LaBelle Processing Company v. Swarrow ( 1995 )

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
11-28-1995
LaBelle Processing Company v. Swarrow
Precedential or Non-Precedential:
Docket 95-3116
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
----------
No. 95-3116
----------
LABELLE PROCESSING COMPANY,
Petitioner
v.
JOHN SWARROW
and
DIRECTOR, OFFICE OF WORKERS'
COMPENSATION PROGRAMS, UNITED
STATES DEPARTMENT OF LABOR,
Respondents
----------
On Petition for Review of the Final Decision
of the Benefits Review Board
(No. 93-1491 BLA)
----------
Argued Tuesday, October 24, 1995
BEFORE: SLOVITER, Chief Judge,
COWEN and GARTH, Circuit Judges
----------
(Opinion filed November 28, 1995)
----------
Mark E. Solomons (Argued)
Laura Metcoff Klaus
Arter & Hadden
1801 K Street, N.W.
Suite 400K
Washington, DC 20006
1
Attorney for Petitioner
2
Jean Zeiler (Argued)
United Mine Workers District 5
RD 1, Box 172
Belle Vernon, PA 15012
Attorney for Respondent Swarrow
Thomas S. Williamson, Jr.
Donald S. Shire
Christian P. Barber
Dorothy L. Page (Argued)
United States Department of Labor
Office of the Solicitor
200 Constitution Avenue, N.W.
Washington, DC 20210
Attorney for Respondent Director,
Office of Workers' Compensation
Programs,
United States Department
of Labor
----------
OPINION OF THE COURT
----------
GARTH, Circuit Judge:
Petitioner Labelle Processing Company ("Labelle") appeals an
adverse decision of the Benefits Review Board ("BRB") of the
United States Department of Labor ("DOL"). The BRB affirmed the
decision of an administrative law judge ("ALJ") awarding black-
lung benefits to John Swarrow, a former employee of Labelle. The
BRB had jurisdiction to review the final decision of the ALJ
pursuant to 33 U.S.C. § 921(b)(3), as incorporated into the Black
Lung Benefits Act ("BLBA"), 30 U.S.C. § 901 et seq., by 30 U.S.C.
§ 932(a). We have jurisdiction over the BRB's final order
3
pursuant to 33 U.S.C. § 921(c), as incorporated by 30 U.S.C.
§ 932(a).
Labelle advances alternative arguments for reversal: (1)
the ALJ's determination that Labelle's former employee was
entitled to benefits under the BLBA violated principles of res
judicata; and (2) the ALJ applied the wrong standard in finding
that the employee had established "a material change in
conditions," a necessary prerequisite to the filing of a
duplicate claim under the BLBA. We hold that res judicata is
inapplicable in the present context, but we agree that the ALJ
did not apply the correct standard. We will therefore vacate the
award of benefits and remand for further proceedings consistent
with this opinion.
I.
John Swarrow, Jr., the claimant-respondent, worked as a coal
miner for over thirty-four years, retiring in June 1985, at the
age of sixty-three. Swarrow worked for Labelle from May 1976 to
June 1985. In his last position, as a barge loader, he worked in
a small, very dusty control room, operating the controls to load
coal from the preparation plant onto a barge. Other than when he
was employed as a barge loader (a position that he held for three
or four years), Swarrow worked in underground mines until he
retired.
Swarrow testified that he retired because of respiratory
problems, including chronic wheezing and difficulty climbing
ninety-four stair-steps and a thirteen-step ladder to reach his
4
work station. Swarrow also testified that he had smoked one pack
of cigarettes every three to four days for about forty years but
stopped smoking upon retirement. Swarrow uses a Proventil0
inhaler and also takes other medication for his breathing
problems.
On September 16, 1985, Swarrow filed a claim for benefits
under the Black Lung Benefits Act of 1977, 30 U.S.C. § 901 et
seq. The District Director denied Swarrow's claim on February
21, 1986, informing Swarrow that he had a right to submit
additional medical evidence or request a hearing before an ALJ.
Swarrow subsequently obtained counsel and submitted additional
medical evidence in support of his claim. Labelle also submitted
medical evidence. After considering the new evidence, the
District Director reaffirmed the denial of Swarrow's claim on May
28, 1986.
Swarrow submitted the following medical evidence in support
of his claim: chest x-rays; six pulmonary function tests; and
three blood gas studies. The results from the pulmonary function
tests (PFTs) and the blood gas studies, standing alone, did not
establish total disability.0
0
Proventil is the brand name for albuterol, a beta-adrenergic
bronchodilator, typically administered in the form of an
inhalation aerosol. See Physicians' Desk Reference 2280-83 (49th
ed. 1995).
