Opinions of the United
1995 Decisions                                                                                                             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Precedential or Non-Precedential: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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              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. XXX-XX-XXXX)


      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


                            1
                                 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



                                 2
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. 

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.


                                 4
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


                                 5
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.

                                  6
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, 

,

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

Co., 

, 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."      

Carroll is not participating in the appeal.


                                  7
at 463.    We exercise plenary review over the Board's legal

determinations.    

             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,


                                  8
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.



                               9
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."




                                  10
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., 

, 255, 

, 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, 

,

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).


                                  11
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, 

, 464-65, 

, 1144 (1967);

, 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, 

, 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, 

, 950 (4th Cir.
1990)0; Warner Coal Co. v. Director, OWCP, 

, 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. 

.


                                12
regulations do not contemplate limiting the carrier's exposure to

indemnifying an operator found liable for payments of benefits.0

Warner 

.   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. 

(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, 

, 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." 

-52 (citations omitted).


                                13
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."   

, 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

                                  14
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."    

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.

                                  15