USERY v. TURNER ELKHORN MINING CO.
Legal provision: Due Process
Argument of R. R. Mcmahan
Chief Justice Warren E. Burger: We will hear arguments next in Dunlop (ph) against Turner Elkhorn Mining in the argument on the cross petition.
Mr. R. R. Mcmahan: Mr. Chief Justice and may it please the Court.
The issue raised by these cross-appeals is one of the constitutional rationality of the means that Congress has chosen to achieve, clearly, the legitimate purposes of the Black Lung Benefits provisions of the Coalmine Health and Safety Act of 1969.
The Coalmine Health and Safety Act, as counsel for the government no doubt will point out to you at much greater length, was originally conceived and enacted to redress some very real grievances among mineworkers.
It was designed at its original conception to deal with health and safety aspects of mining, to control dust levels, to prevent accidents.
Later, toward the end of congressional consideration of the legislation, provisions were inserted for providing economic relief to disabled retired coalminers, principally in the southern United States.
Then at the very end of the consideration of the Act, provisions were inserted to create a Workman’s Compensation Program, a fairly elaborate three-part program, third part of which would impose liability on former and present employers of retired and active coal mine workers suffering from occupational disease, a single occupational disease known as Coal Worker’s Pneumoconiosis, a disease which is caused by breathing dust.
The disease actually is a physiological condition that develops from breathing dust at certain levels in certain concentrations over given periods of time.
The more dust that is breathed, the longer it is breathed, the more likely it is that the disease will develop.
This appeal arouse out of a suit brought by 22 mine operators in the Eastern District of Kentucky to enjoin the enforcement of the legislation, the Workman’s Compensation provisions of the legislation.
The Three-Judge Court in the Easter District upheld the major portions of the law against plaintiff's attack.
Plaintiffs challenged to their validity under the Due Process Clause of the Fifth Amendment of the United States Constitution.
The Court, however, did strike down two presumptive provisions that were included in the line.
I will describe those in greater detail.
That is why these cases are before the Court now on cross-appeal.
The act benefits provisions of the Act, which is all that we are concerned with here today, create a three-part program, the first part ending in the end of June of 1973, under which former President of Coal mine employees could apply for benefits which will be paid by the federal government through the Department of Health, Education, and Welfare administered by the Social Security Administration.
The six months following the end of that program, which will be referred to here, frequently, as the Part B Program, involved a dual administration of claims for benefits to be carried out by the Department of Labor and HEW jointly.
The Department of Health, Education, and Welfare establishing the benefits of the diagnostic criteria, the medical criteria, for determining whether a miner or former miner has the disabling occupational disease, the Act was designed to cover.
Claimants filing within that time would be paid by the government for six months and, thereafter, by a former employer or present employer or a coal mine operator.
The crucial part of this legislation and the part that plaintiffs here consider constitutionally objectionable is Part C of the Act which imposes upon mine operators the former employers of former miners and the present employers of present miners the obligation to pay benefits in connection with this single occupational disease.
Plaintiffs maintain that to the extent that this portion of the Act indiscriminately imposes liability for the claims of former employers based upon employment periods that had terminated long prior to the enactment of the legislation, that it constitutes a completely irrational means for achieving what is admittedly the legitimate purpose of providing economic relief to a large population of elderly, retired, and ill coal miners and their survivors.
Justice William H. Rehnquist: Mr. McMahan, are you talking now about those who were employed by a particular mining operator and who are presumed to have contracted the disease during the period of that employment although their symptoms showed much later?
Mr. R. R. Mcmahan: I am talking about all applicants for benefits payable by a former employer whose employment terminated prior to the enactment of the law that imposed this obligation.
It must be recognized in this case that this is not a typical workman’s compensation law that imposes liability in respect of occupational disease that develops after an employment relationship is terminated when there has been a workman’s compensation law in effect during the employment relationship.
There is no question that that is a rational legislative program because an employer, if he knows that the potential liability is there, can insure against it and then it does not make any difference if the work-related disability results following termination of the employment.
That is not the case here, what this law has been what Congress has done, has lost sight of the fact, that in attempting to accomplish two purposes here through the use of workmen's compensation type law, they have chosen a completely irrational means of delivering relief to former retired miners.
Justice William H. Rehnquist: Well, I do not see what is irrational about it.
Certainly, the retired miners are getting the money.
I take it your contention of irrational intents from who is based on the source of the money.
Mr. R. R. Mcmahan: Yes, my contention and unless the Court is prepared to accept that the only question of rationality here is whether the money actually reaches the miners.
I think that the means has to be examined more carefully and we say that it is irrational to single out former employers to deliver what is really economic relief as a result of disability due to a disease which no one knew existed in the United States at the time these men were employed, and that has been recognized repeatedly in the legislative history of the Act as being a national obligation and recognized as being a moral obligation by the government.
Justice William H. Rehnquist: You are just suggesting different ways Congress might have treated it.
