United States Ex Rel. Department of Labor v. Insurance Co. of North America

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 20, 1997 Decided December 23, 1997

No. 97-5075

United States of America, on behalf of its agency,

the Department of Labor,

Appellee

v.

Insurance Company of North America,

Appellant

Appeal from the United States District Court

for the District of Columbia

(No. 93cv02660)

Richard A. Bunn argued the cause and filed the briefs for
appellant.

John G. Interrante, Attorney, United States Department of
Justice, argued the cause for appellee, with whom Frank W.
Hunger, Assistant Attorney General, Mary Lou Leary, Unit-

ed States Attorney, and J. Christopher Kohn, Attorney, Unit-
ed States Department of Justice, were on the brief.

Before: Wald, Williams and Randolph, Circuit Judges.

Opinion for the Court filed by Circuit Judge Wald.

Wald, Circuit Judge: Kaiser Steel Corporation ("Kaiser"),
a coal mine operator, obtained a number of indemnity bonds
in order to fulfill its self-insurance responsibilities under the
Black Lung Benefits Act ("the Act"), 30 U.S.C. ss 901-945
(1994), which imposes liability on mine operators for payment
of benefits to miners who have developed pneumoconiosis
("black lung"). One of the bonds, issued in 1982 and canceled
in 1984, named Insurance Company of North America
("INA") as the surety. When Kaiser filed for bankruptcy in
1987, INA, as Kaiser's surety, was obligated to pay covered
claims under the bond, a fact INA has never challenged.
What has remained in dispute, however, is how to determine
the claims for which INA is liable. In its first appearance
before this court, United States v. Insurance Co. of N. Am.,
83 F.3d 1507 (D.C. Cir. 1996) [hereinafter INA I] held that,
according to the bond's language, INA was liable only for
those claims that accrued during the bond period, rejecting
the district court's conclusion that INA was liable for all
claims outstanding during the bond period. The case now
makes a return appearance, as INA claims that the district
court on remand incorrectly interpreted our mandate by
requiring that a miner's last year of employment with Kai-
ser--rather than his first year of employment--fall within the
bond period in order for the claim to accrue during that
period. We hold that our previous opinion did not address
the issue of which year should be considered to mark the
accrual point, so to the extent that the district court believed
it was compelled by our opinion to choose a miner's last year
of employment, it did so in error.1 We therefore vacate its
judgment and order and remand to the district court for it to

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1 Because our conclusion necessarily implies that INA's appeal
was not frivolous, we deny the government's motion for sanctions.

decide, with additional evidence if necessary, the trigger year
intended by the parties to the bond agreement.

I. Background

Under the Act, coal miners who have become totally dis-
abled due to black lung that arises at least in part out of their
coal mine employment and certain surviving dependents of
miners whose death was due to black lung are entitled to
monthly benefits. As of January 1, 1974, claims for benefits
must be filed pursuant to the applicable state workers' com-
pensation law if that law has been deemed by the Secretary
of Labor to provide adequate coverage for black lung. 30
U.S.C. s 931 (1994); 20 C.F.R. s 722.101 (1997). Where no
approved state workers' compensation statute exists, claims
are filed with the Secretary of Labor and are paid by
responsible coal mine operators. 30 U.S.C. s 932(b) (1994);
20 C.F.R. s 725.1(d) (1997). An operator is considered a
"responsible operator" under the Department of Labor's reg-
ulations if it is the operator "with which the miner had the
most recent periods of cumulative employment of not less
than 1 year." 20 C.F.R. s 725.493(a)(1) (1997). This regula-
tion ensures that only one mine operator is responsible for
the payment of a particular miner's benefits.2

The Act requires that each operator secure the payment of
benefits for which it is liable in advance, either by qualifying
as a self-insurer pursuant to 20 C.F.R. ss 726.101 et seq. or
by obtaining outside insurance. 30 U.S.C. s 933(a) (1994); 20
C.F.R. s 725.494 (1997). A mine operator that self-insures
must acquire either an indemnity bond or negotiable securi-
ties in an amount sufficient to discharge its liability under the
Act. 20 C.F.R. s 726.101 (1997). If a responsible operator
or its surety does not make timely payments, or if no opera-