0
A "qualifying" pulmonary function study or blood gas study
yields values that are equal to or less than the values set out
in the tables at Part 718, Appendices B and C. See 20 C.F.R.
§ 718.204(c)(1), (c)(2). In the absence of contrary probative
evidence, "qualifying" test results (i.e. equal to or less than
the table values) from pulmonary function or blood gas studies
conclusively establish "total disability" within the meaning of
5
Swarrow also submitted physicians' readings of the chest x-
rays. Two doctors, one of whom was a "B reader,"0 found that the
x-rays showed the presence of pneumoconiosis. Four other
doctors, three of whom were "B readers," determined that the x-
rays were negative for pneumoconiosis.
In addition, Swarrow submitted the evaluations of several
physicians who had examined him. Dr. George Riegel, at the
request of the DOL, examined Swarrow on November 26, 1985 and
determined that Swarrow did not suffer from coal workers'
pneumoconiosis. In a report dated February 28, 1986, Dr. Thomas
Morgan, Swarrow's treating physician since May 18, 1983, diag-
nosed chronic obstructive pulmonary disease (i.e. pneumoconiosis)
and concluded that Swarrow was totally disabled due to exposure
to coal dust. Dr. Peter Kaplan examined Swarrow on March 21,
1986 and found no evidence of pneumoconiosis, opining that
Swarrow was capable of performing the duties of his last job.
On May 18, 1987, Swarrow, through counsel, attempted to
submit additional evidence.0 The DOL, however, returned the
the regulations. See Director, OWCP v. Siwiec, 894 F.2d 635, 636
(3d Cir. 1990)
0
A "B reader" is a physician, often a radiologist, who has
demonstrated proficiency in reading x-rays for pneumoconiosis by
passing annually an examination established by the National
Institute of Safety and Health and administered by the U.S.
Department of Health and Human Services. See 20 C.F.R.
§ 718.202(a)(ii)(E); 42 C.F.R. § 37.51. Courts generally give
greater weight to x-ray readings performed by "B readers." See
Mullins Coal Co. v. Director, OWCP, 484 U.S. 135, 145 n.16
(1987); Old Ben Coal Co. v. Battram, 7 F.3d 1273, 1276 n.2 (7th
Cir. 1993).
0
Swarrow attempted to submit medical evaluations performed by Dr.
J.D. Silverman and Dr. Warfield Garson. Dr. Silverman examined
Swarrow on April 3, 1987, diagnosing anthracosilicosis and
6
material, advising Swarrow that the new evidence was untimely and
therefore would not be considered. Specifically, the DOL wrote,
in a letter, that the evidence should have been submitted within
one year from the initial decision denying Swarrow's claim, that
is, one year prior to February 21, 1987.
On October 2, 1989, Swarrow filed a second application, or
"duplicate claim," for black-lung benefits. In support of his
new application for benefits, Swarrow resubmitted the medical
evidence he had previously submitted or attempted to submit in
connection with his original claim. This evidence included the
reports by Drs. Garson and Silverman, which had been rejected as
untimely by the DOL and accordingly had not been considered by
the DOL in its review of Swarrow's original application.
Swarrow also submitted new medical evidence, including chest
x-rays, PFTs, and blood gas studies. The PFTs and blood gas
studies did not demonstrate, under the standards set forth in the
federal regulations, a totally disabling respiratory impairment.
Additional medical reports by Drs. Fino and Kaplan were also
submitted. Both physicians concluded that Swarrow did not suffer
from pneumoconiosis.0 Another physician, Dr. Cander, based upon
obesity. Dr. Silverman stated that Swarrow was totally disabled
due to anthracosilicosis caused by exposure to coal dust, and
further opined that Swarrow would be disabled even if he lost
weight.
Dr. Garson examined Swarrow on June 2, 1986, diagnosing coal
workers' pneumoconiosis, arteriosclerosis, arthritis and obesity.
Dr. Garson concluded that Swarrow was totally disabled as a
result of a combination of his medical problems.
0
Dr. Gregory J. Fino examined Swarrow on October 21, 1987, and
diagnosed bronchial asthma, asthmatic bronchitis, hypertension
and a stomach ulcer. Dr. Fino also opined that Swarrow's asthma
was unrelated to coal dust exposure.
7
his review of Swarrow's medical records, initially diagnosed
Swarrow as totally disabled due to pneumoconiosis but later
recanted, stating that "the presence of disabling pneumoconiosis
has not been established by the information available."0 In
addition to Drs. Morgan (Swarrow's treating physician), Garson
and Silverman, two other examining physicians, Drs. Cho and
Levine, concluded that Swarrow suffered from disabling
pneumoconiosis.0
Finding that Swarrow had not proven "a material change in
conditions,"0 the District Director denied Swarrow's duplicate
claim in an order dated February 27, 1990. On March 6, 1990,
Dr. Peter Kaplan examined Swarrow on March 21, 1986, June
14, 1990, and December 6, 1991. On all three occasions, Dr.