Is it not our scope of inquiry extremely narrow here so that we would have to say, in effect, that Congress just lost its head when it passed the statute in order to hold it unconstitutional?
Mr. R. R. Mcmahan: I think that the scope of the inquiry here is narrow but not as narrow as it would be in the case of more conventional economic regulatory legislation.
I think that the means chosen by Congress to deliver relief to these former and retired miners in this instance, deserve a closer scrutiny because it involves a suspect imposition of new rights and obligations on transactions and on basis of conduct, what closed in the past.
Justice William H. Rehnquist: What is suspect about it?
Mr. R. R. Mcmahan: It is suspect because this Court has recognized that laws that have that effect are suspect, not necessarily unconstitutional but worthy of close examination.
Justice William H. Rehnquist: Well, are coal mine operators now in the classification of racial minorities and aliens?
Mr. R. R. Mcmahan: No, certainly not, but coal mine operators to the extent that they are now being held responsible to pay benefits to former employers in connection with exposure in the production of a product in the past and the creation of a disease that could not be anticipated and could not be passed on in a pricing are carved out as a class.
I am not--
Unknown Speaker: (Inaudible)
Mr. R. R. Mcmahan: It is Due Process and Equal Protection.
In this area they merge, as the Court well knows, it is Due Process in the sense that, our contention is that a Workmen’s Compensation Law is an irrational means no matter on what basis it is analyzed.
It is an irrational means for delivering benefits to persons who were not in workforce at the time that the law was passed.
It might well be irrational means to impose this economic burden on the industry as a whole.
Unknown Speaker: This is as only constitutional argument, irrationality of the means to achieve this?
Mr. R. R. Mcmahan: No, we also argue that carving out former employers within the industry as a class to bear the burden and, to bear the arbitrary consequences of that burden will have competitive consequences.
It is an irrational classification because this Court --
Unknown Speaker: The rationality is your argument.
Mr. R. R. Mcmahan: That is our argument as far as what would become to be known as the retroactive provisions of the (Inaudible).
Unknown Speaker: So you, in fact, argue that you are being deprived of your property without Due Process of law?
Mr. R. R. Mcmahan: Yes, that is implicit in the whole irrationality argument.
We contend that the irrationality of the means chosen is what deprives us of our property.
No, there is no contention that we are suffering any other deprivation for lack of Due Process but a definite property deprivation has occurred.
Unknown Speaker: Are you saying that the government is relying on that other part of the Fifth Amendment that is saying that the government is taking your property without adequate compensation?
You are not relying on that, are you?
Mr. R. R. Mcmahan: No.
I am saying that we are suffering a deprivation of property by the enforcement against us of irrational legislation and discriminatory --
Unknown Speaker: Being irrational about it.
Mr. R. R. Mcmahan: That is correct.
Unknown Speaker: As far as the irrationality the proposition, this is a question to you, that it is irrational to put all the liability in one place where it may be derived from many places, the responsibility, the fault?
Mr. R. R. Mcmahan: The crux of the irrationality of the workman’s compensation approach to trying to serve these two different ends is that Workman’s Compensation Law cannot rationally function to spread that risk when you are dealing with former employers.
Now, the reason that is irrational and, we think, unconstitutionally irrational as a means is that it will have an impact that is entirely unwarranted and unnecessary and competitive in fact on present mine operators, will impose economic obligations on them to pay very large benefits in respect of workforces in the past that may have been very much larger.
Chief Justice Warren E. Burger: What happens to a coal mine operator who went into business, let us say the year, six months or two months before the Act took effect, and his workforce included men who have been in mining work for 20 or 30 years.
To what extent is he liable for--
Mr. R. R. Mcmahan: I think, practically, under this Act he would become almost immediately liable to pay benefits to all of them because--
Chief Justice Warren E. Burger: He just went in to the mining business.
Mr. R. R. Mcmahan: Yes, principally because anyone who has been in the workforce that long could qualify.
Virtually, anyone could qualify under the Act for benefits and the Act attaches liability to active workforces on the basis of the present employer or the last responsible operators, the concept of the Act for whom the claimant has worked for a cumulative year.
There is a second major basis upon which we object to the constitutionality of the Act and it applies not only to a liability imposed for paying benefits to former miners but to the present miners as well.
And that is the elaborate presumptions and limitations on medical diagnosis and diagnostic criteria included in the Act which the Government concedes, this is one area where we agree although we might differ as to the extent, concedes as over inclusive in the sense that through the operation of these presumptions and the adjudication of claims, miners who suffer from non-work related disease, as respiratory diseases, and who are not actually, totally, physically disabled may qualify for benefits.
Now, I will be frank that the legislative history here is voluminous and the question of whether there is any occupational disease arising out of the breathing of coal dust other than coal worker’s Pneumoconiosis was subject to dispute.
