Volume 14 Issue 4                                                    October 2007


RAILWAY CLAIM SERVICES, INC.                     Our 20th Year of Service







Ø      GONE IN 26.4 SECONDS? 











Railway Claim Services , Inc. (RCSI) can perform background checks for potential job applicants.  RCSI can also check injury histories for employees.  For further information contact Brenda Cox of RCSI at 731-967-1796 , Fax 731-967-1390 , or via email at coxb@railway-claim-services.com. 

Background checks are required for new employees under the Haz Mat Security Plan implemented by CFR Part 172, Hazardous Materials: Security Requirements for Offerors and Transporters of Hazardous Materials.  This rule states in part, “No later than the date of the first scheduled recurrent training after March 25, 2003 , and in no case later than March 24, 2006 , each hazmat employee must receive training that provides an awareness of security risks associated with hazardous materials transportation and methods designed to enhance transportation security”.

If your railroad has not yet implemented 49 CFR Part 172, Railway Claim Services can assist. 


According to figures compiled by the Federal Railroad Administration for January through July, railroads reported 7,076 incidents of all types - from train derailments to yard accidents and trespassers killed on tracks - down 8.6 percent from the same period in 2006.

The frequency of accidents or reportable incidents fell to a 15.32 rate for the first seven months of this year, down from 16.46 a year earlier.  More striking than a single year's gain is that the incident rate has fallen steadily since 2000, even while train miles grew 9.5 percent.

Despite almost steady traffic increases until this year, the incident rate went consistently the other way - falling from 23.09 in 2000 to 17.72 in 2005 when traffic was surging, and then declining further the past two years.

Still, rail operations can be deadly for some, and carriers reported 475 deaths for the first seven months of this year. Of those, 266 were deaths of trespassers on railroad tracks or other rail property, illustrating that trespassing remains a widespread problem for railroads.  Another 191 deaths so far this year were from grade-crossing accidents - vehicles on tracks.

Together those categories accounted for 96 percent of all fatalities through July, and hundreds more were injured. Yet all of those categories showed improvement from last year and the years before freight surged.


U.S. railroads are reducing their ranks at many locations, laying off a small number of workers, putting others on reduced-time status and slowing recruitment of trainees to fill vacancies as part of this year's unexpectedly long slowdown in traffic levels.

The industry leader, Union Pacific Railroad, had 257 workers on furlough as of October 1, with another 166 listed as reserves. Railroads say these reserves are on call to work, in a status that keeps their benefits flowing.  UP is mainly handling its reduced labor need through cuts in new hires to replace those who leave the company.

UP now expects to hire 1,300-1,400 new workers this year, while it looks for attrition to shrink about 2,200 positions.  UP said its work force averaged 50,755 employees in the second quarter, down about 1 percent from a year before.  

UP's Western U.S. rival, BNSF Railway, reported 41,595 employees at the end of June, down 1.8 percent or 762 positions from the same point in 2006. BNSF has put few on outright layoffs, but has more on a reserve status.

Through the first 37 weeks of this year, the freight slump has reduced U.S. railroad-originated traffic from last year's levels by 3 percent in bulk-cargo carloads and 1.9 percent for Intermodal units.  This decline represents 460,000 carloads and another 170,000 Intermodal containers or trailers. Fewer trains translates into fewer crew members.

There is also another factor affecting railroad employment levels. Carriers this year are widely boasting of gains in service levels - average velocity, less terminal dwell time, more on-time service and even some gains in guaranteed cross-country delivery times. This translated into more freight hauled per worker-hour, and less need to have as many workers.

CSX Transportation stated in their second quarter earnings filings that CSX paid more money for labor costs partly due to performance-based payouts, but said "the increases were partially offset by productivity gains from improved operations and lower volume, which resulted in a reduction of train crews."  CSX said that its train velocity increased 4 percent to 20.4 miles per hour, while the average number of relief crews called per day improved by 8 percent to 58 per day from 63 a day in the 2006 period when congestion was more of an issue.

