RECOMMENDED FOR PUBLICATION

Pursuant to Sixth Circuit I.O.P. 32.1(b)

File Name: 20a0248p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

KARST ROBBINS COAL COMPANY; BITUMINOUS 

CASUALTY CORPORATION,

Petitioners,

v.

DIRECTOR, OFFICE OF WORKERS’ COMPENSATION 

PROGRAMS, UNITED STATES DEPARTMENT OF LABOR;

MARLIN D. RICE,

Respondents.

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No. 19-3836

On Petition for Review from the Benefits Review Board;

No. 17-0625 BLA.

Argued: July 29, 2020

Decided and Filed: August 7, 2020

Before:MOORE, CLAY, and McKEAGUE, Circuit Judges.

_________________

COUNSEL

ARGUED: Mark E. Solomons, GREENBERG TRAURIG, LLP, Washington, D.C., for 

Petitioners. Cynthia Liao, UNITED STATES DEPARTMENT OF LABOR, Washington, D.C., 

for Federal Respondent. Timothy C. MacDonnell, WASHINGTON AND LEE UNIVERSITY 

SCHOOL OF LAW, Lexington, Virginia, for Respondent Marlin Rice. ON BRIEF: Mark E. 

Solomons, Laura Metcoff Klaus, GREENBERG TRAURIG, LLP, Washington, D.C., for 

Petitioners. Gary K. Stearman, Michelle Gerdano, UNITED STATES DEPARTMENT OF 

LABOR, Washington, D.C., for Federal Respondent. Timothy C. MacDonnell, WASHINGTON 

AND LEE UNIVERSITY SCHOOL OF LAW, Lexington, Virginia, for Respondent Marlin 

Rice.

>
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 2

_________________

OPINION

_________________

CLAY, Circuit Judge. Bituminous Casualty Corp., as the insurer for Karst Robbins Coal 

Co. (“KRCC”), seeks review of a decision by the Department of Labor’s Benefits Review Board 

finding Bituminous responsible for paying a claim under the Black Lung Benefits Act 

(“BLBA”), 30 U.S.C. §§ 901–45. Bituminous argues that the Department was collaterally 

estopped from finding that KRCC was the responsible operator under the Act, because an 

administrative law judge had previously found that another, related company was actually the 

claimant’s employer. Bituminous also argues that it was entitled to rescind its insurance 

agreement based on alleged fraud by KRCC, and that delays in the Department’s administrative 

proceedings violated its right to due process. For the reasons that follow, Bituminous is incorrect 

on each of these counts, and so we deny its petition for review.

BACKGROUND

A. Black Lung Claims

Marlin Rice is a former coal miner who filed a claim for benefits under the BLBA. 

Under that statute and its associated regulations, a miner is eligible for black lung benefits if 

(1) she has pneumoconiosis, which is known as black lung disease when caused by exposure to 

coal dust, (2) the pneumoconiosis arose out of her coal mine employment, (3) she is totally 

disabled, and (4) her pneumoconiosis contributes to that disability. 20 C.F.R. § 725.202(d)(2). 

On the second prong, if a miner worked in coal mines for ten years or more, there is a rebuttable 

presumption that her pneumoconiosis arose out of coal mine employment. Id. § 718.203(b).

Once a miner establishes her eligibility for benefits, the next question is who must pay. 

To answer this question, the Department of Labor (“DOL”) looks to the miner’s employers to see 

which of them employed the miner for at least one year and are capable of paying benefits under 

the BLBA. Id. § 725.494(c), (e). The miner’s most recent employer that meets these 

requirements is deemed the “responsible operator” and is forced to foot the bill. Id.

§ 725.495(a)(1). And to ensure that potentially responsible operators can pay out benefits, the 
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 3

BLBA requires them to either qualify as a self-insurer or purchase insurance to cover any BLBA 

liability. 30 U.S.C. § 933(a); 20 C.F.R. § 725.494(e); see also id. pt. 726 (providing regulatory 

requirements for insurance coverage). If DOL cannot identify a responsible operator, the 

miner’s benefits are instead paid by the Black Lung Disability Trust Fund. 26 U.S.C. 

§ 9501(d)(1).

B. KRCC’s Insurance Coverage

Karst Robbins Coal Co. (“KRCC”) operated a coal mine where Rice worked from at least 

June 7, 1982 to August 9, 1983. But on paper, Rice never worked for KRCC. Instead he was 

employed by a separate corporate entity, Karst Robbins Machine Shop, Inc. (“KRMS”), which 

then charged KRCC for the cost of Rice’s labor. KRMS’s ownership and management 

overlapped with that of KRCC, it had no assets, and it operated out of the same offices as KRCC.

KRCC obtained workers’ compensation insurance, including BLBA coverage, from 

Bituminous Casualty Corp. But according to evidence submitted by Bituminous, KRCC only 

listed ten employees on its books. The other 150 or so were employed by KRMS, and thus 

covered by KRMS’s separate insurance. According to both companies’ shared bookkeeper, new 

hires would choose whether they were willing to waive workers’ compensation coverage and 

take only disability insurance instead. If so, they would be hired as an employee of KRMS; 

otherwise they would work for KRCC. Bituminous describes this as a scam designed to dodge 

the otherwise higher premiums KRCC would have paid for BLBA and workers’ compensation 

coverage.

