awarded both in Kentucky and at the Federal level, will be paid through the state system rather than through the Federal system. Any claim honored at the Federal level and not at the State level will however be paid by the responsible coal mine operator and because of the differences in determination standards, a great many claims in this later category will apparently be filed. A separate memorandum from Public Systems, Inc. to James R. Yocum entitled "Comment on Federal Criteria for State Assumption of Black Lung Responsibility" dated April 17, 1973 (Appendix IV) provides a detailed analysis of these Federal requirements and indicates those areas in which Kentucky's law is not in compliance. Recently, Carl D. Perkins (D., Ky.), Chairman of the House Education and Labor Committee has submitted legislation for an additional extension of Part B through June 30, 1975 (Appendix V). The primary objection of the extension legislation is to make certain that those inactive miners and the widows of deceased miners shall have an adequate opportunity to file claims under Part B in keeping with the original intent of the original legislation. It is interesting to note that the four states whose residents are responsible for two-thirds of the Federal claim activity (Kentucky, Pennsylvania, West Virginia and Virginia) have all undergone revisions in their workmen's compensation legislation in the last three years and that they all now provide benefits to victims of black lung in excess of those prescribed in the Federal legislation. A separate effort is under way toward a full investigation of the existing law in each of these states with the objective of mobilizing their combined political resources toward a more reasonable approach to the problem at the Federal level. The results of that investigation will be submitted to yon separately on its completion. The specific directive of the Task Force has been to propose an agreed upon solution for Federal legislation and to develop a program for rectifying the escalation of attorney's fees within the state system. This latter problem has not only been the source of some difficulty and confusion in Kentucky, it has also resulted in considerable adverse Congressional reaction to Congressman Perkins extension bill. Consequently, it is apparent that a change in Kentucky's procedure regarding attorney's fees is timely and should be immediately communicated to those interested National officials. II. RECOMMENDATIONS FOR FEDERAL ACTION The Task Force unanimously recommends that the Federal government assume full, permanent responsibility for compensation to victims of pneumoconiosis using those standards for determination of penumoconiosis now imposed under Part C of the existing Federal legislation. And we further recommend that this compensation cost be fully underwritten by a national severance tax imposed on all coal mine operations, based on tonnage removed, without regard to the operations' previous history of valid, pneumoconiosis claims. We further recommend that the coal mine operators assume and accept responsibility for valid pneumoconiosis claims filed at the Federal level by all miners whose employment began on or after June 30, 1971. We further add our endorsement to the legislation currently before the House Education and Labor Committee introduced by Congressman Perkins for an extension of the Part B aspect of the Federal legislation until July 1, 1975. In support of these recommendations, we offer the following: Our desire to have the Federal government assume full and permanent responsibility in this area is a pragmatic decision based on the reality of the existing Federal intervention and an acceptance of the proposition that such intervention is highly unlikely to disappear. A far more desirable, but much less realistic, solution would be to have the Federal government abandon all responsibility in this area. However, even though Kentucky's revised workmen's compensation law is, in our collective judgment, sufficiently liberal and generous to victims of black lung, it is apparent that a great many other states throughout the nation have not yet made such improvements in their legislation as is needed and dictated. We believe that the standards for determination of penumoconiosis imposed under Part C should be adopted as part of this legislation since the alternative -standards used under Part B-is excessively liberal and burdensome. We believe that this compensation cost should be fully underwritten by a national severance tax imposed on all coal mine operations, based on tonnage removed, without regard to the operation's history of valid pneumoconiosis claims. Such a tax seems to be a highly desirable alternative to experiencerated insurance. This form of insurance is currently used to pay for such claims, both under Part C of the Federal legislation and under the existing Kentucky legislation. Recent evidence shows, however, that experience-rated insurance for penumoconiosis claims tends to create serious inequities. First, it unduly penalizes small coal mine operators, whose rates may escalate in the next twelve months to an amount in excess of $150 for each $100 of payroll. Operators faced with such insurance rates will have no choice but to immediately close their mines. Second, experience-rated insurance inequitably favors new mine operations, such as those recently developed and opened in the Western states. The typical case of penumoconiosis requires approximately ten years to develop and for the first ten years of operation in a new mine their insurance rate will be inordinately low since they will have no black lung claimants in their employ. The significantly lower insurance rates which they will pay in that period will place Kentucky, and