LaBelle Processing Company v. Swarrow

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Precedential or Non-Precedential: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

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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)

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Argued Tuesday, October 24, 1995

BEFORE: SLOVITER, Chief Judge,
COWEN and GARTH, Circuit Judges

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(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

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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