1996 First Quarter Release

ON  TRACK   WITH   RAILWAY  CLAIM  SERVICES,   Inc.
Volume 2 Issue 1                                                                                                     1st Quarter, 1996

RAILWAY CLAIM SERVICES

 

FROM THE DIRECTOR

Lexington, TN (01/96) - With 1995 now a memory and 1996 a promise to be fulfilled, I thank those who have allowed Railway Claim Services, Inc. (RCSI) to provide services over the last seven years. Railway Claim Services, Inc.’s goal in 1996 remains, "to save our clients more of the money they work so hard to make". As we achieved that goal in the past, we will continue to do so in the future. Thank you for allowing RCSI to be a part of your business.

1995 was another year for change in the railroad industry, with mergers of giant rail systems, and the continued downsizing of the industry generally. While the number of railroad employees nationally decreased, the number of railroads continues to increase, and will do so more dramatically over the next five years.

On the eastern side of the Mississippi many industry watchers are looking at a combination of Conrail and NS to challenge CSX for market share.

The Canadian National and its subsidiaries continued their downsizing and went public, with stock offerings of 76.2 million shares @ $27.00 Canadian (That’s $19.94 U.S.)

On November 13 the government of Mexico put it’s 15,000-mile national railway system, Ferrocarriles Nacionales de Mexico, up for sale.

The Illinois Central (IC) appears to making railroad news with their proposed UTU labor agreement, $23.00 per hour and doing away with the mileage-based pay in effect. IC employees will receive a one-time lump sum of $60,000 per trainman for work-rule relief. Under the proposed UTU agreement, IC road crews work a 10-hour day between cities and yard crews work 8-hour shifts. Although this may seem novel to Class I railroads (None of the other railroads are expected to attempt to work out a similar deal.), isn’t this what we have been seeing in the short line industry, an hour's pay for an hour's work?

1995 produced another 5,000 plus crossing accidents across the nation. There were 616 crossing accident fatalities. Included in these was a grade crossing accident which spotlighted crossing safety. On October 25, in Fox River Grove, Illinois a school bus, with 35 passengers, was stopped at a red light when Metra Express 624, slowing from 69 miles per hour, clipped the rear of the bus. Seven high school students died. A side bar to this will be an attempt to challenge Illinois’s Tort Reform limitations of a $250,000 wrongful death cap. Illinois Tort Reform was also a product of 1995. Athough the first focus was "highway signal coordination" we are now seeing more attention being focused on railroad crossing accident safety generally. Although railroads have always been an advocate of crossing safety, we now have the general public (and politicians) saying crossing accidents can be prevented . . . and aiming those prevention barbs at the motorist, not the railroad. Let’s keep the pressure on. Remember the three E’s of Operation Lifesaver. Engineering. Education. Enforcement.

The U. S. Department of Transportation has formed a task force on grade crossing safety, and is soliciting public views. You can write this task force at: Grade Crossing Safety Task Force, Room 10126, U.S. DOT, 400 Seventh St. SW, Washington, DC 20590, through April 01, 1996.

Thank you again for allowing Railway Claim Services to assist you. Be sure to tell me or one of the other RCSI Claims Professionals how we can help you better in 1996 and the years to come.

VERDICTS AND POINTS OF LEGAL INTEREST

On January 8, 1996, the US Supreme Court is scheduled to hear arguments in the case of Norfolk & Western Railway v. Hiles (No. 95-6). The question to be answered is this: If an employee goes between railcars to align a drawbar which failed to automatically couple, is there liability under the Safety Appliance Act? In the case under review, NW switchman Hiles injured his back while straightening a misaligned drawbar on a coupler in NW's St. Louis Luther Yard. Hiles filed suit in Madison County, Illinois Circuit Court, alleging a violation of the Safety Appliance Act. The court refused to admit evidence offered by NW showing that the coupler was not defective, ruling the evidence was irrelevant. The jury awarded Hiles $492,500. NW appealed to the 5th Judicial District Appellate Court o Illinois which upheld the lower court's decision, saying that the railroad is liable when the railcars fail to couple automatically and a worker is injured when required to manually align the couplers. NW appealed to the US Supreme Court after the Illinois Supreme Court refused to review the case. The prevailing attitude in federal courts is that strict liability under the SAA is absent unless the couplers are defective. However, the broad view held by most state courts is that the mere fact that the drawbars fail to automatically couple constitutes liability under the SAA. Watch this one closely, folks, it's important.

FELA - BNRR - Speaking of drawbar claims. Conductor has a problem aligning drawbar. Rather than use the "knuckle mate" as instructed, he elects to use a length of oak board laying on the ground near the car. He feels a twinge in his lower back, eventually diagnosed as degenerative disc disease. Jury rejects SAA claim, but finds the railroad completely liable for failure to properly maintain the drawbar. Awards $620,000.

FELA - UPRR - In yet another misaligned drawbar claim, a 48 year old brakeman injures his back and suffers a umbilical hernia while attempting to align the drawbar. The jury rejects the SAA claim, and also rejects the FELA claim. Victory for the railroad. Defense verdict. Hooray!