Appalachian coal generally, in an unjust competitive posture. Kentucky's coal industry, the tax base which it supplies to the General Treasury and the employment which it creates will all be in serious jeopardy under such circumstances. It is, however, only fair that the coal mine industry assume responsibility for this burden and it is our judgment that a national severance tax is the most acceptable and equitable means for accomplishing this objective. We believe that the coal mine operators should accept responsibility for valid pneumoconiosis claims filed by all miners whose employment began on or after June 30, 1971, since that is the initial effective date of the dust level standards imposed under the Federal Mine Health and Safety Act of 1969. Those standards place a heavy burden on coal mine operators to maintain dust levels not greater than two milligrams of respirable dust per cubic meter of air. Since that time, the U.S. Bureau of Mines has conducted periodic inspections of all the nation's coal mines regarding these dust levels. It is both legislative theory and medical fact that a typical coal miner will not contract pneumoconiosis in such an environment (although there will be certain exceptions to this rule). We believe that since the onset of the dust level inspection, operators have had the clear burden for maintaining these standards and consequently, should be responsible, in perpetuity, for any cases of pneumoconiosis which develop in their mines in that period. Conversely, we feel that the severance tax ought to be used for claims filed by miners whose employment predated June 30, 1971. We submit a June 29, 1973 memorandum on this subect from Kentucky Elkhorn Coals, Inc. as Appendix VI. III. RECOMMENDATIONS FOR KENTUCKY ACTION We recommend that KRS 342.316 (2) paragraph 5 be amended to read as follows: Within sixty days of the filing of the claim, the Special Fund, and any other interested party shall notify the board and the claimant of the name, address and time of an appointment, within sixty days thereafter, for an examination of the claimant by at least one competent physician (or in the event that the diseased employee is deceased, his medical report shall be forwarded to such physician), accompanied by necessary expenses for travel, and within thirty days after such examination, a report shall be transmitted by the physician to the employer, the Special Fund, and the claimant and any other interested party. Within thirty days thereafter, the defending party shall notify the Workmen's Compensation Board whether or not it will resist the claim and if it does elect to resist, stating in detail, the reasons therefore. Failure to so notify the Workmen's Compensation Board, accompanied by a statement of the reasons for resistence, shall result in an award for the claimant. If the claim is resisted, the board shall set a date for a hearing and shall notify all parties thereof. In litigated claims, the regular procedures prescribed by the board shall be followed." We further recommend that a new Section (4) of KRS 342.320 be added to read as follows: "Provided that any award made to a claimant in nonresisted claim as established under the provisions of KRS of 342.216 (2) paragraph 5 may result in an award of attorney fee not in excess of $750." It is apparent from the testimony which we heard that the Special Fund is often forced into the position of resisting a claim for fear that the statutory time permitted for gathering of medical evidence will lapse. This proposal then assures that adequate time is available for the defense to gather its medical evidence with the expected result that notices of resistence to claims will not be filed unless there is solid and valid reason for believing the claim to be faulty. In such a claim where there is no resistence submitted by the defense, the attorney is restricted to a fee not in excess of $750.00. The chief counsel for the Special Fund estimates that from 50% to 75% of all black lung claims would be nonresisted if such statutory language were in existence. The net effect of these actions is that attorney fees can be expected to be cut to approximately 60% of their existing level. We further recommend that the Workmen's Compensation Board adopt immediately the following administrative regulation pertaining to attorney fees in black lung claims filed under KRS 342.316: "Any attorney representing a claimant for black lung benefits shall support a claim for fees by detailed affidavit, including a statement of the number of hours expended by the attorney in prosecution of the claim, and shall be entitled to a maximum fee in an amount equal to 52 weeks of an award, unless the attorney can justify a fee greater than this amount through a substantiating detailed affidavit setting forth extraordinary effort and unusual circumstances. The board, in its consideration and award of attorney fees in such cases, considers the results obtained, the complexity or novelty of the issues presented, the number of meritorious hours expended by the attorney in prosecution of the claim, the experience and expertise of the attorney, the degree to which the claim was validly resisted, and such other consideration which the board shall deem appropriate. "That board member who shall have been assigned the claim for decision shall, simultaneously with the opinion and award, set forth therein his recommendation of the amount to be awarded the attorney in the absence of an appeal. If no appeal shall be perfected, then the recommendation in such case shall be referred to a member of the board, other than the member to whom the case was originally assigned, for review and recommendation as to the amount of the attorney fee to be awarded." And we further recommend