Reich v. Youghiogheny and Ohio Coal Co.

Decision Date13 May 1994
Docket NumberNo. C2-92-793.,C2-92-793.
Citation858 F. Supp. 1381
PartiesRobert REICH, Secretary of Labor, United States Department of Labor, Plaintiff, v. The YOUGHIOGHENY AND OHIO COAL COMPANY, a corporation, Defendant.
CourtU.S. District Court — Southern District of Ohio


Steve Vahalik, Columbus, OH, Deborah E. Mayer, Associate Sol., U.S. Dept. of Labor, Washington, DC, for plaintiff.

John R. Estadt, Hanlon, Duff, Paleudis & Estadt Co., LPA, St. Clairsville, OH, for defendant.


GRAHAM, District Judge.

This case concerns the enforcement of a federal lien which attached to the property of the Youghiogheny and Ohio Coal Company ("Y & O") upon its purported failure to pay statutory interest due to the Black Lung Disability Trust Fund (hereinafter the "Fund") as provided for under 26 U.S.C. § 9501 et seq. The interest stems from reimbursements made to the Fund in connection with final determinations of Y & O's liability for disability benefits payable to Steve Vihalik and medical benefits payable to Edward Turkal, Jones Ferris, Cecil Dutton, Lewis Peterson and George Pothorski.


The Black Lung Benefits Act, codified as amended at 30 U.S.C. §§ 901-945 (1982) (hereinafter the "Act"), establishes a federal program for compensating coal miners who are totally disabled due to pneumoconiosis. See 30 U.S.C. § 901. The Act provides, inter alia, for the recovery by disabled miners of expenses they incurred in treating their pneumoconiosis. Typically, the Fund is to pay benefits to claimants initially determined eligible when the putative responsible coal mine operator, as determined in accordance with the regulations of the Secretary, fails to pay these benefits. 26 U.S.C. § 9501(d)(1)(A). Where the employer is ultimately determined liable for payment of these benefits, it must reimburse the Fund with interest. 30 U.S.C. § 934, 20 C.F.R. § 725.608(b).

On September 4, 1992, the plaintiff filed its original complaint which it subsequently amended on May 5, 1993. Plaintiff seeks to collect on the purported liability of the defendant imposed by 30 U.S.C. § 934(b)(1) and to enforce the lien of the United States arising under 30 U.S.C. § 934(b)(2) for interest outstanding on payments made by the Fund to claimants for which the defendant was ultimately liable.

This matter is presently before the Court on cross motions for summary judgment filed by the plaintiff and the defendant. The cross motions raise identical issues. With respect to Count I of the Amended Complaint, the Court must determine whether the plaintiff forfeited its ability to collect interest due and owing where its claims adjuster undercalculated the amount due and the defendant paid that amount. The second issue, relating to Counts II through VI of the Amended Complaint, concerns whether under the Act interest on medical benefits claims begins to accrue from the date of the government's actual disbursements upon an initial determination of eligibility or thirty days after the bills are tendered to the operator for payment.


The procedure for granting summary judgment is found in Fed.R.Civ.P. 56(c), which provides in pertinent part:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

The evidence must be viewed in the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Summary judgment will not lie if the dispute about a material fact is genuine, "that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). However, summary judgment is appropriate if the opposing party fails to make a showing sufficient to establish the existence of an element essential to that party's case and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). See also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).


The parties do not dispute the procedural histories of the six separate claims. In each case, there exists a final administrative determination holding Y & O liable as the coal mine operator for the payment of disability or medical benefits to the individual coal miners. The Fund initially paid benefits to the miners. After a final administrative determination was made, Y & O reimbursed the Fund its principal but refused to pay all or some of the statutory interest claimed by the plaintiff. The specific facts of each particular claim are set forth more fully below:


On July 15, 1977, Mr. Steve Vihalik filed a claim under the Black Lung Benefits Act, 30 U.S.C. §§ 901-945, for his total disability resulting from pneumoconiosis. The Department of Labor district director issued an administrative finding of entitlement for Mr. Vihalik on May 21, 1979. The awarded benefits were paid by the Black Lung Disability Trust Fund for the period extending from July, 1978 until September, 1982 in the form of interim benefits as required by 26 U.S.C. § 9501(d)(1)(A); 20 C.F.R. §§ 725.522(b) and 725.701A, pending a formal hearing requested by employer, Y & O, for purposes of controverting the award.