Some efficiency gains no doubt come because softer demand and fewer trains mean less congestion. But some gains also reflect targeted spending by railroads.


In the past few weeks, RCSI has been involved in six trespasser incidents, wherein trespassers were struck by trains.  In four of these incidents, the trespasser was laying between the rails as the train approached.  When I received the telephone report of one of these incidents, I jokingly remarked to the General Manager making the report, “The engineer thought it was a trash bag, didn’t he?”  “How did you know that?” he replied.

There were 530 trespasser fatalities in the United States in 2006, 54% of which involved rail operations.  50% of all trespasser deaths are loiterers, many of which are many involve alcohol and/or drugs, and/or socializing.  Interestingly 15 to 20% of all trespasser fatalities are suicides.

I’ve been investigating railroad accidents for over thirty years.  In that time, I cannot estimate the number of trespasser accidents in which I’ve been involved, but one thing stands out in my mind about each one.  When the engineer, conductor, brakeman or fireman (I told you I have been doing this for a while) is interviewed, I almost often hear, “I thought it was a trash bag.”  Occasionally, I might hear the dead dog, or dead deer story, but if memory serves me correctly, at least 80% of the time it is the dreaded TRASH BAG.  That makes me wonder how often people will go out of their way to dump a loaded trash bag on the railroad track, rather than just throw it in a dumpster.

I said that RCSI has had three recent incidents involving trespassers between the rails.  In three of the four instances, we heard the Trash Bag story.  Three of four, that is 75%!  In one case, the crew noticed a tennis shoe at the last minute.  In another, they noticed a hand.  In the third, the Trash Bag raised its head.  Two of these resulted in fatalities.  One may make it.  The doctors aren’t sure just yet.  As you may have guessed, drugs and/or alcohol were involved in all four cases.

I am not suggesting that you require your train crews to place their train in emergency every time they see something between the rails.  What I am suggesting is that whenever they see a trash bag between the rails, there is a possibility that what they are seeing ain’t trash.   If you have comments, questions, or further insight into this I would like to hear from you.  If you want your comments added to the next RCSI Newsletter we will try to do so; if not we won’t.  My contact information is at the bottom of this email.  Dave Gardner , Operations Manager, Railway Claim Services , Inc.


Beer is proof that God loves us and wants us to be happy. Benjamin Franklin

What soberness conceals, Drunkenness reveals.  Unknown Author


According to the National Insurance Crime Bureau’s (NICB) annual “Hot Wheels” report, 1.2 million motor vehicles were stolen in 2006.  That is one vehicle stolen every 26.4 seconds.

While those figures indicate a 3.5 percent drop from last year’s numbers — and the third annual decrease in a row — it still adds up to some big losses for insurance companies. The NICB’s report stated that if each vehicle loss is estimated at $6,649 (FBI’s evaluation of average stolen vehicle cost), which would peg the total loss at $7.9 Billion in 2006 alone (just in vehicle value).

As it did in 2005, California ’s vehicle theft rate once again ranked highest in the nation. In fact, California dominated the other 49 states. For instance, while California reported more than 242,000 stolen cars last year, the next top-ranking states ( Texas , Florida , and Arizona ) combined for a total of 226,000 stolen cars between the three of them.

But times could be changing for the Golden State ; its car thefts dropped by almost six percent when compared to 2005’s figures.  The NICB also examined several fraud schemes it says contributes to the high rates of theft, especially in those states on the border of Canada and Mexico . They reported several schemes, such as exporting cars to other countries, owner give-ups in which a false theft report is made in order to collect insurance proceeds, and chop shops, as contributing to the problem.

