Mary Helen Coal Corp. v. Hudson

• Decision Date: 28 August 1997
• Docket Number: Civil Action No. 3:97CV71.
• Citation: 976 F.Supp. 366
• Court: U.S. District Court — Eastern District of Virginia
• Parties: MARY HELEN COAL CORP., Plaintiff, v. Mary D. HUDSON, Michael H. Holland, Thomas O.S. Rand, Elliot Segal, Carlton R. Sickles, Gail R. Wilensky, and William P. Hobgood, as Trustees of the United Mine Workers of America Combined Benefit Fund, and Mary D. Hudson, Michael H. Holland, Thomas F. Connors, and Robert Wallace, Trustees of the 1992 United Mine Workers of America Benefit Plan, Defendants.

976 F.Supp. 366

MARY HELEN COAL CORP., Plaintiff, v. Mary D. HUDSON, Michael H. Holland, Thomas O.S. Rand, Elliot Segal, Carlton R. Sickles, Gail R. Wilensky, and William P. Hobgood, as Trustees of the United Mine Workers of America Combined Benefit Fund, and Mary D. Hudson, Michael H. Holland, Thomas F. Connors, and Robert Wallace, Trustees of the 1992 United Mine Workers of America Benefit Plan, Defendants.

Civil Action No. 3:97CV71.

United States District Court, E.D. Virginia.

August 28, 1997.

John Lyons Marshall, Jr., Betty S.W. Graumlich, Patrick Michael McSweeney, McSweeney, Burtch & Crump, Richmond, VA, for Mary Helen Coal Corp.

Samuel Morton Brock, III, Mays & Valentine, Richmond, VA, John Mills Barr, Morgan, Lewis & Bockius, Washington, DC, Larry D. Newsome, UMWA Health & Retirement Funds, Washington, DC, John R. Mooney, Mooney, Green, Baker, Gibson and Saindon, Washington, DC, Peter Buscemi, Morgan, Lewis & Bockius, Washington, DC, for Marty D. Hudson, Michael H. Holland, Thomas O.S. Rand, Elliott A. Segal, Carlton R. Sickles, Gail R. Wilensky, Thomas F. Connors, Robert Wallace, William P. Hobgood.

MEMORANDUM OPINION

RICHARD L. WILLIAMS, Senior District Judge.

This matter is before the Court on cross motions for summary judgment. Plaintiff Mary Helen Coal Corporation ("Mary Helen") brought a declaratory judgment action asking the Court to declare the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C. §§ 9701 et seq. (the "Coal Act") unconstitutional as it applies to Mary Helen. The Defendants, the Trustees of the United Mine Workers of America 1992 Benefit Plan ("the Trustees") filed a motion for summary judgment and Plaintiff filed a cross motion for summary judgment.

At the heart of the dispute is the constitutionality of the Coal Act as it applies to Mary Helen. The Coal Act seeks to ensure the continuation of health benefits for tens of thousands of retired coal miners and their dependents. It does so by spreading the cost of such care among all employers that have in the past employed these miners and voluntarily participated in collectively bargained multiemployer plans for the provision of health care to coal industry retirees.

Plaintiff Mary Helen argues that the Coal Act, as it applies to Mary Helen, violates the Due Process Clause and the Takings Clause of the Fifth Amendment to the United States Constitution. Plaintiff asks the Court (1) to enjoin the Trustees and all other related parties from enforcing the Coal Act against Mary Helen; (2) to award Mary Helen judgment for payments it previously made under protest in response to assessments required under the Coal Act; and (3) to provide such further relief, including attorneys' fees and costs, as may be "equitable and just."

For the reasons stated below, plaintiff's prayer for a declaratory judgment that the Coal Act is unconstitutional is DENIED. Plaintiff's cross motion for summary judgment is also DENIED. Moreover, plaintiff's request that the Court enjoin the Trustees and all other related parties from enforcing the Coal Act against Mary Helen is DENIED. Finally, all forms of monetary and other relief that plaintiff seeks in this lawsuit are summarily DENIED.

For the reasons stated below, defendant's motion for summary judgment is GRANTED. In accordance with this ruling, Mary Helen is ordered to pay all monies that it currently owes to the Combined Fund under the applicable statutory mandates. These monies may include but are not limited to outstanding interest, liquidated damages and attorney's fees and are due and payable immediately. Finally, Mary Helen is required to make and continue to make each monthly payment to the Combined Fund according to its obligations under the relevant statutory provisions. This case is hereby DISMISSED WITH PREJUDICE as to all plaintiffs and defendants.

