Volume 7 Issue 3                                                              January, 2002


RAILWAY CLAIM SERVICES, INC.          Our 14th Year of Service


Railway Claim Services express our wishes and desires that 2002 will bring peace to America and all other countries subscribing to our values and elimination of terrorism across the world.  May we continue with the revised Godly patriotic trend that arose subsequent to September 11, 2001 .  At the same time, may we continue to hold our firemen, medical personnel, policemen and military in high esteem, and as role models for our children, instead of entertainers, politicians, and athletes.  When we quote the pledge of allegiance to the flag, may we really mean it, especially when we say "Under God."

The fighting in Afghanistan hit home with me in two different manners.  The first American killed, 32 year-old CIA Agent Mike Spann, was from my hometown of Winfield , Alabama , a small town in northwest Alabama .  The second aspect of this is the fact that his dad, Johnny Spann, is four years younger than I am.  May God be with our servicemen and women as they continue our mission overseas and here in the USA .  We have never forgotten the Pearl Harbor date of December 7, 1941 (60th anniversary last month), and we shall never forget September 11, 2001 .

On another important note, we wish you and your employees a prosperous and injury-free year.  Hopefully, we can face every aspect of our life, whether it is work, play, church or whatever, in the same manner as a caring family associates with each other on a daily basis.

Railway Claim Services considers itself fortunate to have the opportunity to serve and work as a service provider in the rail industry.   This relationship is not taken for granted and we wish to thank you for the past courtesies extended to us.  Because of your faith and belief in RCSI, we will make every effort to maintain and improve our services wherever and whenever the opportunity presents itself.  


When I got cut from the varsity team as a sophomore in high school, I learned something.  I knew I never wanted to feel that bad again.  I never wanted to have that taste in my mouth, that hole in my stomach.  So I set a goal of becoming a starter on the varsity.    Michael Jordan, Pro Basketball Superstar

Colin Powell's Letter To First Graders

Shortly after the Gulf War ended in 1991, a class of Grand Rapids , Michigan first graders sent letters to then-Chairman of the Joint Chiefs of Staff, General Colin Powell.  Powell's answer to the children's multitude of queries is a succinct glimpse at the life and mind of this great American hero.

"In response to most of your questions, I can drive a tank, have been scared, like to read, travel frequently, eat snacks, have a family, smile often, sometimes get angry, love pizza, have attended many schools….have eaten at the White House, and have very little spare time.  There are female generals, my boss is the Secretary of Defense, and my wish is for a peaceful earth where every individual is free."

Adapted from War Letters:  Extraordinary Correspondence from American Wars, Scribner

Echoes Of The PastThe world will little note, nor long remember what we say here, but it can never forget what they did here….It is rather for us to be here dedicated to the great task remaining before us—that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom and that government of the people, by the people, for the people shall not perish from the earth.

Abraham Lincoln - The Gettysburg Address

We, and all others who believe in freedom as deeply as we do, would rather die on our feet than live on our knees.

Franklin Delano Roosevelt - 32nd president of the United States


Amtrak trivia information:  1)  Official name is the National Railroad Passenger Corp.  2)  25,000 employees.  3)  Began service May 1, 1971 , with 184 trains serving 314 stations.  4)  Today, an average of 260 trains serve 512 stations daily.  5)  Took over the passenger operations of all but three railroads, the Rock Island Railroad, Southern Railway and Denver & Rio Grande Western Railroad.  All three ceased passenger service by 1984.  6)  Amtrak serves 45 states.  Those without service are Alaska , Hawaii , Maine , South Dakota and Wyoming .  7)  Operates more than 22,000 route miles.  Most are owned by freight railroads.  8)  Amtrak owns 730 miles of track, mostly between Boston and Washington and in Michigan .  9)  Busiest stations are New York with 8.4 million boardings last year; Philadelphia (3.9 million); Washington (3.4) million; Chicago (2.2) million; and Newark , N.J. , (1.4 million).  10)  Carried a record 22.5 million riders in 2000.