Kaplan found no evidence of pneumoconiosis and no lung impair-
ment. When deposed in 1991, however, Dr. Kaplan admitted that he
had observed a decrease in Swarrow's lung function since the 1986
tests, but attributed "some" of this decrease to aging and less
than maximal effort exerted by Swarrow in performing the test.
0
Dr. Leon Cander, who did not actually examine Swarrow, reviewed
Swarrow's medical records upon request of the Office of Workers'
Compensation (OWCP). After Dr. Cander reported that the records
indicated disabling pneumoconiosis, the OWCP, on February 2,
1990, forwarded a "revised" file to Dr. Cander and asked him to
reevaluate his diagnosis. Upon reconsideration, Dr. Cander
submitted a new report on February 12, 1991, withdrawing his
earlier diagnosis and instead concluding that the medical
evidence did not establish disabling pneumoconiosis.
0
Dr. Yong Dae Cho examined Swarrow on November 8, 1989, and
diagnosed disabling restrictive lung disease with hypoxia caused
by coal dust exposure and obesity.
Dr. Macy I. Levine examined Swarrow on May 30, 1989 and
November 5, 1991. On both occasions, Dr. Levine diagnosed
pneumoconiosis, chronic bronchitis and obesity. Dr. Levine found
that Swarrow was totally disabled and that the pneumoconiosis had
been caused by coal dust exposure. Significantly, in his 1991
report, Dr. Levine noted that "the pulmonary function test showed
progression of [Swarrow's] respiratory impairment . . . ."
0
DOL regulations allow the filing of "duplicate claims" where
"there has been a material change in conditions." 20 C.F.R.
§725.309(d).
8
Swarrow appealed the denial to the BRB. On December 5, 1990, the
BRB remanded Swarrow's claim to the Office of Administrative Law
Judges, based upon the Tenth Circuit's ruling in Lukman v.
Director, OWCP, 896 F.2d 1248 (1990),0 for a hearing before an
ALJ.
After a hearing, held on April 9, 1992, the ALJ, finding
that Swarrow had established "a material change in conditions,"
issued its decision and order on March 31, 1993. This order
awarded benefits to Swarrow.
Labelle appealed the award to the BRB. The BRB, on
September 15, 1994, affirmed the award and denied Labelle's
motion for reconsideration on January 4, 1995. This appeal by
Labelle followed.
II.
The BLBA provides for the payment of benefits to coal miners
"who are totally disabled due to pneumoconiosis [also known as
black lung disease]." Id. at § 901(a); 20 C.F.R. § 725.1(a).
Pneumoconiosis is defined under the BLBA as "a chronic dust
disease of the lung and its sequelae, including respiratory and
pulmonary impairments, arising out of coal mine employment." 30
U.S.C. § 902(b); 20 C.F.R. § 725.101(20). The "legal" definition
0
Previously, the BRB had held that duplicate claims filed
pursuant to section 725.309 must be appealed directly to the BRB
rather than to an ALJ. Lukman v. Director, OWCP, 10 Black Lung
Rep. (MB) 1-56 (1987), aff'd on recon., 11 Black Lung Rep. (MB)
1-71 (Ben. Rev. Bd. 1988) (en banc), rev'd, 896 F.2d 1248 (10th
Cir. 1990). Consistent with the Lukman rule, Swarrow had
appealed directly to the BRB. The Tenth Circuit later reversed
Lukman, holding that a claimant who filed a duplicate claim had a
right to a hearing before an ALJ. Lukman, 896 F.2d at 1254.
9
of pneumoconiosis (i.e. any lung disease that is significantly
related to, or substantially aggravated by, dust exposure in coal
mine employment) is much broader than the medical definition,
which only encompasses lung diseases caused by fibrotic reaction
of lung tissue to inhaled dust. See Doris v. Director, OWCP, 938
F.2d 492, 496 (4th Cir. 1991).
Congress granted the Secretary of Labor broad authority to
promulgate regulations under the BLBA. 30 U.S.C. §§ 932(a),
936(a); 20 C.F.R. § 725.301-.422; see also Director, OWCP v.
National Mines Corp., 554 F.2d 1267, 1275 (4th Cir. 1977)
(holding that validity of regulations will be sustained as long
as "'reasonably related to the purposes of the enabling
legislation'") (quoting Mourning v. Family Publications Serv.,
Inc., 411 U.S. 356, 369 (1973)). Congress expressly authorized
the Secretary to establish and operate field offices which
process claims filed by miners and their survivors. 30 U.S.C.
§ 901(a).
