Penn Allegh Coal Co v. Holland, Michael H.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 26, 1999 Decided August 20, 1999

No. 98-7161

Penn Allegh Coal Company, Inc.,
Appellee

v.

Michael H. Holland, Marty D. Hudson, Elliot A. Segal
and A. Frank Dunham, as Trustees of the
UMWA 1992 Benefit Plan,
Appellants

Appeal from the United States District Court
for the District of Columbia
(No. 97cv00121)

Peter Buscemi, with whom Paul A. Green and David W.
Allen were on the briefs, argued the cause for appellants.

E. Preston Rutledge, with whom John R. Woodrum was on
the brief, argued the cause for appellee.

 Before Edwards, Chief Judge, Rogers, Circuit Judge, and
Buckley, Senior Circuit Judge.

Opinion for the court filed by Senior Judge Buckley.

Buckley, Senior Judge: The trustees of a health benefit
plan created by the Coal Industry Retiree Health Benefit Act
of 1992 claim that Penn Allegh Coal Company is obliged to
pay premiums to the plan because it is responsible, under
section 9711(b) of the Act as codified, 26 U.S.C. s 9711(b)
(1994), for the continuing payment of the health benefits due
a former employee under an earlier industry-wide labor
agreement. Penn Allegh denies liability on the grounds that
the former employee, who was a disability pensioner, had not
met the "age and service requirements" necessary to qualify
for benefits under section 9711(b) and that he had not "re-
tired from the coal industry" by September 30, 1994, as
required by the section. The district court granted summary
judgment in favor of Penn Allegh based on the first ground
and therefore did not reach the second.

Because we conclude that Congress intended to ensure the
continued payment of the health benefits due all coal industry
retirees covered by the Act, including those of disability
pensioners, we hold that section 9711(b) must be construed to
cover any pensioner who qualified for disability retirement on
or before the statutory cut-off date of February 1, 1993, and
retired from the coal industry on or before September 30,
1994. Accordingly, we reverse and remand the case so that
the district court may consider Penn Allegh's remaining claim
that the employee failed to retire by the September deadline.

I. Background

A. The Coal Act

For a number of years, the employees of the members of
the Bituminous Coal Operators' Association ("Association")
were covered by health benefit plans established pursuant to
collective bargaining agreements between the Association and
the United Mine Workers of America ("UMWA"). In the
1980's, these plans began to suffer financial difficulties be-

cause a growing number of those members ("signatory opera-
tors") went out of business, withdrew from the agreements,
or otherwise defaulted on their obligations to the plans estab-
lished for the benefit of employees. Because of these and
other developments, the various plans began to experience
deficits that reached a level of approximately $110 million by
1990. See Eastern Enterprises v. Apfel, 524 U.S. __, 118
S. Ct. 2131, 2140 (1998).

In March 1990, then-Secretary of Labor Elizabeth Dole
appointed an Advisory Commission on United Mine Workers
of America Retiree Health Benefits ("Coal Commission"),
which she tasked with developing a "solution for assuring that
orphan retirees in the [various benefit trusts] will continue to
receive promised medical care." The Secretary of Labor's
Advisory Comm'n on United Mine Workers of America Retir-
ee Health Benefits, Coal Comm'n Report 2 (1990), reprinted
in Joint Appendix ("J.A.") at 95. Later that year the Com-
mission issued a report in which it noted that "coal miners
have been promised and guaranteed health care benefits for
life." Coal Comm'n Report, Executive Summary at vii, re-
printed in J.A. at 86. It then submitted two alternative
statutory proposals for ensuring that these promises would be
kept. Id. at viii, reprinted in J.A. at 87.

After conducting hearings on the report, in which it was
advised that more than 120,000 retirees might not receive the
benefits promised to them through the collective bargaining
process, Congress acted on the Commission's recommenda-
tions and passed the Coal Industry Retiree Health Benefit
Act of 1992, Pub. L. No. 102-486, 106 Stat. 3036 (codified at
26 U.S.C. ss 9701-22 (1994)) ("Coal Act" or "Act"). Eastern
Enters., 118 S. Ct. at 2141-42. An explicit purpose of the Act
was "to provide for the continuation of a privately financed
self-sufficient program for the delivery of health care benefits
to the beneficiaries of [multi-employer benefit] plans." Coal
Act, Pub. L. No. 102-486, s 19142(b)(3), 106 Stat. 3037 (1992)
(codified as note following 26 U.S.C. s 9701 (1994)).

This case is concerned with Subchapter C of the Coal Act,
which ensures the continued payment of health benefits to

certain retired coal mining employees through either an
individual employer plan ("IEP") or a statutory trust fund.
Part I of the subchapter is addressed to retired miners who
were covered by an IEP maintained pursuant to a 1978 or
subsequent coal wage agreement. It requires that the last
signatory operator to employ a retiree continue to provide
him with health benefits under its IEP if he was either
(a) receiving retiree health benefits as of February 1, 1993, 26
U.S.C. s 9711(a), or (b) "met the age and service require-
ments for eligibility to receive benefits under [the IEP]" by
that date and had not "retired from the coal industry after
September 30, 1994." Id. s 9711(b)(1).