Date of WTC attack was 9/11.  9 + 1 + 1 = 11.   September 11th is the 254th day of the year.  2 + 5 + 4 = 11.  After September 11th there are 111 days left in the year.  The area code to Iraq-Iran is 911.  9 + 1 + 1 = 911.  The Twin Towers standing side by side form the number 11.  The first plane to hit the towers was Flight 11.  State of New York – The 11th state added to the Union .  New York City has 11 letters.  Afghanistan has 11 letters.  The Pentagon has 11 letters.  Ramzi Yousef (convicted of orchestrating the attack on the World Trace Center in 1993) has 11 letters.  Flight 11 had 92 on board.  9 + 2 = 11.  Flight 77 had 65 on board.  6 + 5 = 11.  The number to dial for emergencies is 911.  And last but not least.  With the number 11, bring the bottom portion of each one inward and touching, leaving the top portion of each one where it is located and you form "V" for victory.  Let freedom ring!!

Wal-Mart Woes – Nearly 5,000 lawsuits were filed against Wal-Mart in 2000.  According to USA Today, it is the second most-sued entity in the country after the federal government.

Wal-Mart Plus - On September 11, 2000 Wal-Mart sold 6,400 American flags.  On September 11, 2001 Wal-Mart sold 116,000 American flags.

Time Magazine

Ever notice when you blow in a dog's ear he gets mad, but when you take him for a ride in the car he sticks his head out the window?

When my mother-in-law turned 60 I encouraged her to stay in shape by walking five miles a day.  She's now 81 and we have no idea where she is.

Can anyone please tell me why Kamikaze pilots wore helmets?

Everyone has a photographic memory.  Some just don't have film.

I just got lost in thought.  It was unfamiliar territory.

Those who live by the sword get shot by those who don't.

It's hard to understand how a cemetery raised its burial cost and blamed it on the cost of living.

Something Yogi Berra would say:  "Latest survey shows that 3 out of 4 people make up 75% of the world's population.

Something I would say:  "I started out with nothing and I still have most of it."

Bumper sticker:  "Honk, if you love peace and quiet."  


President George W. Bush signs the Railroad Retirement and Survivors Improvement Act of 2001.  - On December 21, 2001 President Bush signed legislation that will allow, for the first time, a $15 billion railroad retirement fund to be invested in stocks and bonds.  President Bush signed the Railroad Retirement and Survivors Improvement Act of 2001 with neither fanfare nor comment.   The bill will cut payroll taxes for rail companies; allow workers with 30 years of service to retire at age 60, down from 62; and increase benefits for surviving spouses of railroad retirees by an average of $300 a month. The legislation will move $15.6 billion out of lower-earning Treasury bonds and into private markets.

For employers, the legislation eliminates the supplemental tax, which is currently 26 cents per man-hour worked and phases in a reduction of the employer portion of the 16.1% Tier II tax.  The tax is reduced to 15.6% in 2002, 14.2% in 2003 and 13.1% in 2004.  The Tier II tax reductions depend on a specific favorable ratio of assets to benefits in the system.   The RRB web site is http://www.rrb.gov in case you wish to review.

Monetary Threshold of Railroad Accidents Reporting Increased – From the Federal Register for December 26, 2001 , page 66346.   The Federal Railroad Administration final rule establishes at $6,700 the monetary threshold for reporting railroad accidents/incidents involving railroad property damage that occur during calendar year 2002.  The monetary threshold of $6,700 for calendar year 2002 represents an increase of $100 over last year’s monetary threshold of $6,600.

Short Lines Safety Improvements  -  Safety improvements were noted by the ASLRRA for the period, January, 2001 through August, 2001.  Comparing that period with the same 2000 period, fatalities are down from six to zero, non-fatal injuries are down from 845 to 675, employee days absent are down from 13,571 to 8,325, train accidents are down from 361 to 345 and FRA's rate for ASLRRA member railroads is down from 6.26 to 5.25.  Congratulations to the short lines.