Part 718 of the black lung regulations sets forth the
criteria for evaluating disability claims filed after March 31,
1980, or claims filed before that date but adjudicated after
March 31, 1980. See id. at §§ 718.2, 725.4(a). As previously
stated, Swarrow filed his claim on September 16, 1985. Under
Part 718, to obtain benefits, a claimant must establish that (1)
he is totally disabled (2) due to pneumoconiosis, (3) which he
contracted as a result of coal mine employment. See id. at
§ 718.201-.204; see also Director, OWCP v. Mangifest, 826 F.2d
1318, 1320 (3d Cir. 1987).
10
When a claim is filed, the District Director marshals the
relevant evidence, schedules medical testing, notifies interested
parties, and issues a decision awarding or denying benefits. See
generally 20 C.F.R. § 725.401-.418. Any party objecting to the
District Director's decision may request reconsideration or a
formal hearing before an ALJ. Id. at § 725.419, .421.
If a party requests a formal hearing, an ALJ will conduct a
de novo hearing and then issue a decision awarding or denying the
claim based upon the evidence presented. Id. at § 725.461(a),
.476. Any party dissatisfied with the ALJ's decision and order
may, within thirty days of the filing of the order (or the filing
of the denial of a request for reconsideration), appeal the
decision to the BRB. Id. at § 725.479-.480.
The BRB, a quasi-judicial body composed of five members
appointed by the Secretary, is authorized to hear "appeals . . .
from decisions or orders with respect to [black lung] claims for
compensation or benefits . . . ." Id. at § 801.102(6); see also
33 U.S.C. § 921(b); 20 C.F.R. § 801.101-.201. As an appellate
tribunal, the BRB reviews the ALJ's decision based upon the
hearing record. See 33 U.S.C. § 921(b)(3), as incorporated by 30
U.S.C. § 932(a). "The [ALJ's] findings of fact . . . shall be
conclusive if supported by substantial evidence in the record
considered as a whole." Id.A claimant or employer who is "adversely affected or
aggrieved by a final order of the [BRB]" may appeal that order to
the United States Court of Appeals for the circuit in which the
injury occurred by filing a petition for review within sixty days
11
of the issuance of the BRB order. Id. at § 921(c); 20 C.F.R.
§ 802.410(a). See also generally Lukman v. Director, OWCP, 896
F.2d 1248, 1252-53 (10th Cir. 1990) (presenting overview of
procedure); Kalaris v. Donovan, 697 F.2d 376, 381-83 (D.C. Cir.)
(same), cert. denied, 462 U.S. 1119 (1983).
III.
The Benefits Review Board is bound by an ALJ's factual
findings "if they are rational, supported by substantial
evidence, and consistent with applicable law." Elliot Coal
Mining Co. v. Director, OWCP, 17 F.3d 616, 626 (3d Cir . 1994).
See also 33 U.S.C. § 921(b)(3), as incorporated by 30 U.S.C.
§ 932(a); Kowalchick v. Director, OWCP, 893 F.2d 615, 619 (3d
Cir. 1990). Substantial evidence is defined as "such relevant
evidence as a reasonable mind might accept as adequate to support
a conclusion." Kowalchick, 893 F.2d at 620.
We review the Board's decision to determine whether the
Board properly deferred to the ALJ's fact findings which were
supported by substantial evidence. Hillibush v. Department of
Labor, 853 F.2d 197, 202 (3d Cir. 1988); Kertesz v. Crescent
Hills Coal Co., 788 F.2d 158, 162 (3d Cir. 1986). We exercise
plenary review over questions of law. Carozza v. U.S. Steel
Corp., 727 F.2d 74 (3d Cir. 1984). We will defer, however, to
the Director's reasonable interpretation of the statute and the
Department's regulations. Pauley v. BethEnergy Mines, Inc., 501
U.S. 680, 696 (1991); Director, OWCP v. Barnes & Tucker Co., 969
F.2d 1524, 1527 (3d Cir. 1992).
12
IV.
Labelle argues that Swarrow's duplicate claim is barred by
res judicata principles. Labelle asserts that "[t]he only
difference [between Swarrow's duplicate claim and his original
claim] was that he got more doctors to say he had pneumoconiosis
and he found a sympathetic ALJ." Petitioner's Brief at 26.
According to Labelle, the decisions of the BRB and the ALJ below,
in essence, "permit unsuccessful claimants to keep filing claims
until the right mixture of doctors, lawyers and ALJs produce[] an
award of benefits." Id.Under the doctrine of res judicata or claim preclusion, a
subsequent suit based on the same cause of action as a prior suit
that involved the same parties or their privies is barred where
there has been a final judgment on the merits in the prior suit.
