Connors v. Amax Coal Co., Inc.

• Citation: 858 F.2d 1226
• Decision Date: 21 September 1988
• Docket Number: No. 88-1120,88-1120
• Parties: Joseph P. CONNORS, Sr., et al. Plaintiffs-Appellants, v. AMAX COAL CO., INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1226

858 F.2d 1226

Joseph P. CONNORS, Sr., et al. Plaintiffs-Appellants, v. AMAX COAL CO., INC., Defendant-Appellee.

No. 88-1120.

United States Court of Appeals Seventh Circuit.

Argued May 31, 1988.

Decided Sept. 21, 1988.

Charles G. Starrs, UMWA Health and Retirement Funds, Washington, D.C., for plaintiffs-appellants.

James F. Bleeke, Ice Miller Donadio & Ryan, Indianapolis, Ind., for defendant-appellee.

Before BAUER, Chief Judge, CUMMINGS and CUDAHY, Circuit Judges.

CUDAHY, Circuit Judge.

Plaintiffs, trustees of the United Mine Workers of America 1950 Benefit Plan and Trust (the "Plan"), claim to have paid out over $27,000 for black lung related medical expenses of miners who worked for Amax Coal Company, Inc. ("Amax"). The trustees seek reimbursement from Amax alleging that the company is liable for these expenses under the Black Lung Benefits Act (the "BLBA"), 30 U.S.C. Secs. 901-945 (1982 & Supp. IV 1986). Amax has refused to pay until the trustees establish that these expenses qualify as black lung related medical services that the company is obligated to reimburse under the applicable regulations. See 20 C.F.R. Sec. 725.701(a)-(c) (1988).

The trustees brought suit in federal district court as subrogees to the miners' rights against Amax, alleging that the company had been unjustly enriched by the Plan's payment of the black lung related expenses of the company's former employees. The district court granted Amax's motion to dismiss for lack of subject matter jurisdiction, ruling that under the BLBA the trustees could only sue in district court to enforce a final compensation order obtained through prescribed procedures and that the trustees' attempted invocation of the Employee Retirement and Income Security Act ("ERISA") and federal common law was insufficient to confer subject matter jurisdiction on the district court. The trustees then brought this appeal. We affirm.

I.

Section 422 of the BLBA, 30 U.S.C. Sec. 932(a) (1982 & Supp. IV 1986), incorporates the claims procedures set forth in the Longshore and Harbor Workers' Compensation Act (the "LHWCA"), 33 U.S.C. Secs. 918-928 (1982 & Supp. IV 1986). The procedures outlined in the LHWCA and in the procedural regulations for the black lung benefits program strictly limit claimants' access to federal district court. District courts decide disputes over black lung benefits awards only when a claimant sues to enforce "a compensation order making an award, that has become final"--that is, an administrative award that has not been appealed within the required time or with respect to which all appeals have been exhausted. ¹ Claims for compensation for black lung related medical expenses are subject to three levels of administrative review: an initial determination by the Deputy Commissioner of the Division of Coal Mine Workers' Compensation, Office of Workers Compensation Programs, 20 C.F.R. Secs. 725.410-.420 (1988); a formal hearing, if requested, before an Administrative Law Judge, id. Secs. 725.421, .456-.479; and an appeal, if requested, to the Benefits Review Board, id. Sec. 725.481 & Part 802. Section 21(c) of the LHWCA, 33 U.S.C. Sec. 921(d) (1982), requires exhaustion of this three-step procedure as a prerequisite to judicial review in the courts of appeals. ²

The trustees contend, and Amax does not dispute, that the Deputy Commissioner has found Amax liable for the black lung related medical expenses of the miners named in this action and that these determinations have become final. However, Amax does dispute the trustees' contention that the company can be sued in federal district court and forced to pay particular medical bills not yet certified under 20 C.F.R. Part 725 as having been incurred in the treatment of black lung disease. Amax points out that section 725.707 of the regulations establishes an administrative process for resolving disputes over whether particular expenses were incurred in the treatment of black lung disease. Section 725.707, like the mechanism for resolving the threshold questions of miner eligibility and company liability, provides for initial action by the Deputy Commissioner to be followed by ALJ review, Benefit Review Board review and appeal to the courts of appeals. 20 C.F.R. Sec. 725.481, .707 & Part 802 (1988).