Short Lines New Organization  -  Some forty-plus short lines form the Association of Regional Railways of Canada. The short lines organized to better lobby for, among other things, changes in federal transportation law that would give smaller railroads more running rights over CN and CP lines.  ARRC spokesman Bob Ballantyne, a 40-year veteran of CP, stated, "As the short line industry has matured, some of its views and interests have started to diverge from the two Canadian Class I's.   Certainly, some of the short lines felt it was now time to have their own association."

Legislation  -  Legislation dubbed RIDE-21, a massive rail infrastructure bill introduced by Rep. Don Young (R-Ala.) lost momentum the latter part of last year, leaving short lines frustrated once again.  The bill called for $71 billion for new high-speed passenger/commuter and freight rail improvements.  Of that total, some $35 billion would come in the form of loans as part of the FRA-managed Rail Rehabilitation and Infrastructure Financing (RRIF) program.

Short Line Purchases  -  Genesee & Wyoming, Inc. purchased South Buffalo Railway for $33.1 million in cash and $3.3 million in assumed liabilities in an effort to increase its coal hauling business.  Located on the shores of Lake Erie, South Buffalo operates over 52 miles of owned track in the Buffalo, N.Y. region with connections to Class I carriers CSX, NS, CN and CP.  An agreement has also been signed to acquire Emons Transportation Group for $18.5 million in cash and the assumption by G&W of roughly $10.9 million in debts.

RailAmerica News  -  Congratulations to RailAmerica for being selected by Forbes magazine as one of the 200 best small companies in America . RailAmerica ranked 85 on the list, an improvement over last year's 103rd ranking.    This past year also saw RailAmerica's acquisition of States Rail companies for $90 million, of which $70 million will be in cash and assumption of debt, and approximately $20 million in RailAmerica common stock, as well as their purchase of Park Sierra Corporation for $23 million of common stock to Park Sierra shareholders.  RailAmerica completed a private placement of its common stock in the aggregate amount of approximately $54.3 million.  Investors in the private placement included Capital Research & Management, Putnam Investments, and Banc of America Capital Management among others.

ASLRRA Marketing Awards  -  Congratulations to the Heart of Georgia Railroad, the Philadelphia, Bethlehem and New England Railroad and the Toledo, Peoria and Western Railway, recipients of the 2001 ASLRRA Marketing Awards

Fate or Chance?  -  Mansfield , La.., Oct. 29, 2001 .  A Benson man, Louis Rascoe, age 54, was killed when he drove into the path of a train at the same rural Desoto Parish crossing where his wife, daughter and grandchild died in a similar accident four years ago.  State Police Sgt. Howard McKee said, "There is no physical evidence showing why Rascoe drove in front of the train."

Rail Accidents Drop  -  FRA Safety Chief issues release as to why rail accidents have dropped by half since 1990.  George Gavalla credits a massive public safety campaign, stricter enforcement of laws against motorists, crossing closures and installation of more warning devices with reducing railroad accidents from 31,175 in 1990 to 16,891 in 2000.  That translated into 13.93 accidents per one million train-miles last year compared to 26.82 per million train-miles in 1990.

Regional Railroad Purchased  -  In the last quarter of 2000 CN purchased Wisconsin Central's 2,800 route miles of track and trackage rights, becoming CN's sixth operating division.  WC shareholders received $17.15 per share for their stock.  


Quoting Shakespeare:   "To settle or not to settle, that is the question."   Well, that might not be the exact quote, but you get my drift.

The Self Insured Retention (SIR/Deductible) can amount to a lot of money for some short lines.  SIR's run anywhere from zero to several hundred thousand dollars.   It is understandable if a railroad does not want to voluntarily settle a claim within their SIR, especially when they do not consider there to be any liability on the part of the railroad and/or their employees.  Granted, a lot of smaller incidents will merely go away.  However, if the incident is serious enough to begin with or subsequent developments indicate that an incident/claim will not go away, i.e., formal claim made by the victim, attorney employed, or suit filed, it becomes time to evaluate our position from an economic viewpoint.  No matter what our personal feelings are concerning the moral legitimacy of the claim, the bottom line is we need to make decisions that are in the best economic interest for the insured railroad and for the insurance company.  Sometimes that is difficult to do.

