Court Opinion

ID: 2968172
Source: CourtListenerOpinion
Date Created: 2015-09-22 04:22:58.884687+00
Date Added: 2024-06-11T15:28:28.533694
License: Public Domain

Filed:   July 21, 2005

                 UNITED STATES COURT OF APPEALS
                     FOR THE FOURTH CIRCUIT

                           No.   02-1088

BOYD AND STEVENSON COAL COMPANY; OLD REPUBLIC
INSURANCE COMPANY,
                                                       Petitioners,

     versus

DIRECTOR, OFFICE OF WORKERS’ COMPENSATION
PROGRAMS, UNITED STATES DEPARTMENT OF LABOR;
IRENE SLONE,
                                                       Respondents.

                            O R D E R

     The Director has moved that we correct the last two sentences

in the first full paragraph of Part IV of our slip opinion,

appearing on pages 10 and 11 thereof.

     We have considered the motion and the responses of the parties

and correct the last two sentences of the said paragraph to read:

          Accordingly, the only forms Mrs. Slone was required
     to file to receive her widow’s benefits were those
     required under 20 C.F.R. §§ 725.304 and 725.305. There
     is no time limit on the filing of those forms. 20 C.F.R.
     § 725.308(a). Mrs. Slone filed her claim in April, 1999,
     and, there being no time limit on the filing of her
     claim, it was timely filed.
                          -2-

With the concurrences of Judge Wilkinson and Judge Niemeyer.

                         /s/ H. E. Widener, Jr.

                                For the Court
                          PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

BOYD AND STEVENSON COAL               
COMPANY; OLD REPUBLIC INSURANCE
COMPANY,
                       Petitioners,
                v.
                                               No. 02-1088
DIRECTOR, OFFICE OF WORKERS’
COMPENSATION PROGRAMS, UNITED
STATES DEPARTMENT OF LABOR; IRENE
SLONE,
                      Respondents.
                                      
               On Petition for Review of an Order
                 of the Benefits Review Board.
                             (01-202)

                     Argued: January 21, 2003

                      Decided: May 13, 2005

Before WIDENER, WILKINSON, and NIEMEYER, Circuit Judges.

Vacated and remanded with instructions by published opinion. Judge
Widener wrote the opinion, in which Judge Wilkinson and Judge Nie-
meyer concurred.

                           COUNSEL

ARGUED: Mark Elliott Solomons, GREENBERG TRAURIG,
L.L.P., Washington, D.C., for Petitioners. Mark S. Flynn, Senior
2          BOYD AND STEVENSON COAL v. DIRECTOR, OWCP
Appellate Attorney, UNITED STATES DEPARTMENT OF
LABOR, Washington, D.C., for Respondents. ON BRIEF: Laura
Metcoff Klaus, GREENBERG TRAURIG, L.L.P., Washington, D.C.,
for Petitioners. Eugene Scalia, Solicitor of Labor, Allen H. Feldman,
Associate Solicitor for Special Appellate and Supreme Court Litiga-
tion, Nathaniel I. Spiller, Deputy Associate Solicitor, UNITED
STATES DEPARTMENT OF LABOR, Washington, D.C., for
Respondent Director; Joseph E. Wolfe, W. Andrew Delph, Jr.,
WOLFE, WILLIAMS & RUTHERFORD, Norton, Virginia, for
Respondent Slone.

                             OPINION

WIDENER, Circuit Judge:

   Defendants, Boyd & Stevenson Coal Company (Boyd & Steven-
son) and Old Republic Insurance Company (Old Republic), seek
relief from an order of the Department of Labor’s (DOL) Benefits
Review Board holding defendants responsible for the payment of sur-
vivor benefits to a miner’s widow, claimant Mrs. Irene Slone, under
the Black Lung Benefits Act, 30 U.S.C. §§ 901-945. The parties agree
that Mrs. Slone is entitled to survivor benefits. The issue on appeal
is whether Boyd & Stevenson and its insurer, Old Republic, are
responsible for payment of these benefits. Finding that the decision
of the Benefits Review Board is contrary to law, we reverse.

                                 I.

   Ezra Slone, claimant’s deceased husband, worked as a coal miner
for Boyd & Stevenson from 1970 to 1974. Old Republic insured Boyd
& Stevenson’s black lung claims. After leaving Boyd & Stevenson,
Slone worked as a coal miner for Viking Mining Corporation
(Viking) from 1974 to 1988. Viking’s insurer for black lung benefit
claims was Rockwood Insurance Company (Rockwood).