Historical Background

The allocation of health benefits for retired coal mine workers and their dependents has been a divisive issue in labor-management relations in the coal industry. The United Mine Workers of America ("UMWA") is a labor organization representing coal miners throughout North America. The Bituminous Coal Operators' Association ("BCOA") is a multiemployer bargaining association that represents various coal operators in collective bargaining with the UMWA. For over 40 years, the UMWA and BCOA have entered into a series of collective bargaining agreements known as National Bituminous Coal Wage Agreements ("NBCWAs"). Each NBCWA required signatory coal operators to provide health benefits for both active and retired miners and their dependents through multiemployer benefit plans.

The first of these plans was the Krug-Lewis Agreement. This agreement was reached after President Harry Truman authorized Secretary of the Interior Julius Krug to seize the coal mines and negotiate a truce between the striking UMWA and the bituminous coal operators. The Krug-Lewis Agreement created two new benefit plans: the United Mine Workers of America Welfare and Retirement Fund (the "1946 W & R Fund") and the United Mine Workers of America Medical and Hospital Fund (the "UMWA M & H Fund"). These funds were designed to provide economic and medical relief to miners, their dependents and their survivors. Shortly after these 1946 funds commenced operations, the UMWA and the bituminous coal industry reached a new collective bargaining agreement, effective May 1, 1947. Like the plans preceding it, this fund was established to provide monetary and medical relief to UMWA miners and their dependents. By the end of 1948, the 1947 Fund had provided medical benefits to more than 250,000 coal miners and their families in 26 states. In March, 1950, the UMWA Welfare and Retirement Fund of 1950 replaced the 1947 Fund. The 1950 Fund was established to continue providing pension and health benefits to UMWA miners and their dependents and to introduce a comprehensive hospital and medical care program. This program provided for the payment of unlimited hospitalization and medical care for (1) working and unemployed miners; (2) working and unemployed miners' wives and dependent children; (3) retired miners and their wives; (4) widows of deceased miners; and (5) relatives of deceased miners who cared for the miners' orphaned children and retired miners and their wives. During the 28 years of its existence, the 1950 Fund and its predecessors collected approximately $3.9 billion in hospital and medical care benefits, $283 million in survivors and other related benefits, and approximately $2 billion in pension benefits.

In 1974, BCOA and the UMWA divided the 1950 Fund into four separate multiemployer plans. Two of the plans provided pension benefits to retired miners; the other two provided health benefits to retired miners. One of the health benefit plans offered medical assistance to miners who retired before 1976 (the "Pre-1976 Plan"); the other health plan provided a similar portfolio of medical assistance to miners who retired after 1976 or remained actively employed (the "Post-1976 Plan"). In 1978, the UMWA and BCOA restructured the Post-1976 Plan to embody an agreement reached between miners and their employers that signatory employers would establish individual employer health plans to provide benefits to their active employees and retirees. This plan is called the 1978 NBCWA.

During the last ten years, the Pre-1976 Plan and the Post-1976 Plan have experienced serious financial problems. Numerous coal companies that had signed the 1978 NBCWA sought to terminate their participation in the Pre- and Post-1976 plans. To do so, they sought to "dump" the retirees who were in their individual employer plans into the Post-1976 Plan and abandon their contribution obligations altogether. This activity forced the remaining signatories of the NBCWAs to pay higher contributions in order to finance coverage for retirees who had been abandoned by their former employers.

The Coal Act

By the late 1980s, escalating health care costs and the benefit funds' increasing inability to provide adequate benefits for eligible recipients caused uncertainty and instability in the coal mining workforce. When labor disputes and unrest had escalated to the point of threatening the economies of several coal-producing states the Secretary of Labor appointed a commission to analyze the retiree heath care crisis. The commission found a steady increase in the number of "orphaned" retirees and a hastily eroding funding base for providing these individuals with health and pension benefits. At the termination of the commission's investigation, the commission concluded that the continued delivery and financing of health care in the coal industry depended on the imposition of a statutory mandate upon coal operators to contribute to health benefit funds.

Congress' response to this recommendation was its passage of the Coal Industry Retiree Benefit Act of 1992 ("Coal Act"), 26 U.S.C. §§ 9701 et seq. — the statute that lies at the heart of this case. Under this Act, Congress created two trust funds to provide health care benefits to retired miners and their dependents — the Combined Fund and the 1992 Plan. The Combined Fund provides health and death benefits to coal industry retirees who, as of July 20, 1992, were eligibly receiving benefits from the UMWA 1950 or 1974 Benefit Trusts. The 1992 Plan was designed to provide benefits to eligible retirees who are not beneficiaries of the Combined Fund and who are not receiving health care coverage directly from their former employers. For the purposes of this case, Mary Helen has obligations under the Coal Act to make payments to the Combined Fund. It has no legal or monetary obligations to the 1992 Fund.

The Coal Act provides that coal operators who had previously contributed to the UMWA Trusts pursuant to collective bargaining agreements, including Mary Helen, are required to finance the Combined Fund by paying annual premiums. By so...