A controversy has broken out over Labor Secretary Raymond J. Donovan's efforts to fire two of the three judges on the department's Benefits Review Board, a panel that spends most of its time reviewing federal black lung compensation claims.

Donovan became the first labor secretary to attempt to fire judges on the 10-year-old board when he moved last May to oust judges Ismene M. Kalaris and Julius Miller, who have served since 1978 and 1974, respectively. The action raised suspicions that the secretary planned to appoint judges to the panel who are sympathetic to the coal and insurance industries.

According to court papers, Chief Justice Robert L. Ramsey, a Donovan appointee, told the other two judges that he had agreed to accept the job only after the secretary agreed to fire them. Kalaris and Miller had held seats traditionally reserved for a public and a union representative, and Ramsey was named to a seat that generally went to an industry official.

Elizabeth Woodruff, a Virginia attorney who has represented coal and insurance firms, confirmed yesterday that Donovan has spoken to her about taking a seat on the board.

Congress created the benefits board in 1972 to ease the burden compensation cases were placing on the U.S. District Courts. The board was to decide appeals of black lung compensation cases and claims by federal workers not covered by state workers' compensation programs--mostly government employes on federal waterways.

When a coal miner's claim is upheld, black lung benfits are paid by the coal company that is found to be responsible; when that can't be determined, the federal government pays the benefits.

Kalaris and Miller filed suit last May, contending that Donovan wasn't authorized to fire them, and even if Congress had given him that power, he couldn't without citing a reason. The U.S. District Court here backed them up, saying, "Congress certainly didn't intend to permit the secretary to pack this independent and quasi-judicial tribunal."

But last month the U.S. Circuit Court for the District of Columbia reversed that decision, saying, in effect, that the benefits panel had been operating for years with much more power than Congress had intended.

The ruling has caused an uproar among many attorneys who regularly appear before the benefits panel and has raised eyebrows among the congressional subcommittees that oversee the black lung program.

"The decision has caused havoc," said Thomas C. Fitzhugh III, a Houston attorney who represents insurance firms in compensation cases. Fitzhugh said that if the board can be changed with each new administration, companies will never know what to expect when making their appeals.

Fitzhugh and Galveston attorney Richard Melancon yesterday filed suit to block Donovan from tampering with the board. In their motion, the attorneys claim their clients can't get a fair hearing if Donovan replaces the judges.

Meanwhile, the Justice Department has asked the appellate court to drop the standard 45-day waiting period so that Donovan can fire the two judges immediately. Kalaris and Miller are trying to block that move.

The two contend that Congress intended for them to serve terms for life--just like other federal judges--and thus did not specify a term. But Justice Department attorneys argued that because the secretary of labor had appointed the judges, he could fire them, too.

The appellate court agreed, saying "in the face of congressional silence," the benefits board could not "assume" Congress had wanted the judges to serve for life.

It also declared that the benefits board was not a legal court, but "simply an additional layer of administrative review." That ruling has upset Fitzhugh, who said yesterday that the decision "reduces the board to a kangaroo court."

Sen. Don Nickles (R-Okla.), chairman of a Senate labor subcommittee, plans to reintroduce a bill this week that would set six-year terms for the judges. It also would make them presidential appointees, subject to confirmation by the Senate--cutting Donovan out of the process completely. Nickles introduced the bill last year, but it died in the House.