Harmar Coal Co. v. Director, Office of Workers' Compensation Programs, U.S. Dept. of Labor

• Decision Date: 21 February 1991
• Docket Number: No. 90-3259,90-3259
• Citation: 926 F.2d 302
• Parties: HARMAR COAL COMPANY and Old Republic Insurance Company, Petitioners, v. DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR and Joseph J. Rostis, Respondents.
• Court: U.S. Court of Appeals — Third Circuit

Page 302

926 F.2d 302

19 Fed.R.Serv.3d 128

HARMAR COAL COMPANY and Old Republic Insurance Company, Petitioners, v. DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR and Joseph J. Rostis Respondents.

No. 90-3259.

United States Court of Appeals Third Circuit.

Argued Oct. 9, 1990.

Decided Feb. 21, 1991.

Mark E. Solomons (argued) Laura Metcoff Klaus, Arter & Hadden, Washington, D.C., for petitioners.

Robert P. Davis, Sol. of Labor, Donald S. Shire, Associate Sol. for Black Lung Benefits, Sylvia T. Kaser, and Michael J. Denney, Counsel for Appellate Litigation, Rita Roppolo (argued), U.S. Dept. of Labor, Office of the Sol., Washington, D.C., for respondent Director, Office of Workers' Compensation Programs.

William L. Lowman and James Harkness (argued) United Mine Workers of America, Belle Vernon, Pa., for respondent Joseph J. Rostis.

Before GREENBERG, HUTCHINSON and COWEN, Circuit Judges.

OPINION OF THE COURT

HUTCHINSON, Circuit Judge.

Harmar Coal Company (Harmar) and Old Republic Insurance Company (Old Republic), Harmar's insurer against liability for federal black lung benefits, petition for review of an order of the Benefits Review Board (Board). The Board affirmed the Department of Labor's (Department's) determination that Joseph Rostis (Rostis) was entitled to black lung benefits and that Harmar and Old Republic were responsible for paying those benefits to Rostis. Harmar and Old Republic conceded almost at the outset of this case that they would be liable if any benefits were due Rostis. The Department determined that benefits were due Rostis in a default judgment that a deputy commissioner entered against Harmar and Old Republic on September 18, 1980. ¹

This matter then began its tortuous procedural route. Harmar and Old Republic appealed to an administrative law judge (ALJ), who decided parts of the appeal and remanded the rest of it back to the deputy commissioner. Following the deputy commissioner's decision on remand, Harmar and Old Republic appealed to the Board and simultaneously filed a timely motion for reconsideration with the deputy commissioner. Even though Harmar and Old Republic's motion for reconsideration remained pending before the deputy commissioner, the Board denied Harmar and Old Republic relief from the ALJ's determination that they had proper notice of the deputy commissioner's initial finding that benefits were due as well as from the deputy commissioner's determination on remand that they otherwise lacked good cause to vacate the default. Harmar and Old Republic seek review of these Board determinations.

30 U.S.C.A. Sec. 932(a) (West 1986) incorporates the appellate review procedures of the Longshore and Harbor Workers' Compensation Act, 33 U.S.C.A. Sec. 921(c) (West 1986), into the Black Lung Benefits Act. Section 921(c) provides:

Any person adversely affected or aggrieved by a final order of the Board may obtain a review of that order in the United States court of appeals for the circuit in which the injury occurred....

Id. The Board's order, if it stands, requires Harmar or Old Republic to pay benefits due Rostis and to reimburse the Black Lung Trust Fund for amounts already advanced to him. Therefore, we hold the Board's decision is a final order, and we have jurisdiction over Harmar and Old Republic's petition for review of the Board's order. We are, however, unable to reach the merits of Harmar and Old Republic's contentions that they had good cause for their failure to controvert properly the Department's initial determination that Rostis was entitled to benefits. We cannot reach the merits of the good cause issue because Harmar and Old Republic's appeal to the Board was filed simultaneously with their timely motion for reconsideration of the good cause issue. Even today, it appears that motion remains pending before a deputy commissioner. Accordingly, their appeal to the Board was premature under the controlling regulation, 20 C.F.R. Sec. 802.206(f) (1990), and the Board lacked power to hear Harmar's appeal. Thus, we will vacate the Board's decision and order on the good cause issue without reaching the merits of Harmar and Old Republic's good cause argument. As a result, we are equally unable to consider petitioners' other arguments on the merits: that they were not properly notified of the deputy commissioner's initial finding; that even if they were notified, they are entitled to a hearing before an ALJ to present their claim that they had good cause to file a late response; and that considering the way the Department handled this case, denying them a hearing violated due process. Our reasoning follows.