We believe that if the record were analyzed and if the proper weight were given to all of the expert testimony that we would find that that dispute is more apparent than real.
It is a matter of volume, and that all of the medical experts in the area including, principally, the Secretary of Health, Education, and Welfare and the Secretary of Labor, the defendants here agree that this is the only disease arising out of breathing of coal dust that can be defined as occupationally related and disabling, but there is evidence--
Unknown Speaker: One used to hear a video about silicosis in miners.
Is that a generic term of which this is a specifically included disease or is that something else?
Mr. R. R. Mcmahan: Silicosis, as I understand it, is what is much broader form of physiological condition and coal worker’s Pneumoconiosis until the 50's in this country was thought to be silicosis.
There is a condition or conditions called the Pneumoconiosis which develop from breathing dust of various sorts.
Coal worker’s Pneumoconiosis is an expressly identifiable physiological condition arising out of the breathing of coal dust as opposed to flax dust or stone dust.
The presumptions in this Act are deemed rebuttable for the most part.
There is one that the lower Court struck down which creates a presumption of total disability from a complicated form of the disease, and the Court found that an irrational presumption because the Act expressly set up determination, required determination of the existence of the disease and the total disability from it as two separate factors.
I think the Court was clearly right in reaching that conclusion.
I, however, think that the Court seriously misapplied the law and misunderstood the impact of these presumptions, of the rebuttable presumptions which are primarily responsible for the over inclusiveness of the diagnostic criteria that the Department of Labor is forced to apply in its adjudication of claims and it results in many, many people, we believe, being paid compensation for diseases such as chronic bronchitis and emphysema which exists in 25% of the general population.
There were 6% of the social security disability benefits to the general public are payable with respect to respirable diseases.
It was believed by the Public Health Service, by the government, that when this Act was first enacted that there would only be about 53,000 beneficiaries and that that would cost the government about $120 million a year and, to this point, there have now been 500,000 people found eligible for benefits and it is costing $1 billion annually.
We do not believe that this is a paradox resulting from an epidemic of the disease.
I think it results purely from the inclusion of great numbers of people in the benefits eligibility criteria who simply were not made ill by coal mining.
Now, this Court has struggled in recent years with how to treat presumptions and especially irrebuttable presumptions and especially implicit presumptions.
We really do not have that problem in this case.
These are plain evidentiary presumptions.
The question is, is there a rational connection between the fact to be proved to establish the fact to be presumed, and is that presumption, the fact presumed fairly rebuttable.
We claim that it is not fairly rebuttable.
That they are not fairly rebuttable in this case because the Congress has written in to the legislation limitations on rebuttal which make it impossible to distinguish non-work-related respirable diseases from this single work-related disease.
Now, if this Court is going to--
Justice William H. Rehnquist: Mr. McMahan, what if Congress had said “because of the difficult of distinguishing between all of these diseases, any former coal miner who comes up with any sort of a respiratory disease is going to have to be compensated by his former employer,” it might not be this coal mine Pneumoconiosis but there is some substantial chance that it might be, and we are going to resolve doubts in favor of the miner?
Mr. R. R. Mcmahan: I think that you put your finger on the crucial problem here.
I would agree with you completely that it would be within the power of Congress to pass a law saying that all coalminers, past or present, who have a respirable disease regardless of whether it is work-related should receive benefits, but I do not think it is within the authority of Congress to say that all such persons having such diseases should be paid by coal mine operators.
Justice William H. Rehnquist: Why not?
Mr. R. R. Mcmahan: Because the coal mine operators would then certainly be singled out as a class to pay benefits to substantial numbers of persons who are suffering from a disease that they would have regardless of their employment, and it would be just as rational or irrational to single out any clients, as long as there is not that nexus.
Justice William H. Rehnquist: Not necessarily because these people, let us say, were employed by the coalminers for a substantial period of time.
There is medical evidence that shows that Pneumoconiosis does develop in people so employed and it is very hard to tell from other respiratory diseases.
Now, you are resolving many doubts against the coalminers but I do not see how that makes it irrational.
Mr. R. R. Mcmahan: There, you have changed the question somewhat.
You are saying if there is a possibility that their disease has developed out of coal mining, that that is sufficient to attach that liability through presumptions.
Now, I think that that is probably a reversal of what legislative presumptions have always been designed to do.
Far more often, except in cases of intent or subjective indeterminable questions, presumptions are only appropriate when they are used to forego evidence of a fact that is clearly inferable and for administrative convenience.
We would submit, in this case, that if the Court should only find that the evidence is 50-50 on whether any other respirable diseases are caused by coal mining.
That finding, in itself, should be sufficient to suggest that it is not appropriate for Congress to proceed by presumptions at all because there is no question, the government will admit that these same respirable diseases exist in non-mine employees, in the general population and, therefore, there is no way to determine actual causation and, in that case, it would seem sensible and it would not seem to impose this Court’s values on Congress at all to simply say this is a case where, instead of redefining a disease in a way that no doctor would accept absent the compulsion of law, simply say you will compensate for the occupational disease and those which may or may not be compensable.