C. Procedural History

Rice filed his first claim for BLBA benefits in October 1983. During proceedings on that 

claim, DOL identified KRCC and KRMS, among others, as potentially responsible operators. 

While perhaps strange given their shared ownership and management, KRCC and KRMS 

retained separate counsel and argued conflicting positions: KRCC said that Rice was actually 

employed by KRMS, while KRMS said that it never operated a coal mine or ran a coal mining 

business, and so could not be considered an employer under the applicable regulations. 
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 4

The administrative law judge (“ALJ”) settled on KRMS as the responsible operator, leaving 

KRCC and Bituminous off the hook.1

Despite this finding, the ALJ denied Rice’s claim, holding that Rice failed to establish 

that he had pneumoconiosis. Accordingly, Rice was ineligible for BLBA benefits. Rice then 

appealed to the Benefits Review Board.

During those appellate proceedings, KRCC and Bituminous (along with other employers 

of Rice) filed a motion to be dismissed from the case, given that the ALJ found that KRMS was 

the responsible operator. The Director of the Office of Workers’ Compensation Programs, who 

represented DOL’s interests in the proceedings, did not file a response. Accordingly, the Board 

granted the motion and dismissed KRCC and Bituminous. The Board then went on to affirm the 

denial of Rice’s claim on the merits. The Director never filed a cross-appeal or otherwise 

challenged the responsible operator determination.2

Fast-forward more than a decade. In 2002, Rice filed another claim for benefits. During 

proceedings on that claim, DOL again sent a notice to KRCC and Bituminous saying that KRCC 

might be the responsible operator.3 Bituminous claims it “denied coverage based on the 

fraudulent arrangements” between KRCC and KRMS, and so requested that DOL dismiss it from 

the case. (Pet’rs’ Br. at 6.) After various administrative proceedings, DOL refused to dismiss 

Bituminous, but again denied Rice’s claim. While this time Rice established that he suffered 

from pneumoconiosis, DOL’s district director found that Rice failed to show that the 

pneumoconiosis was caused by his coal mine employment. This was in line with DOL’s earlier 

finding that Rice had only worked for a little more than eight years in coal mines; as discussed 

1As described more extensively in the parties’ briefs, the procedural history of Rice’s BLBA claims falls 

somewhere between Kafka and Joyce. For example, Rice’s 1983 claim was initially denied by a deputy 

commissioner in DOL, appealed to an ALJ, remanded back to the deputy commissioner, again appealed to the ALJ, 

appealed to the Benefits Review Board, appealed to this Court, and then dismissed for failure to pay the filing fee. 

For clarity’s sake, we have limited the proceedings recounted here to only what is relevant to the outcome of 

Bituminous’s petition.

2This makes some intuitive sense. It seems unlikely that DOL would care who the responsible operator 

was, so long as the Black Lung Disability Trust Fund did not have to pay.

3By this point, KRMS had ceased operations.
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 5

above, at least ten years of coal mine employment is required for a presumption that any 

pneumoconiosis was caused by that work. 20 C.F.R. § 718.203(b).

In 2006, Rice filed another claim for BLBA benefits, and KRCC and Bituminous were 

again identified as potentially responsible for payment.4 Bituminous moved to be dismissed 

from the case, arguing that Rice was employed by KRMS, that its liability was precluded by res 

judicata, and that DOL had failed to investigate other potential carriers. Bituminous also moved 

to rescind its insurance policy with KRCC on the grounds that its employee leasing scheme with 

KRMS constituted fraud. The ALJ rejected all of these arguments, finding that under the 

governing regulations, KRCC was the responsible operator and that Bituminous was required to 

cover the claim. See 20 C.F.R. § 725.493(a)(1) (defining employment “as broadly as possible” 

to “include any relationship under which an operator retains the right to direct, control, or 

supervise the work performed by a miner, or any other relationship under which an operator 

derives a benefit from the work performed by a miner”); see also id. (“It is the specific intention 

of this paragraph to disregard any financial arrangement or business entity devised by the actual 

owners or operators of a coal mine or coal mine-related enterprise to avoid the payment of 

benefits to miners who, based upon the economic reality of their relationship to this enterprise, 

are, in fact, employees of the enterprise.”).

Nevertheless, the ALJ denied Rice’s claim. According to the ALJ, Rice’s claim was a 

“subsequent claim” under the applicable regulations, meaning Rice had to demonstrate that “one 

of the applicable conditions of entitlement [to benefits] has changed since the date upon which 

the order denying the prior claim became final.” 20 C.F.R. § 725.309(c) (citations omitted). 

Because the denial of Rice’s 2002 claim was based solely on his failure to show that his 

pneumoconiosis was caused by coal mine employment, and because this “is not something that 

can change over time,” Rice could not show his eligibility under the BLBA. (App. at 92.)