For 2006, the most stolen vehicles* in the nation were:

1. 1995 Honda Civic

2. 1991 Honda Accord

3. 1989 Toyota Camry

4. 1997 Ford F-150 Series Pickup

5. 2005 Dodge Ram Pickup

6. 1994 Chevrolet C/K 1500 Pickup

7. 1994 Nissan Sentra

8. 1994 Dodge Caravan

9. 1994 Saturn SL

10. 1990 Acura Integra

* This report reflects only stolen vehicle data reported to National Crime Information Center in 2006. No further filtering of information is conducted, i.e., determining the total number of a particular make and model currently registered in the U.S. for comparison purposes.  


Editors Note:  I am sorry, but I had to include the following, as reported in the September 14, 2007 edition of Business Insurance.  As we all know, there is more to any verdict than gets reported in the short news stories we see, and I am sure that is the situation here.  I will say no more, but leave to the reader to consider this one.

BOSTON —The Appeals Court of Massachusetts has awarded workers compensation death benefits to the widow of a 50-year-old mechanic who killed himself after being terminated.

The court in The Gilbert Dube’s Case found that the claimant was entitled to benefits because her husband’s Dec. 18, 2001, suicide was causally connected to a work-related back injury and pain that led to a deteriorating mental condition.  An administrative judge and the Industrial Accident Reviewing Board both found in favor of the claimant, but the insurer in the case, Professional Liability Insurance Co., appealed.

The insurer argued, among other things, that the judge and board should have found that the termination was independent and broke a causation chain between the employee's back injury and his suicide.  The appeals court disagreed. It found that suicide is compensable when it is causally related to a work-place injury despite intervening circumstances.


According to the September 10 issue of Business Insurance, a prominent Mississippi trial lawyer and two state judges have been sentenced to prison for bribery schemes that included fixing a local bank’s bad-faith claim against insurer United States Fidelity & Guaranty Co.

Jackson, Mississippi-based Chief U.S. District Judge Henry T. Wingate last Friday sentenced Paul S. Minor, a past president of the Mississippi Trial Lawyers Assn., to 11 years and prison and fined him $2.7 million.

The judge also sentenced Walter W. Teel, a former state chancery court judge, to five years and 10 months in jail and John H. Whitfield, a former state circuit judge, to nine years and two months.

A federal jury in Jackson convicted the three men in March on all 14 charges against them, including bribery, racketeering and fraud.

According to federal prosecutors, Attorney Minor bribed Judge Teel in several ways, including guaranteeing and then paying off a $25,000 line of credit at a Biloxi , Miss. , bank as well as paying to defend Judge Teel in an earlier investigation into possible misappropriation of funds.

While accepting these favors, Judge Teel was presiding over a bad-faith lawsuit filed by one of Attorney Minor’s clients, People’s Bank of Biloxi, against USF&G, its general liability insurer. The dispute arose over the insurer’s refusal to defend the bank in suits brought by mortgage borrowers.

Judge Teel pressured USF&G to settle, suggesting in one settlement conference that he would be inclined to award punitive damages to People’s Bank if the suit went to trial, prosecutors charged. Soon after, USF&G agreed to settle the case for $1.5 million, unaware of the financial relationship between the judge and Attorney Minor, prosecutors alleged.

USF&G later sued People’s Bank to recover the settlement, citing the federal bribery and fraud indictment of Attorney Minor and Judge Teel.

Judge Whitfield, also sentenced to prison on Friday, was convicted of fixing a personal injury case that resulted in a $3.75 million damage award to an oil rig worker represented by Attorney Minor’s law firm in a negligence suit against the rig worker’s employer.


According to the Insurance Information Institute, in 2005, dog bite claims accounted for 15% of liability claim dollars paid under homeowners’ insurance policies.





The 30th Annual General Claims Conference in Williamsburg , Virginia , September 26-28, 2007 , hosted by Norfolk Southern, was a resounding success.  The conference was held at Kingsmill Resort and Spa which is located along the historic James River .  The theme was “Back to Basics – Even Old Dogs!”  Next year will see a return to Canada with host railroad CN.  Details will be in subsequent newsletters.  