And then, we believe that if Congress is forced to do this it might examine more carefully the legislative means it chooses to achieve that in and, in so doing, might, we hope, discover that it is not rational to impose that liability on former employers of those people, that it might more rationally be imposed on industry and ultimately on the consumer of the product or that it might more rationally be paid out of public funds.
Thank you, Your Honors.
Chief Justice Warren E. Burger: Very well, Mr. McMahan.
Argument of Wallace
Mr. Wallace: Mr. Chief Justice and may it please the Court.
This case brings before the Court issues for reexamination on plenary review which were decided last term in the Court’s summary affirmance of a Three-Judge Court decision in the District of Columbia, in a case called National Independent Coal Operators Association against Brennan.
The chief difference between the two cases is that in the National Independent Coal Operators Association case, the Three-Judge District Court exercised pendant jurisdiction over challenges to the implementing regulations of this Act, as well as the statutory challenges and upheld both the statutory provisions at issue and the regulations.
And that judgment was summarily affirmed by this Court.
The Three-Judge Court in the present case declined to exercise, pending jurisdiction over the challenge and the regulations.T
He issues with respect to the regulations have been remitted to a single District Judge and are presently being litigated before him, and reached only the statutory issues and, for the most part, upheld the Act although, in two respects, it ruled that the Act was unconstitutional subsequent to this Court’s summary affirmance last term.
In a way, the case is reminiscent also of this Court’s decision last term in Weinberger against Salfi which we iterated and elaborated upon many of the governing principles which we think apply here.
Congress was faced in this legislation with extensive medical and other evidence developed through a lengthy series of hearings, both in connection with the 1969 Act and in connection with the 1972 Amendments, which were concerned only with the compensation aspects of the program, with the problems of respiratory diseases among coalminers and, particularly, Pneumoconiosis which is a chronic disease, an irreversible disease which, in its later stages, becomes progressive and inevitably fatal.
It is true that Congress first gave attention to these problems in the 1960s and found, at that time, the state workman’s compensation laws were grossly inadequate to take care of these problems, but the disease was not entirely unknown until that time.
It was first recognized in England and elsewhere in Europe in the 1930s that the hearings pointed out.
So, I do take exception to the statement that no coal mine operator could have known of these dangers for the miners and it came to be recognized in the medical profession in this country in the 1950s.
Be that as it may, it was in the late 1960s and again in the early 70s that Congress attempted to find a legislative solution to these serious problems.
And in doing so, Congress was concerned, first of all, to strike a proper balance of the burden between the Federal Treasury, the industry, and the victims of this disease in attempting to provide for the very large backlog of cases that had not previously been provided for.
We have summarized some of the results of the balance Congress struck on page 25 of our brief.
The figures at the top and the hundreds of thousands are figures that have been brought in to the part of the program paid for entirely from the Federal Treasury with respect to the compensation claims.
352,000 of these claims have been approved out of the 550,000 applied for.
Then you get down in the second paragraph on page 25 to the portion of the prospective burden largely which Congress thought fit to assigned to the industry.
We are talking about 70,000 claims that have been filed thus far with an estimated yearly rate to come of 5,000-6,000 claims and, of the 70,000 claims filed, only 21.6% have been approved for payment.
The approvals are running at rates slightly above 20%.
Many of them are claims that were already rejected under the federally financed portion of the program.Congress was solicitous toward the industry and particularly, as a result of the 1972 Amendments, set up the program so that it is doubtful if any truly retroactive claims will be made against any of the companies because of the three-year statute of limitations and the extension of the federally financed portion of the program to three-and-a-half years, followed then by a half-year transitional program partially financed by the Federal Treasury.
We have, on pages 30 and 31 of our brief, noted that retrospective aspects to legislation do not necessarily invalidate it, far from it.
There are numerous cases cited there and in footnote 29 of the brief in which the Court has upheld retrospective application of laws in appropriate circumstances.
Unknown Speaker: I notice the top of page 26, you have a statement that 97% of these cases have been administering reviewed themselves?
Mr. Wallace: That is correct.
Unknown Speaker: And only 12 have been reviewed so far by--
Mr. Wallace: By the Review Board.
Well, these proceedings can be lengthy.
It was anticipated at the time they were established that the awards would not be contested in so large a percentage of the cases and, as a matter of fact, Congress was hopeful in enacting this legislation that it would be temporary legislation that state workmen’s compensation laws would be amended to make adequate provision for this disease and that a federal program would not be necessary.
That is not happening, Your Honor, far from it.
Unknown Speaker: Well, the national workman’s compensation could entirely take care of this problem, this is basically reparations, is it not?
I mean, this is part of the legislation.
Mr. Wallace: For the former miners, yes.