I.

Because of the twists and turns the administrative process took in this case as it circled back on itself, we first summarize in general terms Harmar and Old Republic's claims against the procedural background of our decision.

Old Republic says that at the time Rostis's claim was filed, it had adopted a practice of handling without outside counsel the preliminaries of miners' claims for which its insureds were potentially liable. These preliminaries included the preparation and filing of the controversion necessary to prevent entry of a default judgment based on a deputy commissioner's initial finding that benefits were due. See 20 C.F.R. Secs. 725.410, 725.413 (1990) (concerning initial findings and defaults).

Harmar and Old Republic's problems in Rostis's case began when Old Republic permitted an outside attorney to enter an appearance for Harmar before the deputy commissioner made his initial finding that Rostis was eligible for benefits. Old Republic does not deny retaining this attorney, George Thompson (Thompson), to represent it on Rostis's claim. The written appearance Thompson filed directed the Department to send copies of all notices involving Rostis's claim to Thompson. Thereafter, when a deputy commissioner determined that Rostis was indeed eligible for benefits, the Department sent notice of that determination to Thompson. The notice included a warning that a default judgment would be entered against Harmar and Old Republic unless they notified the deputy commissioner that they intended to controvert Rostis's eligibility by filing, within thirty days, a controversion of liability on a form the Department prescribed for that purpose. The form was enclosed.

A Department regulation published at 20 C.F.R. Sec. 725.364 (1990) provides with respect to notice:

Notice given to any party of any administrative action, determination, or decision, or request to any party for the production of evidence shall be sent to the representative of such party and such notice or request shall have the same force and effect as if it had been sent to the party represented.

Instead of filing a controversion on the form provided, Thompson sent the Department a summary of medical evidence that tended to refute the deputy commissioner's determination that Rostis was eligible for benefits. Apparently failing to recognize Thompson's submission of the medical evidence as a proper controversion of Rostis's claim, the deputy commissioner entered a default judgment against Harmar and Old Republic. As soon as Old Republic learned of the default, it began efforts to take it off. Ultimately, Old Republic filed both an appeal from the default with the Board and a timely motion with the deputy commissioner for reconsideration of his refusal to accept Old Republic's argument that it had good cause for its failure to file a proper controversion of the deputy commissioner's initial finding that Rostis was eligible for benefits. ²

20 C.F.R. Sec. 802.206(f) (1990) provides:

If a timely motion for reconsideration of a decision or order of an administrative law judge or deputy commissioner is filed, any appeal to the Board, whether filed prior to or subsequent to the filing of the timely motion for reconsideration, shall be dismissed without prejudice as premature. Following decision by the administrative law judge or deputy commissioner pursuant to either paragraph (d) or (e) of this section, a new notice of appeal shall be filed with the Clerk of the Board by any party who wishes to appeal.

This Department regulation prevails over any conflicting Board rulings holding that the Board can review an appeal to it despite the pendency of a timely motion for reconsideration before a deputy commissioner or ALJ. See Revak v. National Mines Corp. 808 F.2d 996, 1002 n. 10 (3d Cir.1986) (citing United States v. Nixon, 418 U.S. 683, 695-96, 94 S.Ct. 3090, 3100-02, 41 L.Ed.2d 1039 (1974)), overruled on other grounds, Mullins Coal Co. v. Director, OWCP, 484 U.S. 135, 108 S.Ct. 427, 98 L.Ed.2d 450 (1987); cf. 5 U.S.C.A. Sec. 556(c)(8) (West 1977) (agency rules govern decisions made in agency hearings). Accordingly, it is plain that the Board lacked the power to consider the good cause issue.

II.

In order to understand fully the problem this petition for review presents, we now set out in detail what happened.

On May 3, 1978, Rostis filed a claim with the Department for benefits under the version of the Black Lung Benefits Act then in effect. On March 27, 1980, the Department sent a Notice of Claim to Harmar, Rostis's last employer, and Harmar's insurer, Old Republic. Old Republic agreed that the claim correctly named Harmar as the responsible employer liable for any benefits to which Rostis might be entitled. Determining the responsible employer is the first step in the administrative processing of a black lung claim. The second step requires a deputy commissioner to make an initial finding of injury. See 20 C.F.R. Secs. 725.410, 725.412 (1990). After Old Republic determined that its insured, Harmar, was responsible for benefits that might be owed Rostis, Thompson filed an appearance before the Office of Workers' Compensation Programs (Compensation Office) as counsel for Harmar and Old Republic, asking that the Department "send copies of any and...