On September 24, BestWire Services reported that two claims adjustors are suing American International Group Inc. (AIG), claiming that they have been denied overtime pay and seeking to expand their suit to include other AIG adjustors.

The lawsuit, a collective action filed in the U.S. District Court in Camden, N.J., under the federal Fair Labor Standards Act, asserts that AIG (NYSE:AIG) intentionally misclassified employees as being exempt from federal overtime requirements since January of 2002. The plaintiffs, Sandy Dorofy and Angela Bonett, work in an AIG office in Mount Laurel , N.J.  

There have been several cases involving claims adjustors and overtime in the past few years. A federal appeals court in October, 2006 ruled in favor of Farmers Group Inc. in a class-action suit concerning overtime, which meant the insurer didn't have to pay 1,039 current and former insurance adjusters a total of $52.5 million in overtime pay awarded by a lower federal court (BestWire, Oct. 30, 2006 ). In 2004, a lawsuit filed by 2,402 adjusters in California resulted in a payout of $210 million plus interest by Farmers, which had to pay an additional $40 million when a federal judge found it didn't immediately change its overtime practices (BestWire, Sept. 8, 2004 ).

According to an A.M. Best company report, American International Group Inc. is the largest underwriter of commercial and industrial insurance in the United States , with more than $74.1 billion of net premium written in 2006.

American International Group, a member of American International Group Inc., currently has a Best's Financial Strength Rating of A+ (Superior).


Problems collecting for damages?  Increase your chances of collecting that money, or reducing the total you are legally obligated to pay.  All without the cost and delays where litigation is involved.  Let Railway Claim Services , Inc. handle these collection issues for you.  You pay nothing if RCSI fails to collect or fails to reduce the bill for the submitted loss.  Email or call Randal Little or Dave Gardner for further information.  There is no cost if we are not successful.


Railway Claim Services , Inc. maintains a website containing useful information for our industry.  If you haven’t visited our website recently, you may have missed some of the content recently added.

The Code of Federal Regulations, TITLE 49—Transportation, Subtitle B--OTHER REGULATIONS RELATING TO TRANSPORTATION, CHAPTER II--FEDERAL RAILROAD ADMINISTRATION, DEPARTMENT OF TRANSPORTATION.  Please visit our website and click on the following link.  http://www.railway-claim-services.com/waycar.htm  

Railway Claim Services ’ website has the complete General Code of Operating Rules posted for your reference.  http://www.railway-claim-services.com/safety_first.htm

RCSI also has the entire test of the FELA posted on our website:  http://www.railway-claim-services.com/waycar.htm

Also, The Occupational Safety & Health Act of 1970 is available at:  http://www.railway-claim-services.com/waycar.htm

As a part of our ongoing efforts to provide RCSI clients with information vital to the safe and efficient operation, RCSI’s website contains the complete text of the Emergency Response Guidebook:  http://www.railway-claim-services.com/waycar.htm

RCSI is always trying to upgrade our website and make it a place for you to find the information you need.  If you have any suggestions, comments, or questions, please feel free to contact me at your convenience.  We appreciate your feedback.


Crossings — KCS Train hits tractor-trailer hauling Caterpillar Bulldozer — Texas Jury attributes most of the liability to the trucking company.  On March 17, 2006, a KCS train struck a tractor-trailer that was hauling a D9 Caterpillar bulldozer. Two KCS workers sustained injuries, and later filed suit against KCS and Holt Cat, Ltd., owner of the tractor-trailer.  KCS and Holt Cat asserted cross-claims against each other for property damage.  According to KCS and its employees, the Holt Cat driver improperly blocked the tracks.  Holt Cat argued that the railroad employees failed to bring the train to stop once they observed the tractor trailer on the tracks.  Further, according to Holt Cat, its tractor-trailer was stuck on the tracks because the crossing was improperly maintained by KCS.  One railroad worker settled with both defendants for confidential sums.  The second worker settled with HoIt Cat and dismissed KCS . The cross-claims proceeded to trial, prior to which the parties stipulated that the railroad’s damage was $572,418 and that Holt Cat’s damage was $106,853. The jury returned a verdict which apportioned fault 71% to Holt Cat and 29% to KCS. Everett C. Gladney, Ray Devones v. Holt Cat, Ltd.; The Kansas City Southern Railway Co., U.S. District Court, Eastern District of Texas, Case No. 2:06-00127.   Paul O. Wilkes of Hunton & Williams, Dallas , TX for KCS .