Rice appealed this denial to the Benefits Review Board, and Bituminous cross-appealed 

the responsible operator designation. But the Board remanded the case to the ALJ, finding in 

part that Rice’s filing was not a “subsequent claim” but rather a request for modification based 

4

In 2007, while this claim was pending, KRCC was dissolved in bankruptcy.
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 6

on its proximity in time to another 2005 filing by Rice. (Id. at 76.) Following this remand, 

during a years-longer procedural morass, another ALJ revealed that Rice’s attorney had 

specifically told a DOL claims examiner years earlier, in ex parte phone calls, not to adjudicate 

that earlier filing as a modification request. This meant that the 2006 filing had correctly been 

construed as a subsequent claim. While the claims examiner recorded this information in 

“note[s] to file,” these notes were misfiled and so were not included in the record before the 

earlier ALJ or the Board. (Id. at 9–10 (alteration in original).) This new information then went 

back up to the Board and back down to the original ALJ, who in 2013 decided that his original 

decision had gotten it right: the 2006 filing was indeed a subsequent claim, and so was properly 

denied. The delay in revealing the ex parte discussion between the claims examiner and Rice’s 

counsel, and the additional proceedings that occurred as a result, is one of the things that 

Bituminous complains of today.

Later in 2013, Rice filed a request for modification, which worked its way back to an 

ALJ. After a hearing, and for the first time during the three decades of Rice’s BLBA 

proceedings, the ALJ found that Rice was eligible for benefits. Specifically, he found that the 

previous denials of Rice’s claim had been based on mistaken determinations of facts. Reviewing 

the record, the ALJ found that after including a period of off-the-books employment gathering 

“house coal” from smaller mines for in-home use, Rice had at least ten years of coal mine 

employment. (Id. at 30–31.) This was enough to trigger the presumption that Rice’s 

pneumoconiosis was caused by coal mine work. See 20 C.F.R. § 718.203(b).

Bituminous then appealed to the Benefits Review Board. There, Bituminous argued that 

(1) collateral estoppel precluded the designation of KRCC as the responsible operator, 

(2) Bituminous was entitled to rescind its insurance agreement with KRCC based on its 

allegations of fraud, (3) the late disclosure of the claims examiner’s ex parte communication with 

Rice’s counsel violated Bituminous’s right to due process, and (4) the ALJ erred in crediting 

Rice with at least ten years of coal mine employment and in weighing the medical evidence. The 

Board rejected all of Bituminous’s arguments and affirmed the ALJ’s decision, and later denied 

Bituminous’s petition for rehearing en banc. Bituminous then filed a petition for review in this 
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 7

Court, and now raises the first three arguments listed above that it presented to the Benefits 

Review Board.5

DISCUSSION

A. Standard of Review

On petitions for review from the Benefits Review Board, we review the Board’s legal 

conclusions de novo. Island Creek Coal Co. v. Young, 947 F.3d 399, 403 (6th Cir. 2020). We 

do, however, grant deference to the Board’s interpretations of both the BLBA and its own 

regulations. Ark. Coals, Inc. v. Lawson, 739 F.3d 309, 315 (6th Cir. 2014); Cumberland River 

Coal Co. v. Banks, 690 F.3d 477, 485 (6th Cir. 2012); see also Auer v. Robbins, 519 U.S. 452, 

461 (1997) (holding that agency interpretations of their own regulations are “controlling unless 

‘plainly erroneous or inconsistent with the regulation’” (quoting Robertson v. Methow Valley 

Citizens Council, 490 U.S. 332, 359 (1989))); Anderson Bros. Ford v. Valencia, 452 U.S. 205, 

219 (1981) (“[A]bsent some obvious repugnance to the statute, the Board’s regulation 

implementing this legislation should be accepted by the courts, as should the Board’s 

interpretation of its own regulation.”).

Findings of fact are reviewed under the deferential “substantial evidence” standard, 

meaning the ALJ’s findings of fact must be upheld if supported by “such relevant evidence as a 

reasonable mind might accept as adequate to support a conclusion.” Island Creek Coal Co. v. 

Bryan, 937 F.3d 738, 754–55 (6th Cir. 2019) (quoting Kolesar v. Youghiogheny & Ohio Coal 

Co., 760 F.2d 728, 729 (6th Cir. 1985) (per curiam)). On a petition for review, we conduct the 

5

In its opening brief, Bituminous included a section arguing that the ALJ erred in recalculating the length 

of Rice’s coal mine employment. But Bituminous also expressly said that its petition “does not challenge [Rice’s] 

entitlement to benefits.” (Pet’rs’ Br. at 2.) While difficult to square these two statements, Bituminous’s reply brief 

and statements at oral argument disclaimed any challenge to Rice’s eligibility, including the length of his coal mine 

work. In this Court, Rice filed a brief arguing that Bituminous had forfeited the length-of-employment argument by 

failing to raise it before the ALJ, and that in any event, the ALJ had correctly decided the issue. In its reply, 

Bituminous specifically referenced Rice’s arguments and said that “[n]either defense is necessary to the litigation of 

this claim since KRCC is not challenging Rice’s entitlement; the only issue on appeal is who should pay Rice’s 

benefits.” (Reply Br. at 17 n.6.) At oral argument, when asked about this issue, Bituminous repeated that it was not 

challenging Rice’s employment length, and said there was no reason for Rice to even have appeared in this appeal. 

