1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

8-30-1995

Natl Mines v Carroll

Precedential or Non-Precedential:

Docket 94-3711

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Recommended Citation

"Natl Mines v Carroll" (1995). 1995 Decisions. Paper 237.

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1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

 

No. 94-3711 

 

IN THE MATTER OF: 

NATIONAL MINES CORPORATION; 

and 

OLD REPUBLIC INSURANCE COMPANY, 

 Petitioners

v. 

MARTHA CARROLL, Widow of Andrew J. Carroll; 

and 

DIRECTOR, OFFICE OF WORKERS' COMPENSATION 

PROGRAMS, UNITED STATES DEPARTMENT OF LABOR, 

 Respondents

 

On Petition for Review of a Decision 

and Order of the Benefits Review Board 

(BRB No. 93-0887 BLAO; 

OWCP No. 191-03-2274) 

 

Submitted under Third Circuit LAR 34.1(a) 

August 21, 1995 

BEFORE: GREENBERG, COWEN, and SAROKIN, Circuit Judges

(Filed: August 30, 1995) 

 

 George H. Thompson 

 Thompson, Calkins & Sutter 

 1412 Frick Building 

 Pittsburgh, Pa. 15219 

 Attorneys for Petitioners

 Thomas S. Williamson, Jr. 

 Solicitor of Labor 

 Donald S. Shire 

 Associate Solicitor 

 Helen H. Cox 
2 

 Christian P. Barber 

 United States Department of 

 Labor 

 Office of the Solicitor 

 200 Constitution Avenue, N.W. 

 Washington, D.C. 20210 

 Attorneys for Respondent

 Director Office of

 Workers' Compensation

 Programs

 

OPINION OF THE COURT 

 

GREENBERG, Circuit Judge. 

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

 This matter is before us on a petition for review of a 

decision and order of the Benefits Review Board of the United 

States Department of Labor dated October 26, 1994, affirming an 

award of benefits on a miner's and survivor's claim filed 

pursuant to the provisions of the Black Lung Benefits Act, as 

amended, 30 U.S.C. § 901 et seq. (the "Act"). 

 This case originated when the miner, Andrew J. Carroll, 

filed a claim for benefits on June 7, 1978. The Department of 

Labor (the "DOL") issued a Notice of Initial Finding on June 25, 

1979, indicating that it had determined preliminarily that 

Carroll had become totally disabled as of June 7, 1978, and 

identifying National Mines Corporation as the operator 

potentially liable for benefits to be paid from June 1, 1978. See

20 C.F.R. §§ 725.413, 725.412. The DOL required National Mines 
3 

to file a controversion to the determination within 30 days or be 

deemed to have accepted the initial finding of entitlement and to 

have waived its right to contest the claim, absent good cause 

shown. See 20 C.F.R. § 725.413. The notice was sent to National 

Mines on June 27, 1979, but not to its insurance carrier, Old 

Republic Insurance Company. On September 30, 1980, the DOL 

issued an Award of Benefits addressed to Old Republic which, in 

light of National Mines' failure to respond to the June 25, 1979 

order, was essentially a default judgment. However, neither 

National Mines nor Old Republic initiated payment and thus the 

Black Lung Disability Trust Fund made the payments on their 

behalf from June 1978 to February 1981.0

 On March 25, 1981, counsel entered an appearance on 

behalf of National Mines and Old Republic who together are the 

petitioners. By letter dated July 10, 1981, petitioners' counsel 

informed DOL that Old Republic intended to controvert Carroll's 

claim. Old Republic stated that it elected to have Carroll 

examined by a physician on September 3, 1981, and requested that 

the record stay open on the ground that this was the earliest 

available appointment. On September 25, 1981, and June 16, 1983, 

Old Republic submitted the results of its medical testing. The 

matter then languished. 

 