  Ezra Slone filed a claim for black lung benefits in 1989, and on
February 14, 1990, an ALJ issued a decision awarding Ezra Slone
benefits. Viking, as Slone’s most recent coal mining employer, was
            BOYD AND STEVENSON COAL v. DIRECTOR, OWCP                     3
designated as the responsible operator along with its insurer, Rock-
wood. However, previously, on June 1, 1989, Viking had been "auto-
matically terminated" as a corporation for failing to file annual reports
with the Commonwealth of Virginia. Nevertheless, Viking’s insurer,
Rockwood, remained in existence. Rockwood, therefore, assumed
responsibility for covering Viking employees’ black lung claims and
began making benefit payments to Ezra Slone.

   On August 26, 1991, a Pennsylvania court declared Rockwood
insolvent, dissolved its corporate existence, and directed the insurance
commissioner of Pennsylvania to liquidate Rockwood. Notice was
given requiring all claims against Rockwood to be filed with the liqui-
dator by August 26, 1992. Following Rockwood’s insolvency and
pursuant to Virginia Code Annotated sections 38.2-1600 and 38.2-
1606, the Virginia Property and Casualty Insurance Guarantee Asso-
ciation (VPCIGA) assumed responsibility for insurance claims
against the now insolvent Rockwood and took up payment of Ezra
Slone’s black lung benefits until his death on March 25, 1999.

   After Ezra Slone’s death, his widow and only dependent under the
Black Lung Act, Mrs. Irene Slone, filed a claim in April 1999 for sur-
vivor benefits. The Office of Workers’ Compensation Programs
(OWCP) approved the award of benefits to Mrs. Slone and initially
designated Viking as the potentially responsible operator on the
claim. After discovering Viking’s termination as a corporation and
Rockwood’s insolvency, the Director turned to VPCIGA for payment
of benefits. Pursuant to a letter dated June 29, 1999, VPCIGA denied
that it was responsible for payment of Mrs. Slone’s survivor benefits
because "[a]ll claims [against Rockwood] must have been filed by
August 26, 1992."

   The Director accepted VPCIGA’s argument and designated the
next most recent employer, Boyd & Stevenson, as the operator
responsible for payment of Mrs. Slone’s benefits. Boyd & Stevenson
and Old Republic contested liability and the case was transferred to
the Office of Administrative Law Judges for hearing.1
  1
    Mrs. Slone’s entitlement to benefits is not at issue in this case. While
Boyd & Stevenson initially opposed Mrs. Slone’s entitlement to benefits,
by a letter dated May 5, 2000, and during the ALJ hearing held on May
12, 2000, Boyd & Stevenson conceded that Mrs. Slone was entitled to
survivor benefits.
4          BOYD AND STEVENSON COAL v. DIRECTOR, OWCP
   After a hearing and pursuant to a written order issued September
29, 2000, the ALJ awarded Mrs. Slone benefits and designated Boyd
& Stevenson as the responsible operator pursuant to 20 C.F.R.
§ 725.492(a)(4) (1999). The ALJ determined that because the evi-
dence showed that Viking had been dissolved more than eleven years
prior to the hearing and Rockwood had been liquidated in 1991,
Viking and Rockwood were not currently "capable of assuming [ ]
liability for the payment of continuing benefits," and therefore Viking
did not meet the definition of responsible operator under 20 C.F.R.
§ 725.492(a)(4) (1999). The ALJ also concluded that because
Viking’s officers had complied with regulations requiring them to
obtain and keep insurance while the company was in operation, the
officers were not liable individually for payment of benefits. See 20
C.F.R. §§ 725.492(a)(4), 725.495(a) (1999). The ALJ accepted, with-
out discussion, the Director’s position that VPCIGA’s August 26,
1992, deadline applied to Mrs. Slone’s claim for survivor benefits.

   On appeal, the Benefits Review Board affirmed the decision of the
ALJ. With respect to defendants’ contention that VPCIGA was
responsible for the payment of Mrs. Slone’s benefits, the Board con-
cluded that VPCIGA "is a statutorily established method of providing
prompt payment of covered claims that result from the insolvency of
an insurer" and because Mrs. Slone’s claim was filed after August 26,
1992, VPCIGA "was not legally obligated by the BLBA or state stat-
ute to provide insurance coverage to the claimant based on her 1999
survivor’s claim."

   On January 18, 2002, Boyd & Stevenson and Old Republic filed
with this court a petition for review of the Benefits Review Board’s
final decision affirming the ALJ’s order.

                                  II.