Given this express disclaimer of any challenge to Rice’s eligibility for benefits, we consider the issue waived. See

United States v. Olano, 507 U.S. 725, 733 (1993) (noting that waiver occurs upon the “intentional relinquishment or 

abandonment of a known right” (quoting Johnson v. Zerbst, 304 U.S. 458, 464 (1938))).
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 8

same review as the Board to ensure that it correctly applied this standard to the ALJ’s findings 

below. See id. (“[This Court] must ensure that the Board applied the deferential ‘substantial 

evidence’ test to the administrative law judge’s fact findings.”).

B. Responsible Operator Designation

Instead of arguing the merits of KRCC’s designation as the responsible operator, 

Bituminous says that DOL gave up any chance to hold KRCC liable thirty years ago, when the 

Director chose not to challenge the ALJ’s determination that KRMS was Rice’s employer. To 

change its position now, Bituminous says, would cut against traditional principles of finality, 

which apply in black lung cases just as they would in other types of litigation. But even under 

these traditional principles of finality, Bituminous is wrong to say that DOL is stuck with this 

previous finding. This is because the ALJ went on to deny Rice’s original claim on the merits, 

regardless of who the responsible employer was. Only a finding that is necessary to the outcome 

of an earlier proceeding will result in issue preclusion, and so DOL was not estopped from 

claiming that KRCC was Rice’s true employer.

In Arkansas Coals, Inc. v. Lawson, this Court addressed the role of collateral estoppel in 

BLBA proceedings. In that case, the ALJ conducted a hearing and ultimately found that the 

claimant had failed to establish the existence of pneumoconiosis. 739 F.3d at 314. In the same 

decision, the ALJ discussed the question of whether Arkansas Coals was the responsible 

operator. Id. The ALJ noted that the Director failed to appear at the hearing and submitted no 

evidence on this issue. Id. at 314–15. And so, because Arkansas Coals submitted evidence that 

another mining company had more recently employed the claimant, the ALJ found that Arkansas 

Coals was not the responsible operator and that the Black Lung Disability Trust Fund would pay 

“should this claim be awarded” in the future. Id. at 315. Later, the claimant filed a subsequent 

claim, and the Director again named Arkansas Coals as the responsible operator. Id. Arkansas 

Coals sought review in this court, arguing—just like Bituminous—that the responsible operator 

designation “was blocked by principles of finality and collateral estoppel.” Id.

As we explained, “[c]ollateral estoppel, otherwise termed issue preclusion, bars 

‘successive litigation of an issue of fact or law actually litigated and resolved in a valid court 
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 9

determination essential to the prior judgment, even if the issue recurs in the context of a different 

claim.’” Id. at 320 (quoting Taylor v. Sturgell, 553 U.S. 880, 891 (2008)). “The doctrine has 

been applied to administrative decisions, particularly when an agency acts in a judicial capacity 

and issues a final determination.” Id.; see also Astoria Fed. Sav. & Loan Ass’n v. Solimino, 

501 U.S. 104, 107 (1991) (“We have long favored application of the common-law doctrines of 

collateral estoppel (as to issues) and res judicata (as to claims) to those determinations of 

administrative bodies that have attained finality.”); Pittston Coal Grp. v. Sebben, 488 U.S. 105, 

122–23 (1988) (applying res judicata to BLBA claims).

The Arkansas Coals court then went on to list the four traditional requirements for 

collateral estoppel:

(1) the precise issue must have been raised and actually litigated in the prior 

proceedings; (2) the determination of the issue must have been necessary to the 

outcome of the prior proceedings; (3) the prior proceedings must have resulted in 

a final judgment on the merits; and (4) the party against whom estoppel is sought 

must have had a full and fair opportunity to litigate the issue in the prior 

proceeding.

739 F.3d at 320–21 (quoting Ga.-Pac. Consumer Prods. LP v. Four-U-Packaging, Inc., 701 F.3d 

1093, 1098 (6th Cir. 2012)). Because identification of the responsible operator was not 

“necessary to the outcome of the proceeding” when the claimant was denied benefits on the 

merits, we held that collateral estoppel did not apply. Id. at 321.