to the Workmen's Compensation Board and to the Governor that an emergency be declared and that this regulation become effective upon filing with the Legislative Research Commission and that the recommended regulation be included as an amendment to KRS 342.316 in the next session of the General Assembly. The foregoing recommendation will deal effectively with the imminently threatened prospect that attorney fees for lifetime awards to claimants might soon escalate to $15,000 per case and more. The regulation does not however, forbid the Workmen's Compensation Board from awarding attorney fees in excess of 52 weeks of the claimants benefits and we feel that the elasticity which such a regulation provides is desirable in that there are cases, both in occupational disease and injury, where the litigation is so extensive that an attorney can and does justifiably earn a fee in excess of the limits prescribed herein. The maximum fee limitation of 20% consequently remains. The regulation requires that the attorney present thorough justification for a fee in excess of 52 weeks and that he cannot receive such a fee unless at least two members of the Workmen's Compensation Board are convinced of its validity. Enclosed also, you will find a transcription of that portion of our proceedings which dealt with the existing policy of the Workmen's Compensation Board as to their procedures on reviewing cases and submitting decisions (Appendix VII). That evidence justifies, in our opinion, the requirement for dual review of attorney fee awards. We, the Black Lung Task Force, have been privileged to serve the Commonwealth of Kentucky in our proceedings, urge that immediate action be taken on the recommendations submitted and offer to stand available for additional involvement as deemed necessary by the Governor and the Commissioner of Labor. HARRY CAMPBELL, United Mine Workers of America. President, District 30, United Mine Workers of America, Pikesville, Ky. EXCERPT FROM APPENDIX II (Other Appendix ommitted) II. ATTORNEY FEES There is much concern in Congress for the attorney fee situation which has developed in Kentucky. Several members of Congressman Perkins' Committee are adamant about their refusal to vote in favor of an extension for so long as this situation continues. Congressman Mazzoli is extremely vocal among this group. It is interesting to note that none of the other three primary coal mining states face this problem on the scale which we do. Their law and the administration of it is much tighter than has been the case in Kentucky. Kentucky's new Workmen's Compensation law which grants lifetime benefits for black lung rather than for 425 weeks, will become effective on July 1, 1973. Fees which now run regularly as high as $5,000 might then escalate to $25,000 if nothing is done. We have reason to believe a huge number of claims are being held until July 1 so that the claimants and their attorney can take advantage of these new benefit schedules. There has been a recent tightening at the Workmen's Compensation Board. In the last several weeks, fees as low as 8% have been awarded, down from the previous 20% level, which had become common. The Board is also requiring greater documentation on fees than they have in the past, and they have begun to pay partial settlements in some cases. This situation is aggravated by the administration of the Federal program by the Social Security Administration. When a claim is awarded in Kentucky for 425 weeks, the attorney receives a commuted lump sum payment of his fee which represents the last 113 weeks of the claim. If it were not for the Federal program then the claimant would cease to receive benefits after the 312th week of his claim. However, SSA has decreed that as the week when they will begin awarding their benefits to those claimants. The net effect is that the fee is "subsidized" by the Federal Government. (There has been much misunderstanding on this point. Recent newspaper accounts have indicated that Kentucky's attorneys have been paid with Federal funds. This is not the case. They are paid with funds from the Special Fund. Moreover, there have not been any cases where the 312 weeks have elapsed and, consequently, this SSA benefit replacement has not yet begun.) In order to correct this situation, we recommend the following: 1. A ceiling must be placed on attorney fees. Legislation should be planned for the next session and announced now as part of the administration's legislative package. This legislation should place an absolute ceiling on attorney fees of 52 weeks of the claimant's benefits. This would mean that the maximum attorney fee under the existing benefit schedule would be $4,212. In addition to the ceiling, thorough documentation of services performed and hourly fee charges should also be required, and the Workmen's Compensation Board must pay only an amount which they are sure has been earned. 2. The Federal Government should be persuaded to decide that effective July 1, 1973, Federal black lung benefits will not be utilized as a supplement to state attorney fees. This would mean that even though the state claimant's benefits had been cut off to allow for payment of his attorney, the Federal benefits would not begin until after the state award had ceased, without regard to the attorney fee. 3. Since a great many attorneys throughout the state practice Workmen's Compensation law but do not handle black lung claims, the thrust of these proposals should be discussed with representatives of the Kentucky Bar Association, reminding them that they also have something to gain from the correction of the existing situation, and reassuring them that the new legislation should not in any way curtail the standard practice of Workmen's Compensation law. |