0

The fund paid Carroll $12,908.84. It ceased payments to Carroll 

after he was awarded Pennsylvania workers' compensation benefits 

as the result of his pneumoconiosis. See 30 U.S.C. §932(g); 20 

C.F.R. § 725.533(a)(1). Moreover, because Carroll's widow was 

awarded state benefits as a result of Carroll's pneumoconiosis, 

the Fund has not paid her interim benefits. Id. 
4 

 By letter dated September 24, 1986, a supervisor at Old 

Republic wrote to the DOL claims examiner inquiring into the 

status of Carroll's claim. The letter referred to an August 12, 

1986 telephone conversation in which "it was determined that the 

initial finding issued by the Department of Labor [in] June, 1979 

was not controverted by either Old Republic Insurance Company or 

[its] attorney." The supervisor stated that the DOL claims 

examiner had indicated in that conversation that she "would 

review the file and issue an amended notice." However, the 

supervisor stated that no amended order or notice had been 

received. The supervisor sent similar letters of inquiry on July 

6, 1987, and June 1, 1989.0

 On August 14, 1989, pursuant to 20 C.F.R. §§ 725.310 

and 725.480, the DOL entered an order directing Carroll to show 

cause within 30 days why Old Republic should not be given the 

opportunity to controvert the claim.0 The order stated as a 

finding of fact that "[a]n initial finding of entitlement to 

benefits was made on June 25, 1979; the responsible operator's 

insurance company was not notified of that finding and, 

 

0

On June 3, 1989, Carroll died. Martha E. Carroll, his widow, 

filed a survivor's claim on February 16, 1990, and her claim 

proceeded independently. The DOL initially denied the claim but 

notified National Mines of its potential liability for survivor's 

benefits. National Mines controverted the claim and submitted 

additional evidence. After her claim was denied again, the widow 

requested a hearing before an administrative law judge and her 

claim was consolidated with Carroll's claim for a hearing. Her 

claim, however, may be moot because she was awarded derivative 

survivor's benefits under her husband's claim. See 30 U.S.C. 

§932(1). 

0

 There is no explanation in the record for the approximate 

three-year time span between the 1986 correspondence and the 1989 

Order to Show Cause. 
5 

therefore, did not have the opportunity to controvert the claim." 

Because Carroll did not respond, the DOL gave Old Republic 30 

days to controvert the claim. On October 3, 1989, Old Republic 

filed an "Operator Controversion Form" on behalf of itself and 

National Mines. In its supplemental response, petitioners 

argued, inter alia, that the DOL was precluded by the statute of 

limitations set forth in 20 C.F.R. § 725.603(c)(6) from 

collecting benefit reimbursements from both National Mines and 

Old Republic because the DOL had failed to bring an enforcement 

action within six years of the date upon which there had been a 

final determination of liability, September 30, 1980. 

 By letter dated November 16, 1989, the DOL informed 

petitioners that because it had accepted the controversion, the 

DOL intended to rescind the Decision and Order of September 30, 

1980, which had been based upon National Mines' failure to 

controvert the initial findings. Old Republic objected to the 

rescission. In response, the DOL stated that it would not 

rescind the Decision and Order of September 30, 1980, and that 

the issue would be addressed at an informal conference. 

 After an informal conference, a DOL deputy commissioner 

recommended that the September 30, 1980 decision and order be 

rescinded. The deputy commissioner also stated that "[t]he 

Controversions filed by [petitioners] on October 3, 1989 and 

October 17, 1989 are herewith accepted as timely." The case was 

referred subsequently to the Office of the Administrative Law 

Judges for consideration of several contested issues, including 

the questions of whether the September 30, 1980 Decision and 
6 

Order should be considered final and whether the six-year statute 

of limitations set forth in 20 C.F.R. § 725.603(c)(6) precludes 

imposition of liability on National Mines and/or Old Republic for 

any benefits awarded in this case. 

 On October 22, 1991, a formal hearing was held. On 

December 14, 1992, the administrative law judge ("ALJ") issued a 

Decision and Order - Awarding Benefits. The ALJ determined, as a 

preliminary matter, that the rescission of the September 30, 1980 

order was proper and equitable. The ALJ concluded that the claim 

had been reopened on petitioners' own initiative. In support of 

his conclusion that National Mines and Old Republic "were aware 

of [Carroll's] claim and [had] attempted to file a controversion 

well before the expiration of the six-year statute of 

limitations," the ALJ cited the petitioners' counsel's appearance 

on March 25, 1981, and the subsequent letter, dated July 10, 

1981, which stated that petitioners were controverting the claim 

and electing to have Carroll examined by a physician.0 The ALJ 

concluded that a final determination regarding Carroll's 

eligibility had not been reached yet, thereby precluding the 

applicability of the six-year statute of limitations. 

 The ALJ also determined that the medical evidence 

showed that Carroll was totally disabled due to pneumoconiosis 

and that, as a result, his widow was entitled to benefits on his 

behalf as well as survivor's benefits under 20 C.F.R. § 725.212. 

