A.T. Massey Coal Co., Inc. v. Barnhart, No. CIV. RDB 03-3389.

Decision Date11 August 2005
Docket NumberNo. CIV. RDB 03-3389.
Citation381 F.Supp.2d 469
PartiesA.T. MASSEY COAL COMPANY, INC., et al., Plaintiffs, v. Jo Anne B. BARNHART, Commissioner of Social Security, et al., Defendants.
CourtU.S. District Court — District of Maryland

John Ray Woodrum, Margaret Summers Lopez, William Gregory Mott, Ogletree Deakins Nash Smoak and Stewart PC, Washington, DC, for Plaintiffs.

Brian G. Kennedy, Department of Justice, Stephen J. Pollak, John Townsend Rich, Shea and Gardner, Washington, DC, for Defendants.

MEMORANDUM OPINION

BENNETT, District Judge.

Pending before this Court are cross motions for summary judgment filed by Plaintiffs A.T. Massey Coal Company, Inc., et al., ("Plaintiffs" or "Assigned Operators") and Defendant Jo Anne B. Barnhart ("Barnhart" or "Commissioner"), Commissioner of the Social Security Administration ("SSA") and Defendants Michael H. Holland, William P. Hobgood, Marty D. Hudson, Thomas O.S. Rand, Elliot A. Segal, Carl E. Van Horn, and Gail R. Wilensky, who are Trustees of the United Mine Workers of America Combined Benefit Fund (collectively "Trustees").1 Plaintiffs comprise 118 companies assigned responsibility by the SSA to pay annual premiums to the United Mine Workers of America Combined Benefit Fund ("Combined Fund") according to the Coal Industry Retiree Health Benefit Act of 1992 ("Coal Act"), 26 U.S.C. §§ 9701 et seq. On April 15, 2004, Plaintiffs filed a second amended complaint ("Second Amended Complaint") against Defendants Barnhart and Trustees seeking injunctive and declaratory relief: (1) concerning the correct premium amount the Commissioner of the SSA is required to calculate and that the Plaintiffs are obliged to pay; and (2) to recover amounts owed to them due to the supposed unlawful premiums set by the Commissioner. Plaintiffs' Second Amended Complaint seeks review of a two-tiered premium approach that was adopted by the Commissioner in 2003, which requires some coal operators to pay higher health care premium rates for retired workers and their dependents than those paid by other coal operators.

On November 22, 2004, Plaintiffs filed a Motion for Summary Judgment on Counts One and Two of their Second Amended Complaint. On January 21, 2005, Defendant Barnhart and Defendant Trustees filed separate Cross Motions for Summary Judgment on Counts One and Two. Count One of the Second Amended Complaint alleges that the Commissioner's June 10, 2003 decision ("2003 Premium Decision") altered the method used by the Commissioner to calculate annual premiums from 1995 to 2003 and in doing so violated the plain language of the Coal Act, 26 U.S.C. § 9704(b)(2)(A). Count Two of the Second Amended Complaint claims that the 2003 Premium Decision violated the Administrative Procedure Act ("APA"), in particular 5 U.S.C. § 706(2)(A), because the 2003 Premium Decision was arbitrary and capricious and not in accordance with the law.

In sum, the pending motions for summary judgment focus on the interpretation and application of the term "reimbursements" as it is used in 26 U.S.C. § 9704(b)(2)(A) of the Coal Act. Earlier premium decisions have faced similar challenges in federal courts in two other districts, the Northern District of Alabama (National Coal Ass'n v. Shalala, No. CV-94-H-780-S, 1995 U.S. Dist LEXIS 21116 (N.D.Ala. June 2, 1995), aff'd sub nom. National Coal Ass'n v. Chater, 81 F.3d 1077 (11th Cir.1996) (summary judgment decisions)) and the District of Columbia (Holland v. Apfel, 96-9744(CKK), 2000 U.S. Dist. LEXIS 6134 (D.D.C. Feb. 25, 2000), aff'd in part, rev'd in part sub nom. Holland v. National Mining Ass'n., 309 F.3d 808 (D.C.Cir.2002) (summary judgment decisions)). Both the prior premium decisions and the outcomes of the earlier court challenges, which are discussed below, are central in understanding the development of the two-tiered structure established in the 2003 Premium Decision. The 2003 Premium Decision states, in relevant part:

Accordingly, for the determination letter for the plan year beginning October 1, 2003, we intend to provide two per-beneficiary premium calculations. The higher amount will represent a calculation based on the initial interpretation of the term "reimbursement." We believe that this interpretation is consistent with the text and structure of the Coal Act as a whole and represents a permissible construction of the statute's plain language of the term "reimbursement." The lower amount will represent a calculation consistent with the interpretation established in National Coal.

(See Pls' Mem. Summ. J. Ex. 10 at 2, "2003 Premium Decision".)

This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331, 26 U.S.C. § 9721 (the Coal Act), and 29 U.S.C. § 1451 (ERISA). The issues have been fully briefed and no hearing is necessary. See Local Rule 105.6 (D.Md.2004). For the reasons stated below, the Plaintiffs' Motion for Summary Judgment on Counts One and Two is GRANTED, Defendant Barnhart's Motion for Summary Judgment on Counts One and Two is DENIED, and Defendant Trustees' Motion for Summary Judgment on Counts One and Two is DENIED.