Unknown Speaker: Yes but future, of course, ordinary conventional workman’s compensation can take care of it.
We are not dealing here with that aspect, are we?
Mr. Wallace: Well, we are not in the principle challenge here although, the figures that Mr. Justice Brennan is referring to are the figures from Part C of the program which has just taken effect quite recently--
Unknown Speaker: And that is?
Mr. Wallace: That is the part that is financed under workman’s compensation insurance by the former employers--
Unknown Speaker: Apply the Fifth Annual thing now being—
Mr. Wallace: That is correct, Mr. Justice.
Unknown Speaker: 97% of all determinations being appealed?
Mr. Wallace: They are being administratively appealed.
Now, this is the early administration of the Act at a time when the constitutionality has not been authoritatively settled even after one summary affirmance by this Court and perhaps there would not be quite as many appeals once the matter--
Unknown Speaker: Is there a particular reason, Mr. Wallace, why it takes so long to try one of these administrative reviews?
Mr. Wallace: None that I could give you.
I cannot say I have looked into that question with any depth.
Unknown Speaker: Well, it would be such a small number.
Mr. Wallace: Yes, I am sure they are progressing now.
At the time the brief was written, this part of the Act had been in effect a relatively short time and the jurisdiction was moving over to the Department of Labor from--
Unknown Speaker: If the states pick this up as part of the state workman’s compensation system, would amendments of state laws be required?
Mr. Wallace: That is correct.
Unknown Speaker: And the states have simply not amended the statute.
Mr. Wallace: Some amendments are being made but not amendments that meet the federal statutory standard that would remove the federal program.
Unknown Speaker: Is this limited to a few states?
Mr. Wallace: No, it is quite a few and, as a matter of fact, it is a nationwide program when the miners, they may have moved to any state but--
Unknown Speaker: Well, is that I mean the current ones, 5,000-6,000 a year they would still be widespread throughout the --
Mr. Wallace: There are about 25 states in which there is some coal mining that amounts to something.
I have not really looked into that figure but I get an affirmative nod here.
Unknown Speaker: Wallace, did I understand you say earlier that you thought it would be relatively few claims made retroactively?
Mr. Wallace: Well, truly retroactive basis--
Unknown Speaker: Where do you find the retroactive basis here?
Mr. Wallace: That would be a claim that against the former employer which had fully ripened before enactment of the statute.
In other words, when the disease had become manifest.
Unknown Speaker: Unless this precedes to be a matter before the effective date of the Act and he must have made his claim disability after the effective date.
That is the way I understood your brief.
Mr. Wallace: Well, we would consider it a completely retroactive claim for purposes of the usual labeling a tort in workman’s compensation laws would be a claim by a former employee who knew he had the disease or he should have known it, that the symptoms arouse prior to the enactment of the Act.
That is when the claim ripens.
There is a long time between contraction of this disease and its detection and, because the Act is set up with a three-year statute of limitations and it is not until three-and-a-half years after its enactment that employer liability comes into the picture--
Unknown Speaker: There is a record in the brief to an employee who quit being a coalminer in 1920.
When does the statute of limitation run as to him exactly, three years from the effective date of the Act?
Mr. Wallace: Three years from when the disease becomes manifest to him.
That does not mean a medical diagnosis of it but it is when the symptoms become manifest that he would know he had the disease and it is very unlikely that he would have that long incubation period if he did not expose himself to coal dust.
Unknown Speaker: Does these irrebuttable presumptions operate against the man who comes in with a claim 20,30,40 years old in his favor?
Mr. Wallace: Well, the presumptions would operate if he spent the requisite amount of time in the mines, but the presumptions are a matter of evidentiary proof to which I will turn in a moment.
Unknown Speaker: And there are, according to the briefs, already claims being filed, as my brother Powell says, by people who left the coal mines in the 20s or in the 30s or in the 40s and the benefits run not only to these people if they are alive but also to their widows and children, do they not?
Mr. Wallace: Under the Act, until the Act’s expiration day which now is December 30, 1981.
It may be amended.
Chief Justice Warren E. Burger: Is that true if emphysema might be the disease they really have?
Mr. Wallace: Well, that is a matter of proof.
If they meet the standards of proof, the Act rewards benefits only for Pneumoconiosis as defined and aided by statutory presumptions.
Unknown Speaker: This allows x-ray evidence as exclusive reason for disallowing the claim.
Mr. Wallace: As the exclusive reason if the claim can be established by means of the other pertinent evidence which there is an opportunity to contest, x-rays have proven to have a 25% error rate based on the only really reliable evidence which is autopsy evidence as to this disease.
Chief Justice Warren E. Burger: That would not suggest over a period of time this broad scale approach of Congress will have considerably more than a 25% error, if I understood the sum total of this argument.
The presumptions are going to reach a great many people who are here.