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2 To be precise, a finding that an operator is a "responsible
operator" creates a rebuttable presumption that a miner's black
lung arose out of his employment with that operator. The operator
is therefore liable for payment of benefits to that miner unless it
successfully rebuts that presumption. 20 C.F.R. s 725.494(a)(6)
(1997).

tor is liable for payment, benefits are paid from the Black
Lung Disability Trust Fund ("the Fund"), which is financed
by a tax on most types of coal and for which the Secretary of
the Treasury, the Secretary of Labor, and the Secretary of
Health and Human Services are trustees. 30 U.S.C. s 934
(1994); 26 U.S.C. s 9501 (1994); 20 C.F.R. s 725.1(g) (1997).
A responsible operator is then liable to the federal govern-
ment for repayment to the Fund of any expenditures attribut-
able to that operator. 30 U.S.C. s 934; 20 C.F.R. s 725.603
(1997).

In 1973 the Department of Labor ("the Department")
authorized Kaiser to act as a self-insured coal mine operator.
To fulfill its obligations under section 726.101, Kaiser ob-
tained two indemnity bonds from INA, one in the amount of
$684,750 (effective November 2, 1973) and one in the amount
of $3,304,000 (effective May 1, 1982, and canceled on May 20,
1984) ("the 1982 bond"). Kaiser filed for bankruptcy in
February 1987 and stopped paying benefits to its miners. In
June 1987, the Secretary of Labor wrote to INA, requesting
that INA, as Kaiser's surety, make arrangements for pay-
ment under the 1982 bond for claims filed from July 1, 1973,
to May 20, 1984. Relying on the language of the bond, which
defined INA's liability as that "which attaches to or is accrued
by" Kaiser during the bond period, INA declined to pay all
but two claims, asserting that the remainder of the claims
accrued before 1982. The Department arranged for payment
of the outstanding claims from the Fund and continued to
request payment from INA. When its efforts proved unsuc-
cessful, the Department filed suit in the district court on
December 30, 1993.

Both parties moved for summary judgment as to the scope
of INA's liability.3 The district court entered judgment
against INA on October 12, 1994, agreeing with the govern-

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3 INA also moved for summary judgment on the ground that the
government's claim was barred by the statute of limitations in 28
U.S.C. s 2415(a) (1994). That assertion was rejected both by the
district court and by this court on appeal, see INA I, 83 F.3d at
1510-11, and thus is no longer an issue in this case.

ment that language in the bond that rendered INA liable for
all of Kaiser's "present, past, and potential liability" under the
Act created a broad scope of liability "for all Kaiser's obli-
gations existing as of the effective date and continuing until
the termination of the bond." United States v. Insurance Co.
of N. Am., 881 F. Supp. 1, 5 (D.D.C. 1994).4 It therefore held
INA liable for all past and future claims arising from employ-
ment with Kaiser on or before May 20, 1984, and subsequent-
ly directed the government to file a proposed judgment
stating the amount for which INA would be liable.

On December 9, 1994, the government moved for leave to
file, in support of its proposed judgment, a declaration by
Scott D. Valentine ("Valentine"), a computer specialist with
the Department who had reviewed the Department's records
and calculated the amount due from INA. INA objected to
the Valentine declaration, asserting that Valentine had not
previously been identified as a witness and that the informa-
tion upon which the declaration was based had not been
disclosed during discovery. INA asked that its objections be
sustained or, in the alternative, that it be granted 20 days in
which to verify the accuracy of Valentine's calculations. The
district court granted both the government's motion for leave
to file the declaration and INA's request for review time on
January 17, 1995, and on March 24, 1995, it entered judgment
against INA in the amount of $659,871.80, plus interest, and
ordered INA liable for payment of all future benefits arising
from employment with Kaiser on or before May 20, 1984,
capped by the penal sum of the bond.