This case is effectively identical. Just as in Arkansas Coals, the determination that 

KRMS was the responsible operator was not “necessary to the outcome of the prior 

proceedings,” id. (quoting Ga.-Pac. Consumer Prods., 701 F.3d at 1098), which similarly ended 

in the denial of Rice’s claim based on his ineligibility for benefits. Accordingly, the Director is 

not collaterally estopped from claiming that KRCC was Rice’s true employer and so can be held 

responsible for paying his BLBA benefits.6

6

In its reply brief, Bituminous points to Jonida Trucking, Inc. v. Hunt, 124 F.3d 739 (6th Cir. 1997), but 

that case proves the rule that Bituminous struggles against today. In Jonida, the ALJ ultimately awarded the 

claimant benefits, but Jonida nevertheless failed to appear or challenge its responsible-operator designation until it 

later moved for reconsideration. Id. at 741. When the ALJ awards benefits, the determination of which responsible 
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 10

Bituminous attempts to distinguish Arkansas Coals by pointing out that in that case, the 

claimant never filed an appeal of the original denial, whereas here, Rice appealed to the Board 

but the Director never cross-appealed. This argument conflates collateral estoppel with the lawof-the-case doctrine; collateral estoppel makes no distinction based on whether or not a party 

appeals. See Commodities Exp. Co. v. U.S. Customs Serv., 957 F.2d 223, 228 (6th Cir. 1992) 

(giving preclusive effect to an earlier decision even when an appeal was still pending); cf. FCA 

US, LLC v. Spitzer Autoworld Akron, LLC, 887 F.3d 278, 286–87 (6th Cir. 2018) (describing the 

law-of-the-case doctrine).7

Bituminous also tries to use DOL regulations to say that a different result is required 

here. But the regulation it points to says the opposite of what Bituminous claims. Specifically, 

the regulation provides that “[i]f the claimant demonstrates a change in one of the applicable 

conditions of entitlement, no findings made in connection with the prior claim, except those 

based on a party’s failure to contest an issue, will be binding on any party in the adjudication of 

the subsequent claim.” 20 C.F.R. § 725.309(c)(5) (citation omitted). If this plain text were not 

enough, Arkansas Coals again expressly forecloses Bituminous’s argument: “no findings, which 

would include the designation of a responsible operator, are binding” in proceedings on a 

subsequent claim. 739 F.3d at 318.

Arkansas Coals did nothing more than apply the traditional standards for collateral 

estoppel and finality, which is exactly what Bituminous asks for now. Because the ALJ’s 1989 

determination that KRMS was Rice’s employer was not necessary to the outcome of that 

proceeding, DOL was not precluded from finding otherwise today.

operator must pay them is obviously “necessary to the outcome of the proceeding”; indeed, Arkansas Coals

expressly distinguished Jonida on this basis. Ark. Coals, 739 F.3d at 321 (citing Jonida, 124 F.3d at 744).

7Bituminous has not raised a law-of-the-case argument on appeal, nor does it point to anywhere it did 

during the administrative proceedings in this case. Even if it had, the doctrine only applies to subsequent stages of 

the same proceeding. Musacchio v. United States, 136 S. Ct. 709, 716 (2016); FCA, 887 F.3d at 286–87. It thus 

seems doubtful that the doctrine would apply in this case, which involves a subsequent claim for benefits over ten 

years after the conclusion of Rice’s original BLBA proceedings.
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 11

C. Rescission of Insurance Policy

In addition to its estoppel argument, Bituminous also argues that it should be allowed to 

rescind its insurance agreement with KRCC and thereby avoid liability on Rice’s BLBA claim. 

Under Kentucky law, cancellation of an insurance policy prevents coverage only for events that 

occur after the cancelation. Progressive N. Ins. Co. v. Corder, 15 S.W.3d 381, 383 (Ky. 2000). 

But in certain cases—such as when the contract was obtained through fraud—a party can instead 

rescind the agreement and render it void from its inception. Id. According to Bituminous, the 

employee-leasing scheme between KRMS and KRCC was a fraudulent effort to avoid paying the 

appropriate premiums, and thus Bituminous was tricked into an insurance policy it otherwise 

would never have issued. Because of this, Bituminous says, it should be allowed to rescind the 

policy and treat it as though the agreement had never been made.

For several reasons, this argument fails. Both DOL regulations and Kentucky law 

prohibit the use of rescission to retroactively avoid liability under a BLBA or workers’ 

compensation policy, and even if this were not the case, Bituminous slept on its rights for 

decades and so cannot seek rescission now. The Benefits Review Board was correct to reject 

Bituminous’s claim for rescission.

First, DOL regulations preclude rescission of an insurance policy providing BLBA 

coverage; only prospective cancellation is permitted. In order to issue insurance that satisfies the 

BLBA’s mandatory coverage requirement, insurers agree to be bound “to full liability for the 

obligations under the Act of the operator.” 20 C.F.R. § 726.210; see also 30 U.S.C. § 933(b)(3) 

(empowering the Secretary of Labor to regulate the contents of BLBA insurance policies). DOL 

regulations also provide that the BLBA endorsement added to such workers’ compensation 

policies must “be construed to bring any policy or contract of insurance [for BLBA liability] into 

conformity with the legal requirements placed upon such operator by [DOL regulations and the 

BLBA].” 20 C.F.R. § 726.203(c)(6). And one of these legal requirements is that insurers must 

give DOL thirty days’ advance notice before canceling a policy, which in turn relieves the 

insurer from paying claims that arise after that cancellation. 33 U.S.C. § 936; 20 C.F.R. 

