Berwind Corp. v. Comm. of Social Security
| Citation | 307 F.3d 222 |
| Decision Date | 02 October 2002 |
| Docket Number | No. 00-3729.,No. 00-3798.,No. 00-3830.,00-3729.,00-3798.,00-3830. |
| Parties | BERWIND CORPORATION v. COMMISSIONER OF SOCIAL SECURITY; United Mine Workers of America Combined Benefit Fund; Michael H. Holland; William P. Hobgood; Marty D. Hudson; Thomas O.S. Rand; Elliot A. Segal; Carl E. Vanhorn; Gail R. Wilensky, as Trustees of the United Mine Workers of America Combined Benefit Fund; the United Mine Workers of America 1992 Benefit Plan; A. Frank Dunham, as Trustee of the United Mine Workers of America 1992 Benefit Plan; United States of America United Mine Workers of America Combined Benefit Fund, Michael H. Holland, William P. Hobgood, Marty D. Hudson, Thomas O.S. Rand, Elliot A. Segal, Carl E. VanHorn, Gail R. Wilensky, the United Mine Workers of America 1992 Benefit Plan, A. Frank Dunham, United States of America, Appellants Berwind Corporation, Appellant v. Commissioner of Social Security; United Mine Workers of America Combined Benefit Fund; Michael H. Holland; William P. Hobgood; Marty D. Hudson; Thomas O.S. Rand; Elliot A. Segal; Carl E. Vanhorn; Gail R. Wilensky, as Trustees of the United Mine Workers of America Combined Benefit Fund; the United Mine Workers of America 1992 Benefit Plan; A. Frank Dunham, as Trustee of the United Mine Workers of America 1992 Benefit Plan; United States of America Berwind Corporation v. Commissioner of Social Security; United Mine Workers of America Combined Benefit Fund; Michael H. Holland; William P. Hobgood; Marty D. Hudson; Thomas O.S. Rand; Elliot A. Segal; Carl E. Vanhorn; Gail R. Wilensky, as Trustees of the United Mine Workers of America Combined Benefit Fund; the United Mine Workers of America 1992 Benefit Plan; A. Frank Dunham, as Trustee of the United Mine Workers of America 1992 Benefit Plan; United States of America Commissioner of Social Security, Appellant |
| Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
Peter Buscemi, (Argued), John Mills Barr, Robert C. Farley, Morgan, Lewis & Bockius LLP, Washington, John R. Mooney, Mooney, Green, Gleason, Baker, Gibson & Saindon, P.C., Washington, David W. Allen, Office of General Counsel, UMWA Health and Retirement Funds, for Appellants/Cross-Appellees UMWA Combined
Benefit Fund, UMWA 1992 Benefit Plan, and their respective trustees.
Stuart E. Schiffer, Acting Assistant Attorney General, Michael R. Stiles, United States Attorney, Mark B. Stern, Jonathan H. Levy, (Argued), Attorneys, Appellate Staff, Civil Division, Department of Justice, Washington, for Appellant/Cross-Appellee, Commissioner of Social Security.
Arthur Newbold, (Argued), Ethan D. Fogel, Andrew S. Miller, Dechert Price & Roads, Philadelphia, for Appellee/Cross-Appellant, Berwind Corporation.
Before SLOVITER, NYGAARD and McKEE, Circuit Judges.
The basic question we must answer in these consolidated appeals is whether assignments the Commissioner of Social Security made pursuant to the Coal Industry Retiree Health Benefit Act of 1992 (the "Coal Act"), 26 U.S.C. SS 9701-9722 are unconstitutional pursuant to Eastern Enterprises v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998). The Commissioner assigned beneficiaries of the United Mine Workers of America Combined Fund to Berwind Corporation as provided in the Coal Act. Those beneficiaries were either miners who had been employed by Berwind prior to 1962 or they were dependents of miners who had been so employed. Berwind permanently ceased coal mining operations in 1962. Nevertheless, for the reasons that follow, we hold that assignments are valid because the Act is not unconstitutional as applied to Berwind.
This case involves yet another of the disputes arising from the historic enactment of the Coal Act and the economic and social forces that spawned it. The history of the Act has been recited in great detail in the Supreme Court's opinion in Eastern Enterprises v. Apfel, and to a lesser extent in our opinions in Unity Real Estate v. Hudson, 178 F.3d 649 (3d. Cir.1999), and Anker Energy Co. v. Consolidation Coal Co., 177 F.3d 161 (3d Cir.1999).1 Thus, we need not repeat that history here except insofar as it may be helpful to our discussion.
The Coal Act was enacted in 1992 "to resolve the imminent insolvency of multi-employer trusts created by coal industry agreements," Coltec v. Hobgood, 280 F.3d 262, 265 (3d Cir.2002). Congress wanted "to ensure that retired coal miners and their dependents would continue to receive the health and death benefits they had been receiving since the 1940s pursuant to a series of collective bargaining agreements." Anker Energy Corp. v. Consolidation Coal Co., 177 F.3d at 163-64.