   On review, Boyd and Stevenson and its insurer, Old Republic,
advance two arguments for why the decision of the Benefits Review
Board was in error. First, they maintain that federal law requires all
insurers and reinsurers to assume full liability for black lung benefits
claim payments, and therefore that the BLBA preempts contrary state
laws which limit reinsurers’ liability through under-inclusive filing
deadlines. Second, defendants argue that even if Rockwood and
           BOYD AND STEVENSON COAL v. DIRECTOR, OWCP                 5
VPCIGA are not responsible for payment of Mrs. Slone’s claim, the
Director, in accordance with Dir., Office of Workers’ Compensation
Programs v. Trace Fork Coal Co., 67 F.3d 503, 507 (4th Cir. 1995),
failed to investigate whether Viking, through an undiscovered succes-
sor or through Viking’s former officers in their individual capacity,
had the ability to pay survivor benefits. And Mrs. Slone raises another
point addressed in her briefs: Whether Virginia law allows VPCIGA
to deny benefit payments to Mrs. Slone based on VPCIGA’s position
that her claim was not timely filed and whether Mrs. Slone’s claim
is separate and distinct from her husband’s original claim.

   In reviewing a decision of the Benefits Review Board, our review
is governed by the same standard the Board applies when reviewing
an ALJ’s decision. Walker v. Dir., Office of Workers’ Compensation
Programs, 927 F.2d 181, 183 (4th Cir. 1991). Factual determination
will be upheld if the record contains "substantial evidence" supporting
the ALJ’s decision. Walker, 927 F.2d at 183. We review conclusions
of law de novo. Walker, 927 F.2d at 183.

   We need not, and do not, determine whether federal law preempts
Virginia law; or whether the Director failed to properly investigate
whether Viking had the ability to pay Mrs. Slone’s survivor’s claim
through a successor or its corporate officers; or even whether Old
Republic is the responsible operator under the Black Lung Act.
Rather, our review of the applicable contract provisions and principles
of insurance law leads us to conclude that VPCIGA is obligated by
Virginia law to pay Mrs. Slone’s survivor’s claim.

                                 III.

   The Virginia General Assembly created VPCIGA to "provide
prompt payment of covered claims to reduce financial loss to claim-
ants or policyholders resulting from the insolvency of an insurer." Va.
Code Ann. § 38.2-1600. The General Assembly directs that the provi-
sions governing VPCIGA shall be "liberally construed to effect the
purpose under § 38.2-1600." Va. Code Ann. § 38.2-1602. VPCIGA is
obligated to pay a "covered claim" for policies issued by an insolvent
insurer. Va. Code Ann. § 38.2-1606(A)(1). A "covered claim" is
defined as
6          BOYD AND STEVENSON COAL v. DIRECTOR, OWCP
    an unpaid claim, including one for unearned premiums, sub-
    mitted by a claimant, which arises out of and is within the
    coverage and is subject to the applicable limits of a policy
    covered by this chapter and issued by an insurer who has
    been declared to be an insolvent insurer.

Va. Code Ann. § 38.2-1603.

  While plaintiff’s claim for survivor benefits clearly falls within this
definition, VPCIGA seeks to limit its liability through statutory lan-
guage stating:

    a covered claim shall not include any claim filed with the
    Guaranty Association after the final date set by the court for
    the filing of claims against the liquidator or receiver of an
    insolvent insurer.

Va. Code Ann. § 38.2-1606-A.1.b.

  The statutory notice sent by the liquidator to persons insured fol-
lowing Rockwood’s insolvency states as follows:

    Filing of Claims:

    If you are a claimant of Rockwood and are currently receiv-
    ing workers compensation benefits, you need not file a proof
    of claim form with the liquidator. All known claims will be
    forwarded directly to the proper association for handling.
    Please note that the association may require you to complete
    certain forms in order to continue your benefits. Any sub-
    missions for new claims should be presented to the statutory
    liquidator.

(emphasis in original). The notice continues on the next page stating:

    Filing of Claims:

    If you are an insured or claimant, and you wish to file a
    claim for monies owed to you by Rockwood, you must file
           BOYD AND STEVENSON COAL v. DIRECTOR, OWCP                   7
    a Proof of Claim form with the Statutory Liquidator not later
    than 8/26/92. If you fail to file a proof of claim by this date,
    your claim may not be considered as a valid claim against
    the Estate. A proof of claim is enclosed.

    Instructions for the completion of this form are attached to
    the Proof of Claim.