§ 726.212.
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 12

Under DOL’s interpretation of these regulations, insurers agree to cover the full amount 

of any BLBA liability assessed to the insured operator, regardless of whether the operator 

reported the correct number of employees to the insurer. See Ark. Coals, 739 F.3d at 313 (noting 

that DOL’s regulations were intended “to ensure that coal mine operators are liable ‘to the 

maximum extent feasible’ for awarded claims” (quoting Dir., Off. of Workers’ Comp. Programs 

v. Oglebay Norton Co., 877 F.2d 1300, 1304 (6th Cir. 1989))). And so, while with proper notice, 

Bituminous could have canceled its policy on a forward-looking basis (thus requiring KRCC to 

find other insurance in order to comply with the law), it cannot retroactively rescind the policy 

and leave the Trust Fund to pay the bill.

At least one other circuit has largely agreed with DOL’s interpretation. In Lovilia Coal 

Co. v. Williams, 143 F.3d 317, 319–22 (7th Cir. 1998), Bituminous argued that it should not have 

to pay a BLBA claim brought by the owner of the mine who opted out of workers’ compensation 

coverage and thus was excluded from Bituminous’s premium calculation. Looking to the text of 

the BLBA and DOL’s regulations, the court noted that “[t]he BLBA and its regulations require 

that every coal operator’s contract of insurance contain provisions agreeing to cover fully all of 

the coal operator’s liabilities under the BLBA,” regardless of whether premiums were collected 

for a given employee. Id. at 322. Finding that it was Bituminous’s responsibility to ensure that 

the premiums charged reflected the operator’s full risk under the BLBA, the Seventh Circuit 

upheld the Board’s award of benefits. Id. at 324.

Setting aside Lovilia, even if Bituminous’s reading were the better one, this Court will 

“defer to an agency’s interpretation of its own regulation . . . unless that interpretation is plainly 

erroneous or inconsistent with the regulation.” Ark. Coals, 739 F.3d at 315 (quoting Cumberland 

River, 690 F.3d at 485); accord, e.g., Chase Bank USA, N.A. v. McCoy, 562 U.S. 195, 208 

(2011). Because DOL’s reading follows the text of its regulations and fits within the BLBA’s 

statutory scheme, Bituminous is barred from rescinding its policy and thereby avoiding liability 

for Rice’s benefits.

Second, even if DOL’s regulations did not themselves preclude rescission, this Court has 

already held that Kentucky law would instead. See United States v. Simpson, 538 F.3d 459, 466 

(6th Cir. 2008) (“Under our reading of Kentucky insurance law, however, it appears that the 
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 13

insurance companies would have to pay on claims submitted by employees of Simpson who 

were injured on the job even if Simpson had fraudulently misrepresented the number of 

employees covered.”). This is because Bituminous’s insurance contract is a workers’ 

compensation policy, intended to benefit third-party employees like Rice under Kentucky’s 

statutory scheme. Allowing Bituminous to rescind the policy and avoid liability for past events 

would instead force the Black Lung Disability Trust Fund to pay the claim, pushing this cost 

onto taxpayers and eliminating the main incentive for Bituminous to police its own customers.

While Kentucky’s courts do not seem to have yet addressed rescission of workers’ 

compensation agreements, they have prohibited rescission in automotive insurance cases based 

on these same public-policy concerns. In Progressive Northern Insurance Co. v. Corder, 

Kentucky’s high court considered whether an insurer can rescind a motorcycle insurance policy 

and thereby avoid liability to a third-party claimant. The motorcycle at issue was owned and 

insured in the name of the driver’s father. 15 S.W.3d at 382. Progressive claimed this was a 

fraud because the policy-holder’s son was the primary operator of the motorcycle; in fact, the 

father did not even have a motorcycle license. Id. When an unrelated passenger sued to recover 

for her injuries in the accident, Progressive filed a declaratory judgment action to rescind the 

policy, and we requested certification from the Kentucky Supreme Court. Id. at 382–83. The

state supreme court rejected Progressive’s claim, holding that Kentucky Revised Statutes section 

304.14-110—the same section that Bituminous relies on to rescind KRCC’s policy here—cannot 

be used “to defeat recovery to an innocent, injured third party.” Id. at 383.

The Corder court rooted its decision in the public policy behind Kentucky’s mandatory 

insurance regime, saying that to permit rescission after a claim “would strike at the heart of 

compulsory liability insurance and would operate as the functional equivalent of a contractual 

exclusion from minimum liability coverage.” Id. at 383–84.

The result urged by Progressive would likewise defeat minimum coverage, with 

the consequence that an innocent, injured third party would bear the burden of 

intentional misrepresentations by the insured. It would shift the loss to one who 

was entitled to rely on obedience to the law and one who was without any means 

of determining whether a policy had been fraudulently procured. As between the 

injured third party and the insurer, the latter is in the far superior position to 

protect itself. The insurer may accept or reject policy applicants and it possesses 
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 14

the skill and wherewithal to make sound underwriting decisions. Therefore, 

Progressive may not rescind the contract to avoid liability to Corder.

Id. at 384 (footnote omitted); see also Nat’l Ins. Ass’n v. Peach, 926 S.W.2d 859, 861–62 (Ky. 