Board of Trustees of Trucking Employees v. Centra, 983 F.2d 495,
504 (3d Cir. 1992). Although Swarrow's initial claim resulted in
a final judgment and involved the same parties as his present
claim, his second claim asserts a new cause of action.
Consequently, res judicata does not apply and Swarrow's new claim
is not barred.
A claim, even though it is a second claim, in which "a
material change in conditions" is asserted and established cannot
be barred when it states a new cause of action. Of course, new
factual allegations supporting a previously denied claim will not
create a new cause of action for the same injury previously
adjudicated. See, e.g., Rogerson v. Secretary of Dep't of Health
13
& Human Servs., 872 F.2d 24, 29 (3d Cir. 1989). In contrast, new
facts (i.e. events occurring after the events giving rise to the
earlier claim) may give rise to a new claim, which is not
precluded by the earlier judgment. See Lawlor v. National Screen
Serv. Corp., 349 U.S. 322, 328 (1955); Allegheny Int'l, Inc. v.
Allegheny Ludlum Steel Corp., 40 F.3d 1416, 1429-30 (3d Cir.
1994); see also Restatement (Second) of Judgments § 24 cmt. f
(1982) ("Material operative facts occurring after the decision of
an action with respect to the same subject matter may . . . be
made the basis of a second action not precluded by the first.").
The denial of the first claim filed by Swarrow established
only that Swarrow was not then totally disabled due to
pneumoconiosis. See Cooley v. Island Creek Coal Co., 845 F.2d
622, 624 (6th Cir. 1988) (noting that issue to be decided is
miner's physical condition at the time of the hearing); Klouser
v. Hegins Mining Co., 6 Black Lung Rep. (MB) 1-110, 1-115 (Ben.
Rev. Bd. 1983) (same). Although it is true that Swarrow is now
precluded from collaterally attacking the prior denial of
benefits, Swarrow may file a new claim, asserting that he is now
eligible for benefits because he has become totally disabled due
to coal miner's pneumoconiosis and that his disability occurred
subsequent to the prior adjudication.0
0
Of course, the doctrine of collateral estoppel, or issue
preclusion, may bar a claimant from relitigating issues decided
in a previous action. For instance, if the ALJ had found that
Swarrow had not established that he was a "miner" under the Act,
Swarrow may not later relitigate that issue (unless, of course,
he subsequently worked as a miner).
14
Labelle contends that because Swarrow did not return to work
in a coal mine after the denial of his first claim, he cannot, as
a matter of law, establish a new cause of action. According to
Labelle, Swarrow could not contract pneumoconiosis subsequent to
the initial denial of benefits without further exposure to coal
dust.
Labelle's argument overlooks the fact that pneumoconiosis is
a latent dust disease. See Richard Sloane, The Sloane-Dorland
Annotated Medical-Legal Dictionary 558 (1987) ("On any given date
pneumoconiosis may not be detectable . . . . The disease,
nevertheless, may progress and later destroy sufficient lung
tissue [to become detectable]."). A latent condition such as
pneumoconiosis may not become manifest until long after exposure
to the causative agent (i.e. coal dust). See The Merck Manual of
Diagnosis and Therapy (Robert Berkow & Andrew J. Fletcher, eds.,
16th ed. 1992) (explaining that progressive massive fibrosis, a
form of pneumoconiosis "may develop after exposure has ceased, or
. . . progress without further exposure"); David V. Bates et al.,
A Longitudinal Study of Pulmonary Function in Coal Miners in
Lorraine, France, 8 Am. J. Indus. Med. 21, 21 (1985) (observing
continued, accelerated rates of decline in lung function loss
after retirement from mining in both smokers and nonsmokers).
Indeed, Congress, in enacting the BLBA, recognized the
perniciously progressive nature of the disease. See Robert L.
Ramsey & Robert S. Habermann, The Federal Black Lung Program --
The View from the Top, 87 W. Va. L. Rev. 575, 575 (1985) ("Due to
the insidious nature of progressive occupational respiratory
15
disorders such as pneumoconiosis, Congress found that state
programs, which were aimed at adjudicating time-definite
injuries, often precluded recovery due to the running of statutes
of limitations."). The DOL, the agency with purview over black
lung claims, has also noted
that pneumoconiosis is a progressive disease, and that
while the symptoms may, on occasion, subside, the
condition itself does not improve. . . .
. . . [T]he Department has stricken the language of
proposed § 718.404(a)(1), which required notification
of the Office if the respiratory or pulmonary condition
of a recipient of benefits improved. This change is in
response to comments and testimony stating that
pneumoconiosis does not, in fact, improve. . . . In
order to reflect the fact that the symptoms of
pneumoconiosis generally continue, even though
statutory entitlement may cease, the Department has
changed the title of this section from "cessation of
disability" to "cessation of entitlement." Although
the Department agrees that the disease does not
improve, section 22 of the [LHWCA] provides for
modification of awards on a change in condition or
mistake in determination of fact. Subsection (b) of
this regulation effectuates this provision.
