Coal miners seeking benefits under the Black Lung Benefits Act, 30 U.S.C. §§ 901-945, often file an initial application that is unsuccessful and then try again some years later. In this case, we consider what evidence a miner must produce to win the right to proceed on his second or subsequent claim. In so doing, we discuss the scope of our decision in Sahara Coal Co. v. Director, OWCP,
I
Although the background facts were set forth in the panel’s opinion, Peabody Coal Co. v. Spese,
At that time, the Department of Labor (DOL) evaluated black lung applications under 20 C.F.R. Part 727, which the DOL describes as “claimant favorable.” This regulation was issued under the 1977 amendments to the Black Lung Benefits Act (BLBRA), in which Congress allowed the DOL to establish interim criteria for evaluating black lung claims until it was able to issue permanent regulations for those claims. The interim criteria could be no more restrictive than the criteria that had applied to claims filed by June 30, 1973, under earlier legislation administered by the former Department of Health, Education, and Welfare (HEW). See 30 U.S.C. § 902(f)(2); Pauley v. BethEnergy Mines, Inc.,
Using the Part 727 interim criteria, DOL denied Mr. Spese’s claim on April 30, 1979, explaining that he did not qualify because the evidence in his claim did not show that he had pneumoconiosis. In the denial letter, DOL advised Mr. Spese that he had 60 days to submit additional evidence or to request a hearing on the denied claim, and one year to submit proof that his condition had changed or that a mistake was made in denying his claim. Mr. Spese neither appealed the adverse decision nor asked DOL to reconsider it.
Instead, on December 18, 1981, Mr. Spese filed a second claim for black lung benefits, coupled with a request that his first claim be reopened. DOL refused to reopen the 1976 claim, but it processed his second application. Because the second .claim was filed after March 31, 1980, the effective date of DOL’s permanent black lung regulations found in 20 C.F.R. Part 718, the claims examiner from DOL’s Office of Workers’ Compensation Programs, Coal Mine Division, evaluated it under Part 718. The claims examiner denied the second claim on May 6, 1982, because a second round of medical tests, including a second chest x-ray, again showed no signs of pneumoconiosis. This time, Mr. Spese asked for a formal hearing before an Administrative Law Judge, which took place nearly four years later on April 4, 1986. Prior to that
On November 19, 1986, ALJ Richard Hud-dleston issued a decision ruling in Mr. Spese’s favor. The first question he addressed was whether the 1981 claim was a “duplicate” of the 1979 claim, such that the later claim merged into the earlier one under the terms of 20 C.F.R. § 725.309(c). That regulation states, in part:
A Claimant who filed a claim for benefits under Part B of title IV of the Act or Part C of Title IV of the Act, before March 1, 1978, and whose claim(s) are pending or have been finally denied, who files an additional claim under this part, shall have the later claim merged with any earlier claim subject to review under Part 727 of this subchapter. If an earlier claim subject to review under Part 727 of this subchapter has been denied after review, a new claim under this part shall also be denied, on the grounds of the prior denial unless the Deputy Commissioner determines that there has been a material change in conditions or the later claim is a request for modification and the requirements of § 725.310 are met.
Interpreting the first sentence of the regulation, ALJ Huddleston concluded that Mr. Spese’s 1981 claim should be merged into his 1976 claim, because the latter claim, which had been subject to review under Part 727, had been filed before 1978 and it had been “finally denied.” The merger meant two important things for Mr. Spese’s claim: first, it would entitle him to an earlier date for the beginning of his benefits, and second, it would entitle him to have the entire record reviewed under the more lenient criteria of Part 727. Applying the second sentence of § 725.309(c) quoted above, the ALJ concluded that the 1985 x-ray, along with a pulmonary exam dated February 17, 1982, demonstrated a “material change in conditions” that justified consideration of the second claim. On the merits, the ALJ awarded Mr. Spese benefits dating back to April 1976, based on the “interim presumption” of 20 C.F.R. § 727.203(a), which presumed that pneumo-coniosis was caused by exposure at the mines if the applicant had worked there at least 10 years and medical evidence (like the 1985 x-ray) revealed the disease.
Peabody appealed to the Benefits Review Board (BRB), which agreed with the ALJ’s assessment of the “material change in conditions” but which disagreed with his conclusion that Mr. Spese’s 1981 claim merged with the earlier one. The BRB interpreted the phrase “claim subject to review under Section 727” in the first sentence of the regulation to allow merger only if the earlier claim was still subject to Section 727 review. The BRB therefore sent the case back to the ALJ for reconsideration under the more stringent Section 718 criteria.
