Appeal from the United States District Court for the District of Columbia (No. 93cv02660)
Before: Wald, Williams and Randolph, Circuit Judges.
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Opinion for the Court filed by Circuit Judge Wald.
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. Section(s) 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 Kaiser-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. *fn1 We therefore vacate its judgment and order and remand to the district court for it to decide, with additional evidence if necessary, the trigger year intended by the parties to the bond agreement.
Under the Act, coal miners who have become totally disabled 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' compensation law if that law has been deemed by the Secretary of Labor to provide adequate coverage for black lung. 30 U.S.C. Section(s) 931 (1994); 20 C.F.R. Section(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. Section(s) 932(b) (1994); 20 C.F.R. Section(s) 725.1(d) (1997). An operator is considered a "responsible operator" under the Department of Labor's regulations 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. Section(s) 725.493(a)(1) (1997). This regulation ensures that only one mine operator is responsible for the payment of a particular miner's benefits. *fn2
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. Section(s) 726.101 et seq. or by obtaining outside insurance. 30 U.S.C. Section(s) 933(a) (1994); 20 C.F.R. Section(s) 725.494 (1997). A mine operator that self-insures must acquire either an indemnity bond or negotiable securities in an amount sufficient to discharge its liability under the Act. 20 C.F.R. Section(s) 726.101 (1997). If a responsible operator or its surety does not make timely payments, or if no operator 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. Section(s) 934 (1994); 26 U.S.C. Section(s) 9501 (1994); 20 C.F.R. Section(s) 725.1(g) (1997). A responsible operator is then liable to the federal government for repayment to the Fund of any expenditures attributable to that operator. 30 U.S.C. Section(s) 934; 20 C.F.R. Section(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 obtained 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 payment 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 unsuccessful, 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. *fn3 The district court entered judgment against INA on October 12, 1994, agreeing with the govern 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 obligations 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). *fn4 It therefore held INA liable for all past and future claims arising from employment with Kaiser on or before May 20, 1984, and subsequently 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 information 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 claims in existence before the bond period began. *fn5 We rejected the district court's interpretation, holding that because 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 "responsible operator" under 20 C.F.R. Section(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 employment with Kaiser during ...