Challenges of Reserving Federal Black Lung Liabilities

Christine M. Fleming and Alex M. York, of Milliman provided a compelling presentation on the complexities of federal black lung claims at the AIRROC Spring Membership meeting.

As coal continues to decline – the number of jobs nationwide fell to about 40,000 last year from 175,000 in the mid 1980s – you would anticipate that the number of claims for black lung occupational disease from miners would begin to taper off. But that is not the case. As equipment has improved, you would anticipate that injuries attributable to coal dust exposure would lessen in frequency and severity. But it is difficult to see any such impact for a number of reasons. As succinctly described in https://us.milliman.com/en/insight/coal-mining-black-lung-claims-a-struggling-industry claims have steadily increased and present highly complex reserve evaluation issues. This topic was updated from the foregoing article in their presentation at the AIRROC Education Day on March 30, 2022 and Ms. Fleming and Mr. York detailed the challenges and unknowns impacting this reserving process.

To understand how complex this analysis is, it is sufficient to view the chart entitled Legal Process of a Federal Black Lung Claim copied below: Key differences between this compensation scheme and traditional workers’ compensation dramatically impact the claim “tail” (how long it takes for claims to be made); there is no deadline for making claims and no limit to the number of times a claim can be made. Thus, if a worker makes a claim that is denied for one reason or another, he/she can refile any number of times. Further, it is extremely difficult to have accurate claim counts given the benefits afforded for dependents, who can change over time. The threshold for lung impairment that can support a claim for benefits is very low and not necessarily directly attributable to coal dust exposure. Workers who have been working in the industry for 15 years have the benefit of a presumption of causation that is not impacted by exposure to other harmful substance such as cigarette smoking. Once awarded, benefits continue monthly (and are adjusted annually) until the worker’s death. Upon death, benefits continue to be paid to surviving dependents even if the miners did not die as a result of coalmine dust exposure. While workers’ comp claims can be settled, federal black lung claims cannot. Thus reserves for these claims need to be re-evaluated over time to adjust for changes in payments, dependents, over-all claim counts and severity.