Barnhart, Social Security Admin. Commissioner v. Peabody Coal Co., at al. / Holland, Michael, et al. v. Bellaire Co (01/15/2003)

Questions presented: Whether the failure of the Commissioner of Social Security to assign responsibility as of Oct. 1, 1993, for each eligible retired coal miner to the signatory operator that employed the miner (or to a "related person" of the signatory operator) voids the benefits.

BY: AARON LOVELL, MEDILL NEWS SERVICE

In an effort to assure that retired miners received healthcare benefits provided to them under collective bargaining agreements, Congress enacted the Coal Industry Retiree Health Benefit Act of 1992. The legislation provided a plan to assign eligible miners to their former employers (or a related company) for dispersal of their benefits. In the bill, it was noted that assignments should be made before Oct. 1, 1993.

The Coal Act divided unassigned miners among the other companies on a pro rata basis using numbers, as the companies argued, from Oct. 1, 1993.

Peabody Coal Co. and Bellaire Corp., two coal companies with former employees covered under the Coal Act, were assigned miners, but some of the assignments were made after Oct. 1, 1993.

Peabody Coal Co. sued the government in July 2000 in U.S. District Court for the Western District of Kentucky. Bellaire Corp. filed suit five months later in federal court in the Southern District of Ohio. In both cases, the courts sided with the coal companies, ruling the government could not assign miners after the Oct. 1 deadline.

The government appealed and the 6th Circuit Court of Appeals ruled for Peabody and Bellaire on consecutive days in June 2001, holding that the companies would not have to accept miners assigned after the Oct. 1 deadline. In both unanimous opinions, the court cited its 1999 decision in Dixie Fuel v. Commissioner of Social Security.

In Dixie Fuel, the 6th Circuit said that the appointments made after Oct.1 should be invalid. The court ruled that use of the word "shall" in the bill indicated "explicitly mandatory language." The court also acknowledged that the word "shall," when standing alone, is usually not seen as enough to terminate the governments power beyond a specified date, but noted that each operators pro rata unassigned beneficiary premium was determined by the number of miners assigned on Oct. 1, 1993.

In the Dixie Fuel case, the government argued that an earlier case illustrated the commissioner of Social Securitys authority was not divested on Oct. 1. The court responded by saying "the statute is clear [and] the agency has nothing to interpret."

In a similar case, Holland v. Pardee Coal Co., however, the 4th Circuit Court of Appeals reached the opposite conclusion, holding that the government was free to make assignments after Oct. 1, 1993 and these assignments would have to be respected by the coal companies. That opinion was filed a few months after the back-to-back 6th Circuit opinions in Peabody Coal and Bellaire.

In Holland, the 4th Circuit concluded that other Supreme Court decisions showed that the word "shall" is not "jurisdictional" and therefore not limiting. The 4th Circuit opinion went on to say the operators pro rata liability did not have to be fixed as of Oct. 1, 1993, noting the number of unassigned beneficiaries had changed throughout the history of the program.

John G. Roberts, Jr., attorney for Peabody Coal Co., said the governments interpretation maintains that Congress did not mean to set up a deadline. He feels the 4th Circuit is giving the government too much freedom.

According to the government, the 4th Circuit is right because Congress is reluctant to conclude that failure to perform certain duties in a specified length of time is grounds for automatic dismissal of those duties. They also argue that nothing in the Coal Act states that "untimely assignment would be deemed invalid."

The government also charges that the three months provided, between receiving appropriation for the project and the Oct. 1 deadline, was not enough time to comb records and make the proper assignments.

With the obvious conflict in the circuits, the commissioner of Social Security asked the Supreme Court to review the cases.

On Jan. 22, 2002, the U.S. Supreme Court granted certiorari in both cases and consolidated them for review.

Almost a year later, on Jan. 15, 2003, the Court reversed, holding 6-3 that coal companies must pay into the federal pool to pay for miners' care.

Justice David Souter wrote the majority opinion. Justices Clarence Thomas, Antonin Scalia and Sandra Day O'Connor dissented.