Clinchfield Coal Co. v. Harris

Affirmed by published opinion. Judge ERVIN wrote the majority opinion, in which Senior Judge PHILLIPS joined. Judge MURNAGHAN wrote a concurring opinion.

OPINION

ERVIN, Circuit Judge:

Clinchfield Coal Company and Jewell Ridge Coal Corporation (“the Employers”) appeal the Benefits Review Board’s decisions to award attorney’s fees against them for legal work that was done before they controverted their employees’ claims for benefits. Everett Harris, Cleo Jackson, and Leona VanDyke (“the Claimants”) were awarded benefits under the Black Lung Benefits Act, 30 U.S.C. §§ 901-45 (1994), and the Benefits Review Board (“BRB”), reversing longstanding precedent, awarded their attorneys fees for precontroversion work.

The issue in this case is a purely legal one — the interpretation of the fee-shifting provision in black lung cases. In all three cases on appeal, the Director, Office of Workers’ Compensation Programs (“the Director”), made an initial finding that the Claimants were not eligible for black lung benefits. Each claimant then employed an attorney who began to do legal work before the employer controverted the claim. In all three cases, the employer eventually controverted the claim and an ALJ or the BRB subsequently awarded benefits to each claimant. The question in this consolidated appeal is whether the regulation implementing the statute allows the Claimants’ attorneys to receive fees for pre-controversion work. Giving proper deference to the Director’s interpretation of the fee-shifting provision, we hold that the regulation allows a successful claimant to receive pre-controversion attorney’s fees, but only for work accomplished by an attorney after the Office of Workers’ Compensation Programs (“OWCP”) has made an initial determination that the claimant is ineligible for benefits. Subject to that interpretation of the regulation, we affirm the judgments of the BRB.

I.

We have jurisdiction over these three cases pursuant to the Longshore and *309Harbor Workers’ Compensation Act, 33 U.S.C. § 921(c) (1994), as incorporated by the Black Lung Benefits Act, 30 U.S.C. § 932(a) (1994). When we are reviewing the OWCP’s interpretation of its own regulations, the OWCP’s interpretation is entitled to “substantial deference” and will be sustained unless it is plainly erroneous or inconsistent with the regulation. Mullins Coal Co. v. Director, OWCP, 484 U.S. 135, 159-60, 108 S.Ct. 427, 98 L.Ed.2d 450 (1987); Lester v. Director, OWCP, 993 F.2d 1143, 1145 (4th Cir.1993). The BRB is not a policymaking agency; its statutory interpretations are not entitled to any special deference from the courts. Potomac Elec. Power Co. v. Director, OWCP, 449 U.S. 268, 278 n. 18, 101 S.Ct. 509, 66 L.Ed.2d 446 (1980).

II.

Section 422(a) of the Black Lung Benefits Act, 30 U.S.C. § 932(a) (1994), incorporates the attorney’s fee provision of the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. § 928(a) (1994). Pursuant to its authority to implement a structure for administering black lung benefits, the Department of Labor* has adopted the following regulation with regard to attorney’s fees in black lung cases.

If an operator declines to pay any benefits on or before the 30th day after receiving written notice of its liability ... and the person seeking benefits shall thereafter have utilized the services of an attorney in the successful prosecution of the claim, there shall be awarded ... a reasonable attorney’s fee____

20 C.F.R. § 725.367 (1997) (emphasis added).

For almost 20 years, the BRB has interpreted this provision to exclude pre-controversion fees, see, e.g., Baker v. Todd Shipyards Corp., 12 Ben. Rev. Bd. Serv. (MB) 309 (1980); Jones v. Chesapeake & Potomac Tel. Co., 11 Ben. Rev. Bd. Serv. (MB) 7 (1979), and that interpretation was upheld by this court in Kemp v. Newport News Shipbuilding & Dry Dock Co., 805 F.2d 1152 (4th Cir.1986). This interpretation attaches special significance to the use of the word “thereafter,” which distinguishes this fee-shifting provision from the fee-shifting scheme for § 1983 and Title VII claims. Cf. 42 U.S.C. § 1988 (1994) (“[T]he court ... may allow the prevailing party ... a reasonable attorney’s fee.... ”); 42 U.S.C. § 2000e-5(k) (same). This limitation on fee-shifting in longshore and black lung claims is consistent with Congress’s desire that cases in these contexts “be resolved in the first instance without the necessity of relying on assistance other than that provided by the Secretary of Labor.” Kemp, 805 F.2d at 1153.

In the cases before us, the BRB has performed an abrupt about-face Reversing its own clearly established precedent,- the BRB awarded the Claimants attorneys’ fees for pre-controversion work. The BRB justified its departure from precedent by relying on the Supreme Court’s decisions in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), and City of Burlington v. Dague, 505 U.S. 557, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992). The BRB held that Hensley and Dague compelled the Board to reconsider this question and, specifically, to determine whether or not it was “reasonable” to award pre-controversion fees. Finding that the entire fee requested by each Claimant was reasonable, the BRB awarded the Claimants their full attorneys’ fees, including fees for precontroversion work.