On remand, the ALJ again found that Mr. Spese (who had by then passed away and was repreented by his widow) was entitled to benefits. His entitlement, in turn, carried over to his wife, who as a surviving spouse is entitled to benefits based on her husband’s claim. See 20 C.F.R. § 725.212. To establish eligibility under Part 718, the claimant had to show (1) that he is a miner, (2) that he has pneumoconiosis, (3) that his pneumoconiosis arose at least in part out of coal mine employment, and (4) that he is totally disabled as a result of the pneumoconiosis. The first three of these were easy to show, in the ALJ’s view. Mr. Spese had been a miner for 40 years, the 1985 x-ray showed that he had pneumoconiosis, and Peabody had not rebutted the regulatory presumption that Mr. Spese, as a miner with at least 10 years in an environment just as dusty as an underground coal mine, acquired the disease at least in part due to his coal mine employment. See 20 C.F.R. § 718.203(b) (presumption that pneumoconiosis caused by coal mining work).
Even with this presumption, however, a claimant qualifies for benefits only if he can show he is (or was at the time of death) totally disabled as a result of pneumoconio-sis. See 20 C.F.R. § 718.204. On that issue, the ALJ found that Mr. Spese was totally
Peabody again appealed to the BRB, which affirmed the ALJ’s decision on January 24, 1995. It appealed to this court from DOL’s final decision that Mr. Spese was entitled to Part 718 benefits. Mrs. Spese cross-appealed from the decision to reject merger of the 1981 claim with the 1976 claim. The original panel affirmed the award of Part 718 benefits, but it concluded that the 1981 claim should have been merged with the 1976 claim for purposes of calculating the date on which benefit payments should commence. See Spese I,
II
If a later claim merges into an earlier one, then in a real sense it is not a “new” claim at all, but is instead a continuation of the first claim. As the panel opinion here recognized, in those cases where merger is appropriate, “the duplicate claim merges into the first claim and takes on its properties,” including, importantly, eligibility for review under Part 727 instead of Part 718. See Spese I,
A. Merger
The panel took the view that the language of § 725.309(c) admitted of only one interpretation, which was not the one the Director espoused. As the panel saw it, the first sentence of the regulation effectively read as follows: “[a] claimant who filed a claim for benefits ... before March 1, 1978, and whose claim(s) are pending or have been finally denied, who files an additional claim under this part, shall have the later claim
Upon further consideration, we have concluded that this approach failed to take proper account of the context in which the phrase occurs in the two different sentences of the regulation. More importantly, in the face of the statutory language that lies behind this regulation, as well as our responsibility to defer to the Director’s interpretations, a court should not resort to that kind of generalized principle of statutory construction to find an inconsistency with the agency’s interpretation. Unless the language of the statute clearly required a result in conflict with the Director’s view, in which case we would be bound to follow the statute, the question we must ask is whether the Director reasonably could have read the regulation as he did. See Estate of Cowart v. Nicklos Drilling Co.,
The Director has consistently taken the position that the regulation should be read as if the first sentence said “... the later claim merged with any earlier claim [still] subject to review under Part 727....” He points out that Congress created the distinction between the permanent Part 718 procedures and the interim Part 727 procedures in response to its dissatisfaction with black lung claims processing in general. See Pauley v. BethEnergy Mines, Inc.,
Spese’s interpretation of § 725.309(c), which the panel accepted, substantially undermines the Secretary of Labor’s authority to promulgate both an interim and permanent regulatory scheme distinct from the earlier HEW scheme. Transferring to the Secretary of Labor the rule-making authority for this transition period was one purpose of the 1977 amendment. As the Supreme Court has pointed out, the amendment would even have permitted the Secretary of Labor to issue more liberal criteria than those in effect on June 30, 1973. See Pittston Coal,
Under the Director’s interpretation of § 725.309(c), merger is still possible for some duplicate claims, but it is a much smaller
We cannot say that under Chevron,
B. Material Change
Our conclusion with respect to merger means that Mr. Spese’s 1981 claim was a “new claim” for purposes of the second sentence of § 725.309(c). Under the regulation, this kind of new claim “shall also be denied, on the grounds of the prior denial, unless the deputy commissioner determines that there has been a material change in conditions or the later claim is a request for modification and the requirements of section 725.310 are met.” No one is arguing that his 1981 claim was a request for modification meeting the requirements of § 725.310. Peabody argues that under our decision in Sahara Coal Mr. Spese did not demonstrate a material change in conditions; Mrs. Spese defends the BRB’s conclusion that he did, as does the Director.
In Sahara Coal, this court drew an important distinction between a second claim that merely attempts to relitigate the first one and a genuine showing of changed conditions. By requiring denial of a second application unless there has been a material change in conditions, the regulation gives res judicata effect to the first decision. See 20 C.F.R. § 725.309(c). The Sahara Coal court went on to explain that
[a] material change in conditions means either that the miner did not have black lung disease at the time of the first application but has since contracted it and become totally disabled by it, or that his disease has progressed to the point of becoming totally disabling although it was not at the time of the first application.