 

0

 The ALJ also referred to a letter dated April 2, 1981, in which 

Petitioners "stated it had received a copy of the September 30, 

1980 letter from the carrier, and had requested a complete file 

for review." We do not find this document in the appendix. 
7 

The ALJ determined that Carroll was entitled to benefits 

commencing June 1, 1978, and that the widow was entitled to 

derivative benefits commencing on June 1, 1989. Consequently, 

National Mines was ordered to pay benefits under the Act to 

Carroll with derivative benefits to his widow and to reimburse 

the Trust for payments previously made. 

 National Mines and Old Republic appealed the Decision 

and Order to the Benefits Review Board, specifically challenging 

the ALJ's findings regarding the applicability of the statute of 

limitations set forth in 20 C.F.R. § 725.603(c)(6) and the 

commencement of benefits date. On October 26, 1994, the Board 

issued a Decision and Order affirming the ALJ's award of 

benefits. On December 23, 1994, National Mines and Old Republic 

filed a petition for review to this court challenging the Board's 

affirmance of the ALJ's decision to rescind the September 30, 

1980 Award of Benefits.0

 We have jurisdiction over the petition for review 

pursuant to 33 U.S.C. § 921(c), as incorporated by the Act, 30 

U.S.C. § 932(a). We review decisions of the Board "for errors of 

law and to assure that it has adhered to its own standard of 

review." BethEnergy Mines, Inc. v. Director, OWCP, 39 F.3d 458, 

462-63 (3d Cir. 1994) (citing Director, OWCP v. Barnes & Tucker 

Co., 969 F.2d 1524, 1526-27 (3d Cir. 1992)). "[T]he Board must 

accept an ALJ's findings of fact if they are supported by 

substantial evidence in the record considered as a whole." Id.

 

0

 Mrs. Carroll is not participating in the appeal. 
8 

at 463. We exercise plenary review over the Board's legal 

determinations. Id. 

II. DISCUSSION

 Petitioners do not challenge the award of benefits on 

the merits. Rather, they argue that the DOL was without 

authority to rescind its September 30, 1980 Award of Benefits and 

thereby reopen the claim. Petitioners allege that the DOL, after 

nine years of inactivity, realized in 1989 that no action had 

been taken within the six-year statute of limitations period set 

forth in 20 C.F.R. § 725.603(c)(6) to enforce the lien against 

them. Petitioners assert that the DOL, to reinstate its 

enforcement rights, reopened the case without authority to 

restart the running of the six-year statute of limitations and 

legitimize a future enforcement action. 

 In the first place, petitioners' reliance on section 

725.603(c)(6) is misplaced. Under that section, a lien for the 

amount paid out by the Fund due to an employer's failure to pay 

benefits arises in favor of the United States against the 

employer's property when liability for those benefits finally is 

determined. 30 U.S.C. § 934(b)(2); 20 C.F.R. § 725.603(b). 

Section 725.603(c)(6) provides that the Secretary of Labor may 

enforce the lien in a district court where "the proceeding is 

commenced within 6 years after the date upon which liability is 

finally determined." 

 However, the statute of limitations cited refers only 

to the enforcement proceedings described in section 725.603, 
9 

which must brought in the district court. Thus, the statute of 

limitations on which petitioners rely is not applicable in the 

administrative proceedings we review, as those proceedings were 

aimed not at enforcing a lien but at determining liability. In 

short, because the petition before us has been filed to review an 

administrative determination and not to review a judgment in a 

district court enforcement action, the question of whether 

section 725.603(c)(6) acts to bar the enforcement of liens 

against petitioners is not before us. Because petitioners have 

not directed our attention to any applicable statute of 

limitations, there is no basis for us to vacate the Board's 

decision on statute of limitations grounds. 

 Nonetheless, implicit in petitioner's brief is an 

argument that the DOL lacked authority to reopen Carroll's claim 

after 30 days from the September 30, 1980 Award of Benefits. 

Petitioners argue that the September 30, 1980 Award of Benefits 

became final because neither National Mines nor Old Republic 

filed a timely controversion challenging the award within the 30-

day period allowed by 20 C.F.R. § 725.419(a). Section 725.419(d) 

provides that: 

If no response to a proposed decision and 

order is sent to the deputy commissioner 

within the period described in paragraph (a) 

of this section...the proposed decision and 

order shall become a final decision and 

order, which is effective upon the expiration 

of the applicable 30-day period. Once a 

proposed decision and order...becomes final 

and effective, all rights to further 

proceedings with respect to the claim shall 

be considered waived, except as provided in 

§725.310. 
10 

Petitioners assert that Old Republic's letter of controversion 

filed in July 1981 and its submission of medical evidence in 

September 1981 and June 1983 had no effect on the finality of the 

September 30, 1980 Award of Benefits because their failure to 

file a controversion within the 30-day period set forth in 20 

C.F.R. § 725.419(a) deprived them of standing to submit any 

further challenge. In support of this interpretation of events, 

they note that the DOL did not accept explicitly as timely filed 

either the letter of controversion or any of the medical evidence 

submitted in 1981 and 1983. 