In enacting the Coal Act, Congress intended to remedy problems with funding retiree health benefits in the coal industry by providing for sufficient operating assets for health benefit plans. Congress also intended to provide for the continuation of a privately funded and self-sufficient program that would deliver health care benefits to retired miners and their dependents. Pub.L. No. 102-486, § 19142(b), 106 Stat. 3036, 3037 (1992), 26 U.S.C. § 9701 note. Congress created two new statutory trust funds to achieve these ends; the Combined Fund and the 1992 Plan.2
The Coal Act required that certain benefit plans previously established under collective bargaining agreements with the United Mine Workers of America ("UMWA") be merged into a new plan — the United Mine Workers of America Combined Benefit Fund. 26 U.S.C. § 9702(a). This "Combined Fund" provides health and death benefits to retired coal miners and dependents who were eligible to receive benefits from the UMWA 1950 or 1974 benefit plans as of July 20, 1992. 26 U.S.C. §§ 9703(a), (b)(1), (c), (e) & (f). The 1992 Plan was an entirely new entity designed to provide benefits to those eligible retirees and their dependents who are not beneficiaries of the Combined Fund and who are not receiving health care coverage directly from their former employees. 26 U.S.C. § 9712. Benefits paid through the Combined Fund are funded in part by premiums imposed on "signatory coal operators," i.e., coal operators that employed an eligible beneficiary and that also signed a collective bargaining agreement between the UMWA and Bituminous Coal Operators' Association ("BCOA").3 The Act also required that other "related persons" connected to the signatory operator by common ownership or control pay such premiums. See 26 U.S.C. §§ 9701(c)(1) & (c)(2), 9704, 9706.
The Coal Act directs the Commissioner of Social Security4 to assign each individual beneficiary to one of these signatory coal operators or its "related person" in accordance with specified criteria. These criteria establish a system of priorities based upon the length of the beneficiary's service, the date of his service, and whether his employer participated in national collective bargaining agreements with the UMWA that were signed in 1978 or subsequent years.5 26 U.S.C. § 9706(a). The system of assigning beneficiaries by the Commissioner involves three steps or tiers that we have described as the "linchpin" of the Coal Act's statutory scheme. Unity Real Estate Co. v. Hudson, 178 F.3d at 654. The Coal Act provides:
(a) In general. — For purposes of this chapter, the Commissioner of Social Security shall, before October 1, 1993, assign each coal industry retiree who is an eligible beneficiary to a signatory operator which (or any related person with respect to which) remains in business in the following order:
(1) First, to the signatory operator which —
(A) was a signatory to the 1978 coal wage agreement or any subsequent coal wage agreement, and (B) was the most recent signatory operator to employ the coal industry retiree in the coal industry for at least 2 years.
(2) Second, if the retiree is not assigned under paragraph (1), to the signatory operator which —
(A) was a signatory to the 1978 coal wage agreement or any subsequent coal wage agreement, and
(B) was the most recent signatory operator to employ the coal industry retiree in the coal industry.
(3) Third, if the retiree is not assigned under paragraph (1) or (2), to the signatory operator which employed the coal industry retiree in the coal industry for a longer period of time than any other signatory operator prior to the effective date of the 1978 coal wage agreement.
26 U.S.C. § 9706(a)(1), (2) & (3). Once the Commissioner makes an assignment under § 9706, the assignee must then pay annual premiums to the Combined Fund based on the amounts needed to provide health and death benefits for the assigned beneficiaries.
If a miner or his dependents cannot be assigned to an extant company under this scheme, benefits are funded by either asset transfers from one of the Combined Fund's predecessor benefit plans, see 26 U.S.C. § 9705(a), transfers from the U.S. Treasury's Abandoned Mine Land Reclamation Fund, see 26 U.S.C. § 9705(b), 30 U.S.C. § 1232(h), or, if those sources are insufficient or unavailable, an additional unassigned — or "orphaned" — retiree premium is imposed on all signatory operators. See 26 U.S.C. §§ 9704(d), 9705(a)(3)(B), 9705(b)(2).
The Combined Fund's assignment structure also includes a set of statutory provisions governing the imposition of Coal Act liability on business entities that are deemed "related persons" with respect to miners' original employers. The Coal Act sets forth several provisions that, taken together, treat a commonly controlled group of related corporations as a single employer. This "grouping" is an integral part of the Coal Act. It allows responsibility for miners' benefits to be assigned both to the original employer and to a wide range of affiliated companies or successors. Premium assignments may be made either to a "signatory operator" that employed the miner or to any "related person." 26 U.S.C. § 9706(a). A "related person" is defined to include all members of a commonly controlled group of corporations that...
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