FELA - BNRR - Back to the real world, a 39 year old engineer injures his back while reaching for a replacement knuckle. He undergoes a discectomy, but eventually does return to work. The jury finds the railroad at fault and awards $315,000.

FELA - SPRR - Conductor suffers back injury when drawbar he is attempting to align suddenly jams. He undergoes laminectomy and fusion at L4-5 and L5-S1. Jury finds violation of SAA and BIA. Awards $989,075.

FELA - MPRR - Getting away from drawbar claims, we find a carman who trips and falls on a dirty shop floor. He suffers a torn right medial meniscus and lumbar disc injury. At the time of the trial, the plaintiff is still working but his doctor testifies that the injuries will eventually disable him. The defendant argues that his conditions is the result of a prior injury. The jury awards $989,500, but reduces it by 35% due to plaintiff's negligence.

Crossing Accident - NWRR - Tractor-trailer driver struck at flasher crossing. Testimony of driver that flashers were not functioning. Neighbors testify that flashers have not worked in the past. A former NW employee testifies that he had reported problems with the flashers not working. The plaintiff is now confined to a wheelchair and suffers short-term memory loss. The jury stings the railroad. Awards $8,500,000 to the plaintiff and $3,400,000 to his wife. Discount this by 19%, but it's still a chunk of change.

Trespasser - NYCTA - 28 year old man with history of substance abuse was struck by an elevated train when he fell while walking across the tracks. Plaintiff admitted to being intoxicated at the time. Accident resulted in plaintiff being rendered quadriplegic. Evidently, New York juries have big hearts. Plaintiff was awarded $19,094,735, reduced by 34% due to his own negligence. He's left with only $12,602,525.

Trespasser - CSXRR - A 53 year old Florida man passes out on railroad tracks. Blood alcohol level of .203. Gets run over by a train. Left arm amputated, left leg fractured, back injury, multiple abrasions and contusions. Florida juries are not as generous. They only award $1,182,960, and reduce this by 50%.

Trespasser claims are dangerous. Whenever RCSI conducts an on-site inspection of railroad property, this is one issue to which we pay particular attention. I urge you to pay particular attention to this issue also. Identify locations trespassers are known to frequent. Close any paths leading onto railroad property. Post No-Trespassing signs prominently (follow state and local laws regarding to specific wording to be used). Enlist the help of local law enforcement agencies. DO NOT allow trespassers unchallenged access to railroad property. Call RCSI if you need assistance with this problem.

DID YOU KNOW?

1995 was another record setting year in the area of jury liability awards. It will be months before we have all the figures, but preliminary data indicates that the median jury award for medical malpractice in 1995 was $500,000 versus $350,000 in 1994. In 1995, the number of jury awards for med-mal in excess of one million dollars reached 35% versus 28% in 1994.

The interesting thing about these numbers is how they are interpreted by those in the medical industry. I talked with an acquaintance in the medical insurance field and he explained to me that the numbers I just quoted are based on a small percentage of all medical malpractice claims. According to him, less than 20% of all medical malpractice claims are decided by a jury. His inference was that the remaining 80+% were resolved in favor of the hospital and/or physician. As any good claims professional would say, "Bull..............Baloney!" If you think you're going to lose a case, you try your best to settle it, and you never let a bad case go to a jury. The 20% of cases decided by juries represented either (a) cases which the defense considered to be winnable, or (b) cases in which the demand exceeded the anticipated jury award. There were no figures available for cases settled out of court, but as jury awards skyrocket, the cost of out-of-court settlements is also dragged upward. It will be interesting to examine the figures for FELA settlements and jury awards for 1995.

RAILWAY CLAIM SERVICES WEBSITE

The information age is upon us. It is our plan for RCSI to have a Home Page on the Internet in 1996. Those of you with access to the net will not only be able to correspond with us, but will be able to preview this newsletter and use our page as a jumping off point to other rail related pages. I will keep you posted. If you have Internet access, please e-mail me at jrlittle@usit.net.

MERGER MANIA

On October 20, 1995, staff writer Rip Watson wrote an article for the Journal of Commerce entitled "Small Rails Greet Mergers With Optimism, Loathing". The article voices the expectations and fears of many shortline owners and operators in light of the past, present and future Class I mega-mergers. The autocratic approach taken by some Class I's when dealing with Shortlines makes life miserable for many astute Shortline operators. When you are close to your business and know it well, it is hard to accept some of the poor operating decisions forced on you by your interchange "partner". But, what choice do you have? The frustrating and frequently stormy relationship between the Class I's and the Shortlines can be best illustrated by the following quote by an unnamed Shortline official, "Our official position is that we agree with everything anyone from a Class I railroad has ever said or thought in his or her life." You have to admire this person's honesty. When you live in the shadow of a giant, be thankful for the shade. You can quote me on that.