The district court concluded, and we agree, that a claimant, whether a miner or a subrogee to a miner, does not possess a "compensation order making an award, that has become final"--the ticket to admission to district court under section 921(d)--until that party obtains a final administrative determination resolving any dispute as to whether particular expenses are covered expenses. See Connors v. Amax Coal Co., 674 F.Supp. 22, 23-24 (S.D.Ind.1987); see also Lute v. Split Vein Coal Co., 11 Black Lung Rptr. (MB) 1-82 (Benefit Rev.Bd.1987) (Benefit Review Board holds that due process challenge to liability determination is premature prior to miner's demand for reimbursement and administrative assessment of particular expenses under section 725.707). The trustees contend that section 725.707 should apply only to individual employers' claims because disputes arising under this section receive expedited processing by ALJs. Extending this priority treatment to subrogees, according to the trustees, would delay the processing of more pressing claims by individual miners. The trustees concede that the Department of Labor may "perhaps" possess greater expertise in determining which medical expenses qualify for reimbursement under the regulations, but they suggest that the district courts can reduce their comparative disadvantage by relying on the Department's published guidelines for classifying medical expenses.

The trustees advocate, in effect, that we construe the jurisdiction of agency adjudicators narrowly to enable district courts to alleviate the agency's work load, notwithstanding that the determinations at issue involve the application of detailed administrative guidelines in a highly technical area. This approach is unsupported by common sense, the language of section 725.707 or, insofar as we have been able to determine, by any judicial or administrative construction of the black lung benefits regulations. Even the trustees' professed concern about delaying individual miners' claims is unpersuasive. ³ We therefore affirm the district court's conclusion that subrogees to the rights of miners against responsible operators under the BLBA may not sue in district court to resolve disputes over whether particular medical bills were incurred in the treatment of black lung disease.

II.

The trustees also argue that the district court had subject matter jurisdiction because the complaint states claims "arising under" federal law within the meaning of 28 U.S.C. section 1331. In particular, the trustees assert that the complaint sets forth claims arising under ERISA and federal common law. The trustees are not entirely clear about the sense in which their claims arise under ERISA, but they cite provisions requiring fiduciaries to administer funds in accordance with plan documents and prohibiting any use of fund assets that would "inure to the benefit of an employer." See 29 U.S.C. Secs. 1103(c)(1), 1104(a)(1)(D) (1982). ⁴ In addition, they maintain that even if ERISA itself will not serve, there is a federal common law of employee benefit plans supplementing ERISA, which provides a basis for section 1331 jurisdiction.

We find the trustees' arguments unconvincing. To establish a cause of action in district court under section 1331 the trustees must show first that their action against Amax "arises under" ERISA or federal common law and second that section 1331 jurisdiction is not preempted by a more specific statutory provision conferring exclusive jurisdiction elsewhere. Although the boundaries of "arising under" jurisdiction are notoriously indistinct, see, e.g., Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 8, 103 S.Ct. 2841, 2845, 77 L.Ed.2d 420 (1983); Stone & Webster Eng. Corp. v. Ilsley, 690 F.2d 323, 328 (2d Cir.1982), aff'd sub nom. Arcudi v. Stone & Webster Eng. Corp., 463 U.S. 1220, 103 S.Ct. 3564, 77 L.Ed.2d 1405 (1983), it seems clear that neither ERISA nor the purported federal common law of employee benefit plans ⁵ provides a basis for section 1331 jurisdiction in this case. In Connors v. Tremont Mining Co., 835 F.2d 1028 (3d Cir.1987), which rejected arguments similar to those raised here, the Third Circuit observed that

the right of the trustees to recover from the operator[ ] is not dependent simply upon an interpretation of the [ERISA-regulated] Plan. Having only rights of subrogation, the trustees can recover only if the operators are liable to individual beneficiaries under the BLBA, and only if a fund award has been previously promulgated.

Id. at 1029. ERISA, and any interstitial principles of federal common law that supplement ERISA may affect the fund's status as subrogee, but this would appear to be a subsidiary issue that the trustees have raised at this juncture only by anticipating Amax's defenses. The mere relevance of ERISA and federal common law to the trustees' claims does not establish that these claims "arise under" those bodies of law. See Franchise Tax Bd., 463 U.S. at 10, 103 S.Ct. at 2846; see also Gully v. First Nat'l Bank in Meridian, 299 U.S. 109, 116, 57 S.Ct. 96, 99, 81 L.Ed. 70 (1936) ("A suit does not arise under a law renouncing a defense, though the result of the renunciation is an extension of the area of legislative power which will cause the suitor to prevail.").

Even if the trustees' claims did arise under ERISA or federal common law, section 1331 would not supersede the provisions of LHWCA, as incorporated by the BLBA, that call for exclusive jurisdiction in the courts of appeals over disputes concerning specific medical expenses. Tremont Mining held that "where black lung benefits are at issue, jurisdiction is not...