INA appealed the district court's judgment, arguing that
the district court had misinterpreted the bond language and
thus incorrectly broadened the scope of its liability to include

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4 The only coverage issue before the district court was the scope
of the 1982 bond; although the second count of the government's
complaint sought reimbursement under the 1973 bond, the govern-
ment moved for, and was granted, summary judgment only as to
the 1982 bond. 881 F. Supp. at 1 n.1.

claims in existence before the bond period began.5 We
rejected the district court's interpretation, holding that be-
cause the parties intended that the bond impose on INA "only
liability accruing after the bond's effective date," INA would
be liable only for claims for which Kaiser became the "respon-
sible operator" under 20 C.F.R. s 725.493 between May 1,
1982, and May 20, 1984, the date the bond was canceled, "by
virtue of an employee's completion of one full year of employ-
ment with Kaiser during that period." INA I, 83 F.3d at
1512-13. We therefore reversed the district court's holding
as to liability and remanded for reassessment of damages in
accordance with our opinion.

On remand, the government moved for entry of judgment
in the amount of $350,604.49, which represented the amounts
due on claims related to three miners, each of whom had
concluded his employment with Kaiser in 1983.6 In support
of this motion, the government submitted a new declaration
from Valentine, which, like the first declaration, described
how the amount due had been calculated; this amount includ-
ed payments made from the Fund while the case had been on
appeal. INA opposed the government's motion, arguing that
the limitation in our opinion--the requirement of "an employ-
ee's completion of one full year of employment with Kaiser
during [the bond] period"--restricted INA's liability to those
claims filed by miners whose first year of employment with
Kaiser was completed during the bond period, not the last
year of employment, as the government contended. INA also
renewed its objections to Valentine's declaration, asserting
that it contained hearsay in its references to the Depart-
ment's computer databases, that INA had not had the oppor-

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5 INA did not raise any challenge to the Valentine declaration on
appeal, although the declaration was listed as a subject of appeal in
INA's Statement of Issues to Be Raised.

6 The three claimants were Lucas S. Marez, whose last employ-
ment date was September 6, 1983; Arthur R. Mena, whose last
employment date was January 14, 1983; and Ida Miller, widow of
Leroy F. Miller, whose last employment date was June 24, 1983.

tunity to depose Valentine, and that it contained inadmissible
legal conclusions regarding INA's liability.

On January 22, 1997, the district court entered judgment in
favor of the government in the amount of $350,604.49, plus
interest, and ordered INA to pay any future benefits that
became due to individuals whose last mining employment of
at least one year was with Kaiser and ended during the bond
period. It rejected INA's argument that its liability was
determined by a miner's first year of employment as "con-
trary to the plain text of the regulations, counter to the Court
of Appeals' decision, and entirely without merit," United
States v. Insurance Co. of N. Am., No. 93-2660, slip op. at 3-4
(D.D.C. Jan. 22, 1997), and declined to entertain INA's chal-
lenge to the Valentine declaration because INA had not
raised the issue on appeal. INA now appeals a second time.

II. Analysis

Because both parties have framed the debate as one re-
garding the interpretation of our previous opinion, the pri-
mary question before us is whether that opinion dictated the
conclusion reached by the district court. As we have previ-
ously noted, the "mandate rule," an application of the "law of
the case" doctrine, states that a district court is bound by the
mandate of a federal appellate court and generally may not
reconsider issues decided on a previous appeal. See, e.g.,
Maggard v. O'Connell, 703 F.2d 1284, 1289 (D.C. Cir. 1983);
City of Cleveland, Ohio v. Federal Power Comm'n, 561 F.2d
344, 348 (D.C. Cir. 1977). Unlike the doctrine of res judicata,
however, the "law of the case" doctrine does not seek to
sweep under its coverage all possible issues arising out of the
facts of the case. See City of Cleveland, 561 F.2d at 348.
Rather, the scope of the "law of the case" doctrine is limited
to issues that were decided either explicitly or by necessary
implication--"[t]he mere fact that [an issue] could have been
decided is not sufficient to foreclose the issue on remand."
Maggard, 703 F.2d at 1289. We therefore look to our previ-

ous opinion 7 to determine whether the district court unneces-
sarily restricted its ability to determine how INA's liability
should be calculated.