Mr. Wallace: Well, if it will turn to the presumptions now, Congress was faced with the problem under this Act of a disease that is difficult to prove and difficult to disprove and it wanted to set up what it thought would be a fair system of compromising between bringing more people into eligibility than an ideal system might bring, make eligible for the benefits if proof were easier and denying benefits those that it felt needed them that it wanted to help.
And so, it set up a scheme which we have tried to summarize briefly on pages 37 and 38 of our brief.
And, let me talk, first, about the evidentiary presumptions which are the ones that begin in the bottom of page 37, and the first thing to be said about them is I do not think that scheme of the Act was fully understood by the District Court and it is concerned about these presumptions.
It seem to overlook or fail to understand that Section 422c of the Act contains a proviso that is applicable to any claim for benefits against any operator, and that is on page 7a of the appendix to the consolidated brief of the plaintiffs in this case.
That proviso says that no benefits shall be payable by any operator on account of death or total disability due to Pneumoconiosis which did not arise, at least in part, out of employment in a mine during the period when it was operated by such operator.
So that there is always the possibility of making a defense to any of these claims to begin with by showing that the conditions in your mind were such that Pneumoconiosis could not have been contracted by the claimant in your mind.
Second, the Court seemed to overlook that these evidentiary presumptions attach only after the elements that trigger them have been established in an administrative hearing in which the employer is free to participate and contest the existence of those elements.
So, we are not talking about failure of an opportunity for the employer to contest any of these matters.
Now, the first of the presumptions applying, as we summarize it on page 38a there, a miner who has worked in the mines for 10 years or more and shows that he has contracted Pneumoconiosis, and that proof can be contested as to whether or not he actually has that disease, and that is the disease that is occupationally related only to work in the coal mines.
Then, there is a rebuttable presumption--
Unknown Speaker: Mr. Wallace, he has to prove any of that when he sues a particular operator that at some time he worked for that operator.
Mr. Wallace: Yes, that can be contested also.
Unknown Speaker: Had he worked for some operator, long since disappeared, that is the only one, he could not recover from (Inaudible)
Mr. Wallace: That is a problem under the current Act and Congress has amendments under consideration now.
They may change the whole scheme of it for the future.
They are considering setting up and industry-wide fund.
There have been hearings held this year on that, but --
Chief Justice Warren E. Burger: But to pursue that, if he had worked for one operator for 2 years and another operator for 30 years and the 30-year operator was out of business, who pays the bill?
Mr. Wallace: Under the regulations, he could still make a claim for liability against the one who is still in business.
The question of who is liable is remitted by the Act entirely solutions and the regulations are now before the Court.
The only thing that is established in the Act are methods of showing eligibility.
The question of who then is liable to pay the benefits is a matter that has been worked out in the regulations and the--
Chief Justice Warren E. Burger: There are two.
One of them was Wong.
Mr. Wallace: Yes, the regulations--
Chief Justice Warren E. Burger: It is not simple, is it?
Mr. Wallace: Say, the last one that you worked for is presumed to be the one that has to pay if you worked a year there but if he can show that you could not have contracted the disease in his mines because of the conditions of his mines, then it reverts back to the next one before him, if I understand the regulations.
As I say, the validity of the regulations is not before the Court in this case.
Unknown Speaker: Well, there is before the Court who is going to pay for this.
We would not even have a problem if the Good Lord is going to pay for this.
If people were hurt, who is going to pay?
Mr. Wallace: Congress has decided that eligibility for compensation from the industry can be established this way and who in the industry pays has been worked out in the regulations.
Unknown Speaker: We know it is not industry-wide.
It is not a charge on the industry as a whole.
Mr. Wallace: No, it is he particular former employer singled out in the regulations.
But these provisions that are at issue are the provisions about how you establish eligibility for benefits.
Unknown Speaker: Make it a claim against the particular employer when that employee proves was only a desk clerk, never exposed to any of these conditions.
Then, he left that employer and went to another employer, worked for him for 30 years and was exposed, contracted the disease, could not recover if the second employer is out of business, is that it?
Mr. Wallace: Of course, this is always a defense to the award of benefits against a particular employer.
That is a showing that he could not have contracted Pneumoconiosis from the work that he did for you.
Unknown Speaker: Mr. Wallace, thinking of examples like this, does the Act provide for this sort of situation, coal is a depleting product obviously, you could have a mining company that 20-25 years ago may have had 1,000 employees.
It may have gradually depleted its coal and, today, may have 50-100 employees.
Is it not possible that that miner might have more claimants than it has employees today?
Mr. Wallace: It is possible, Mr. Justice.
Unknown Speaker: Is there anything that would protect that company from being put out of business by claims as against which it has had no alternative to set up reserves or carry insurance?
Mr. Wallace: It is possible an instance could arise in which a company would be put out of business.