Part II of the subchapter establishes a new statutory trust,
the United Mine Workers of America 1992 Benefit Plan
("1992 Plan"), id. s 9712(a), which provides health benefits to
two categories of beneficiaries: those who "but for the enact-
ment of [the Coal Act] would be eligible to receive benefits
from the [1950 or 1974 UMWA Benefit Plans], based upon
age and service earned as of February 1, 1993," id.
s 9712(b)(2)(A); and those "with respect to whom coverage is
required to be provided under section 9711, but who do[ ] not
receive such coverage from the applicable last signatory
operator," id. s 9712(b)(2)(B). The 1992 Plan is financed by
the operators who were signatories to the 1988 coal wage
agreement between the Association and the UMWA. These
signatory operators are required to pay both an annual
"prefunding premium" for all eligible and potentially eligible
beneficiaries of the Plan attributable to them and a monthly
"per beneficiary" premium for each beneficiary attributable to
them who is actually receiving benefits under the Plan. Id.
s 9712(d)(1)(A), (B).

B. Factual Background

Penn Allegh Coal Company, Inc. ("Penn Allegh" or "com-
pany") was a signatory to the 1988 coal wage agreement.
That agreement provided that in order to qualify for health
benefits as a disabled pensioner, an employee must be eligible
for Social Security Disability Insurance benefits. In August
1992, Richard J. Ferrari, a Penn Allegh employee who had

been injured in a mine accident, applied for disability benefits
with the Social Security Administration. More than two
years later, on December 8, 1994, that Administration deter-
mined that Mr. Ferrari was indeed disabled and that Decem-
ber 20, 1990, was the effective date of his disability.

On January 12, 1995, Mr. Ferrari applied for a disability
pension, which was granted and dated retroactively to July 1,
1992, the day after he left active employee status. Mr.
Ferrari then applied to Penn Allegh for health benefits under
its IEP. The company determined that he was not eligible to
receive them on the ground that he had not applied for his
pension, and thereby "retired," by September 30, 1994, as
required by section 9711(b). Mr. Ferrari thereafter sought
and received benefits from the 1992 Plan pursuant to sections
9711(b) and 9712(b)(2)(B) of the Act.

In April 1996, the Trustees of the 1992 Plan ("Trustees")
informed Penn Allegh that Mr. Ferrari had been enrolled in
and received benefits from the Plan retroactive to Febru-
ary 1, 1993, and demanded that the company pay per benefi-
ciary premiums on his behalf. Penn Allegh disagreed with
the Trustees' conclusion that Mr. Ferrari was eligible for
coverage under Penn Allegh's IEP and the 1992 Plan and
filed this action in district court. In its complaint, the
company alleged that the Trustees had no authority, under
section 9712(b)(2), to enroll Mr. Ferrari because he had not
retired by September 30, 1994, as required by section 9711(b),
and sought a declaration that it had no obligation to pay
premiums on his behalf. The Trustees responded with a
counterclaim in which they asked the court to declare that
Penn Allegh had a duty, under section 9711, to provide
benefits directly to Mr. Ferrari and, under section 9712, to
pay prefunding and per beneficiary premiums to the 1992
Plan.

The parties filed cross motions for summary judgment that
addressed two issues: (1) whether, in order to qualify for
benefits under section 9711(b), a disabled coal industry retir-
ee had to be eligible for an "age and service" pension as of
February 1, 1993; and (2) whether Mr. Ferrari was ineligible
for such benefits because he did not "retire" from the coal

industry, within the meaning of the Act, on or before Septem-
ber 30, 1994. The district court granted summary judgment
in favor of Penn Allegh on the first issue and therefore did
not reach the second. It concluded that because section
9711(b) specified that a retiree must meet "age and service
requirements" in order to qualify for IEP coverage, it applied
only to individuals who qualified for a pension by virtue of age
and length of service, and not as a consequence of an injury.
Accordingly, the court also held that Mr. Ferrari was not
eligible for benefits from the 1992 Plan because section
9712(b) "bases eligibility on age and service or on entitlement
to coverage under s 9711." Penn Allegh Coal Co. v. Holland,
No. 97-0121, at 9-10 (D.D.C. July 22, 1998).

II. Discussion

Section 9711(b) of the Coal Act assures continued health
benefits coverage under an IEP for any individual who has
retired from the coal industry on or before September 30,
1994, and

who, as of February 1, 1993, is not receiving retiree
health benefits under the individual employer plan main-
tained by the last signatory operator pursuant to a 1978
or subsequent coal wage agreement, but has met the age
and service requirements for eligibility to receive bene-
fits under such plan as of such date....

