adjust this baseline amount

for inflation each year. See 26 U.S.C. § 9704(b)(2)(B); The Pittston Co.

v. United States, 199 F.3d 694, 699 (4th Cir. 1999). 

40 MASSEY COAL CO. v. HOLLAND

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ally received by Plan beneficiaries and paid for by the Plans. See

National Coal Ass’n, 81 F.3d at 1080; Holland, 309 F.3d at 811. This

cost-based method of reimbursement, however, produced ongoing

disputes over covered services and reimbursement amounts. In 1990,

the parties adopted a different practice, entering into a "risk capitation" agreement under which Medicare paid the UMWA Benefit

Plans a predetermined monthly flat fee based on projected Medicare

expenditures. See National Coal Ass’n, 81 F.3d at 1080; Holland, 309

F.3d at 811. As it turned out, the projected expenses (resulting in the

payment of a $182.3 million flat fee to the Plans) exceeded actual

costs during the base year ($156.8 million) by $25.5 million. See Holland, 309 F.3d at 811. 

The Coal Act does not define the term "reimbursements." For

undefined statutory terms, courts accord them "their ordinary meaning." Asgrow Seed Co. v. Winterboer, 513 U.S. 179, 187 (1995);

Schlossberg v. Barney, 380 F.3d 174, 180 (4th Cir. 2004) ("In the

absence of expressed Congressional intent, we must assume that Congress intended to convey the language’s ordinary meaning." (internal

quotation marks omitted)). The parties emphasize different aspects of

the same dictionary definitions to support their readings of the text as

most faithful to the ordinary meaning of the words. Appellants

emphasize the notion of equivalency — that "to reimburse" is "to pay

back (an equivalent for something taken, lost or expended) to someone: [r]epay" or "to make restoration or payment of an equivalent

. . . : [i]ndemnify." Webster’s Third New International Dictionary

1914 (1981); see Holland, 309 F.3d at 816. The coal operators, by

contrast, contend that "reimburse" in the "repayment of an equivalent"

sense is not necessarily limited to repayment on a dollar-for-dollar

basis. See National Coal Ass’n, 81 F.3d at 1082. For example, they

suggest expenses may be "reimbursed" on a per diem basis where the

fixed per diem amount serves as the "equivalent" of the expenditures.

In this instance, as suggested by the split between the circuit courts

of appeal, the "ordinary meaning" approach is not helpful in determining congressional intent as to the meaning of "reimbursement."

Because either reading is plausible on its face, I find the statute

ambiguous. Compare Holland, 309 F.3d at 816 ("The Eleventh Circuit’s analysis is somewhat perplexing, because it acknowledges that

reimburse means to pay back an equivalent for something expended

MASSEY COAL CO. v. HOLLAND 41

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. . . , and yet the opinion concludes that reimbursement is not

restricted dollar-for-dollar [to] what the reimbursed party payed out.

If anything, the Eleventh Circuit’s opinion seems to confirm the statute’s ambiguity.") (internal quotation marks omitted) with National

Coal Ass’n, 81 F.3d at 1082 (concluding, based on the dictionary definition, that the statutory text unambiguously refers to "the entire

amount of the capitation payments that were made to the UMWA

plans"). 

Looking beyond the Webster’s definition of "reimburse," the coal

operators argue that the statute is unambiguous because the "per beneficiary formula" uses 1991 as a base year, and Congress was aware

that a risk-capitation arrangement was in effect in 1991. In support of

this argument for an unambiguous text, the coal operators offer legislative history and other extrinsic materials to demonstrate that the

UMWA Benefit Plans and Medicare had agreed to handle the actualcost dilemma via the capitation agreement. In my view, legislative

history cannot be used to establish the plainness of the statutory text,

see United States v. Gonzales, 520 U.S. 1, 6 (1997), and it probably

ought not be used, as the coal operators do here, to "confirm" the

meaning of a statute if the statute is indeed unambiguous, see Zedner

v. United States, 126 S. Ct. 1976, 1991 (2006) (Scalia, J., concurring)

("[I]f legislative history is relevant when it confirms the plain meaning of the statutory text, it should also be relevant when it contradicts

the plain meaning, thus rendering what is plain ambiguous."). The

statutory text is quite clearly the best evidence of congressional intent

and, therefore, judicial inquiry ends with the conclusion that the statute is clear and unambiguous. See Robinson v. Shell Oil Co., 519 U.S.