BITS AND PIECES

SP suffered a hazmat incident in 1991 and another in 1993, each of which could have had tremendous financial consequences. Thanks to some very creative and insightful legal work by their team of attorneys, SP saved potentially millions of dollars in claims arising from these two spills. All carriers should take note. The first incident involved the spill of metam sodium from a derailed tank car into the Sacramento River in 1991. When the metam sodium contacted the water, it broke down into methylisothio-cyanate and hydrogen sulfide, both of which are regulated hazardous substances. The metam sodium, however, is not a regulated hazardous substance. The SP used this fact to argue that the release of metam sodium did not constitute the release of a hazardous substance and therefore, SP could not be held liable under US environmental law. A good argument, and one which allowed SP an advantage in obtaining a favorable pre-trial settlement. The second incident involved the spill of approximately 6,000 gallons of diesel fuel when an SP engine derailed in 1993. SP recovered about 5,000 gallons of the fuel and spent about $2 million in cleanup. Seven federal and state agencies presented claims under the Oil Pollution Act against the SP. SP argued that the OPA was never meant to allow the government to recover costs expended under the Oil Spill Liability Trust Fund when the fuel was not being transported as a raw or manufactured material. US District Court Judge Michael Hogan agreed and concluded SP was not liable under OPA for the diesel spill. Both these incidents are discussed in greater detail in the November 20, 1995 issue of U.S. Rail News. Case citation for the 1991 incident: CV-92 1296 RMT (Kx) USDC, Central California. Case citation for the 1993 incident: Civil No. 94-6176-HO ORDER, USDC, Oregon.

End-of-train (EOT) braking systems are again a hot topic following the National Transportation Safety Board's conclusion that such a system could have prevented the grade crossing accident which took the lives of seven school children in Fox River Grove, Illinois in October. A two-way EOT device allows the engineer to apply emergency brakes from both the front and rear of the train simultaneously. BLE President Ronald McLaughlin calls the running of trains without EOT brakes "ludicrous". BLE favors regulations requiring two-way EOT brakes on trains.

On Saturday, December 30, 1995, President Clinton signed legislation shutting down the Interstate Commerce Commission, an agency created over 100 years ago to control the robber barons of the railroad industry. As the ICC now fades into memory, there is still no consensus on how those functions still required will be administered and who will handle them. Both the Senate and the House would transfer those functions to an independent agency within the Department of Transportation. The Senate would name this agency the Intermodal Surface Transportation Board. The House would call their agency the Transportation Adjudication Panel. Both proposed agencies would be much smaller than the present ICC, but would be essentially responsible for the same areas. The President is, of course, opposed to both plans, preferring to split the responsibilities among three existing agencies, Labor, Justice and DOT. I agree with the President on this (Check my temperature!). If the ICC is going the way of the dinosaur, let it go. If all you're going to do is reduce the staff, then let's call it ICC Lite.

Attorneys General in 24 states each released a Top 10 list of frivolous lawsuits filed by convicted prisoners in their states. Thousands of such suits are filed annually, nearly all subsidized by taxpayers. Parade Magazine looked at each of the 24 Top 10 lists and chose their own Top 10. Here it is:

Arizona - Donald Beaty v. Bury: A death-row inmate sues corrections officials for taking away his Gameboy electronic game.

Arkansas - An inmate, calling himself a sports fanatic, filed suit claiming cruel and unusual punishment because he was not allowed to view the NFL playoff games.

California - Brittaker v. Rowland: Inmate says his meal was in poor condition. His sandwich was soggy and his cookie was broken.

Florida - Jackson v. Barton: A prisoner convicted of killing 5 people sues after watching broadcast television programs containing violence, profanity and other objectionable material.

Florida - Spradley v. Rathman: Prisoner sues to be served fruit juice at meals and three pancakes instead of two.

Florida - Brown v. Singletary: Prisoner sues to be given Reeboks, Adidas, Pony or Avia high-tops rather than the inferior brand of athletic shoes issued by the prison.

Missouri - Beverly v. Groose: Suits claims that prisoners working in the prison law library should be paid the same rates as attorneys in private practice.

Mississippi - Young v. Murphy: Prisoner sues for not receiving his scheduled parole hearing. It seems that he was absent due to the fact that he had escaped.

New York - A convicted murderer sued for $25,000 claiming a defective haircut caused him lost sleep, headaches and chest pains.

Oklahoma - Trice v. Reynolds: A prisoner who was a chef in civilian life sued because of the poor quality of prison food. He also claimed his portions were too small.

We at RCSI hope that 1995 was a good year for each and all and that 1996 brings the rewards we all work and strive for.

RCSI welcomes your input. If you have any questions or comments of interest to our industry, please contact Dave Gardner at (901) 967-1796 or FAX your message to (901) 967-1788.

Visit the Railway Claim Services, Inc. webpage. It’s located at www.railway-claim-services.com

Railway Claim Services, Inc. is the recognized leader in independent railroad claims management, which includes investigation, negotiations, and all those things in between. If RCSI is not already a partner in your loss control and claims management program are you accepting too much risk?

Railway Claim Services, Inc. 52 South Main Street Lexington, Tennessee

800-786-5204

FAX (901) 967-1788

Email           dave_gardner@railway-claim-services.com

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