Ct. App. 1996) (further discussing this public policy issue). The same concerns apply to 

workers’ compensation policies like the one issued by Bituminous. See Simpson, 538 F.3d at 

466–69 (concluding that Kentucky courts would likely bar rescission of workers’ compensation 

policies based in part on Kentucky automotive cases); see also, e.g., Cruz v. New Millennium 

Constr. & Restoration Corp., 793 N.Y.S.2d 548, 550–51 (App. Div. 2005) (same for New York); 

State Ins. Fund v. Brooks, 755 P.2d 653, 657 (Okla. 1988) (same for Oklahoma); cf. In re 

Cummings, 754 N.E.2d 715, 719 (Mass. App. Ct. 2001) (barring rescission based on a 

cancellation-notice requirement similar to DOL’s).

Bituminous argues that these public policy concerns do not apply because the Black Lung 

Disability Trust Fund will cover the cost of Rice’s benefits, meaning no innocent third party will 

be left holding the bag. But Kentucky also has a state fund to cover lapses in workers’ 

compensation coverage, and yet this Court still held that rescission was unavailable, expressly 

rejecting an identical argument to Bituminous’s. Simpson, 538 F.3d at 466–67. Thus, even if 

Kentucky common law alone determined the availability of rescission in this case, Bituminous 

would still be out of luck.

Finally, even if rescission somehow were an option, Bituminous lost any claim to that 

remedy when it slept on its rights for decades and failed to take any action against KRCC. 

Under Kentucky law, a party seeking to rescind its contract must promptly act after discovering 

the fraud or else loses its right to that remedy. See, e.g., Cent. Life Ins. Co. v. Taylor, 176 S.W. 

373, 374 (Ky. 1915). Bituminous argues that it met this requirement by requesting rescission in 

Rice’s 2002 BLBA proceedings, since only during KRCC’s bankruptcy did it discover facts 

showing the whole of the companies’ alleged fraud.

The record shows that the opposite is true. Bituminous was already aware of the core 

facts for its rescission claim during Rice’s 1983 claim for benefits. In that proceeding, the record 

established that Rice was employed on paper by KRMS but worked in KRCC’s mine. If such an 
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 15

arrangement constitutes fraud (as Bituminous claims here), then Bituminous had the facts 

necessary to rescind the insurance policy decades before its first effort to do so.

Indeed, the record contains a September 1985 internal memorandum from a Bituminous 

employee that raises precisely this issue. The memorandum noted that the employee-leasing 

arrangement between KRMS and KRCC “seemed to be a sham by these two involved companies 

to avoid paying the proper premium.” (App. at 209.) Not only did Bituminous have enough 

information to draw the inference that KRCC’s conduct constituted fraud, it in fact did draw that 

inference. The only difference is that in 1989, DOL found that KRMS was the responsible 

operator and left Bituminous off the hook, but today, that liability falls to KRCC and 

Bituminous, prompting the latter’s belated claim for rescission.8

Bituminous betrays its timeliness arguments in its own brief, noting that “it was not until 

DOL awarded benefits in Rice’s claim that Bituminous had any financial incentive to request 

rescission.” (Pet’rs’ Br. at 30.) The requirement that an insurer promptly act to rescind a 

fraudulent contract—regardless of its immediate financial incentives to do so—is precisely 

intended to prevent such gamesmanship: an insurer cannot continue to accept premiums on a 

fraudulently obtained policy in the hopes that no claim will be made, and then void that policy as 

soon as a claim is filed and its previous choice becomes unprofitable. Because Bituminous 

waited decades to initiate any claim of rescission, it has forfeited any right to that remedy and 

must cover the cost of Rice’s benefits.

D. Due Process Claim

Unable to lean on issue preclusion or rescission, Bituminous last argues that the 

administrative proceedings before DOL violated its right to due process, and so it should be 

excused from paying Rice’s benefits. Specifically, Bituminous says that after the DOL claims 

8Furthermore, although only dissolved in 2007, KRCC first filed for bankruptcy in 1990. While 

Bituminous claims “[i]t was not until KRCC filed for bankruptcy that the extent of the fraudulent scheme became 

clear,” even accepting this as true, that means Bituminous might have known “the extent of the fraudulent scheme” 

for over a decade before Rice’s 2002 BLBA claim. (Pet’rs’ Br. at 30.) Bituminous points to nothing in the record 

showing when within that nearly twenty-year period it learned of the facts necessary to demonstrate KRCC’s alleged 

fraud. Bituminous thus cannot show its entitlement to rescission under Kentucky law, and certainly cannot 

demonstrate the Board’s error in rejecting its argument on this basis below.
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 16

examiner spoke with Rice’s counsel by phone—an ex parte communication that Bituminous says 

violates the Administrative Procedure Act—DOL failed to include notes of those phone calls in 

the record. Because this failure led to an unnecessary remand by the Benefits Review Board, and 

thus delayed the resolution of Rice’s BLBA claim, Bituminous says it was prejudiced to such a 

degree that the proceedings failed to provide the due process required by the Constitution.