The cases relied upon by the BRB, however, are inapposite to the determination of whether the regulation at issue allows the award of pre-controversion fees. Hensley and Dague flesh out the word “reasonable” in federal fee-shifting statutes, indicating generally that the “lodestar” amount (the number of hours worked on a ease times a reasonable hourly rate) is the baseline for determining the reasonableness of any fee. See Hensley, 461 U.S. at 433, 103 S.Ct. 1933; Dague, 505 U.S. at 562, 112 S.Ct. 2638. All the parties to this consolidated appeal agree *310that those decisions are inapposite to this case, which involves an interpretation of different statutory language — the word “thereafter” rather than “reasonable.” See Petitioners’ Br. at 13; Respondents’ Br. at 25. We agree with the parties that the BRB’s reliance on Hensley and Dague is misplaced.

The Director suggests, however, that the BRB’s decision can be affirmed on an alternative ground. The Director argues that the award of pre-controversion attorney’s fees should depend on whether the OWCP, in its initial determination of benefits, accepts or denies the claim: if the OWCP initially denies benefits, then a claimant may recover pre-controversion attorney’s fees if the claim is ultimately successful; if the OWCP initially approves benefits, then the claimant may not receive pre-controversion attorney’s fees, even if the employer unsuccessfully controverts -the claim.

This interpretation of the statute assumes that the policy behind the legislation “focuses on the point at which the adversarial relationship arises.” Respondents’ Br. at 28. According to the Director, that point obviously arises when the employer controverts an employee’s Claim, but in the case in which the OWCP initially denies a claim, “the [employer]^ concurrence is viewed as retroactive to the agency denial since it merely ratifies the [OWCP]’s action.” Id. In other words, when the OWCP’s initial determination is to deny a claim, it is inevitable that the employer will controvert any subsequent claim for benefits before an ALJ.“[I]f the [OWCP] determines that the evidence of record is insufficient to satisfy claimant’s burden of proof, there is every reason to expect that the employer will agree and controvert the claim.” Id. In these “initial-denial” cases, the Director believes that an attorney’s pre-controversion work deserves compensation because an adversarial relationship arises between the employer and the claimant at the moment the OWCP determines that the claimant is ineligible for benefits.

By contrast, when the OWCP initially decides to award benefits to a claimant, the Director believes that “there is no reason for the claimant to seek professional assistance until the employer registers its disagreement.” Id. It appears reasonable to expect that a claimant who has “won” in the OWCP determination will not require the assistance of counsel unless his employer chooses to controvert the OWCP’s award. In the Director’s parlance, no adversarial relationship exists between the claimant and the employer in “initial-award” cases until the employer decides that it will controvert the benefits award.

As we have noted, .our review of an agency’s interpretation of its own regulation is limited to a determination of whether the interpretation is plainly erroneous or inconsistent with the express language of the regulation. The Director’s position, as articulated above, is a reasonable and commonsense interpretation of an ambiguous fee-shifting scheme. While the BRB’s about-face on this question and its misplaced reliance on Hensley and Dague are some cause for concern, these concerns are not enough to outweigh our belief that the Director’s interpretation is consistent with the regulation. The Director’s interpretation of the regulation is eminently reasonable and fully merits the “substantial deference” we owe it.

The Employers argue that the Director’s interpretation is contrary to the plain language of the regulation. Their argument is supported by the fact that the BRB, for almost 20 years, interpreted the underlying statute in a manner consistent with the Employers’ interpretation. The Director concedes, as he must, that the Employers’ reading of the regulation, which would preclude the award of any pre-controversion fees, is a reasonable one. Respondents’ Br. at 30. But in order to succeed in this court, the Employers must show that the Director’s interpretation of the regulation is irreconcilable with the text of the regulation. Such is the Employers’ burden despite our holding in Kemp and the fact that, since Kemp, the Director has changed his interpretation of the statute. See De Osorio v. INS, 10 F.3d 1034, 1042 (4th Cir.1993) (holding that “an agency is allowed to change its interpretation as long as its position is reasonable and does not conflict with congressional intent”). As we noted in Kemp, this statutory fee-shifting scheme is “ambiguous,” see Kemp, 805 F.2d *311at 1153, and the Director’s new interpretation appears to resolve the ambiguity in a reasonable and commonsense manner.

The Employers also point out that in January 1997 the Secretary of Labor proposed a change in the regulation at issue that would require an employer only to pay post-controversion attorney’s fees. See 62 Fed. Reg. 3337-3435 (Jan. 22, 1997). The language of the proposed regulation eliminates the ambiguity that currently exists in the regulation and is consistent with the interpretation of the present regulation for which the Employers argue in this appeal. It is indeed awkward that the government opposes the Employers’ interpretation in the eases before us while simultaneously proposing a regulation that is in accord with the Employers’ position. Again our task is not to determine whether the Director’s position is the most reasonable or logical, but rather whether the interpretation is plainly erroneous. Whatever position the Department of Labor chooses to adopt under its authority to engage in formal rulemaking, it does not render its interpretation of the current regulation unreasonable or inconsistent with the regulation in its present form.

III.

In sum, we hold that the decision whether to award precontroversion attorney’s fees depends on whether the OWCP, in its initial determination of whether a claimant is entitled to benefits, awards or denies benefits. .Pre-controversion fees should be awarded only in those cases in which the OWCP makes an initial determination that a claimant be denied black lung benefits. Since all three of these cases clearly fall into that category, these awards of precontroversion fees are appropriate and, therefore, the decisions of the BRB are accordingly affirmed.

AFFIRMED

The Secretary of Labor has delegated to the Director, Office of Workers' Compensation Programs, responsibility for the administration of the black lung program. 20 C.F.R. § 701.202(0. For ease of reference, this opinion will ascribe the government's argument to the Director, who represents the interests of both the Department of Labor and, in this case, the Claimants.