At issue before us on the first appeal in this case was a
narrow question regarding the scope of INA's liability:
whether INA was liable for all claims outstanding during the
bond period or only for those claims arising during the bond
period. The government had claimed, and the district court
had agreed, that the bond's "broad" language and references
to "present, past, and potential liability" led to the conclusion
that INA would be liable for any claim that was outstanding
between 1982 and 1984, even if the condition that made INA
liable for that claim--that Kaiser had become the "responsi-
ble operator"--had been fulfilled before the first day of the
bond period. We disagreed, holding that such an interpreta-
tion would "virtually delete[ ]" the penultimate sentence of
the second clause of the bond, which defined INA's liability as
that "which attaches to or is accrued by [Kaiser] in or for the
period during which this bond is in force." INA I, 83 F.3d at
1511. Recalling the " 'cardinal principle of contract construc-
tion: that a document should be read to give effect to all its
provisions and to render them consistent with each other,' "
id. (quoting Mastrobuono v. Shearson Lehman Hutton, Inc.,
115 S. Ct. 1212, 1219 (1995)), we concluded that the parties to
the bond intended to impose on INA "only liability accruing
after the bond's effective date," id. at 1512. Because liability
under the Act is assigned only to the operator with which a
miner was most recently employed for at least one year, see
20 C.F.R. s 725.493(a)(1), we held that INA was liable under
the 1982 bond only for claims in which the miner had complet-
ed at least one year's employment with Kaiser during the
bond period (between May 1, 1982, and May 20, 1984). INA
I, 83 F.3d at 1513. Our holding was thus intended simply to
narrow the broad scope of liability imposed by the district

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7 As we have previously noted, it is entirely appropriate--and, in
most cases in this circuit, necessary--to consult the opinion to
interpret the mandate. See, e.g., City of Cleveland, 561 F.2d at 347
n.25.

court and to require that there be a temporal connection
between a claimant's employment with Kaiser and the bond
period.

The district court on remand, however, read this holding
more broadly, believing it not only to require such a temporal
connection but also to define how that connection should be
determined. The parties now before us commit the same
error, each contending that our opinion dictates the year of
employment that fulfills the one-year requirement and each
mustering various regulatory language and policy rationales
in its favor. But these arguments are misdirected: As we
have noted above, a careful reading of the opinion reveals
that the issue was not decided, nor was any resolution neces-
sarily implied by our holding. Simply put, we did not decide
which year of employment the parties to the bond intended to
trigger INA's liability.

If the answer to this question were clear from the language
of the bond, it would be incumbent upon us to decide it on
this appeal. The indemnity bond at issue in this case is a
contract between the principal (here, Kaiser) and the surety
(INA) in favor of an obligee (the U.S. government); as with
any contract, if its terms are unambiguous on their face,
interpretation is considered a question of law appropriately
resolved by this court. See, e.g., NRM Corp. v. Hercules,
Inc., 758 F.2d 676, 682 (D.C. Cir. 1985).8 Where, however, a