The main protection against it is the fact that the three-and-a-half year period of exclusive federal responsibility was set up to take care of the backlog of former employees, the principal part of the backlog, and it would have had to be a very rapid reduction in a company’s employment that would result in the situation that you are mentioning, and this problem has been complained of by the industry and it is one that Congress considered.
And one may agree or disagree with the solution that Congress reached, but I think the Court’s decisions make it clear that putting someone out of business for an appropriate reason in the public interest is not a constitutional violation.
That is exactly what Ferguson against Skrupa was, and a complaint by someone who was in the debt adjusting business that a new state statute saying that only lawyers could be in that business was depriving him of his rightful occupation and that he was a fine outstanding businessman providing a service to the community.
The Court unanimously held that that is a legislative concern whether it, in the public, interest restrict that business in the circumstances that concern the legislature.
So, I really think it is a legislative argument rather than a constitutional one that some companies will be hurt more than others.
It is very reminiscent of the argument in Williamson against Lee Optical Co. that competition was being affected between the makers of the prescription glasses and the makers of ready-to-wear glasses by applying the regulation only to the maker of prescription glasses.
Justice William H. Rehnquist: Of course it may be one thing to put out a business just in the sense of not being able to carry on your traditional occupation where another thing to be put out of business by having a large indebtedness which you are unable to pay settled on you.
Mr. Wallace: But if it results from the fact that it was through working for you that these injuries were incurred through your profit-making activities it is a permissible legislative judgment that that burden should be placed on a company.
Unknown Speaker: The proposition for which, by traditional Due Process standards, no recovery might be had in some of those cases.
Mr. Wallace: And then another legislative solution undoubtedly will be found for such examples, but I do want to point out that these are the moment highly speculative concerns.
An amicus brief filed in our support by the United Mine Workers of America points out quite cogently, beginning on page 13 of that brief though page 17, that the economic impact thus far has been minimal and it cites hearings in 1973 that first began consideration of amendments in which it was reported that all of the companies have thus far been enabled to provide additional workman’s compensation coverage under the regular workman’s compensation insurance, and the increases in premiums thus far have been noticed in the case of Kentucky, non-existent thus far. Now--
Unknown Speaker: Mr. Wallace, the government takes on the whole financial burden for the first three-and-a-half years or a part of it.
Mr. Wallace: Yes, largely.
Unknown Speaker: That itself has had the effect of minimizing the responsibility --
Mr. Wallace: By and large, it has and, of course, the industry is in a relatively strong economic position now, as is pointed out in quite persuasively in a footnote in the same brief.
That is footnote 37 on page 16 of that brief, dealing with the recent profits of some of the plaintiffs here, Footnote 37, yes, Your Honor.
But in addition to that, there is some time lag involved here which is true of doing business under any workman’s compensation scheme and this takes us back to the retroactivity argument for a moment.
The plaintiffs’ brief in this Court is premised on the notion that in order for a program to be fair, it must apply only to current employees so that while they are doing work the company can price its products in a manner that will cover the cost of compensating them, but that is not actually the way workman’s compensation laws work in the economy at all.
The fact is, insurance rates are adjusted after claims experience will cause them to be adjusted upwards and it--
Unknown Speaker: The accountants who handle the work for these employers do not set up reserves to take this into account on the present.
Mr. Wallace: Undoubtedly, they set up reserves as best they can to anticipate these matters but, the fact of the matter is, if they have a large number of workers disabled through injury and the employment and who become no longer employees, it is only in the following year that what is known in the industry is retrospective rating will cause an increase in their workman’s compensation premiums and any impact that the company feels comes after these people are no longer employees.
There is no extra cost that the company had to pay while they were employees.
Justice William H. Rehnquist: It is not true of a self insurer.
Mr. Wallace: It is not true of a self insurer but the prevalent practice is that there is a retrospective effect that is very similar to the effect under this statute.
Not only that, but the argument by analogy would carry over to increases in benefits to be paid to former employees which Congress enacts periodically because of the severe inflation that we have had for workers who have been disabled under the Longshoremen and Harbor Workers Act.
This program has an automatic escalator feature.
It says that the compensation shall be one-half of what a disabled government worker grade GS2 will receive that goes up as inflation goes up and this is, by analogy, the same argument could be made with respect to any of these increases.
The retroactivity argument would really be an argument that would freeze the benefits to be paid based on contributions that may be and the salaries that may be woefully out of date in terms of the living cost for disabled persons and that it is common place to have these increases under state workman’s compensation laws.
They are not even challenged.
Justice Potter Stewart: I think the challenge here is not what the plaintiffs get but rather who has to pay.
What do you concede to be the provision of the constitution that is an issue here?
Mr. Wallace: The only provision that has been referred to as the Fifth Amendment Due Process Clause, federal legislation, it seems to me that it basically is substantive Due Process.
Justice Potter Stewart: Well, it is not my question, is it?
Mr. Wallace: It seems to me, basically, a substantive Due Process claim of the kind that was made in Ferguson against Skrupa and Williamson against Lee Optical Co. An unfair burden is being placed on particular competitors in the economy.
