Peabody Coal Co. v. Spese

• Decision Date: 27 June 1997
• Docket Number: 95-1709,Nos. 95-1687,s. 95-1687
• Citation: 117 F.3d 1001
• Parties: PEABODY COAL COMPANY, Petitioner, Cross-Respondent, and Old Republic Insurance Company, Petitioner, v. Annabelle SPESE, Widow of John Spese, Respondent, Cross-Petitioner, and Director, Office of Workers' Compensation Programs, United States Department of Labor, Respondent, Cross-Respondent. . Re
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1001

117 F.3d 1001

PEABODY COAL COMPANY, Petitioner, Cross-Respondent and Old Republic Insurance Company, Petitioner, v. Annabelle SPESE, Widow of John Spese, Respondent, Cross-Petitioner and Director, Office of Workers' Compensation Programs, United States Department of Labor, Respondent, Cross-Respondent.

Nos. 95-1687, 95-1709.

United States Court of Appeals Seventh Circuit.

Reargued en banc Dec. 18, 1996.

Decided June 27, 1997.

Mark E. Solomons (argued), Laura M. Klaus, Arter & Hadden, Washington, DC, for Peabody Coal Company, Old Republic Insurance Company in No. 95-1687.

Ida Castro, Department of Labor, Appellate Litigation, Washington, DC, Patricia M. Nece, Cheryl Blair-Kijewski, Gary K. Stearman (argued), Department of Labor, Office of the Solicitor, Washington, DC, for Office of Workers' Compensation Programs, United States Department of Labor.

Raymond T. Reott, Michael S. Freeman (argued), Jenner & Block, Chicago, IL, for Annabelle Spese.

Thomas O. Shepherd, Jr., Benefits Review Board, Washington, DC, for Benefits Review Board.

Mark E. Solomons (argued), Laura M. Klaus, Arter & Hadden, Washington, DC, for Peabody Coal Company in No. 95-1709.

Before POSNER, Chief Judge, and CUMMINGS, COFFEY, FLAUM, EASTERBROOK, RIPPLE, MANION, KANNE, ROVNER, DIANE P. WOOD and EVANS, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

Coal miners seeking benefits under the Black Lung Benefits Act, 30 U.S.C. §§ 901-945, often file an initial application that is unsuccessful and then try again some years later. In this case, we consider what evidence a miner must produce to win the right to proceed on his second or subsequent claim. In so doing, we discuss the scope of our decision in Sahara Coal Co. v. Director, OWCP, 946 F.2d 554 (7th Cir.1991), which we believe has been misunderstood in some quarters. In addition, we must also decide when a later-filed claim merges with an earlier claim, under 20 C.F.R. § 725.309(c), one of the Director's regulations implementing the Act. The answers to these two questions determine the fate of the application before us, which has been in litigation in one form or another by the miner (and later his widow) for more than twenty years.

I

Although the background facts were set forth in the panel's opinion, Peabody Coal Co. v. Spese, 94 F.3d 369 (7th Cir.1996) (Spese I), for the sake of convenience we review the essential points here. John Spese, the miner, had worked as a mechanic repairing and maintaining coal trucks at a surface mine operated by Northern Illinois Coal Company, which Peabody Coal Company later acquired. (For convenience, we refer to his employer as "Peabody" without distinguishing it from its predecessor.) By the time he was laid off in February 1976, as a result of Peabody's decision to close the mine, Mr. Spese had worked for the company for 40 years. Two months after his retirement, Mr. Spese filed his first claim for black lung benefits. As part of his application, he underwent a battery of tests, including a physical examination, a chest x-ray, and a pulmonary function examination.

At that time, the Department of Labor (DOL) evaluated black lung applications under 20 C.F.R. Part 727, which the DOL describes as "claimant favorable." This regulation was issued under the 1977 amendments to the Black Lung Benefits Act (BLBRA), in which Congress allowed the DOL to establish interim criteria for evaluating black lung claims until it was able to issue permanent regulations for those claims. The interim criteria could be no more restrictive than the criteria that had applied to claims filed by June 30, 1973, under earlier legislation administered by the former Department of Health, Education, and Welfare (HEW). See 30 U.S.C. § 902(f)(2); Pauley v. BethEnergy Mines, Inc., 501 U.S. 680, 688, 111 S.Ct. 2524, 2529, 115 L.Ed.2d 604 (1991); Pittston Coal Group v. Sebben, 488 U.S. 105, 110, 109 S.Ct. 414, 418, 102 L.Ed.2d 408 (1988). In taking this step, Congress apparently wanted to continue the "prompt and vigorous processing of the large backlog" of black lung claims that the HEW's lenient interim presumptions (as opposed to HEW's more stringent permanent regulations) had been designed to facilitate. See Pittston Coal, 488 U.S. at 116, 109 S.Ct. at 421.

