A Fourth Circuit ruling has allowed two coal operators dodge a black lung claim, sticking a debt-laden trust fund with the bill.
The April 23 decision turned on a deceptively simple question: which of Robert Rule's former employers should pay his black lung benefits? The answer, it turned out, was neither of them.
Rule spent 38 years working in West Virginia coal mines before retiring in 2015. His final stint was a ten-month stretch with Wildcat Energy, LLC, which owned the Eagle #3 mine in Bolt, West Virginia. Before that, Rule had worked at the Eagle #1 and #3 mines for Rhino Energy, a subcontractor for Wildcat, from mid-2012 through the end of 2014. When Rhino's subcontract ended, Rule moved onto Wildcat's payroll and continued working at the Eagle #3 mine.
After Rule filed for benefits in 2017, a district director at the Department of Labor's Office of Workers' Compensation Programs tagged Rhino as the operator responsible for paying the claim. His reasoning was straightforward: Wildcat had only employed Rule for about ten months, falling short of the one-year minimum required under federal regulations for an operator to be considered potentially liable. Rhino, which had employed Rule for more than two years, fit the bill.
Rhino pushed back immediately, arguing that Wildcat was Rule's most recent employer and should bear the cost. The district director disagreed, and an administrative law judge later affirmed the designation in 2023. The Benefits Review Board upheld that decision in October 2024.
The Fourth Circuit, however, saw things differently. The court applied its own recent precedent in Baldwin v. Director, Office of Workers' Compensation Programs, decided earlier in 2026, which clarified how a "year" of employment is calculated under the Black Lung Benefits Act.
Under that ruling, a miner does not need to show a full calendar year on the job. Working at least 125 working days within any one-year period is enough. Since everyone agreed that Rule had logged at least 125 working days with Wildcat in 2015, the court found that the ALJ got the employment duration question wrong.
That left the matter of whether Wildcat could actually afford to pay Rule's claim. Federal regulations require operators to demonstrate financial capability before they can be held liable. The district director never addressed Wildcat's finances, focusing solely on the employment-duration question. He never filed what the regulations call a Coverage Statement, a certification that the agency searched its records and found no evidence of insurance coverage or self-insurance authorization for the operator in question.
That omission proved decisive. Under the applicable regulation, the absence of a Coverage Statement triggers a presumption that the most recent employer is financially capable of paying the claim. The court held that this presumption applied here, and since nothing in the record contradicted it, Wildcat was deemed financially capable as a matter of law.
The Director of OWCP argued that the presumption should only kick in when a Coverage Statement was specifically required and then omitted – not when the district director simply never got around to the financial capability question. The court rejected that reading, calling it a recipe for absurd outcomes. Under that logic, the presumption of financial capability would only arise in cases where the district director had already concluded the operator was financially incapable, creating a direct contradiction.
The court also noted a practical dimension to its reasoning. The agency regularly collects data on operators' insurance status and self-insurance authorizations. Insurance carriers are required to report every policy and endorsement issued, canceled, or renewed to OWCP, and operators seeking to self-insure must apply for and maintain authorization through the agency. Expecting a small coal operator to independently verify another operator's federal black lung insurance status, the court reasoned, would be unrealistic given that the agency already has that information on file.
With Wildcat meeting all the criteria for a potentially liable operator, the court concluded that the district director should have designated Wildcat – not Rhino – as the responsible operator from the start.
Under the regulatory framework governing black lung claims, once the district director's designation is found to be incorrect, a new operator cannot be substituted in at the appellate stage. The claim does not get sent back for a do-over. Instead, the Black Lung Disability Trust Fund picks up the tab – even when the operator that should have been designated can be clearly identified.
The Trust Fund was established by Congress to serve as a backstop for black lung claims where no responsible operator can be found or made to pay. It is financed primarily through an excise tax on coal sales and, when revenues fall short, through borrowing from the Treasury. That borrowing has become more rule than exception.
As of September 2024, the Fund carried $5.1 billion in outstanding debt. Federal estimates project that figure could reach upwards of $13 billion by 2050, despite repeated Congressional interventions that have included forgiving $6.5 billion in prior debt, restricting miner eligibility, imposing a five-year moratorium on the Fund's accrual of interest, and more than doubling the coal excise tax.
Judge Wilkinson, in dissent, took sharp issue with the outcome. He argued that Rhino, which concedes it can afford Rule's claim, should not be allowed to escape liability based on a procedural lapse by the district director. He characterized the result as transforming the Trust Fund from a payer of last resort into a generous backstop for employers lucky enough to find themselves in Rhino's position. He also pointed out that the statute already provides a mechanism for situations where an operator contests its designation: the Trust Fund can pay benefits on an interim basis and then recoup the cost, plus interest, from the correct operator once liability is finally determined.
The majority acknowledged the strain its decision places on the Fund but maintained that the law left no alternative. It urged district directors to be more thorough in future designations, specifically calling for comprehensive written explanations addressing all five regulatory criteria for operator liability, not just the one factor that appears most dispositive.
Rule will receive his benefits regardless of the outcome. The only question was always who would write the check. In this case, it will be the American taxpayer.