We have two choices when it becomes obvious that a claim is being pursued.   One, take a hard stance and decline to negotiate a compromised, reasonable settlement consistent with the facts and injuries.  Two, evaluate the claim and try to negotiate a compromised, reasonable settlement consistent with the facts and injuries.

Possible results from the first option:  See the lawsuit through and win or lose it.  If the case is lost, we are then stuck with the verdict and legal expenses.  A verdict against the railroad and legal costs can be much greater than the SIR.  A verdict in favor of the railroad and legal costs in trying the case could still exceed the SIR or be greater than the amount for which it could have been settled .

Results from the second option:  The incident/claim is settled within the SIR and any future costs or exposure are eliminated.

Often the second option is the best choice.  However, keep in mind that this option becomes viable when we know from the beginning that the incident/claim is serious or it is not going to go away and will have to be addressed at one time or the other.  Remember that old Fram Oil Filter commercial, "Pay me now, or pay me later."  Unfortunately, experience has taught me that this phrase has quite often applied to my subject matter if I chose the first option. 

Argument has been made to this effect:  "If we settle with this person, word will get out and cause future claim problems."  These words are especially quoted if it is an injured railroad employee.  In rebuttal of that argument, voluntarily settling an obvious claim lets the employees know the railroad cares for their employees, the settlement can be kept confidential, and it eliminates a large publicized jury verdict that everyone will hear about.

Medical management of an FELA claim is important for several reasons.  Your goals are to see that the employee receives the best medical treatment available because that is obviously in the employee's best interests as well as yours.  If the railroad maintains control of the case from a medical viewpoint it increases the chances of holding the claim in line for a direct settlement and at the same time keeps an attorney from ushering the employee to a doctor who may be more concerned with building the dollar value of the claim rather than the employee's recovery.   Exhibiting care and concern about an employee's medical condition should bode well with the employee's attitude toward their employer.

Railway Claims Services, Inc. has many qualified claims managers with many years of experience investigating, evaluating and negotiating claims of all nature.  We stand ready to assist you in all three endeavors and assist in assuring the best possible outcome of an incident/claim.  Please see our modes of contact at the end of this newsletter.

My quarterly topic next time will expand and pertain to claim negotiations, with or without an attorney's involvement. 

Stay tuned.

POINTS OF LEGAL INTEREST                      

Finley v. Norfolk and Western Rwy. Co., 540 S.E.2d 144.  Finley filed suit for a back injury allegedly caused while attempting to throw a switch.  Jury found that Norfolk & Western Railway was not negligent and returned a verdict in favor of the company.  Plaintiff also lost on appeal. 

Rogers v. Norfolk Southern Corp., 538S.E.2D 664 (S.C., App. 2000, rehearing denied 2001).  Following a $3,000,000 verdict (30% attributed to NS), NS appealed.  Asst. track supervisor Rogers was injured while inspecting a hole on the property of U.S. Silica Co. (70% attributed toward verdict).  Herniated disc surgery.  Appeal court did not see any negligence on the part of NS and confirmed that the trial court erred in denying NS's motion for judgment notwithstanding the verdict.  Trial court's decision reversed and NS exonerated of any negligence in the judgment.

Louisiana Federal Court Upholds $850 Million Punitive Award for New Orleans Residents in 1987 Tank Car Fire Incident.  A Louisiana appeals court upheld an $850 million punitive damage award to more than eight thousand New Orleans residents and eight companies who lived or operated near a 1987 railroad tank car fire.  Original verdict was $2 billion and later reduced to $850 million. Subsequently, CSX and the plaintiffs agreed to a settlement expected to cost roughly 17 cents a share.  While no specific amount was announced, CSX has approximately 213.2 million shares outstanding, which indicates the total payment will be roughly $36 million dollars, a large amount but certainly no where near $850 million.

U.S. Court of Appeals for 7th Circuit, in Brown v. Illinois Central Railroad Co., ruled that a railroad worker can not sue for disability discrimination under the ADA .  The claim must be arbitrated under the Railway Labor Act, 45 U.S.C., Section 151 et seq., which requires arbitration of all disputes about working conditions.  Plaintiff was a railroad worker who was required to be available for work seven days a week, 24 hours a day.  He was diagnosed with "schizoaffective" disorder and demanded a five day work week with two scheduled off days.  The railroad refused to accommodate him and he sued under the ADA .  The court ruled in favor of Illinois Central Railroad and arbitration.

