Opinion ID: 754166
Heading Depth: 2
Heading Rank: 1

Heading: Construction of the Insurance Contract

Text: 13 We initially consider whether the insurance policy obligates the petitioners to provide benefits for Williams's entitlements under the BLBA. The petitioners contend that the BLBA does not require an insurer to pay benefits to a mine owner who has opted not to purchase workmen's compensation insurance for himself, and has thus not paid any premiums, but has paid the necessary premiums for his employees. 6 We disagree. The 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. The insurance contract between Bituminous and Lovilia is in conformity with these requirements, and specifically provides coverage for all compensation and other benefits required of Lovilia under the BLBA. Furthermore, the petitioners do not dispute that Williams is entitled to black lung benefits; they only contend that the Trust Fund, and not Bituminous, should be responsible for providing those benefits. However, the law specifically requires Bituminous to pay benefits to all insured miners, regardless of whether or not insurance premiums have been paid. As discussed above, § 933 of the BLBA requires coal operators to insure payments of benefits. [E]ach such operator shall be liable for and shall secure the payment of benefits, as provided in this section and § 933 of this title. 30 U.S.C. § 932(b). According to section 933, each operator of a coal mine ... shall secure the payment of benefits for which he is liable under § 932 of this title by (1) qualifying as a self-insurer ..., or (2) insuring and keeping insured the payment of such benefits.... Id. at § 933(a). Insurance providers implicitly agree to pay all benefits required under the BLBA; that is, benefits must be paid to eligible miners and their survivors. See id. at §§ 933(b)(1), 922(a). 14 When creating this insurance scheme, the Labor Secretary determined that drafting an insurance policy tailored to the BLBA might result in unnecessary administrative delays and expense.... 20 C.F.R. § 726.203(c). Thus, in providing BLBA insurance, the Secretary allowed operators and insurers to use standard workmen's compensation policies, subject to an endorsement that provides that the term  'workmen's compensation law' includes Part C of Title IV of the Federal Coal Mine Health and Safety Act of 1969, 30 U.S.C. § 931-936, and any law amendatory thereto, or supplementary thereto, which may be or become effective while this policy is in force.... Id. at § 726.203(a). Therefore, insurers may use existing workmen's compensation policies to insure BLBA benefits so long as they include an endorsement explicitly incorporating the provisions of the BLBA, as did Bituminous's policy with Lovilia in this case. 15 Furthermore, insurers are held to be as responsible as coal mine operators in assuring that black lung benefits policies conform to federal law. See id. at § 726.207. Each carrier shall report to the Office [of Workers' Compensation Programs] each policy and endorsement issued, cancelled, or renewed by it to an operator. Id. at § 726.208. Most important, the regulations also provide: 16 Every carrier seeking to write insurance under the provisions of [the BLBA] shall be deemed to have agreed that the acceptance by the Office of a report of the issuance or renewal of a policy of insurance, as provided for by § 726.208 shall bind the carrier to full liability for the obligations under this Act of the operator named in said report. It shall be no defense to this agreement that the carrier failed or delayed to issue, cancel or renew the policy to the operator covered by this report. 17 Id. at § 726.210 (emphasis added). Several courts have interpreted the meaning of the language of section 726.210, and have held that such language obligates insurers to assume a coal mine operator's entire liability; insurers are not permitted to provide partial liability, even at the request of the coal mine operator. In Tazco, Inc. v. Director, Office of Workers Compensation Programs, the Fourth Circuit held: 18 The regulations properly identify the insurance carrier as a party in interest for the simple reason that the carrier takes on all the employer's responsibilities in connection with insured claims. Once the carrier has reported the issuance of the policy, as mandated by the regulations, the insurer is fully liable for the obligations of the operator. See 20 C.F.R. §§ 726.208-10. The carrier is required to discharge the statutory and regulatory duties imposed on the employer, thus stepping into its shoes. 19 895 F.2d 949, 951 (4th Cir.1990) (footnote omitted) (emphasis added). In National Mines Corp. v. Carroll, 64 F.3d 135, 140 (3d Cir.1995), the Third Circuit, recognizing the court's reasoning in Tazco, which provides that insurers are liable for all BLBA liability, held that the [BLBA] and regulations do not contemplate limiting the carrier's exposure to indemnifying an operator found liable for payments of benefits. (footnote and citation omitted). 20 The petitioners erroneously attempt to refute this line of reasoning by relying on the TenthCircuit's decision in Clayton Coal Co. v. Liberty Mutual Ins. Co., 594 F.2d 1378 (10th Cir.1979). In Clayton, the Tenth Circuit held that insurer Liberty Mutual was not liable for the payment of black lung insurance benefits pursuant to a policy created between the insurer and the coal operator. See id. at 1382. However, the court's reasoning was based on the fact that the endorsement required under 20 C.F.R. § 726.203(a) specifically relieves insurance companies from paying benefits on claims filed before the effective date of the policy. See id. No ex post facto issue exists in the case under consideration. We hold that the very structure of the BLBA effectively requires that an insurance carrier provide benefits for all of a coal mine operator's black lung liability, and that the insurance carrier bears the burden of collecting proper premiums for all covered miners. Thus, the petitioners are liable for the respondent's benefits even though Williams did not pay premiums for himself. 21 On the contrary, the ALJ found that the insurance policy failed to provide coverage because Williams was a partner in Lovilia Coal. According to the policy, [i]f the insured is a partnership ..., such insurance as is afforded by this policy applies to each partner ... thereof as an insured only while he is acting within the scope of his duties as such partner. However, the policy also provided that [t]erms of this policy which are in conflict with the provisions of the workmen's compensation law are hereby amended to conform to such law. (emphasis added). As discussed earlier, the FCMHSA endorsement amends the definition of workmen's compensation law as used in the contract to include benefits required under the BLBA. The BLBA compensates miners, defined as any individual who works or has worked in or around a coal mine or coal preparation facility in the extraction or preparation of coal. 30 U.S.C. § 902(d). This definition treats coal-mining-employees and coal-mining-partners alike. The petitioners acknowledge that Williams was a miner eligible for BLBA benefits, and to the extent that the policy excludes a miner from coverage, it conflicts with the BLBA. Therefore, the ALJ's ruling was in error. 22 Finally, the petitioners contend that they should not be held liable for the benefits because Bituminous did not charge premiums that accurately reflected the coverage of the policy sold. However, were we to accept this circular argument, we would in essence be freeing insurers of liability in any circumstance where an insurer contends that the premium charged did not accurately reflect the coverage of the policy sold. Lovilia sought insurance in order to discharge its duty to secure BLBA benefits, as required by 30 U.S.C. § 933(a). Bituminous sold Lovilia a policy that did just that because it contained the FCMHSA endorsement. By including the endorsement, Bituminous redefined the liability it assumed under the contract to include liability for benefits imposed on Lovilia by the BLBA. Under the Act, Lovilia bears liability for benefits owed its miners (and surviving spouses), and Williams was a miner within the terms of section 902(d). Whether Bituminous charged an appropriate premium is not relevant to whether the BLBA imposed liability on Lovilia. 23