In its recent en banc decision in Lisa Lee Mines, supra, the Fourth Circuit summarized what it believed to be the three competing ways of satisfying the regulation’s requirement to. show a “material change in condition”: (1) the test initially formulated by the BRB in this very ease, see Spese v. Peabody Coal Co., 11 Black Lung Rptr. 1-74, 1-76 (BRB 1978) (per curiam), under which the Director would look to see whether the newly submitted evidence favorable to the claim has a “reasonable possibility” of changing the prior result; (2) the Sahara Coal test, which the Fourth Circuit characterized as requiring the miner to show a material change on every element that was previously decided against him; or (3) the Director’s new “one-element” standard, under which the claimant’s new claim could proceed once he demonstrated a material change in at least one of the elements that was previously adjudicated against him. Virtually every court has rejected the BRB’s Spese test,
The law of preclusion also bars re-litigation of issues between the same parties when those issues were actually litigated and necessary to the decision of the earlier tribunal. See Astoria Fed. Sav. & Loan Ass’n v. Solimino,
We have no quarrel either with that general proposition or its applicability to new claims brought under the black lung benefits program. The key point is that the claimant cannot simply bring in new evidence that addresses his condition at the time of the earlier denial. His theory of recovery on the new claim must be consistent with the assumption that the original denial was correct. To prevail on the new claim, therefore, the miner must show that something capable of making a difference has changed since the record closed on the first application. As we said in Sahara Coal, if the earlier denial was premised on a failure to show pneumoconio-sis, the material change could be evidence showing that the disease has now manifested itself. If the earlier denial was premised on a failure to show total disability, even if the claimant had a mild ease of pneumoconiosis, then the material change would need to relate to the severity of the disability. See
The Director’s “one-element” test comes close to what we have described here, as the following description from the Sixth Circuit’s Sharondale decision shows:
[T]he ALJ must consider all of the new evidence, favorable and unfavorable, and determine whether the miner has proven at least one of the elements of entitlement previously adjudicated against him. If the miner establishes the existence of that element, he has demonstrated, as a matter of law, a material change.
We have little trouble concluding, as the panel did, that the ALJ’s decision that Mr. Spese demonstrated a material change in his condition was “rational, supported by substantial evidence, and in accordance with law.” Spese I,
Peabody argued strenuously both in its briefs and during the two oral arguments in this case that the ALJ had no evidence before him that specifically addressed the question whether simple pneumoconiosis can be progressive without further exposure to coal dust. Both Mrs. Spese and the Director responded first that the progressive nature of the disease has been recognized as a legislative fact, but more importantly, that Peabody waived this argument by failing to make it to the ALJ. We agree with the waiver point and therefore find it unnecessary to address the extent to which the possibility of progression without further exposure can be, or has been, established as an incontrovertible fact. Once Mr. Spese introduced the 1985 x-ray, he had put before the ALJ concrete evidence that his simple pneu-moconiosis had progressed. If . Peabody wanted to controvert this evidence, either by submitting a competing interpretation of the 1985 x-ray or by introducing evidence that the disease of simple pneumoconiosis does not progress in that way in the human body, it was up to Peabody to do so. As the Director points out, Peabody’s failure to do so means that the record does not even contain evidence on this point.
The consequences of Peabody’s failure to mount any challenge to the ALJ’s and the BRB’s conclusion that the disease can progress are particularly apparent in light of the parties’ efforts to force us to resolve this issue. In a supplemental appendix in this court, the Director offers various studies that
We also find no error in the ALJ’s conclusion that Mr. Spese was totally disabled, as that term is used in the regulations. Once the evidence showed that he was totally disabled and that he was suffering from pneumoconiosis, the ALJ was entitled to invoke the presumption of total disability due to the pneumoconiosis established in 20 C.F.R. § 718.204(b). Last, § 718.305(a) sets up a rebuttable presumption of totally disabling pneumoconiosis when a miner was employed for 15 or more years in underground coal mines or substantially similar dust conditions and the claimant presents evidence of a totally disabling respiratory or pulmonary ailment. The ALJ found that Mr. Spese met these criteria and that Peabody had not rebutted his ease. To the contrary, the medical testimony showed that Mr. Spese’s respiratory problems (even before the positive x-ray) arose out of his coal mine work. Coupled with his more than 40 years’ work at the surface mine, in conditions so dusty that he sometimes could not see what was in front of him, this was enough to support the ALJ’s finding. If Peabody wanted to object to the ALJ’s use of 20 C.F.R. § 725.503(b) to determine that benefits were payable beginning in the month of Mr. Spese’s December 18, 1981 claim, it again had some responsibility to raise an objection before the ALJ. Since Peabody does not argue in the alternative that the ALJ erred in determining the date from which benefits accrued, that issue is waived.
We conclude, therefore, that Mrs. Spese is entitled to black lung benefits, as the surviving spouse of Mr. Spese, payable from December 1, 1981. We reject Mrs. Spese’s argument that the 1981 claim merged with the 1976 claim, just as we reject Peabody’s various challenges to the BRB’s decision. The decision of the Benefits Review Board of the U.S. Department of Labor is Affirmed in its entirety. Costs to be taxed against Peabody.