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8 Subject matter jurisdiction in this case was obtained under,
inter alia, 28 U.S.C. s 1352 (1994), which mandates original juris-
diction in the district courts, concurrent with state courts, "of any
action on a bond executed under any law of the United States,
except matters within the jurisdiction of the Court of International
Trade under section 1582 of this title." Because "[t]here is no
federal legislative standard for bonds 'executed under any law of
the United States,' " Skirlick v. Fidelity & Deposit Co. of Md., 852
F.2d 1376, 1377 (D.C. Cir. 1988) (internal quotation marks omitted),
state law provides the applicable rules of contract interpretation
and construction. The record before us does not indicate where the
bond was executed, although the bond itself reflects that Kaiser is
located in California and that INA is incorporated in Pennsylvania.
Because both these jurisdictions--as well as the District of Colum-
bia--hold that unambiguous contract provisions are enforced ac-

contract provision is ambiguous, extrinsic evidence may be
necessary to ascertain the mutual intent of the parties and
thus resolve the ambiguity, and its admission is within the
province of the district court. See, e.g., America First Inv.
Corp. v. Goland, 925 F.2d 1518, 1522 (D.C. Cir. 1991).

We thus return to the bond provision we examined in the
first appeal to determine if there is an unambiguous reference
to the year of employment that should serve as the trigger of
liability, keeping in mind that a contract provision is ambigu-
ous "if it is reasonably susceptible of different constructions,
but it is not ambiguous merely because the parties later
disagree on its meaning." Bennett Enters., Inc. v. Domino's
Pizza, Inc., 45 F.3d 493, 497 (D.C. Cir. 1995) (citation omit-
ted). The only portion of the bond which could be said to
define the trigger of liability is the last sentence of the second
clause, which reads: "For purposes of this clause liability
shall be construed to attach or be accrued by the Principal for
such periods and in such manner as is determined by the
Secretary of Labor pursuant to said Act of 1969 and the
applicable regulations duly promulgated thereunder." Joint
Appendix ("J.A.") 12. Thus, we can conclude, at a minimum,
that the parties unambiguously intended that the trigger for
Kaiser's--and thus INA's--liability would be determined ei-
ther by the Act itself or by regulation.9

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cording to their terms, compare Paylor v. Hartford Ins. Co., 640
A.2d 1234, 1235 (Pa. 1994) with AIU Ins. Co. v. Superior Court, 799
P.2d 1253, 1264 (Cal. 1990) and Skirlick, 852 F.2d at 1378, we need
not decide which state's law would apply in this case.

9 We are mindful of the fact that the bond states that liability
attaches "as is determined by the Secretary of Labor pursuant to
said Act of 1969 and the applicable regulations duly promulgated
thereunder," J.A. 12 (emphasis added), language that could support
an interpretation that discretion to determine liability is wholly
vested with the Secretary of Labor. Nevertheless, we are confi-
dent, given that the bond refers to a determination "pursuant to"
the Act and the regulations, that the parties did not intend that the
Secretary's discretion would be unfettered. Except for rejecting an
interpretation vesting total discretion in the Secretary, we take no

When a contract incorporates a regulation by reference,
that regulation becomes a part of the contract for the indicat-
ed purposes as if the words of that regulation were set out in
full in the contract. See, e.g., Washington Metro. Area
Transit Auth. v. Mergentime Corp., 626 F.2d 959, 962 n.3
(D.C. Cir. 1980); Maryland-National Capital Park & Plan-
ning Comm'n v. Lynn, 514 F.2d 829, 833 (D.C. Cir. 1975).
Therefore, the bond's reference to "applicable regulations" as
the standard that determines when liability attaches neces-
sarily incorporates 20 C.F.R. s 725.493(a)(1), the regulation
that defines when an operator becomes a "responsible opera-
tor" and thus becomes liable for paying miners' claims.10 If
we then read the bond as if the language of section
725.493(a)(1) were included in full, it becomes apparent that
the bond is ambiguous as to when liability is deemed to
accrue--the requirement that Kaiser be the operator "with
which the miner had the most recent periods of cumulative
employment of not less than 1 year" admits of either reading
the parties urge upon us on appeal. As INA argues, the
language could be interpreted to impose liability after a
miner's first year of employment with Kaiser: If Kaiser is
that miner's most recent employer, liability is triggered as
soon as one year of employment has been completed. But, as
the government argues, the language could just as easily
refer to a miner's last year of employment with Kaiser, given
that the regulation's focus is on the employment most recent
in time. Given this ambiguity, it would be inappropriate for
us to determine the intention of the parties on the basis of the
record as it now stands.11 We therefore remand this case

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position on the circumstances, if any, under which a Departmental
interpretation of the regulations would be entitled to deference.