45 Fed. Reg. 13,694 (Feb. 29, 1980) (emphasis added).
Moreover, courts have long acknowledged that pneumoconiosis
is a progressive and irreversible disease. See Mullins Coal Co.
v. Director, OWCP, 484 U.S. 135, 151 (1987); Kowalchick v.
Director, OWCP, 893 F.2d 615, 621 (3d Cir. 1990); accord Back v.
Director, OWCP, 796 F.2d 169, 172 (6th Cir. 1986); Orange v.
Island Creek Coal Co., 786 F.2d 724, 727 (6th Cir. 1986);
Consolidation Coal Co. v. Chubb, 741 F.2d 968, 973 (7th Cir.
1984); Andryka v. Rochester & Pittsburgh Coal Co., 14 Black Lung
Rep. (MB) 1-34 (1990); Stanley v. Betty B Coal Co., 13 Black Lung
16
Rep. (MB) 1-72 (1990); Belcher v. Beth-Elkhorn Corp., 6 Black
Lung Rep. (MB) 1-1180 (1984).
Labelle contends, however, that "simple" pneumoconiosis, in
contrast to its "complicated" form, is not a progressive disease,
but has submitted no medical evidence to support this assertion.
In support of the proposition that "[p]neumoconiosis is
progressive only in its advanced or complicated form," Labelle
relies entirely on two sources: Usery v. Turner Elkhorn Mining
Co., 428 U.S. 1 (1976); and Report of the Surgeon General, The
Health Consequences of Smoking: Cancer and Chronic Lung Disease
in the Workplace (1985) [hereinafter "Surgeon General's Report"].
Usery does not directly support Labelle's contention. The
Usery Court, in providing background information about pneumo-
coniosis, merely noted that "the disease is progressive, at least
in its complicated stage . . . ." Usery, 428 U.S. at 7-8(emphasis added). The inference that Labelle would have us draw
(i.e. the disease is not progressive unless in its complicated
stage) is not warranted. The Usery Court merely qualified its
observation that pneumoconiosis is a progressive disease; it did
not state that "simple" pneumoconiosis cannot progress in the
absence of exposure to coal dust.
Similarly, Labelle's reliance on the Surgeon General's
Report is misplaced. The report does state that "[s]imple CWP
[coal-workers' pneumoconiosis] does not progress in the absence
of further exposure." Surgeon General's Report, supra at 294.
This statement, however, addressed only the progressive nature of
clinical pneumoconiosis.
17
Legal pneumoconiosis (i.e. pneumoconiosis within the meaning
of the BLBA) is defined more broadly than the medical (clinical)
definition of pneumoconiosis. The legal definition encompasses
all "chronic pulmonary disease[s] resulting in respiratory or
pulmonary impairment significantly related to, or substantially
aggravated by dust exposure in coal mine employment." 20 C.F. R.
§ 718.201. "The definition includes, but is not limited to, coal
workers' pneumoconiosis, anthracosilicosis, anthracosis,
anthrosilicosis, massive pulmonary fibrosis, progressive massive
fibrosis, silicosis or silicotuberculosis, arising out of coal
mine employment." Id.
Significantly, the Surgeon General's Report discusses
chronic bronchitis caused by coal dust exposure but at no point
suggests that industrial chronic bronchitis cannot progress in
the absence of continuing dust exposure. See Surgeon General's
Report, supra at 183-85, 299-300. Chronic bronchitis, as a
chronic pulmonary disease, falls within the legal definition of
pneumoconiosis.
Moreover, even if Labelle had established that "simple"
pneumoconiosis could not progress without further dust exposure,
it is far from evident that Swarrow necessarily suffered from the
simple form of the disease.0 Indeed, implicit in the ALJ's
0
Labelle asserts that "complicated" pneumoconiosis can be
diagnosed only by x-ray, biopsy or autopsy, citing 30 U.S.C.
§ 921(c)(3) in support of this contention. That statutory
provision, however, does not address the distinction between
"complicated" and "simple" pneumoconiosis. The statute merely
creates an irrebuttable presumption of entitlement to benefits,
without proof of disability, where the diagnosis of pneumo-
coniosis is established by one of the methods listed in the
18
finding that Swarrow demonstrated "a material change in
conditions" is the recognition that Swarrow's respiratory ailment
had progressed until Swarrow was totally disabled.
