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Mining companies and insurers are vowing to block a controversial and potentially costly federal proposal to expand the black lung benefits program.
They hold that the 97-page Labor Department proposal, which would restructure the black lung program for the first time since the early 1980s, is unnecessary, expensive and illegal.
The nation's biggest miners union also has some problems with the proposal-namely that it does not appear to go far enough in making the benefits program more responsive to claimants.
The federal black lung program was created by the Coal Mine Health and Safety Act of 1969 and amended significantly in 1972, 1977 and 1981. The program was introduced because lawmakers thought state workers compensation systems provided inadequate compensation for mining-related diseases and for the survivors of miners who died of such diseases. Congress allowed mining companies to purchase black lung insurance generally as an endorsement to workers compensation or to self-insure the benefit.
Beneficiaries receive the black lung benefits on top of whatever workers comp benefits they receive.
In 1977, Congress set up the Black Lung Disability Trust Fund, supported by levies on coal mining companies, to compensate miners who had retired before Jan. 1, 1970, or for whom no responsible employer could be found.
The Labor Department aims to increase the rate of black lung claims approved for benefits and speed up the claims approval process.
A spokeswoman for the Labor Department in Washington said that, under the proposal, the claims approval rate would rise to between 8.5% to 9% from the current rate of about 7.9%.
She said there are about 30,000 current beneficiaries, though that number rises to about 160,000 by adding miners' widows and those who receive benefits from Social Security rather than the black lung program. The program has paid out about $30 billion since its inception nearly 30 years ago, she said.
Among other things, the Labor Department proposal would:
Broaden the definition of "pneumoconiosis"-or black lung disease-to encompass any chronic obstructive lung diseases, such as those caused by smoking.
Limit the number of medical examinations a miner would have to complete before becoming eligible for black lung benefits.
Excuse miners from repaying benefit overpayments they receive from mine operators under certain circumstances.
Give more weight to a miner's personal physician than any other physician in determining eligibility for benefits.
Permit claims to be refiled more than a year after denial of the same claim filed earlier.
"The Labor Department hoped to shorten to a year or less a process that now can take years to resolve. It also wants to make the process more equitable for miners by restricting the number of medical examinations to two each for
the miner and the mining operator, for a total of four. Under the current system, there are no limits, and miners often are forced to pay for a number of exams," said the spokeswoman for the department.
"We're doing it now because the process has not been changed since the early 1980s. These proposed changes reflect legal rulings that have been issued during the past 14 years," according to the spokeswoman.
But Bruce Wood, assistant general counsel of the American Insurance Assn., said the department has put forth an "outrageous and illegal regulatory proposal that will bring a swift response from the regulated community if not from Congress."
"The black lung program has a long and checkered history that goes back to 1969. It's been revised a number of times since then; most of the time it has been revised to expand eligibility. More recent amendments, which took effect in 1982, rebalanced the black lung program," he said.
Those changes more than a decade ago reduced inappropriate approvals significantly and incorporated principles that made the program work more like a traditional workers comp program, said the AIA's Mr. Wood.
A spokesman for the country's largest organization of mining companies made clear its members don't view the proposal as necessary.
"It's unnecessary based on what the Department of Labor perceives to be needed changes," said Bobby J. Jackson, vp-human resources for the Washington-based National Mining Assn.
"If you look at the approval rate, which Department of Labor now claims is about 7.9% of those that apply, the Department of Labor and other people feel that rate should be higher; we question the validity of that," said Mr. Jackson.
The largest miners' union in the country contends the Labor Department should aim to make the approval rate much higher.
"It is the UMW's position that this kind of incremental change is not sufficient to restore fairness to the program," said the United Mine Workers of America in Washington in an analysis of the proposal. According to the miners' union, 43% of the claims made before 1980 were approved.
"There is no categorical public benefit program, federal or state, in which the allowance rate for benefits claims is remotely as low as it is in the black lung program. The program was intended as a meaningful compensation program for those afflicted with pneumoconiosis. It has turned into an almost nightmarish scheme in which miners must litigate for years and can prevail against well-financed coal operators and their insurance carriers only if the miner is able to secure experienced counsel and expend substantial amounts of money on expert witnesses," according to the UMW.
In general, the proposed changes are "a very mixed bag from our point of view. We support some of the changes, and we're strongly opposed to some others," said Grant Crandall, general counsel for the UMW. Giving the miner's personal physician's testimony more weight in determining eligibility and limiting the number of exams needed to establish eligibility are two of the more favorable changes in the view of the UMW, he said.
The Labor Department estimates the changes overall would cost about 3,000 coal operators an additional $28 million to $40 million annually, said the spokeswoman.
Mining companies and insurers dispute the financial impact, arguing it would be much higher.
"The National Council on Compensation Insurance estimates that it would cost $200 million to $400 million to the insurance industry. The bulk of that would be from the retroactivity of the proposal. You're opening the door to claims that have previously been denied," said Tamera R. Velasquez, public affairs counsel in the Washington office of the Alliance of American Insurers.
In addition, the measure broadens the scope of disease eligible for compensation, she said.
"One of the major things they do here is expand the definition of black lung to encompass smoking-related ailments," which means "resurrecting survivor benefits to cases where death was unrelated to coal mining," said Ms. Velasquez.
The NMA's Mr. Jackson noted that an August study conducted by actuarial consultant Milliman & Robertson found that $34 billion has been spent on federal black lung claims during the past 27 years.
Milliman & Robertson estimated that if the program remained unchanged, an additional $7.5 billion would be paid in the future, $5 billion from the black lung trust fund and $2.5 billion by operators and their insurers.
But according to Milliman & Robertson, the Labor Department's proposed changes would ultimately mean additional liabilities of up to $7.5 billion, up to $5.8 billion of which operators and insurers would pay. The study also estimated the additional annual costs for the first year could reach $76.8 million, nearly double the Labor Department's high estimate.
Mr. Jackson said the additional costs would threaten some companies. "Anything that increases the costs of mining operations-whether it be black lung (benefits) or any other financial burden-puts operations in jeopardy. The indications are there would be dramatic increased costs based on the proposed rule," he said.
"What the proposal does is to impose on insurers significant new retroactive costs for which premium was never collected-and which cannot be collected-and also significant prospective costs that will inflate the ultimate cost of the black lung program significantly," said the AIA's Mr. Wood.
Mr. Jackson of the NMA said: "This rule making is fundamentally flawed in many other ways. For example, it violates the statutory authority of the agency, it usurps congressional powers, it attempts to adopt invalid science, (the Department of Labor has) violated the Regulatory Flexibility Act, the agency has failed to conduct an effective economic analysis and they violate fundamental due process and litigants' rights."
Opponents of the change have received support from the Small Business Administration, which questions the Labor Department's economic assumptions, and from the American Bar Assn., which criticizes the proposal on 13 grounds, including the limitation of medical examinations. Both organizations sent their concerns to the department.
"We received voluminous comments. They are still under review," said the Labor Department spokes-woman.
The next move is Labor Secretary Alexis Herman's.
"The secretary can issue a complete final rule, a partial final rule, to repropose portions of the standards based on the responses, withdrawing the rule-which we would endorse-or doing absolutely nothing, which we would equally endorse," said NMA's Mr. Jackson.
If the rule is promulgated without significant revision, a legal battle appears certain. "They can promulgate these, but they will not go into effect," vowed AIA's Mr. Wood.