The Pittston Co. v. USA.

• Decision Date: 23 September 1999
• Docket Number: No. 98-2398,AND-ELKHORN,CA-97-294,98-2398
• Citation: 199 F.3d 694
• Parties: (4th Cir. 1999) THE PITTSTON COMPANY; BUFFALO MINING COMPANY; CLINCHFIELD COAL COMPANY; EASTERN COAL CORPORATION; ELKAY MINING COMPANY; JEWELL RIDGE COAL CORPORATION; KENTLCOAL CORPORATION; MEADOW RIVER COAL COMPANY; PITTSTON COAL GROUP; RANGER FUEL CORPORATION, Plaintiffs-Appellants, v. UNITED STATES OF AMERICA, Defendant & Third Party Plaintiff-Appellee, v. MICHAEL H. HOLLAND, Trustee of the United Mine Workers of America Combined Benefit Fund; UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT PLAN; ELLIOT A. SEGAL, Trustee of the United Mine Workers of America Combined Benefit Fund; WILLIAM P. HOBGOOD, Trustee of the United Mine Workers of America Combined Benefit Fund; MARTY D. HUDSON, Trustee of the United Mine Workers of America Combined Benefit Fund; THOMAS O. S. RAND, Trustee of the United Mine Workers of America Combined Benefit Fund; GAIL R. WILENSKY, Trustee of the United Mine Workers of America Combined Benefit Fund; CARL E. VAN HORN, Trustee of the United Mine Workers of America Combined Benefit Fund, Third Party Defendants Appellees, and THE BITUMINOUS COAL OPERATORS' ASSOCIATION, INCORPORATED; INTERNATIONAL UNION, UNITED MINE WORKERS OF AMERICA, Parties in Interest. (). . Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 694

199 F.3d 694 (4th Cir. 1999)

THE PITTSTON COMPANY; BUFFALO MINING COMPANY; CLINCHFIELD COAL COMPANY; EASTERN COAL CORPORATION; ELKAY MINING COMPANY; JEWELL RIDGE COAL CORPORATION; KENTL AND-ELKHORN COAL CORPORATION; MEADOW RIVER COAL COMPANY; PITTSTON COAL GROUP; RANGER FUEL CORPORATION, Plaintiffs-Appellants, v. UNITED STATES OF AMERICA, Defendant & Third Party Plaintiff-Appellee, v. MICHAEL H. HOLLAND, Trustee of the United Mine Workers of America Combined Benefit Fund; UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT PLAN; ELLIOT A. SEGAL, Trustee of the United Mine Workers of America Combined Benefit Fund; WILLIAM P. HOBGOOD, Trustee of the United Mine Workers of America Combined Benefit Fund; MARTY D. HUDSON, Trustee of the United Mine Workers of America Combined Benefit Fund; THOMAS O. S. RAND, Trustee of the United Mine Workers of America Combined Benefit Fund; GAIL R. WILENSKY, Trustee of the United Mine Workers of America Combined Benefit Fund; CARL E. VAN HORN, Trustee of the United Mine Workers of America Combined Benefit Fund, Third Party Defendants Appellees, and THE BITUMINOUS COAL OPERATORS' ASSOCIATION, INCORPORATED; INTERNATIONAL UNION, UNITED MINE WORKERS OF AMERICA, Parties in Interest.

No. 98-2398 (CA-97-294).

UNITED STATES COURT OF APPEALS, FOR THE FOURTH CIRCUIT.

Argued: September 23, 1999.

Decided: December 27, 1999.

Appeal from the United States District Court for the Eastern District of Virginia, at Richmond.

James R. Spencer, District Judge.

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] COUNSEL ARGUED: Wade Wallihan Massie, PENN, STUART & ESKRIDGE, Abingdon, Virginia, for Appellants. Jeffrey A. Clair, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Stephen John Pollak, SHEA & GARDNER, Washington, D.C., for Appellees. ON BRIEF: Stephen M. Hodges, PENN, STUART & ESKRIDGE, Abingdon, Virginia; Gregory B. Robertson, HUNTON & WILLIAMS, Richmond, Virginia; A.E. Dick Howard, Charlottesville, Virginia, for Appellants. David W. Ogden, Acting Assistant Attorney General, Helen F. Fahey, United States Attorney, Douglas N. Letter, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee United States. Wendy S. White, Howard R. Rubin, SHEA & GARDNER, Washington, D.C.; Samuel M. Brock, III, MAYS & VALENTINE, L.L.P., Richmond, Virginia, for Appellees Holland, et al.

Before WILKINS, NIEMEYER, and TRAXLER, Circuit Judges.

Reversed and remanded by published opinion. Judge Wilkins wrote the majority opinion, in which Judge Traxler joined. Judge Niemeyer wrote a dissenting opinion.

OPINION

WILKINS, Circuit Judge:

The Pittston Company¹ (Pittston) appeals an order of the district court that, in relevant part, dismissed under the doctrine of claim preclusion Pittston's claim that the Coal Industry Retiree Health Benefit Act of 1992 (the Coal Act), see 26 U.S.C.A.§§ 9701-22 (West Supp. 1999), violates the non-delegation and separation of powers doctrines of the United States Constitution by improperly placing governmental powers and federal revenues in the hands of a private entity. Pittston also appeals an order of the district court denying its motion to amend its complaint to add claims based on the Due Process and Takings Clauses of the Fifth Amendment. Concluding that the district court erred on both points, we reverse and remand for further proceedings.

I.

A.