If Swarrow's earlier exposure to coal dust caused his
present disability and pneumoconiosis was merely latent at the
time of his initial application for benefits but has since become
manifest, Swarrow would be entitled to prove that the disease has
progressed to the point of total disability since the filing of
his original claim. Moreover, if the ALJ were convinced by
Swarrow's proofs (and if the ALJ's findings were supported by
substantial evidence), Swarrow would be entitled to receive black
lung benefits. In sum, we reject Labelle's argument that
Swarrow's duplicate claim is barred by res judicata.
V.
Labelle argues, in the alternative,0 that the ALJ applied
the wrong standard in determining whether Swarrow demonstrated "a
material change in conditions." The ALJ applied the standard
enunciated by the BRB in Spese v. Peabody Coal Co., 11 Black Lung
Rep. (MB) 1-174 (Ben. Rev. Bd. 1988) (per curiam). Labelle notes
provision. See 30 U.S.C. § 921(c)(3). Swarrow did not rely on
that presumption but rather submitted proof that he was totally
disabled due to pneumoconiosis.
0
Labelle also argues, in the alternative, that the ALJ's decision
must be reversed because the ALJ failed to satisfy the
factfinder's duty of explanation. In its brief, Labelle fails to
specify the findings of fact that the ALJ allegedly did not fully
explain. Rather Labelle contests each of the determinations made
by the ALJ. Our reading of the ALJ's opinion does not disclose
the shortcomings of which Labelle complains. We do not, however,
reach or decide this issue in light of our holding that the ALJ
applied the incorrect legal standard.
19
that the courts of appeal that have addressed this issue have
uniformly rejected the Spese standard. Labelle argues that the
Third Circuit should likewise reject that standard.
Under 20 C.F.R. § 725.309(d), when a miner files more than
one claim for benefits, the later claims are merged with the
first claim if the earlier claim is still pending. If an earlier
claim has been denied, however, a later claim must likewise be
denied "unless the [District Director] 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." 20 C.F.R. § 725.309(d). Section 725.310 permits the
District Director, "at any time before one year from the date of
the last payment of benefits, or at any time before one year
after the denial of a claim, [to] reconsider the terms of an
award or denial of benefits." Id. at § 725.310(a). Therefore,
because Swarrow filed his second claim on October 2, 1989, more
than one year after the denial of his first claim on February 21,
1986, Swarrow must establish a material change in conditions.
Neither the BLBA nor its associated regulations explicitly
0
define "a material change in conditions." However, in Spese,
the BRB interpreted section 725.309 to require that the claimant
submit "evidence which is relevant and probative so that there is
a reasonable possibility that it would change the prior
administrative result." Spese, 11 Black Lung Rep. (MB) at 1-176;
0
An appeal of the Board's decision was taken to the United States
Court of Appeals for the Seventh Circuit, but was dismissed with
prejudice by stipulation. See Spese v. Peabody Coal Co., No.
88-3309 (7th Cir. Feb. 2, 1989) (order).
20
see also Shupink v. LTV Steel Co., 17 Black Lung Rep. (MB) 1-24,
1-27 (1992); Rice v. Sahara Coal Co., 15 Black Lung Rep. (MB)
1-19, 1-21 (1990) (en banc). In Shupink, the BRB reaffirmed
Spese and explained that under the Spese formulation, the ALJ
examines only the favorable new evidence and does not weigh the
favorable evidence against unfavorable new evidence. Shupink, 17
Black Lung Rep. at 1-28. See also Sharondale Corp. v. Ross, 42
F.3d 993, 997 (6th Cir. 1994).
The Seventh Circuit rejected the Spese standard as "a plain
misreading of the regulation [i.e. 20 C.F.R.309(d)] . . . ."
Sahara Coal Co. v. Director, OWCP, 946 F.2d 554, 556 (7th Cir.
1991) (Posner, J.). Characterizing the Spese framework as
"mak[ing] mincemeat of res judicata," the Seventh Circuit
declared that "the [BRB] had confused a change in the claimant's
condition with the presentation of newly discovered evidence that
might justify reopening the case as under Rule 60(b) of the
Federal Rules of Civil Procedure." Id.In criticizing Spese, the Sahara court voiced its concern
that the doctrine of finality, an integral aspect of res
judicata, not be eroded by a subsequent application for black
lung benefits. As recited by the Sahara court,
[i]t is not enough that the new application is
supported by new evidence of disease or disability,
because such evidence might show merely that the
original denial was wrong, and would thereby constitute
an impermissible collateral attack on that denial.
Id.21
In place of the Spese/Shupink standard, which looked only to
an evaluation of favorable new evidence, the Seventh Circuit
offered its own definition of "material change":
A material change in conditions means either that the
miner did not have black lung disease at the time of
the first application but has since contracted it and
become totally disabled by it, or that his disease has
progressed to the point of becoming totally disabling
although it was not at the time of the first
application.
