Bailey v. Dir., Office of Workers’ Comp. Programs, 20-1075
| Decision Date | 11 March 2021 |
| Docket Number | No. 20-1075,20-1075 |
| Citation | 990 F.3d 1066 |
| Parties | Nancy BAILEY, on behalf of Charles Bailey, Petitioner, v. DIRECTOR, OFFICE OF WORKERS’ COMPENSATION PROGRAMS, United States Department of Labor, Respondent. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Thomas E. Johnson, Attorney, Johnson, Jones, Snelling, Gilbert & Davis, Robert Seer, Attorney, Ellis Legal P.C., Chicago, IL, for Petitioner.
Sean G. Bajkowski, Attorney, Department of Labor, Black Lung and Longshore Legal Services Division, Washington, DC, Maia S. Fisher, Attorney, Jeffrey Steven Goldberg, Attorney, Department of Labor, Office of the Solicitor, Washington, DC, Edward Dean Sieger, Attorney, Edward D. Sieger, ESQ., Arlington, VA, for Respondent.
Before Wood, Brennan, and St. Eve, Circuit Judges.
Petitioner Nancy Bailey filed this petition for review to contest the Department of Labor Benefit Review Board's (the "Board") decision affirming an offset to her husband's federal-benefits award. Charles Bailey, a former coal miner, qualified for disability benefits under the Black Lung Benefits Act (the "Act"). The Office of Workers’ Compensation Programs ("OWCP") subsequently realized that Charles Bailey had received a state workers’ compensation award nearly ten years earlier for the same disability and determined that the federal benefits should be offset to account for the state award. Petitioner contested that decision, arguing both that the Act did not authorize an offset and that, if it did, the OWCP District Director erred in calculating the amount. An administrative law judge ("ALJ") upheld the Director's decision, and the Board affirmed. We agree that the Director correctly offset the federal benefits and deny the petition for review.
As a result of his years as a coal miner, Charles Bailey became partially disabled after contracting pneumoconiosis
, a debilitating lung disease caused by inhalation of coal dust. In July 2002, he entered into an agreement with his employer to settle his state workers’ compensation claim for that disability. The parties agreed that he was rendered 15% disabled and settled on a $35,000 payout. Of that total, $27,677.50 was designated as Charles Bailey's take-home amount, while the remaining $7,322.50 represented attorney's fees and costs. The agreement indicated that the take-home amount represented payments of $135.67 per month for seventeen years, beginning in July 2002.
In November 2011, Charles Bailey filed a claim for federal benefits under the Act. The OWCP did not grant Charles Bailey's claim until October 2013, but his benefits entitlement began the month he filed his claim and continued through May 2016—the month preceding the month that he died. At the time of his death in June 2016, he was entitled to $52,088.60 for the 55 months from November 2011 through May 2016. He had received benefits from October 2013 through May 2016, totaling $30,507.70. He was still owed a portion of his $52,088.60 in benefits, however, for the months from November 2011 through September 2013, which amounted to $21,508.90. Charles Bailey's employer—which was required to pay the federal benefits awarded—went bankrupt before he received the remaining $21,508.90. He then sought the remaining benefits from the federal Black Lung Disability Trust Fund (the "Trust").
While the OWCP approved the claim for payment from the Trust, a District Director reevaluated the original federal-benefits award. The Director determined that Charles Bailey's state workers’ compensation award represented monthly state benefits, some of which ran concurrent with his federal-benefits eligibility period. As a result, the Director determined that the federal benefits must be offset by the amount of state benefits received for that time—$135.67 per month over 55 months ($7,461.85). The OWCP subtracted this amount from the $21,508.90 in remaining benefits. Petitioner contested that decision.
