Director, Office of Workers' Compensation Programs, U.S. Dept. of Labor v. Mangifest

• Citation: 826 F.2d 1318
• Decision Date: 21 August 1987
• Docket Number: No. 86-3447,86-3447
• Parties: DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR, Petitioner, v. August MANGIFEST, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 1318

826 F.2d 1318

DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR, Petitioner, v. August MANGIFEST, Respondent.

No. 86-3447.

United States Court of Appeals Third Circuit.

Argued Feb. 24, 1987.

Decided Aug. 21, 1987.

George R. Salem, Sol. of Labor, Donald S. Shire, Associate Sol., J. Michael O'Neill, Counsel for Appellate Litigation, Thomas L. Holzman, Asst. Counsel for Appellate Litigation, Sylvia T. Kaser (argued), U.S. Dept. of Labor, Office of the Solicitor, Washington, D.C., for petitioner.

James J. Panchik (argued), Kittanning, Pa., for respondent.

Allen R. Prunty, Jackson, Kelly, Holt & O'Farrell, Charleston, W.Va., for Consolidation Coal Co.--amicus curiae.

John J. Bagnato (argued), Spence, Custer, Saylor, Wolfe & Rose, Johnstown, Pa., for BethEnergy Mines, Inc.--amicus curiae.

Mark E. Solomons, Arter & Hadden, Washington, D.C., for Old Republic Ins. Co.--amicus curiae.

Before WEIS, BECKER and HUNTER, Circuit Judges.

OPINION OF THE COURT

BECKER, Circuit Judge.

Under the Black Lung Benefits Act, disability claims ultimately come before an Administrative Law Judge (ALJ) who must, inter alia, determine the reliability of medical evidence submitted to prove that the claimant is totally disabled. The regulations promulgated by the Secretary of Labor provide that the ALJ may find a miner totally disabled on the basis of a physician's judgment if the judgment is "reasoned" and based on medically acceptable evidence. 20 C.F.R. Sec. 718.204(c). In this case, we must decide whether the Secretary has limited the ALJ's discretion under Sec. 718.204(c) by providing that a judgment contained in a medical report "alone" may support a finding of total disability only if the report is in "substantial compliance" with a quality standard set out at 20 C.F.R. Sec. 718.104. That section mandates that a report include a medical and employment history, describe certain test results and certain symptoms. The Secretary's designate, the Director of the Office of Workers' Compensation Programs (OWCP) advocates this view.

The Benefits Review Board (BRB) rejected the Director's contention. Following one of its prior decisions based both on construction of the regulations and statutory grounds, the BRB held that the regulation's quality standards, of which the medical report standard is only one, do not preclude ALJ's from relying on noncomplying evidence. In the BRB's view, the quality standards have a mandatory effect only on the OWCP's internal decisionmaking not on ALJ's, who adjudicate claims only after the OWCP has denied them. The BRB therefore affirmed an ALJ's decision granting benefits to respondent August Mangifest despite the ALJ's primary reliance on a medical judgment contained in an apparently noncomplying report.

The Director now petitions for review. On the basis of our own interpretation of the regulations, but for different reasons than those of the BRB, we agree with the BRB that an ALJ may find a miner totally disabled in reliance upon a medical judgment in a noncomplying report so long as the judgment is reasoned and based on medically acceptable evidence as required by Sec. 718.204(c)(4). We believe that the ALJ must make this decision "in accordance with" Sec. 718.104, but only in the sense that that section should serve as a guide: it identifies the kinds of information ALJ's should expect a physician to rely on in finding total disability, and it instructs the hearing officer to examine the evidence in determining whether the physician's diagnosis was reasoned. Such a rule is consistent with the Black Lung statutes and the APA.

We ground our decision on "our own interpretation" notwithstanding the deference normally required to an interpretation of the Director because we find ambiguities and inconsistencies in the Director's interpretation of the regulations that are sufficiently great to preclude deference in this case. However, we also believe that our result is ultimately consistent with the views of the Director: the test the Director suggests for evaluating a report's substantial compliance with the quality standards of Sec. 718.104 requires the ALJ to engage in the same analysis of the documentation and reasoning of the report's medical judgment that we find required by Sec. 718.204(c)(4).

Although we reject a rigid approach to the quality standard regulation, we grant the petition for review and remand this case for further proceedings. The ALJ did not use the quality standard as a guideline in determining whether the medical judgments he relied on were documented and reasoned. The ALJ also failed specifically to find the medical judgment documented and reasoned or to explain that finding. Clear articulation was necessary because the medical report apparently deviated substantially from the quality standard.