Id.Recently, the Fourth Circuit, in Lisa Lee Mines v. Director,
OWCP, adopted the Sahara0 standard over competing formulations.
57 F.3d 402, 407 (4th Cir. 1995). The BRB, however, has refused
to acquiesce to the circuit courts' rejection of Spese, instead
adhering to its discredited definition of "material change." See
Shupink, 17 Black Lung Rep. at 1-27 (stating that the Board would
continue to apply Spese "except [in cases] arising within the
jurisdiction of the . . . Seventh Circuit.").
We agree with our sister circuits that Spese confuses the
standard for modification of a decision with the standard for new
claims based on "a material change in conditions."
The Director, while not agreeing with Labelle's res judicata
argument, does agree with Labelle that the ALJ erred in following
Spese. The Director, however, urges us to adopt a different
standard than the standard enunciated in Sahara:
Under the Director's interpretation, the ALJ must
consider all of the new evidence, favorable and
unfavorable, and determine whether the miner has proven
0
The Sahara standard is also commonly referred to as the McNew
standard because Mr. McNew was the claimant in Sahara.
22
at least one of the elements of entitlement previously
adjudicated against him. If the miner establishes the
existence of that element, he has demonstrated, as a
matter of law, a material change. Then the ALJ must
consider whether all of the record evidence, including
that submitted with the previous claims, supports a
finding of entitlement to benefits.
Sharondale Corp. v. Ross, 42 F.3d 993, 997-98 (6th Cir. 1994).
The Sixth Circuit recently embraced the Director's proposed
standard after considering the Spese and Sahara standards. See
id. at 998. The Sixth Circuit acknowledged that the Sahara
standard was "a reasonable interpretation of material change,"
id. at 997, but deferred to the DOL's interpretation, accurately
noting that "courts must defer to the agency 'entrusted by
Congress to make such policy determinations.'" Id. at 998(quoting Pauley v. BethEnergy Mines, Inc., 501 U.S. 680, 696
(1991)).
Notably, "[b]ecause the black lung regulations are issued by
the [OWCP] rather than by the [BRB], it is to the former body
rather than the latter tha[t] we owe the usual deference that
courts give agencies' interpretations of their own regulations or
governing statutes." Sahara, 949 F.2d at 557. See also Potomac
Elec. Power Co. v. Director, OWCP, 449 U.S. 268, 278 n.18 (1980);
Director, OWCP v. Barnes & Tucker Co., 969 F.2d 1524, 1527 (3d
Cir. 1992); Saginaw Mining Co. v. Mazzulli, 818 F.2d 1278, 1283
(6th Cir. 1987); Bethlehem Mines Corp. v. Director, OWCP, 766
F.2d 128, 130 (3d Cir. 1985).
Of course, deference to an agency's interpretation of its
own regulations is warranted only when the interpretation is
23
reasonable. Chevron, Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837, 845 (1984). We may supply our own
construction of a regulation if the agency's interpretation is
"plainly erroneous or inconsistent with the regulation."
Lukosevicz v. Director, OWCP, 888 F.2d 1001, 1006 (3d Cir. 1989)
(quotations omitted).
Labelle argues that the Director's interpretation is not
faithful to the purpose or language of section 725.309(d)
(material change in condition) and that we should consequently
reject the Director's interpretation. We disagree. Adoption of
the Director's interpretation accords with the principle that
courts should liberally construe remedial legislation, such as
the BLBA, so as to include the largest number of claimants within
its entitlement provisions. See Pavesi v. Director, OWCP, 758
F.2d 956, 964 (3d Cir. 1985); Echo v. Director, OWCP, 744 F.2d
327, 330 (3d Cir. 1984). Because the Director's construction of
its own regulation is not unreasonable, deference should be given
to that interpretation.
VI.
Lastly, Swarrow urges us to affirm the ALJ's award of
benefits, even if we conclude that the ALJ applied the wrong
standard, under the theory that the error was harmless. We
cannot agree with that disposition. The ALJ may very well
decide, on remand, that all of the new evidence, favorable and
unfavorable, on balance, satisfies (or does not satisfy) the
Sharondale standard defining "a material change in conditions."
24
If no material change is found, then Swarrow cannot pursue his
second claim. On the other hand, if the ALJ finds that Swarrow
has proved "at least one of the new elements previously
adjudicated against him," Sharondale, 42 F.3d at 997, Swarrow
will have demonstrated a material change. At that point, the ALJ
must consider all of the record evidence, including that
submitted with the prior claim, to determine whether such
evidence supports a finding of entitlement to benefits. These
determinations, however, must be made in the first instance by an
ALJ.
Accordingly, we will vacate the BRB's September 15, 1994
award of benefits to Swarrow, with the direction that Swarrow's
claim be remanded to the ALJ for further proceedings consistent
with this opinion.
25