Fourth Circuit Addresses “Fraud on the Court”

In one of the first published opinions by the Fourth Circuit in the new year, the appellate court ruled against Claimant/Appellant, holding that an Employer had not committed a “fraud on the court.”  Instead, to commit “fraud on the court,” Employer would have to have concealed medical records with an “intentional design aimed at undermining the integrity of the adjudicative process.”  The case arose out of a coal miner’s claim for benefits under the Black Lung Benefits Act (BLBA).  To establish a claim for benefits under the BLBA, the claimant must demonstrate to the Director that he has pneumoconiosis arising out of his employment as a coal miner, he is totally disabled, and the pneumoconiosis substantially contributed to his disability.  In this case, Claimant made a claim for benefits under the BLBA in 1998 after he was diagnosed with an “inflammatory pseudotumor,” but was not diagnosed with pneumoconiosis.  The Director found Claimant eligible for benefits, and Employer requested a hearing before the ALJ.  In preparation for trial, Employer provided Claimant’s 1998 pathology results to two pathologists of Employer’s choosing who wrote reports summarizing their conclusions.  Employer then requested opinions from several radiologists and submitted them, along with the 1998 pathology results, to four pulmonary specialists, but did not submit the reports of the two pathologists.  The four pulmonary specialists concluded that, based on the evidence available to them, Claimant likely did not have coal worker’s pneumoconiosis.  On January 5, 2001, after a hearing where Claimant represented himself pro se, the ALJ denied Claimant’s claim for benefits, finding Claimant failed to show he had pneumoconiosis or that he was totally disabled due to pneumoconiosis.

On November 8, 2006, Claimant again filed a claim for benefits under the BLBA.  The Director found him eligible for benefits, and Employer requested an evidentiary hearing.  This time, Claimant hired counsel, who conducted rigorous discovery.  Employer was forced to hand over the reports of its two pathologists it previously withheld, and claimant moved to set aside the January 5, 2001, judgment on the grounds that Employer had committed fraud on the court because it did not disclose the reports of the two pathologists to its four pulmonary specialists or the court at the previous hearing.  Claimant won; the ALJ ruled Employer had committed fraud on the court, set aside the 2001 judgment, and awarded claimant benefits dating back to January 1997.

On appeal, the Benefits Review Board accepted the ALJ’s factual findings, but held Employer’s “conduct did not rise to the level of fraud on the court” because Employer “did not engage in a deliberate scheme to directly subvert judicial process.”  The Benefits Review Board held Claimant was entitled to benefits beginning in June 2006.  Claimant’s wife appealed the Benefit Review Board’s decision to the Fourth Circuit Court of Appeals, asking the court to set aside the ALJ’s 2001 judgment, which would have the effect of moving her entitlement to benefits from January 1997 to June 2006.   Finding the issue presented to be one of law, the Fourth Circuit found that a showing of fraud on the court must involve not only an intentional plot to deceive the judiciary, but it must also touch on the public interest in a way that fraud between individual parties generally does not.   The court stressed that fraud on the court should be construed very narrowly and only be invoked when the parties attempt egregious forms of subversion of the legal process, not allegations involving a “routine evidentiary conflict.”  To hold otherwise would “seriously undermine the principle of finality” by permitting “parties to circumvent the Rule 60(b) (3) one-year time limitation.”

Further, the court noted, the APA contained no requirement that a party present the most probative evidence in its possession; instead a party is permitted to offer any evidence it would like so long as that evidence is relevant.  Here, Employer did not share the reports of two expert pathologists with Employer’s four expert pulmonologists.  While the ALJ found the reports of the expert pathologist more probative, Employer was under no obligation to advance those reports as evidence because someone else may believe them superior.  In fact, the Supreme Court has recognized cross-examination as “the greatest legal invention for discovery of the truth.”  Claimant had the right to cross examine Employer’s experts and present contradictory medical opinions; that he didn’t was not a failure of the system but Claimant’s failure to avail himself of it.   The court gave little consideration to Claimant’s appearance pro se, noting the narrow confines of fraud on the court have not permitted claimants to relitigate old claims they have lost merely because legal representation may have resulted in better success.

Interestingly, the Eleventh Circuit dealt with a similar issue just nine months prior when Employer concealed its medical expert’s report received four days before trial, and the ALJ admitted the report into evidence post- trial after it fell into the hands of another party to the litigation.  Under the circumstances, the Eleventh Circuit held, Employer knowingly concealed the medical report and the ALJ did not abuse its discretion when it admitted the report post-trial.   The effect of the report was that if Claimant’s surgeries and disabilities resulted from the natural progression of her work-related injury, and would have occurred notwithstanding subsequent work, then liability would rest with Employer.  In Employer’s expert’s report that was concealed, he opined he did not believe Claimant’s work aggravated or worsened her condition or contributed to the need for surgery; the Claimant would have needed the surgery for persistent symptoms regardless of her occupation.   After receipt of the concealed report, the ALJ ruled against Employer and found that the relevant disabilities and complications suffered by Claimant were the natural progression of her injury, not an aggravation of her original injury caused by subsequent employment.

Fox v. Elk Run Coal Company, Inc., et al. (4th Cir. 2014); Ceres Marine Terminals, Inc., v. Director, OWCP (11th Cir. 3/19/13) (unpublished)