10 The current version of 20 C.F.R. s 725.493 was promulgated on
August 18, 1978, and so was in existence when the bond at issue in
this case went into effect. See 43 Fed. Reg. 36,771, 36,804 (1978).

11 The canon of construction known as contra proferentum--that
ambiguities in an insurance contract should be construed against
the insurer who drafted the contract, see, e.g., Revere Copper &
Brass, Inc. v. Overseas Private Inv. Corp., 628 F.2d 81, 82 (D.C.

once again to the district court to determine, with the admis-
sion of extrinsic evidence, if necessary, whether the parties to
the bond intended that the first year of employment or the
last year of employment be the trigger of liability and to
reassess damages in accordance with that determination.

Our decision to remand once again is entirely consistent
with our action in the first appeal, in which we resolved the
interpretation issue before us at that time. There, the provi-
sions we were required to reconcile--the reference to "pres-
ent, past, and potential liability" and the reference to liability
as that which "attaches to or is accrued by" Kaiser during the
bond period--were each unambiguous on their face with
respect to the conflicting claims then presented. Our task,
appropriately undertaken under the rules of contract inter-
pretation, was to harmonize these provisions into a consistent
whole. Here, by contrast, we are faced with a single provi-
sion, the meaning of which cannot be unlocked with the
interpretive keys we, as an appellate court, possess. It would
be appropriate for us to resolve this ambiguity only if "the
proper resolution was so obvious on the basis of the record
that a remand on that issue would [be] 'unduly wasteful of
judicial resources.' " Maggard, 703 F.2d at 1290 (quoting
Independent Bankers Ass'n of Am. v. Heimann, 613 F.2d
1164, 1167 (D.C. Cir. 1979)). Given the absence of evidence in
the bond itself and in the record concerning the proper
interpretation of the bond's liability provision, the solution
here can hardly be said to be that obvious.

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Cir. 1980)--is not a sufficient ground by itself for rejecting the
government's interpretation of the bond language. First, while it is
true that the 1982 bond is merely the government's Form CM-922,
which bears the heading "U.S. Department of Labor," the govern-
ment is neither Kaiser's insurer nor a signatory to the bond; at
most, it is a third-party obligee entitled to enforce the agreement
between Kaiser and INA. Second, and more important, contra
proferentum is traditionally used only in "cases of doubt ...
[where] other factors are not decisive." Restatement (Second) of
Contracts s 206 cmt. a (1979). Only after the district court has
had the opportunity to consider the parties' intent in the first
instance, therefore, would resort to this canon be appropriate.

III. Conclusion

We vacate the district court's judgment and order and
remand to allow the district court to determine the parties'
intent with respect to the year of employment that triggers
Kaiser's--and therefore INA's--liability for claims under the
Act.12

It is so ordered.

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12 Because the district court on remand is permitted to admit
extrinsic evidence to aid it in resolving the bond's ambiguity, INA
should be permitted to challenge the new Valentine declaration
submitted by the government in support of its claim. Although we
stated in Crocker v. Piedmont Aviation, Inc., 49 F.3d 735 (D.C. Cir.
1995), that, pursuant to the "law of the case" doctrine and its
subsidiary waiver principle, "appellate courts are precluded from
revisiting not just prior appellate decisions but also those prior
rulings of the trial court that could have been but were not
challenged on an earlier appeal," id. at 739 (emphases in original),
we also noted that the doctrine "is a prudential rule rather than a
jurisdictional one," motivated by a "practical concern for judicial
economy," id. at 739-40. Given that the second Valentine declara-
tion involves a new set of calculations--and, depending on the
district court's resolution of the bond's ambiguity, there may yet be
a third declaration--and given that the district court will likely be
presented with additional evidence on remand, we find no reason to
bar INA's challenge.