337, 340 (1997). In sum, a statute’s clarity, or lack thereof, cannot be

discovered from extrinsic sources — such materials become useful

only after it becomes apparent that the statute itself is unclear or

ambiguous. See Exxon Mobil Corp. v. Allapattah Servs., Inc., 125 S.

Ct. 2611, 2626 (2005). 

But beyond that, I do not find the legislative history terribly helpful

in deciphering congressional intent. The report of the Coal Commission is the primary source of legislative history offered by the coal

operators, and it indeed references "capitated reimbursement" in

explaining the current state of affairs in the coal industry’s pre-Coal

Act health benefit system. Since the report does not represent the

42 MASSEY COAL CO. v. HOLLAND

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understanding of Congress as a whole, these references do not necessarily mean that Congress meant "capitated reimbursement" when it

merely said "reimbursement." In fact, I cannot be sure of the more

basic premise that the Coal Commission’s report establishes that Congress was "aware" that, in 1991 in this specialized context, "reimbursement" carried a specialized meaning. Indeed, as the Trustees

point out, the principal sponsor of the Act, Senator Rockefeller, suggested "reimbursements" meant "payments by the plans for Federal

program benefits." 138 Cong. Rec. 34034. Of course, the statement

of an individual senator is obviously not controlling evidence of congressional intent, but it highlights the generally ambiguous nature of

legislative history. Nor do I find the private parties’ understanding of

the capitation arrangement relevant to congressional intent. In sum,

these extra-textual sources offered by the coal operators do not indicate that Congress was referring in section 9704(b)(2)(A)(i) to all

payments made pursuant to the capitation agreement. 

The text on its face directs the Commissioner to calculate the per

beneficiary premium using base year, or 1991, figures — meaning

that the Commissioner would simply gather and plug in historical data

about reimbursements received in 1991. Viewed in light of the text

and the purpose of the statute itself, however, I cannot conclude that

Congress thought of this fixed capitation arrangement, which produced a $25 million overpayment from Medicare, as a "reimbursement." Indeed, the Coal Act suggests the opposite. The per

beneficiary premium is based on the average cost of Plan benefits to

a coal operator. It would be a curious approach for Congress to

attempt to achieve such a result by directing that capitation payments

far removed from actual costs be used. Moreover, the coal operators’

preferred interpretation would run contrary to a fundamental purpose

of the Coal Act: to continue private funding of the UMWA Benefit

Plans. Instead of burdening the public fisc with the coal operators’

obligation to continue providing benefits to retired miners, Congress

sought "to provide for the continuation of a privately financed selfsufficient program for the delivery of health benefits to the beneficiaries of such plans." Pub. L. No. 102-486, § 19142(b)(3); cf. Shenango

Inc. v. Apfel, 307 F.3d 174, 195 (3d Cir. 2002) ("In short, the Coal

Act’s key objective is to ensure that the costs of providing retirement

benefits will, so far as possible, be borne by the private parties most

MASSEY COAL CO. v. HOLLAND 43

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responsible for creating retired miners’ expectations of lifetime health

benefits."). 

Based on the foregoing, I view the statute as ambiguous and would

so hold. I agree, however, that Chevron deference is not applicable to

the Commissioner’s decision in this instance. Ordinarily, the next step

would be to consider whether the agency decision is entitled, based

on its power to persuade, to "deference" under Skidmore v. Swift &

Co., 323 U.S. 134 (1944). Because the position ultimately adopted by

the Commissioner is the position I would adopt if I were construing

the statute from scratch, I would reverse regardless of whether Skidmore deference is appropriate. See Edelman v. Lynchburg College,

535 U.S. 106, 114 & n.8 (2002). As noted, the construction advanced

by the coal operators runs contrary to a primary purpose of the Coal

Act to ensure the continued private-financing of health benefits for

retired miners. In effect, the $25.5 million overpayment to the

UMWA Benefit Plans resulted in a windfall for the coal operators and

shifted some of the burden of paying for benefits under the Coal Act

from private entities to Medicare. Accordingly, in the absence of clear

and unambiguous statutory language, and without definitive legislative history to clear up the statute, I would read the word "reimbursement" consistently with the express purposes of the Coal Act and

affirm the Commissioner’s application of the per beneficiary premium

under section 9704(b)(2)(A)(i).

44 MASSEY COAL CO. v. HOLLAND

Appeal: 05-1996 Doc: 144 Filed: 01/19/2007 Pg: 47 of 47