The ALJ sided with the Director, and the Board affirmed that decision. We examine the Board's order for errors of law and for compliance with its scope of review, which is circumscribed by the Act and limited to ensuring that the ALJ's decision is "rational, supported by substantial evidence, and in accordance with applicable law." Consol. Coal Co. v. Dir., OWCP , 911 F.3d 824, 838 (7th Cir. 2018) ; see also 33 U.S.C. § 921(b)(3), (c) ; 20 C.F.R. § 802.301(a). While our review necessitates an examination of the record and ALJ order, "we do not reassess the facts or substitute our judgment for that of the ALJ." Id. Upon review, we deny the petition.1
Benefits Act, as its title suggests, is a federal statute providing benefits for miners who are disabled by a form of pneumoconiosis—black lung disease. It works in tandem with state benefits programs to ensure that between the two sources miners receive a minimum amount of benefits. Under the Act's implementing regulations, federal benefits must be reduced by the amount of a state workers’ compensation award for pneumoconiosis disability if: (1) the state award is for the same months as the federal award, 20 C.F.R. § 725.535(b), or (2) the state award is a lump-sum substitute for periodic payments that would otherwise cover the same benefits period as the federal award, § 725.535(c). Because Charles Bailey's state workers’ compensation award was a single payment, § 725.535(c) is the most relevant provision.
The question of whether his state benefits constitute a lump-sum substitution for periodic payments within the meaning of § 725.535(c) turns on the interpretation of the workers’ compensation settlement agreement between Charles Bailey and his employer. The parties stipulate that the agreement is governed by Illinois contract law.2 Two pages of the Terms of Settlement Attachment to the contract are relevant for our purposes. Page one states that Charles Bailey shall receive a "lump sum payment of 35,000." Dkt. 26 at 59. The next page contains a key paragraph with three subparts that provides as follows:
Id. at 60 (emphasis added).
Petitioner seizes on a single phrase from the beginning of the paragraph: "the lump sum amount is not a substitute for periodic payments." She argues that by the agreement's express terms, the settlement award does not fall within the auspices of § 725.535(c). Petitioner also suggests that this phrase conflicts with subsection (3), rendering the agreement ambiguous. That interpretation, however, takes the phrase out of context.
The ALJ read the agreement as designating the take-home portion of the settlement as a lump sum that "translated into monthly benefits," and the Board agreed. We see no error in this interpretation. The lump-sum amount referenced in the initial sentence is the $35,000 total settlement award mentioned on the preceding page. The following three subsections represent a breakdown of this total amount. The third subsection, which lists the portion of the settlement that goes to Charles Bailey, states that this portion represents the "weekly or monthly benefit of the Petitioner" for the duration of seventeen years, though it is to be paid in the form of a "lump sum." Dkt. 26 at 60. That language tracks the conditions for offset described in § 725.535(c). Although the Petitioner insists that the first sentence of the paragraph creates ambiguity, that is true only if read in isolation from the remainder of the paragraph.
Additionally, Petitioner's interpretation of the agreement runs afoul of Illinois contract principles, under which we must give language its "plain and ordinary meaning" and avoid an interpretation that would render a contract provision null. Stampley v. Altom Transp., Inc. , 958 F.3d 580, 586 (7th Cir. 2020). Petitioner's view of one sentence would impermissibly write off an entire subsection clarifying that sentence. We reject that interpretation and hold that the Board and ALJ did not err in determining that the settlement agreement designates Charles Bailey's $27,677.50 portion of the award as a lump-sum substitute for periodic benefits.
The fact that Charles Bailey received his state benefits years before he became eligible for federal benefits does not alter this conclusion. Section 725.535(c) does not require that the lump sum be paid during the beneficiary's federal-benefits eligibility—just that it be a substitute for periodic payments that would otherwise overlap with the federal benefits.3 Both the ALJ and the Board correctly observe that Charles Bailey's settlement agreement specified the range of time that the lump sum was intended to cover and that the time frame overlaps with his federal-benefits eligibility. As a result, the Fourth Circuit's opinion in Harman Mining Co. v. Director, OWCP , upon which Petitioner relies, is inapposite. 826 F.2d 1388 (...
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