 However, section 725.419(d) clearly contradicts 

petitioners' contention that the failure to file a timely 

controversion left them without an avenue for further review of 

the award. Significantly, section 725.419(d) provides that "all 

rights to further proceedings shall be considered waived, except 

as provided in § 725.310." (Emphasis added.) Section 725.310 

provides that: 

Upon his or her own initiative, or upon the 

request of any party upon the grounds of a 

change in conditions or because of a mistake 

in a determination of a fact, the deputy 

commissioner may, at any time before one year 

from the date of the last payment of 

benefits...reconsider the terms of an award 

of denial of benefits. 

Upon timely request, the deputy commissioner may "issue a new 

compensation order which may terminate, continue, reinstate, 

increase, or decrease such compensation, or award compensation." 
11 

33 U.S.C. § 922.0 The deputy commissioner may make such 

modification to "render justice under the act." O'Keeffe v. 

Aerojet Shipyards, Inc., 404 U.S. 254, 255, 92 S.Ct. 405, 407 

(1971).0

 The DOL submits that Old Republic's letter of 

controversion filed in July 1981 and its later submission of 

medical evidence were sufficient to constitute a timely request 

for modification. The DOL's assertion that the informal 

procedures employed in black lung and longshore cases never have 

required the submission of a formal request for modification is 

supported by case law. See, e.g., Eifler v. OWCP, 926 F.2d 663, 

667 (7th Cir. 1991). Moreover, the July 1981 letter was timely 

because it was filed within one year of the last payment of 

 

0

 Section 725.310 implements section 22 of the Longshore and 

Harbor Workers' Compensation Act, 33 U.S.C. § 922, as 

incorporated by 30 U.S.C. § 932(a). 

0

Petitioners argue that the filing of a timely controversion is a 

prerequisite to a request for modification. They submit that 

"[t]o conclude otherwise would mean that employers could 

challenge an award of benefits at any time by this or like means 

without the need for ever filing formal controversion papers." 

Br. at 16. However, this interpretation is at odds with the 

plain language of section 725.419(d). Section (d) clearly sets 

out 20 C.F.R. § 725.310 as an exception to the waiver occasioned 

by a failure to file a timely controversion. 

 Moreover, our holding does not provide an incentive for 

employers to ignore the 30 day requirement of 20 C.F.R. 

§725.419(a), because the exercise of section 725.310 authority 

is, to some extent, discretionary. There really is no 

qualitative difference between these provisions and the Federal 

Rules of Civil Procedure, which ordinarily require defendants to 

file an answer to the complaint within 20 days, see Fed. R. Civ. 

P. 12(a)(1)(A), yet allow default judgment debtors to move for 

relief from judgment pursuant to Fed. R. Civ. P. 60(b). 
12 

benefits to Carroll by the Black Lung Disability Trust Fund in 

February 1981. 

 The DOL reasonably could infer from petitioners' 

submission of medical evidence that they sought modification on 

the ground of a factual mistake regarding the existence or extent 

of Carroll's disability. See Banks v. Chicago Grain Trimmers 

Ass'n, 390 U.S. 459, 464-65, 88 S.Ct. 1140, 1144 (1967); 

O'Keeffe, 404 U.S. at 254-56, 92 S.Ct. at 406-07 (holding that 

the authority to re-open is not limited to any particular type of 

facts; the Board may review the very existence of a liability as 

well as its extent). See also Metropolitan Stevedore Co. v. 

Rambo, 115 S.Ct. 2144, 2147 (1995). 

 Moreover, petitioners' letters of inquiry dated 

September 24, 1986, July 6, 1987, and June 1, 1989, which assert 

that Old Republic did not receive service of the Notice of 

Initial Finding, provided an additional ground for modification 

if viewed in conjunction with their earlier letter of 

controversion. Two courts of appeal have held that under the 

Black Lung Act and regulations the operator's insurance carrier 

is subject to liability in black lung benefits proceedings and, 

therefore, is entitled to notice as a party to the litigation. 

Tazco, Inc. v. Director, OWCP, 895 F.2d 949, 950 (4th Cir. 