Justice Potter Stewart: Do you think, when you say that, that is really an invalid constitutional claim, almost a frivolous one?
Mr. Wallace: Well, I basically think that the arguments are legislative arguments even if some of the premises of them were not faulty which seems to me they are, that workmen’s compensation typically has retrospective consequences and it has long been upheld in that context anyway.
But even if the premises were not faulty, it seems to me to be a legislative rather than a constitutional argument.
That is our position.
Justice Potter Stewart: What if Congress here had set up these benefits and the same presumptions and then said that the payments to be made, the people who are going to be financially responsible for paying these are all the corporations of the United States whose corporate names begin in the first 13 letters of the alphabet.
Mr. Wallace: That is better, but there is nothing arbitrary of that nature involved here.
Justice Potter Stewart: Let us take my hypothetical case.
Would that be constitutionally invalid?
Mr. Wallace: Well, I do not like to concede away, the power of Congress, but it certainly would be a much more substantial argument in that case.
Justice Potter Stewart: Under what provision of the constitution?
Mr. Wallace: It would be under that provision, under the Fifth Amendment Due Process Clause because it is hard to see any other provision that would be valid.
It might be upheld as taxing provision and I do not say it is necessarily constitutionally vulnerable but, here, you have got a system that is rationally based in the sense that it is compensation for a work-related disease by definition and the only people who can possibly be liable are employers who subjected the claimant to the risk of that disease and adjustments have been made in the kind of medical evidence that will carry various kinds of weight because of detailed medical testimony before a Congress that showed that certain kinds of evidence such as x-rays are not in themselves reliable, if through a contested other tests, it can be proved that you have this disease.
And, there is an opportunity to contest all these other kind of medical evidence.
Justice William H. Rehnquist: Take Justice Stewart’s hypothetical and assume that instead of being paid by all the corporations whose names begin with the first 13 letters of the alphabet, it is to be paid by all corporations who have a net worth of $1 billion or more.
Mr. Wallace: Well, that might be less arbitrary and --
Justice William H. Rehnquist: It is barely rational in the sense that these people are probably better able to pay than just every corporation in the country.
Mr. Wallace: Well, that may be a valid exercise of the taxing power in the form of a compensation system, but this is not that--
Justice William H. Rehnquist: But, certainly, if you wanted to just impose a surtax, income tax on all such corporations of 10% and, ultimately, use pay out of the Public Treasury from general funds compensation to coalminers.
There would not be much anybody could do about it.
Mr. Wallace: Well, that is correct, Your Honor, but--
Chief Justice Warren E. Burger: Is it true, Mr. Wallace, that if Congress now said or had said in this legislation that beginning on that date in 1973, a tax of $2 per ton of every coal mine in the United States would be put into a fund.
That would --
Mr. Wallace: That would be a permissible legislative means of taking care of this problem, but I do think it should be recognized that there is nothing novel in workman’s compensation about presumptions. The ordinary rule in workman’s compensation is that if you can show the injury, it is presumed that it arose out of your employment and it is up to the employer to rebut that.
And, in a way, the first of the evidentiary presumptions cuts back on that rule by saying that you have to show also that you were employed for 10 years in the coal mine in order for that presumption to come into force.
In the ordinary workman’s compensation case, all you would have to show is that you had the injury and it would be presumed that it arose out of your employment unless that were rebutted.
There is nothing that novel about this scheme of compensating injured employees.
Chief Justice Warren E. Burger: Do you have anything further, Mr. McMahan?
Rebuttal of R. R. Mcmahan
Mr. R. R. Mcmahan: Mr. Chief Justice and may it please the Court.
I would only feel compelled to clear up a very dangerous and mistaken impression that counsel for the government has left you with.
The Part C Program, to answer Mr. Justice Stewart’s question, is not just a compensation program.
Part C Program is a reparations program.
This business about the three years statute of limitations is an illusion.
It is an illusion for substantial numbers of these former miners’ claims because the Act has redefined the disease.
Now that means, in effect, that a man could have had emphysema for 30 years.
He could have quit mining in the 40s.
He could have been diagnosed as having emphysema for 30 years, but he can come in and qualify for benefits under this Act because the three years run from discovery of the disease and, suddenly, his emphysema is diagnosed, under this Act, as coal worker’s Pneumoconiosis.
They have many, many claims against the 22 plaintiffs in this case.
Some 80% so far are from people who have not worked in mining for years and years prior to the enactment of the law.
This is not at all comparable to retrospective rating or adjusting your insurance rates from year to year even, if you happen to be one of the few operators in one of the few states that allows that kind of a compensation, and this is purely reparations and we believe that it is irrational that this legislation is an irrational way of delivering those reparations.
Chief Justice Warren E. Burger: Thank you, Gentlemen.
The case is submitted.