26 U.S.C. s 9711(b)(1) (emphasis added).

The controversy in this case centers on the meaning to be
given to the italicized language. The Trustees maintain that
the age and service requirements cannot be read to disqualify
disability pensioners under section 9711(b) for three reasons.
First, they point out that the section speaks of the "age and
service requirements for eligibility to receive benefits"; it
does not state that the section applies only to miners who
have met the age and service requirements for retirement.
Second, because section 9711(a) applies to all pensioners,
including those retired because of disability, Penn Allegh's
construction would lead to the absurd result of treating
differently two miners injured in the same accident merely

because the Social Security paperwork for one of them was
completed before February 1993 while that for the other took
a month or so longer. Finally, they maintain that Penn
Allegh's construction would frustrate the purpose of the Act,
which is to ensure that all retirees continue to receive the
health benefits they had bargained for. For these reasons,
the Trustees insist that the language of section 9711(b) must
be interpreted to require no more than that an individual
meet whatever age and service requirements are applicable to
the kind of pension he is qualified to receive.

For its part, Penn Allegh insists that section 9711(b) unam-
biguously applies to only one category of retiree, namely
those who qualify for pensions by virtue of age and length of
service; and it advances two arguments in support of that
position. It asserts, first, that the inclusion of the "age and
service" provision necessarily distinguishes the scope of sec-
tion 9711(b) from the broader coverage afforded by section
9711(a), which covers disability as well as age and length of
service pensioners. In its view, any other interpretation
would make the age and service requirement surplusage.
Second, the company points to section 9712(b)(2)(A), which
includes, as beneficiaries of the 1992 Plan, individuals who
would have been eligible, under plans superseded by the Coal
Act, for benefits "based upon age and service earned as of
February 1, 1993[.]" It insists that the use of virtually
identical language in the two sections confirms that Congress
intended to limit the application of section 9711(b) to miners
who satisfied the age and service requirement for retirement
by February 1, 1993.

The plausibility of these competing interpretations under-
scores the ambiguity of the statute we are asked to apply. In
such instances, it becomes necessary for a court to look to
"the intent of Congress as revealed in the history and pur-
poses of the statutory scheme." Adams Fruit Co. v. Barrett,
494 U.S. 638, 642 (1990); Tataranowicz v. Sullivan, 959 F.2d
268, 276 (D.C. Cir. 1992) ("[C]ongressional intent can be
understood only in light of the context in which Congress
enacted a statute and of the policies underlying its enact-
ment.").

 The history and purposes of the Coal Act, as summarized
on pages 2-5 above, persuade us that the Trustees have the
better part of the statutory argument. As the Fourth Circuit
observed in a recent case presenting the identical question
concerning the scope of section 9711(b),

[t]he historical background leading to the enactment of
the Coal Act makes clear that Congress intended to
provide coal industry retirees with the lifetime benefits
they had been promised. Since coal workers had been
promised health benefits in the event of their retirement,
whether that retirement resulted from a disability or was
based solely on their satisfaction of age and service
requirements, we conclude that Congress intended that
coal industry workers who retired as a result of a disabil-
ity would be eligible for benefits under s 9711(b)(1) and
s 9712(b)(2).

Holland v. Big River Minerals Corp., No. 98-2353, 1999 WL
417472, *5 (4th Cir. June 23, 1999).

Because the promises the Coal Act was intended to apply
equally to all classes of pensioners, we hold that to qualify for
benefits under section 9711(b), a disability retiree need only
satisfy whatever requirements entitle him to receive a pen-
sion by February 1, 1993, provided he has retired from the
coal industry on or before September 30, 1994. In so ruling,
we express no opinion as to how the age and service require-
ments of section 9712(b)(2)(A) are to be applied because that
section is not involved in this case. If Mr. Ferrari qualifies
for health benefits under section 9711(b), he is eligible for
enrollment in the 1992 Plan pursuant to section 9712(b)(2)(B);
and, of course, Penn Allegh is responsible, in turn, for premi-
um payments to the Plan as required by section 9712(d).

At this point, however, we cannot conclude that Penn
Allegh was obligated to cover Mr. Ferrari under its IEP or to
pay premiums to the 1992 Plan on his account because in its
motion for summary judgment, Penn Allegh raised an alter-
native argument that Mr. Ferrari had not "retired," within
the meaning of section 9711(b), by September 30, 1994, and
therefore was not eligible for benefits under section 9711(b).

We do not address that issue because the district court did
not reach it. See Singleton v. Wulff, 428 U.S. 106, 120 (1976)
("It is the general rule ... that a federal appellate court does
not consider an issue not passed upon below.") We therefore
leave it for the district court to address on remand.

III. Conclusion

In light of the foregoing, we set aside the district court's
grant of summary judgment in favor of Penn Allegh and
remand the case so that the court may consider the compa-
ny's argument that Mr. Ferrari had not retired from the coal
industry, within the meaning of the Coal Act, by Septem-
ber 30, 1994, and was therefore not eligible for benefits under
Penn Allegh's IEP or the 1992 Plan.

So ordered.