The Due Process Clause of the Fifth Amendment applies to administrative proceedings 

just as it does to other instances of government action. Richardson v. Perales, 402 U.S. 389, 401 

(1971). Under the procedural element of that clause, a party must be afforded adequate notice 

and a fair opportunity to be heard before being deprived of its property, in this case the benefits 

money owed to Rice. Arch of Ky., Inc. v. Dir., Off. of Workers’ Comp. Programs, 556 F.3d 472, 

478 (6th Cir. 2009); see also 5 U.S.C. § 554 (establishing procedures for notice and hearings). 

Under this standard, delays or irregularities can rise to such a level as to undermine the fairness 

of a proceeding, which in turn would amount to a due process violation. See, e.g., Island Creek 

Coal Co. v. Holdman, 202 F.3d 873, 883–84 (6th Cir. 2000) (finding a due process violation 

based on the agency’s loss of evidence). But even after such a procedural failure, a party must 

show that it was prejudiced in order to succeed on a due process claim. See, e.g., id. (analyzing 

prejudice with respect to the operator’s due process claim); Peabody Coal Co. v. Holskey, 

888 F.2d 440, 443 (6th Cir. 1989) (rejecting a delay-based due process claim for failure to show 

prejudice).

Bituminous’s prejudice argument appears to be this: Because the DOL claims examiner 

failed to include notes of the phone calls with Rice’s counsel in the record, the Benefits Review 

Board mistakenly determined that Rice’s 2006 filing was a request for modification rather than a 

subsequent claim, and so it erroneously remanded the case to the ALJ. And if the Board had not 

remanded the case, Bituminous theorizes that the Board might instead have affirmed the ALJ’s 

decision. Rather than that, after the remand, Rice got another “bite of the apple” and was able to 

prove his entitlement to benefits, meaning the proceedings that led to this remand 

unconstitutionally prejudiced Bituminous. (Pet’rs’ Br. at 32.) Bituminous adds that, at the very 

least, an affirmance by the Board would have forced Rice to file a subsequent claim instead of 
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 17

continuing to litigate his 2006 claim, which in turn would have resulted in a later onset date for 

benefits.

But this leaves out a key part of the timeline. The ALJ decision that ultimately awarded 

benefits did not come during proceedings on Rice’s 2006 filing alone (i.e., the one that the Board 

remanded). Rather, in 2013, Rice filed a request for modification, which was the filing that 

ultimately yielded the order granting him benefits. Nothing with respect to the proceedings on 

the 2006 filing before the Board and after the subsequent remand impacted Rice’s ability to file 

his request for modification, and it was that action—not the remand—that gave Rice his 

additional bite at the apple. Even had the Board affirmed the ALJ’s decision (itself a rather 

speculative proposition, given that the Board later affirmed an order finding that the original 

ALJ’s decision was legally erroneous), Rice would still have been able to file his request for 

modification, thus defeating Bituminous’s onset-date argument as well. Accordingly, 

Bituminous cannot show how DOL’s failure to include the call notes in the record resulted in any 

prejudice.

Bituminous also argues that the delay in proceedings caused by the failure to include the 

claims examiner’s call notes compromised its defense by preventing Bituminous from gathering 

contrary evidence as to Rice’s work history. But Bituminous knew that Rice’s years of coal 

mine employment were at issue at least as far back as 2006, when Rice submitted his third claim 

for benefits. (See App. at 48 (noting that Rice’s 2006 application for benefits claimed “ten years 

of coal mine employment,” and that during the later modification proceedings, Bituminous “[did] 

not dispute this in argument at hearing or in the brief”).)

Tellingly, Bituminous points to no argument or piece of evidence that was available to it 

during the 2006 proceedings but that was lost before the 2013 proceedings—a task that would be 

a challenge given that the record from the 2006 filing was equally a part of the 2013 

modification proceedings. (See id. at 27 (describing the procedures for modification, including a 

review of the “entire record” of the claim that the party is seeking to modify, which includes all 

“previously submitted evidence”).) And while Bituminous does not need to show precisely what 

the missing evidence would have proven or that it necessarily would have changed the outcome 

of this case, it still needs to show—at minimum—that some evidence actually became 
No. 19-3836 Karst Robbins Coal Co., et al. v. OWCP, et al. Page 18

unavailable. See Holdman, 202 F.3d at 883–84 (finding prejudice based on lost exhibits that 

concerned the issues in dispute); see also Consolidation Coal Co. v. Borda, 171 F.3d 175, 178–

79, 182–84 (4th Cir. 1999) (finding prejudice based on a substantial delay that resulted in a loss 

of a defense); Lane Hollow Coal Co. v. Dir., Off. of Workers’ Comp. Programs, 137 F.3d 799, 

802, 807 (4th Cir. 1998) (finding prejudice from delay when the claimant died during the 

pendency of his claim, preventing the operator from developing contrary evidence). Whatever 

need Bituminous had to marshal evidence in support of its defense, it was aware of that need 

back in 2006, well before the claims examiner’s ex parte phone calls came to light. None of the 

subsequent proceedings on Rice’s claim for benefits changed this calculus, and so Bituminous 

has failed to show that it suffered any prejudice as a result of DOL’s omission.

CONCLUSION

For the reasons stated above, we deny Bituminous’s petition for review.