Using the Part 727 interim criteria, DOL denied Mr. Spese's claim on April 30, 1979, explaining that he did not qualify because the evidence in his claim did not show that he had pneumoconiosis. In the denial letter, DOL advised Mr. Spese that he had 60 days to submit additional evidence or to request a hearing on the denied claim, and one year to submit proof that his condition had changed or that a mistake was made in denying his claim. Mr. Spese neither appealed the adverse decision nor asked DOL to reconsider it.

Instead, on December 18, 1981, Mr. Spese filed a second claim for black lung benefits, coupled with a request that his first claim be reopened. DOL refused to reopen the 1976 claim, but it processed his second application. Because the second claim was filed after March 31, 1980, the effective date of DOL's permanent black lung regulations found in 20 C.F.R. Part 718, the claims examiner from DOL's Office of Workers' Compensation Programs, Coal Mine Division, evaluated it under Part 718. The claims examiner denied the second claim on May 6, 1982, because a second round of medical tests, including a second chest x-ray, again showed no signs of pneumoconiosis. This time, Mr. Spese asked for a formal hearing before an Administrative Law Judge, which took place nearly four years later on April 4, 1986. Prior to that hearing, in 1985, he had undergone a third x-ray. Unlike the earlier two, the 1985 x-ray was read as positive for pneumoconiosis. Confronted for the first time with a positive x-ray, at the hearing Peabody asked the ALJ to keep the record open so that it could submit its own interpretation of the image. In the end, however, it never did so, nor did it offer any other supplemental evidence that might have refuted the 1985 x-ray.

On November 19, 1986, ALJ Richard Huddleston issued a decision ruling in Mr. Spese's favor. The first question he addressed was whether the 1981 claim was a "duplicate" of the 1979 claim, such that the later claim merged into the earlier one under the terms of 20 C.F.R. § 725.309(c). That regulation states, in part:

A Claimant who filed a claim for benefits under Part B of title IV of the Act or Part C of Title IV of the Act, before March 1, 1978, and whose claim(s) are pending or have been finally denied, who files an additional claim under this part, shall have the later claim merged with any earlier claim subject to review under Part 727 of this subchapter. If an earlier claim subject to review under Part 727 of this subchapter has been denied after review, a new claim under this part shall also be denied, on the grounds of the prior denial unless the Deputy Commissioner determines that there has been a material change in conditions or the later claim is a request for modification and the requirements of § 725.310 are met.

Interpreting the first sentence of the regulation, ALJ Huddleston concluded that Mr. Spese's 1981 claim should be merged into his 1976 claim, because the latter claim, which had been subject to review under Part 727, had been filed before 1978 and it had been "finally denied." The merger meant two important things for Mr. Spese's claim: first, it would entitle him to an earlier date for the beginning of his benefits, and second, it would entitle him to have the entire record reviewed under the more lenient criteria of Part 727. Applying the second sentence of § 725.309(c) quoted above, the ALJ concluded that the 1985 x-ray, along with a pulmonary exam dated February 17, 1982, demonstrated a "material change in conditions" that justified consideration of the second claim. On the merits, the ALJ awarded Mr. Spese benefits dating back to April 1976, based on the "interim presumption" of 20 C.F.R. § 727.203(a), which presumed that pneumoconiosis was caused by exposure at the mines if the applicant had worked there at least 10 years and medical evidence (like the 1985 x-ray) revealed the disease.

Peabody appealed to the Benefits Review Board (BRB), which agreed with the ALJ's assessment of the "material change in conditions" but which disagreed with his conclusion that Mr. Spese's 1981 claim merged with the earlier one. The BRB interpreted the phrase "claim subject to review under Section 727" in the first sentence of the regulation to allow merger only if the earlier claim was still subject to Section 727 review. The BRB therefore sent the case back to the ALJ for reconsideration under the more stringent Section 718 criteria.

On remand, the ALJ again found that Mr. Spese (who had by then passed away and was repreented by his widow) was entitled to benefits. His entitlement, in turn, carried over to his wife, who as a surviving spouse is entitled to benefits based on her husband's claim. See 20 C.F.R. § 725.212. To establish eligibility under Part 718, the claimant had to show (1) that he is a miner, (2) that he has pneumoconiosis, (3) that his pneumoconiosis arose at least in part out of coal mine employment, and (4) that he is totally disabled as a result of the pneumoconiosis. The first three of these were easy to show, in the ALJ's view. Mr. Spese had been a miner for 40 years, the 1985 x-ray showed that he had pneumoconiosis, and Peabody had not rebutted the regulatory presumption that Mr. Spese, as a miner with at least 10 years in an environment just as dusty as an underground coal mine, acquired the disease at least in part due to his coal mine employment. See 20 C.F.R. § 718.203(b) (presumption that pneumoconiosis caused by coal mining work).

Even with this presumption, however, a claimant qualifies for benefits only if he can show he is (or was at the time of death) totally disabled as a result of pneumoconiosis. See 20 C.F.R. §...