I. Regulatory Structure

Disability claims filed after March 31, 1980 are evaluated under the criteria established by Part 718 of the permanent black lung regulations. See 20 C.F.R. Sec. 718.2, 725.4(a) (1987). Under Part 718, the miner must prove that he has pneumoconiosis, that he contracted it through his coal mine employment, and that he is totally disabled due to the disease. See 20 C.F.R. Secs. 718.201-.204 (1987).

Subpart C of the Part 718 regulations, 20 C.F.R. Secs. 718.201-.206, establishes criteria for finding these three elements necessary to a black lung claim. At issue in this case are the criteria for finding total disability set out in Sec. 718.204. Subsection (b) of that section defines total disability: a miner is totally disabled if he is incapable of performing his usual coal mine work and if he cannot engage in gainful employment in the immediate area of his residence requiring skills comparable to those he used in his mine employment. See also 30 U.S.C. Sec. 902(f)(1)(A). Subsection 718.204(c) then sets out medical criteria for determining whether a miner meets this standard. It provides that an ALJ must find total disability, in the absence of contrary evidence, if pulmonary function or arterial blood gas tests produce certain results, Sec. 718.204(c)(1-2), or if the medical evidence demonstrates that the miner has cor pulmonale with right sided congestive heart failure, Sec. 718.204(c)(3). In addition, paragraph 718.204(c)(4), ¹ the paragraph most directly relevant to this case, provides that an ALJ "may" find total disability if a physician "exercising reasoned medical judgment, based on medically acceptable clinical and laboratory diagnostic techniques concludes that a miner's respiratory or pulmonary conditions prevents or prevented the miner from engaging in employment" as defined by subsection (b). ²

This case concerns the relationship between the criteria in Sec. 718.204(c)(4) and Sec. 718.104 in subpart B of the Part 718 regulations. Subpart B generally sets out quality standards for most kinds of medical evidence relevant to Black Lung claims, including X-rays, pulmonary function studies, arterial blood-gas studies, and autopsies and biopsies. ³ Section 718.104, which we set out fully below, ⁴ provides the standard for medical reports. It requires that a report "of any physician examination conducted in connection with a claim" use either a form supplied by the OWCP or contain "substantially the same information." The information required includes the miner's medical and employment history, the results of medical tests, and all manifestations and symptoms of chronic respiratory or heart disease.

In Budash v. Bethlehem Mines Corp, 9 Black Lung Rep. 1-48 (en banc), aff'd on reconsideration en banc, 9 Black Lung Rep. 1-104 (1986), the BRB considered the question whether a medical report not in compliance with the quality standard at Sec. 718.104 may nevertheless justify a finding of total disability under Sec. 718.204(c)(4). Rejecting the Director's contention, the BRB held that it could. The BRB did not dispute the authority of the Labor Secretary generally to establish criteria and other reasonable rules that bind the ALJ's consideration of claims. See 30 U.S.C. Sec. 902(f)(1), Sec. 936. The BRB believed, however, that the exclusion of non-complying reports would violate the statutory requirement set out at 30 U.S.C. Sec. 923(b) that claims decisions be based on "all relevant evidence." The BRB also believed that section 7 of the Administrative Procedure Act, 5 U.S.C. Sec. 556(c), requires consideration of all relevant evidence and required rejection of the Director's position. Finally the BRB felt that the regulations themselves do not require the exclusion of non-complying evidence.

The BRB accordingly held that Sec. 718.104 has a mandatory effect only on the OWCP's internal decision whether to grant or deny claims. ⁵ While ALJ's "may" consider the quality standard, the BRB believed, those standards are not binding upon them. 9 Black Lung Rep. at 1-50 to 1-51. ⁶

II. Facts and Procedural History

Respondent August Mangifest is a seventy-two year old resident of Vandergrift in Western Pennsylvania. From 1929 until 1941, Mangifest worked in underground coal mines as a loader, driller and weighman. Following this coal mine experience Mangifest worked in a variety of jobs, most recently as a part-time janitor and as a restaurant supply salesman. On April 8, 1980, Mangifest filed a claim for benefits under the Black Lung Benefits Act as amended, 30 U.S.C. Secs. 901-45. (1982). The OWCP denied the claim and Mangifest requested a formal hearing before an ALJ.

All parties agree that Mangifest has penumoconiosis and that he contracted it through his employment as a coal miner. The Director of OWCP and Mangifest dispute, however, whether Mangifest is "totally disabled." Because the Director offered no information to the ALJ to show that Mangifest is not disabled, the dispute pertains entirely to the adequacy of Mangifest's proofs.

Taken alone, neither Mangifest's pulmonary functions studies nor...