1990)0; Warner Coal Co. v. Director, OWCP, 804 F.2d 346, 347 (6th 

Cir. 1989). The Warner Coal court noted that the Act and 

 

0

 The Tazco court explicitly rejected the theory that notice 

provided to the coal mine operator constitutionally may be 

"imputed" to the carrier. Tazco, 895 F.2d at 951. 
13 

regulations do not contemplate limiting the carrier's exposure to 

indemnifying an operator found liable for payments of benefits.0 

Warner Coal, 804 F.2d at 347. Instead, because the carrier is 

subject to liability on the claim, due process requires that it 

be given adequate notice and an opportunity to defend on the 

question of its direct liability to the claimant. Id. See also

Tazco, 895 F.2d at 953 (holding that failure to notify the 

carrier required vacation of default award and requiring DOL to 

provide insurance carrier and the operator with an opportunity to 

contest the merits of the claim). Consequently, the DOL's 

rescission in this case of its September 30, 1980 Award and offer 

of a new hearing are in accord with the Tazco court's approach. 

That being the case, the DOL generally is entitled to use the 

modification procedures set out in 33 U.S.C. § 922 to remedy a 

failure to notify the appropriate insurance carrier. See

Claudill Constr. Co. v. Abner, 878 F.2d 179, 181 (6th Cir. 1989). 

 Petitioners attempt to avoid these principles by 

alleging that the statement in the various letters of inquiry 

that Old Republic had not received the Notice of the Initial 

Finding is erroneous. Petitioners reason that their action to 

controvert the determination of liability in 1981 shows that Old 

 

0

 As the Tazco court explained, "[o]nce a carrier has reported 

the issuance of a policy, as mandated by the regulations, the 

insurer is fully liable for the obligations of the operator.... 

The carrier is required to discharge the statutory and regulatory 

duties imposed on the employer, thus stepping into his 

shoes....Moreover, unlike an indemnification policy, the Black 

Lung Benefits scheme contemplates that the insurer, as a party, 

may be liable in the original claims proceeding." Tazco, 895 

F.2d at 951-52 (citations omitted). 
14 

Republic had notice of Carroll's claim approximately five years 

before the first letter of inquiry was written. Petitioners fail 

to acknowledge that the significance of DOL's failure to provide 

Old Republic with service is that Old Republic thereby was 

deprived of the opportunity to file a timely challenge to the 

DOL's initial findings and receive a hearing at which it could 

contest them. Old Republic's subsequent awareness of the 

liability determination does not remedy the DOL's failure to 

serve it because Old Republic was left without an opportunity to 

contest the initial liability determination. Consequently, 

because the allegation that Old Republic had not been served 

properly raises the possibility of a violation of its due process 

rights, the DOL reasonably could treat Old Republic's submissions 

as a request for time to file a timely controversion. 

 In sum, we conclude that 33 U.S.C. § 922 authorizes the 

DOL to reopen an otherwise final award to "render justice under 

the act." O'Keeffe, 404 U.S. at 255, 92 S.Ct. at 407. Of 

course, there was an inexplicable lengthy delay in these 

proceedings between the time of petitioners' request for 

modification and the DOL's action, and petitioners spend much 

time in their brief arguing that the delay was improper and 

therefore the subsequent modification procedures failed to toll 

the statute of limitations. But the reasons for that delay are 

not before us.0 We rule only that the statute of limitations 

 

0

The DOL certainly can be faulted for failing to respond to 

petitioners' inquiries in a timely manner. The DOL offers no 

explanation for its failure to take any action on this claim 

between its September 30, 1980 Award of Benefits and its 
15 

relied on by petitioners is inapplicable to these proceedings, 

that the DOL had the authority to construe petitioners' letters 

as requests for modification proceedings, and that the reasons 

stated in those letters provided legitimate substantive bases for 

rescinding an otherwise final award. Nonetheless, as the DOL 

points out in its brief, "as a general rule, the mere existence 

of modification proceedings does not affect the finality of an 

existing award of compensation." Br. at 24. Thus, it 

acknowledges that "the Department cannot initiate modification 

simply to obtain a new date for the commencement of the six-year 

statute of limitations." Id. Whether the modification procedure 

tolled the statute of limitations will be a question before a 

district court in an enforcement proceeding, if one is brought, 

and we do not rule on it. 

III. CONCLUSION

 For the foregoing reasons, we will deny the petition 

for review. 

 

August 14, 1989 Order to Show Cause, despite petitioner's 

controversion letter.