On February 27, 1981, following a formal hearing, Administrative Law Judge Guill awarded Mr. Vihalik benefits to be paid by Y & O for his total disability due to pneumoconiosis. The Administrative Law Judge's award of benefits was affirmed on appeal by the Benefits Review Board. In a letter to the Department of Labor dated March 28, 1986, Y & O accepted liability and reimbursed the Fund in the amount of $23,391.60 for the principal amount of the interim benefits paid to Mr. Vihalik. The Department of Labor received payment on April 7, 1986.

In a letter dated March 2, 1988, a Department of Labor district director informed Y & O that outstanding interest in the amount of $2,707.35 was due to the Fund. Y & O paid this amount to the Fund on March 18, 1988, but on August 2, 1988 a letter was sent from the district director indicating that "interest on benefits was not calculated correctly," and that additional interest in the amount of $11,724.02 was due. Y & O refused to pay the additional interest amount and contested the district director's demand for additional interest in a hearing before Administrative Law Judge Gilday. The Administrative Law Judge concluded that Y & O was not responsible for an additional payment of interest in the sum of $11,724.02. On appeal, the Benefits Review Board reversed the decision of the Administrative Law Judge and the Sixth Circuit subsequently dismissed Y & O's appeal for want of jurisdiction.


In each of the following five causes of action, Y & O initially contested its liability for medical benefits, but ultimately accepted liability or was found liable. Y & O reimbursed the Black Lung Disability Trust Fund for medical benefits amounts initially paid by the Fund in each of these cases, but Y & O refused to pay the statutory interest.

1. Edward Turkal

On June 6, 1978, Edward Turkal filed a claim for medical benefits for his disability due to pneumoconiosis arising from his employment with Y & O as a coal miner pursuant to the provisions of the Act. Y & O controverted Mr. Turkal's claim for medical benefits. As a result, as mandated by 26 U.S.C. § 9501(d)(1)(A), the Fund paid interim expenses incurred in Mr. Turkal's treatment, pending a formal hearing before Administrative Law Judge Musgrove. Prior to the hearing, Y & O withdrew its controversion and the Department of Labor issued an award for medical benefits. On May 2, 1988, the Department of Labor received Y & O's repayment to the Fund in the amount of $210.00 for the cost of the medical benefits previously paid by the Fund. On October 16, 1989, Y & O was notified by the district director that it owed an additional $5,762.90 to the Fund for medical expenses related to Mr. Turkal's treatment, payment for which was made by Y & O and received by the Department of Labor on October 30, 1989. On November 6, 1989 the district director demanded interest in the amount of $3,767.07 which Y & O refused to pay.

2. Jones Ferris

Y & O controverted a medical benefits claim filed on October 24, 1978 by Jones Ferris under Part B of the Act, 30 U.S.C. §§ 921-930. In response, the Fund paid interim expenses related to Mr. Ferris' pneumoconiosis as mandated under 26 U.S.C. § 9501(d)(1)(A); 20 C.F.R. §§ 725.522(b) and 725.701A. Y & O ultimately agreed to pay medical benefits. On February 19, 1988, the district director at the Department of Labor instructed Y & O to pay medical benefits amounting to $7,332.30 which were previously paid by the Fund. Y & O tendered full payment of the principal amount, which was received by the Department of Labor on March 7, 1988. However, Y & O refused to pay the $3,694.60 interest demanded by the district director in a letter to Y & O dated November 17, 1989.

3. Cecil Dutton

Y & O controverted a medical benefits claim filed on May 6, 1978 by Cecil Dutton under Part B of the Act, 30 U.S.C. §§ 921-930. In response, the Fund paid interim expenses related to Dutton's pneumoconiosis as mandated under 26 U.S.C. § 9501(d)(1)(A); 20 C.F.R. §§ 725.522(b) and 725.701A. Administrative Law Judge Kerr ordered Y & O to pay Dutton's medical benefits beginning May, 1978. On appeal, the Benefits Review Board affirmed the Administrative Law Judge's decision. Y & O reimbursed the Fund on or about February 2, 1990 in the amount of $2,492.60, in response to the Department of Labor's...

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