Administrative – Former mine owner dodges liability for black lung benefits

Where the Department of Labor’s Benefits Review Board held the parent of a company was liable for the black lung benefits owed to an employee of that subsidiary, even though the claim was made years after the parent disposed of the subsidiary, it erred.

Background

For a time, Arch Coal Company Inc. was the parent company of Hobet Mining Inc. Arch covered its own and those of its subsidiaries—including Hobet—through a self-insurer indemnity bond. Later, Arch sold Hobet and two other subsidiaries to Magnum Coal. Arch notified the Department of Labor of its sale and stated that, going forward, Magnum would be responsible for all of Hobet’s and the other two subsidiaries’ black lung liabilities. Magnum then transferred those mines to Patriot Coal Company.

The Department approved Patriot as a self-insurer for Hobet and the two other subsidiaries. And when miners—even those who last worked for the subsidiaries when Arch owned them—filed black lung claims, the Department named Patriot, not Arch, as responsible for paying the benefits. After Patriot went bankrupt and Hobet went out of business, however, the Department began seeking to hold Arch liable for claims filed long after it ceased to be the parent company of Hobet and the other two subsidiaries and long after it ceased covering those coal mine operations with its self-insurance bond.

In this case, Horace Meredith’s last job as a miner was with Hobet. During the time Meredith worked there, Arch was Hobet’s parent company and covered its black lung liabilities. An administrative law judge, or ALJ, found that Hobet was the operator responsible for Meredith’s black lung benefits. And she found that Arch was liable for paying Meredith benefits because it owned and provided self-insurance to Hobet on the last day of his coal mining employment. The Department’s Benefits Review Board affirmed the ALJ.

Analysis

Hobet and Arch argue the Board erred in affirming the ALJ’s finding that Hobet satisfied the requirement of being financially capable of assuming Meredith’s benefits through Arch and in concluding that nothing relieved Arch of liability for benefits to miners last employed by Hobet when Arch owned and provided self-insurance for that operator. The court agrees.

Subsection 725.494(e) specifies three ways an operator can be deemed financially capable of assuming benefits due to a miner. Hobet doesn’t satisfy any of them. And neither the Act nor its regulations permit the Department to use the fact that Arch previously covered Hobet’s black lung liabilities through a self-insurance bond to show that Hobet could pay Meredith’s benefits or otherwise hold Arch responsible for Meredith’s benefits.

First, under § 725.495(a)(1), a responsible operator must qualify as a potentially liable operator. And one of those qualifications is that an operator be financially capable of paying the miner’s benefits. The ALJ’s holding that Hobet was financially capable of assuming liability for Meredith’s claim “through its self- insurance with Arch” appears rooted in subsection(e)(2)’s reference to self-insurance.

By its express terms, however, the regulation applies to an operator that “still qualifies as a self-insurer.” Hobet was an operator long ago, but it doesn’t still qualify as a self-insurer. And while Arch qualified as a self-insurer while it owned Hobet, the Department never named Arch as an operator. Since § 725.494(e) applies only to operators, it does not apply here to Arch.

The Board also erred in affirming the ALJ’s conclusion that Arch was liable for Meredith’s benefits because it insured Hobet on Meredith’s last day as a miner. Arch was not covering Hobet through its self-insurance at the time Meredith filed his claim. And prior to Patriot’s bankruptcy, the Department did not designate entities, like Arch, that previously owned the subsidiaries as insurers.

The only difference is that Patriot, the current parent of Hobet, was bankrupt when Meredith filed his claim. Practically, that may have meant Patriot was unable to pay the mining benefits. But it did nothing to create liability for Arch when none existed before.

This is not the first federal appellate court to assess Arch’s liability as a prior self- insuring parent of mining subsidiaries for claims made after it sold the subsidiaries and after Patriot’s bankruptcy. The Sixth Circuit concluded that Arch had liability, and the Seventh concluded it did not. The court finds the Seventh’s Circuit’s reasoning more persuasive. Concluding there was no such source of law, the circuit court vacated the decision of the Board and remanded with instructions that the benefits be assigned to be paid by the trust fund.

Petition granted; Board decision vacated and remanded.

Dissenting opinion

King, J., dissenting:

Contrary to the majority’s erroneous decision, the Sixth Circuit reached the same conclusion that I would reach in these administrative proceedings: that Arch Coal

— as the self-insurer of Hobet — should be responsible for Mr. Meredith’s black lung benefits, irrespective of the corporate maneuvering by Arch to avoid such liability.

Hobet Mining Inc. v. Director, Office of Workers’ Compensation Programs, Case No. 23-2157, Oct. 1, 2025. 4th Cir. (Quattlebaum), from Benefits Review Board, United States Department of Labor. Dominic Emil Draye for Petitioners. Brad Anthony Austin and Sean Gregory Bajkowski for Respondents. VLW 025-2-377. 31 pp.