Fourth Circuit Weighs in on Split Re Meaning of "Reimbursements" in Coal Industry Retiree Health Benefit Act

Per A.T. Massey Coal Co. v. Holland, 472 F.3d 148 (4th Cir. Dec. 21, 2006):

By enactment of the Coal Industry Retiree Health Benefit Act of 1992 ("the Coal Act"), Congress established a new multiemployer benefit plan, the United Mine Workers of America Combined Benefit Fund ("Combined Fund"), to provide health care benefits to retired coal mine workers. The Combined Fund resulted from the statutorily-mandated merger of the 1950 and 1974 Benefit Plans that had been agreed to, through collective bargaining, by the United Mine Workers of America ("UMWA") and coal mine operators. It is financed by the assets of the 1950 and 1974 Benefit Plans, by "premiums" that individual coal mine operators pay to the Combined Fund, and by government benefit plans including Medicare, and it is administered by an independent Board of Trustees. The Coal Act specifies that the premiums payable by the coal operators to the Combined Fund be determined on a per-beneficiary basis by a formula that (1) begins with the sum of payments made to all beneficiaries from the 1950 Benefit Plan and the 1974 Benefit Plan for the plan year July 1, 1991, through June 30, 1992 (the base year); (2) subtracts from that sum the "reimbursements" received from Medicare and other publicly financed programs for the base year but does not subtract administrative costs; (3) divides the resulting number by the number of beneficiaries in the base year; and (4) multiplies the quotient by a cost of living factor. See 26 U.S.C. § 9704(b)(2).

The parties commenced these actions--the most recent skirmishes in a long-running fight--to resolve whether "reimbursements" as used in the formula includes the total payments that Medicare made to the 1950 and 1974 Benefit Plans for the base year ($182.3 million) or only the amount that the 1950 and 1974 Funds actually paid out in Medicare benefits to beneficiaries for the base year ($156.3 million). Interpreting Medicare "reimbursements" to be the $182.3-million figure results in lower premiums for the coal operators; interpreting "reimbursements" to be the $156.3-million figure results in higher premiums.The district court ruled that "reimbursements" unambiguously refers to the total payments ($182.3 million) that Medicare made to the 1950 and 1974 Benefit Plans in the base year, and it declined to defer under Chevron to the contrary interpretation put forth by the Commissioner of Social Security. See A.T. Massey Coal Co. v. Barnhart, 381 F.Supp.2d 469 (D.Md.2005).

Agreeing with the district court, we conclude that "reimbursements" is an unambiguous historical term of art used by Congress to refer to the total reimbursements that Medicare actually made, using a capitation method, to the 1950 and 1974 Benefit Plans during the base year. [FN2]

FN2. In reaching this conclusion, we join the Eleventh Circuit's holding in National Coal Ass'n v. Chater, 81 F.3d 1077 (11th Cir.1996), and depart from the D.C. Circuit's holding in Holland v. National Mining Ass'n, 309 F.3d 808 (D.C.Cir.2002), which had created a split between the circuits.