   The DOL maintains that Mrs. Slone’s claim for survivor benefits
is a separate and distinct claim from her husband’s original claim, and
therefore because she did not file a claim for survivor benefits until
April 1999, her claim was filed "after the final date set by the court
for filing of claims against the liquidator or receiver of an insolvent
insurer" and is time-barred. Because principles of insurance law and
the rules of statutory interpretation conflict with VPCIGA’s interpre-
tation, we conclude that Mrs. Slone’s claim was timely filed because
her claim is derivative of her husband’s claim which was filed before
the August 26, 1992, deadline.

   A principal problem with the DOL and VPCIGA’s argument is that
it creates a condition impossible for Mrs. Slone to perform. Mrs.
Slone’s husband did not die until March 25, 1999, and therefore, the
position advanced by the DOL and VPCIGA would have required
Mrs. Slone to file a claim for survivor benefits in 1992, prior to her
husband’s death and before her derivative right to benefits as a survi-
vor of Ezra Slone had accrued. Thus, filing a claim for benefits prior
to 1992 was a condition impossible for Mrs. Slone to fulfil. The gen-
eral rule of insurance law dictates that conditions precedent which are
impossible of performance are ineffectual and void. Insurance Law
and Practice, Appleman, 1981, § 7005; Couch on Insurance 3d,
§ 83:26; see generally Daburlos v. Commercial Ins. Co., 381 F. Supp.
393, 400 (E.D. Pa. 1974); Strauther v. Gen. Am. Life Ins. Co., 141
S.W.2d 128, 130 (Mo. Ct. App. 1940). Accordingly, we reject DOL
and VPCIGA’s argument that either an insurance contract or a court
order created a duty impossible for Mrs. Slone to perform. For court
orders, see generally Maggio v. Zeitz, 333 U.S. 56, 69 (1948) ("Every
precaution should be taken that orders issue, in turnover as in other
proceedings, only after legal grounds are shown and only when it
appears that obedience is within the power of the party being coerced
by the order.").
8          BOYD AND STEVENSON COAL v. DIRECTOR, OWCP
   It is a general principle of contract law that exclusionary language
in a contract will be construed against an insurer. In American Reli-
ance, the Supreme Court of Virginia summarized the law of exclu-
sionary insurance provisions as follows:

    Exclusionary language in an insurance policy will be con-
    strued most strongly against the insurer and the burden is
    upon the insurer to prove that an exclusion applies. Johnson
    v. Insurance Co. of North America, 232 Va. 340, 345, 350
S.E.2d 616, 619 (1986). Reasonable exclusions not in con-
    flict with statute will be enforced, but it is incumbent upon
    the insurer to employ exclusionary language that is clear and
    unambiguous. State Farm Mutual Ins. Co. v. Gandy, 238
Va. 257, 261, 383 S.E.2d 717, 719 (1989). An ambiguity, if
    one exists, must be found on the face of the policy. Nation-
    wide Mutual Ins. Co. v. Wenger, 222 Va. 263, 268, 278
S.E.2d 874, 877 (1981). And, language is ambiguous when
    it may be understood in more than one way or when it refers
    to two or more things at the same time. Lincoln National
    Life Ins. Co. v. Commonwealth Container Corp., 229 Va.
132, 136-37, 327 S.E.2d 98, 101 (1985). Finally, doubtful,
    ambiguous language in an insurance policy will be given an
    interpretation which grants coverage, rather than one which
    withholds it. St. Paul Ins. v. Nusbaum & Co., 227 Va. 407,
    411, 316 S.E.2d 734, 736 (1984).

Am. Reliance Ins. Co. v. Mitchell, 385 S.E.2d 583, 585 (Va. 1989).

   The notice provision sent to Rockwood claimants after Rock-
wood’s termination is capable of two interpretations, whether Mrs.
Slone’s claim is a separate claim or is derivative of the claim of her
husband. DOL and VPCIGA assert that the miner’s claim and survi-
vor’s claim are two separate and distinct claims because more than
one person receives benefits. Given the Virginia Supreme Court’s
Mitchell directive that exclusionary language is to be construed in
favor of granting coverage, we agree with Mrs. Slone and decline to
adopt the DOL and VPCIGA’s narrow and exclusionary interpretation
of her claim.
            BOYD AND STEVENSON COAL v. DIRECTOR, OWCP                    9
  The notice provision does not require persons currently receiving
benefits to refile their claim because the claim is already known and
can be forwarded to VPCIGA for handling.

      If you are a claimant of Rockwood and are currently receiv-
      ing workers compensation benefits, you need not file a proof
      of claim form with the liquidator. All known claims will be
      forwarded directly to the proper association for handling.
      Please note that the association may require you to complete
      certain forms in order to continue your benefits. (emphasis
      in original).