FACTUAL AND PROCEDURAL HISTORY
I. History and Structure of the Coal Act

For well over seventy years, the employers of the coal mining industry and the United Mine Workers of America ("UMWA"), an organization representing coal miners, have disputed the extent of employee benefits provided to coal miners. Much of this lengthy history is described in a variety of cases, including Barnhart v. Sigmon Coal Co., 534 U.S. 438, 444-45, 122 S.Ct. 941, 151 L.Ed.2d 908 (2002), Eastern Enters. v. Apfel, 524 U.S. 498, 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), and United Mine Workers of America Health & Ret. Funds v. Robinson, 455 U.S. 562, 566, 102 S.Ct. 1226, 71 L.Ed.2d 419 (1982). In the late 1980's, then-Secretary of Labor, Elizabeth Dole, created the Advisory Commission on United Mine Workers of America Retiree Health Benefits ("Coal Commission") to ensure health benefits for over 120,000 individuals. See Sigmon Coal Co., 534 U.S. at 444-45, 122 S.Ct. 941. The purpose of the Coal Commission was to study the retiree health care crisis and advise Congress as to possible funding plan options, as there were numerous problems with the benefit plans then in place. See generally id. After being presented with the Coal Commission's findings and undertaking its own examination, Congress passed the Coal Industry Retiree Health Benefit Act of 1992, Pub.L. No. 102-486, §§ 19141-19143, 106 Stat. 3036, 3056 (codified at 26 U.S.C. §§ 9701-22; 30 U.S.C. § 1232(h)) ("Coal Act"), which is the subject of this litigation. The Coal Act combined the previous benefit plans into a new multiemployer plan entitled the "United Mine Workers of America Combined Fund" ("Combined Fund"). See 26 U.S.C. § 9702. The Combined Fund is financed by coal operators and is to provide health benefits to UMWA retirees, their dependents who were eligible to receive benefits from UMWA Plans on July 20, 1992. See 26 U.S.C. § 9703(f); (Pls.' Mem. Summ. J. at 2.) Additionally, the Combined Fund collaborated with Medicare to provide health care benefits to eligible Medicare recipients.

The four main parties currently involved in the Combined Fund are: (1) the group of current or retired coal miners and their dependents; (2) the Commissioner of the Social Security Administration, who is charged with calculating the per beneficiary premium each coal operator must pay;2 (3) the Trustees who are required to collect premiums and administer the Combined Fund; and (4) the coal operators that are required to pay annual premiums to the Trustees as calculated by the Commissioner.

II. Calculation of Health Benefit Premiums Under the Coal Act
A. Calculating Health Benefits Premium

Calculating the premium to be paid by the coal operators under the Coal Act is governed by 26 U.S.C. § 9704(b)(2)(A), which states:

(2) Per beneficiary premium.-The Commissioner of Social Security shall calculate a per beneficiary premium for each plan year beginning on or after February 1, 1993, which is equal to the sum of —

(A) the amount determined by dividing —

(i) the aggregate amount of payments from the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan for health benefits (less reimbursements but including administrative costs) for the plan year beginning July 1, 1991, for all individuals covered under such plans for such plan year, by

(ii) the number of such individuals ...

The first plan year of the Combined Fund was February 1, 1993 to September 30, 1993. Each subsequent plan year starts on October 1st. See 26 U.S.C. § 9702(c). However, the calculation for the base year established by Congress, beginning July 1, 1991, is crucial, as it provides the basis for all premium calculations going forward. It is this base year calculation that is at issue in the parties' motions for summary judgment. After the initial calculation, the premiums are adjusted by taking the initial calculation per beneficiary and multiplying the premium amount by the percentage of the medical component of the Consumer Price Index that surpasses the medical component for 1992. See 26 U.S.C. § 9704(b)(2)(B).

B. The Combined Fund's Practices Relating to Reimbursements From Medicare

The controversy surrounding the correct base year reimbursement figure focuses on two conflicting approaches to the term reimbursement. The first approach is a capitation-based approach to reimbursement, described below, which was actually in place during the base year established by 26 U.S.C. § 9704(b)(2)(A), which is July 1, 1991 to June 30, 1992. The second approach, also described below, is a cost-based approach to reimbursement that was in place prior to July 1, 1990. The cost-based approach had been abandoned, in lieu of the capitation-based approach, by the base year. See Holland, 309 F.3d at 811, (Pls.' Mem. Summ. J. Ex. 3 at 4, 9.)

The term reimbursements, as it is used in the relevant section of the Coal...

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  • A.T. Massey Coal Co. v. Holland
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • December 21, 2006
    ...to defer under Chevron1 to the contrary interpretation put forth by the Commissioner of Social Security. See A.T. Massey Coal Co. v. Barnhart, 381 F.Supp.2d 469 (D.Md. 2005). Agreeing with the district court, we conclude that "reimbursements" is an unambiguous historical term of art used by......

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