The issue of health care benefits for retired coal industry workers and their dependents has a protracted history. See generally Eastern Enters. v. Apfel, 118 S. Ct. 2131, 2137-42 (1998) (plurality opinion) (discussing history leading to the enactment of the Coal Act); id. at 2165-66 (Breyer, J., dissenting) (same); Holland v. Big River Minerals Corp., 181 F.3d 597, 600-01 (4th Cir. 1999) (same); Holland v. Keenan Trucking Co., 102 F.3d 736, 738-39 (4th Cir. 1996) (same). Disputes concerning health care for miners date back to the time early in this century when such care was funded with a prepayment plan through payroll deductions and was supplied by company doctors. In the 1930s and 1940s, the United Mine Workers of America (UMWA) and coal industry employers sought changes in the method of providing essential services to miners, and from the late 1940s through the early 1970s pension and medical benefits were provided by several UMWA funds created under a series of National Bituminous Coal Wage Agreements (NBCWAs), including a 1950 and a 1974 UMWA Benefit Plan. The funding for these benefits was supplied in part by a royalty on each ton of coal mined and in part by payroll deductions. As benefits improved under UMWA plans and the number of beneficiaries increased, other factors such as a decrease in the amount of coal produced and a rapid increase in health care costs conspired to produce financial problems for the funds. In response to these financial pressures, the 1978 NBCWA allocated to signatory employers responsibility for the health care costs of their active and retired miners. The 1974 UMWA Benefit Plan remained in place, but was responsible for providing benefits only to "orphaned" retired miners --those whose former employers were no longer in business.

Despite this restructuring, the benefit plans continued to suffer financially, and by the late 1980s they were facing insolvency. Unrest concerning this situation led to an 11-month strike beginning in 1989 by mine workers against the Pittston Coal Company, which ended only after the Secretary of Labor intervened and negotiated a settlement. Thereafter, the Secretary established the Advisory Commission on United Mine Workers of America Retiree Health Benefits (the "Coal Commission"), a bipartisan commission formed to assess the financial outlook of the UMWA health benefit plans and to devise possible strategies to guarantee the long-term viability of the plans. The Coal Commission concluded that retired miners were entitled to the health benefits that had been promised them and that such commitments must be honored; that a statutory obligation to fund the benefits should be imposed on current and former signatories to NBCWAs; and that an improved means of funding benefits for orphaned miners should be developed. After conducting hearings on the Coal Commission's recommendations, Congress enacted the Coal Act in 1992. Congress found that

in order to secure the stability of interstate commerce, it is necessary to modify the current private health care benefit plan structure for retirees in the coal industry to identify persons most responsible for plan liabilities in order to stabilize plan funding and allow for the provision of health care benefits to such retirees.

26 U.S.C.A. § 9701 note.

Toward these goals, the Coal Act legislated significant changes in health benefits for retired coal workers. Most relevant to the present case, it consolidated the 1950 and 1974 UMWA Benefit Plans into the United Mine Workers of America Combined Benefit Fund (the Combined Fund). See id. § 9702(a)(2). Coal companies pay annual premiums to the Combined Fund. See id. § 9704(a). The Fund, in turn, provides health and death benefits to coal industry retirees who, as of July 20, 1992, were eligible to receive and were receiving benefits from the 1950 or 1974 UMWA Benefit Plans and to those receiving or eligible to receive such benefits as of such date by virtue of a relationship to such a retiree. See id. § 9703.

The Coal Act provides that each retiree is assigned to a former employer that was a signatory to a NBCWA and that remains in business. Assignments are made in an order prescribed in the Act. A retiree is first assigned to the operator that was a signatory to the 1978 or subsequent NBCWA and that most recently employed the retiree in the coal industry for at least two years. See id. § 9706(a)(1). If no such operator exists, the retiree is assigned to the operator that was a signatory to the 1978 or subsequent NBCWA and that most recently employed the retiree in the coal industry for any length of time. See id. § 9706(a)(2). If no operator meets those criteria, the retiree is assigned to the signatory operator that employed the retiree in the coal industry for the longest period of time prior to the effective date of the 1978 NBCWA. See id. § 9706(a)(3). These "assigned operators" are then required to pay annual premiums to the Combined Fund for each person assigned to them. See id. § 9704.

A retiree not assigned under § 9706 is an"unassigned beneficiary." See id. § 9704(d). Health care payments for unassigned beneficiaries derive from three sources, the first two being surpluses from the 1950 UMWA Pension Plan that are transferred to the Combined Fund, see id. § 9705(a), and transfers from the Abandoned Mine Reclamation Fund, see id. § 9705(b); 30 U.S.C.A.§ 1232(h) (West Supp. 1999). If these sources prove insufficient to pay for the unassigned beneficiaries' health care, an "unassigned beneficiaries premium" is assessed to each assigned operator based on the number of its assigned beneficiaries. See 26 U.S.C.A. § 9705(a)(3); id. § 9704(a)(3).

An assigned operator's health benefit premium for assigned beneficiaries for any year is the product of the "per beneficiary premium" for that year multiplied by the number of eligible beneficiaries assigned to that operator under 26 U.S.C.A. § 9706. See id. § 9704(b)(1). The per beneficiary premium for each year is calculated by adjusting the per beneficiary premium for the initial year--1993-for inflation. See id. § 9704(b)(2). The Coal Act as originally enacted provided that the Secretary of Health and Human Services (the Secretary) would calculate the amount of the per beneficiary premium and assign beneficiaries to assigned operators. See 26 U.S.C. §§ 9704(b)(2), 9706(a) (Supp. IV 1993). However, effective March 31, 1995, both of those duties were transferred to the Commissioner of Social Security (the Commissioner). See Social Security Independence and...