Similarly, a survivor’s claim arises out of the same injury as a miner’s
claim and therefore both VPCIGA and Rockwood knew that once the
miner died, the payments would not necessarily cease, but instead that
the claim would continue if the miner had a surviving spouse or
dependent. Because survivor’s claims arise out of the same facts and
are derivative of the original claim, they are not new claims for bene-
fits and thus should be considered timely if the miner’s original claim
is timely filed. As Mrs. Slone was not making a new claim for benefits,2
she was not required to file a separate claim to meet the August 1992
deadline.3

   In this respect, this case is distinguishable from the Virginia Court
of Appeals decision in Uninsured Employer’s Fund v. Mounts, 484
S.E.2d 140 (Va. Ct. App. 1997). The Mounts claimant, a former coal
  2
    Nothing in the BLBA or the Virginia statute creating VPCIGA
requires us to treat the miner’s claim and the survivor’s claim as separate
entities. We decline to accept the DOL’s argument and instead adopt a
position which recognizes the realities of insurance law and brings the
facts of this case "into conformity with reason and common sense." Rog-
ers v. Tennessee, 532 U.S. 451, 467, 121 S. Ct. 1693, 149 L. Ed. 2d 697
(2001).
  3
    This is not to say that the surviving spouse or dependent does not
have to prove that she is entitled to survivor benefits. The terms of the
notice provision recognize VPCIGA may require Mrs. Slone to complete
additional forms after Ezra Slone’s death to establish that she is eligible
for benefits. Additional qualification requirements, however, do not
make this a new claim.
10          BOYD AND STEVENSON COAL v. DIRECTOR, OWCP
miner employee, discovered he had pneumoconiosis after the deadline
for making claims to Rockwood’s liquidator had passed. Mounts, 484
S.E.2d at 142. Because the claim was filed after the deadline, the Vir-
ginia Supreme Court held that VPCIGA was not obligated to pay ben-
efits under the statute. Mounts, 484 S.E.2d at 144-45. In this case, to
the contrary, Slone’s original claim was filed before the deadline, and
unlike the claimant in Mounts, VPCIGA knew that Mr. Slone was
receiving benefits on his claim prior to the August 1992 deadline.
VPCIGA also knew that the same essential facts establishing the
miner’s claims would support any derivative survivor’s claim after his
death. To allow VPCIGA to bar recovery by creating a technical
defense impossible for Mrs. Slone to comply with is contrary to prin-
ciples of insurance law and justice. Accordingly, we adopt an inter-
pretation which recognizes that a survivor’s claim is part of a miner’s
original claim for filing purposes, and thus we are of opinion that
Mounts does not bar recovery.

   Finally, we are mindful of the Virginia General Assembly’s direc-
tive that the Act creating VPCIGA "be liberally construed" to "pro-
vide prompt payment of covered claims [in order] to reduce financial
loss to claimants or policyholders resulting from the insolvency of an
insurer." Va. Code Ann. §§ 38.2-1602, -1604. We do not believe that
the General Assembly intended for VPCIGA to deny payment of sur-
vivor’s claims based on conditions impossible for the surviving
spouse to perform.

                                   IV.

   Our decision is also supported on an entirely independent basis
which we hold is applicable here. That basis is that the statutory
notice given did not require Mrs. Slone to file her claim. As noted
supra, the notice, which is quoted here at p.6, stated that "[i]f you . . .
are currently receiving workers compensation benefits, you need not
file a proof of claim form with the liquidator." (emphasis in original)
At the time this notice was sent, Mr. Slone was receiving black lung
benefits from Rockwood, which, under 20 C.F.R. § 726.203, are
included in the general term "workmen’s compensation." The Slones
therefore were not required to file a proof of claim under the plain
language of the notice. Accordingly, the only forms Mrs. Slone was
required to file to receive her widow’s benefits were those required
           BOYD AND STEVENSON COAL v. DIRECTOR, OWCP                 11
under 20 C.F.R. § § 725.304 and 725.305. There is no time limit on
the filing of those forms. 20 C.F.R. § 725.308(a). Mrs. Slone filed
her claim in April, 1999, and, there being no time limit on the filing
of her claim, it was timely filed.

  Accordingly, the judgment of the Benefits Review Board is vacated
and the case is remanded to the Board with instructions to enter its
order designating VPCIGA as the insurer responsible for payment of
Mrs. Slone’s survivor benefits.

   The Petition for Review is granted and the case is remanded with
instructions.

                                       VACATED AND REMANDED
                                            WITH INSTRUCTIONS