Pennsylvania Superior Court Affirms order Enforcing Oral Settlement Agreement.   Joseph P. Putcinello vs. Consolidated Rail Corp., Superior Court of Pennsylvania , Case No. 1831 WDA 2000.  Plaintiff sustained multiple injuries while working as a carman for Conrail.  Per the court's standing practice, conciliation was held a week before the trial and a settlement was verbally agreed upon at that time.  Plaintiff refused to sign the release.  Conrail filed a petition to enforce the settlement agreement and petition was granted.

MoPac Brakeman/Switchman Blames Ulnar Nerve Neuropathy on Railroad Career – Texas Appeals Court Finds SAA Claim Established Despite Lack of Proof That Any Particular Device Was Defective.

Plaintiff's employment began on March 27, 1978 .  In 1990 he began to experience intermittent pain in his right arm, but did not see a physician until February 18, 1994 resulting in a diagnosis of progressive neuropathy.  Daily routine job activities were involved with assertion that certain percentages of the switches were hard to throw as well as handbrakes hard to set and release.  The jury awarded $500,000 for lost earning capacity, $15,473.10 for past medical expenses and $10,000.00 for future medical expenses.  All withstood appeal with the exception of future medical expenses.  Final judgment was $515,473.10.

Machinist Develops Cancer and Dies Following Long-term Exposure to Benzene and Other Cleaning Chemicals - $750,000 Mediation Settlement in West Virginia .  Plaintiff began his machinist employment with Norfolk & Western Railway in 1972.  Exposure to heavy concentration of diesel exhaust as well as benzone-contined solvents were his main complaints.  Plaintiff developed multiple myeloma in 1993 and died three years later.   During mediation case settled for $750,000.00.


The last two quoted cases above are the lead-in to this topic.

Occupational illnesses have cost the Class I railroads millions of dollars over the past 20 years or more.   Hearing loss, carpal tunnel syndrome, asbestosis, toxic chemical exposure, etc. have kept a lot of food on the tables of FELA Specialist Attorneys.  Railroads are now on notice and everything possible should be done to, first, prevent legitimate occupational illnesses from occurring and, second, go on record with improvements and changes in order to better defend this type of claims/lawsuits.

In regards to hearing loss claims, be sure your employees are provided with several different types of earplugs and establish a hearing loss program to address all issues. It is important to have rules regarding wearing hearing protection, and it is important that these rules be enforced.  Failure to enforce a rule that is in place could be considered negligence on the part of the railroad.  In regards to carpal tunnel, install any protective or corrective device where indicated and take all steps to address, make safer and improve on any repetitive situation.  In regards to toxic chemicals, don't use them unless it is a necessity.  If that's the case, be sure all chemicals are properly labeled and availability of protective equipment and instructions on how to handle the chemical, as well as instructions on what to do if accidental contact occurs.  Asbestos problems have subsided somewhat; however, be sure there is none lingering at any of your premises.   Inhalation of diesel fumes and stress are up and coming complaints for FELA specialists and we must give thought and insight on how to remove any possible lurking liability that can be removed or corrected in all of these occupational illness categories. The least expensive accident to handle is one that never occurs.

RCSI welcomes your input.  If you have any questions or comments of interest to our industry, please contact either Dave Gardner at (731) 967-1796 or FAX your message to (731) 967-1788 or Mike Redden at (615) 754-0518 or FAX your message to (615) 758-3483.

Editors Note:  If you prefer to receive future editions of this newsletter via email please send an email with that request.  Email distribution is quicker and saves postage and handling.  Mike Redden .

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   38351

(615) 754-0518 FAX (615) 758-3483    ---- Email –  mike_redden@railway-claim-services.com

800-786-5204   FAX (731) 967-1788    ---- Email -  dave_gardner@railway-claim-services.com