FELA -  Alabama conductor claimed hand-hold failure caused injury.  The Jefferson County, Alabama Circuit Court Jury saw proof of old break, and returned a verdict in favor of Norfolk Southern Railway Company.  On June 23, 2004 Thomas C. Vickery, a 52-year old conductor, claimed that he attempted to mount a rail car when the crossover hand-hold failed, causing his body to twist while still trying to hang on to the car.  Vickery claimed a safety appliance defect, and has not worked since the incident.  The NS investigation after the accident revealed a break that most likely occurred prior to this incident.  Multiple medical visits and treatments ensued, to include cervical fusion.  Lumbar surgery was also recommended but declined.  Following an MRI of both shoulders, arthroscopic surgery was performed on the left shoulder, with which the plaintiff was not satisfied.  Continued medical treatment preceded and continued after the surgeries.  The case was tried, with a returned verdict in favor of the Defendant returned on May 22, 2007.   Steven A. Tucker of the Cabaniss, Johnston, Gardner, Dumas and O’Neal firm represented NS.  Thomas C. Vickery vs. Norfolk Southern Railway Company, Circuit Court of Jefferson County , Alabama .

FELA Malpractice against his former Attorney - Union Pacific Conductor says $350,000 settlement only covered up counsel’s mistakes.  In 1998 the plaintiff was working for Union Pacific as a conductor when he fell while on duty. According to plaintiff, he suffered permanently disabling injuries to his shoulder and arm. He retained the defendants, who filed suit under FELA in Colorado state court. In that action plaintiff asserted that he had suffered lost income of $929,000 as well as general damages.  Eleven months after the initial injury, plaintiff suffered injury to the lower back. The railroad took the position that the second injury precluded plaintiff from continuing to work. The case went to trial in June 2000 and settled during trial for $350,000.  Plaintiff subsequently commenced a malpractice action against defendants claiming that defendants failed to properly prepare for trial and failed to have a crucial witness (a neurosurgeon) on hand to testify regarding his back injury. The plaintiff claimed that defendants encouraged settlement to cover up the lack of preparation for trial.

The court granted summary judgment to the defense on the basis that the settlement barred any claim, but an intermediate appeals court reversed and remanded for trial.  During trial the defense asserted that the settlement was reasonable inasmuch as plaintiff could not state the reason that he fell and that he agreed in his deposition that the decision to wear goggles in the middle of a blizzard contributed to his fall.  According to the defense, plaintiff knowingly and voluntarily accepted the risk that he could have received more, less or nothing had he taken the case to trial. Finally, the defense asserted that if plaintiff was entitled to any recovery, the recovery should be reduced by the $60,000 discount in attorney fees which was given. The jury returned a verdict which found that although defendants were negligent, that plaintiff suffered no damages as a result. Keith White v. Anonymous, Colorado , venue was unreported.  


RCSI welcomes your input.  If you have any questions or comments of interest to our industry, please contact either Dave Gardner or Randal Little at (731) 967-1796 or FAX your message to (731) 967-1390.

Visit the Railway Claim Services , Inc. webpage 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?

For further information contact:


dave_gardner@railway-claim-services.com or randal_little@railway-claim-services.com


Corporate Offices at:   52 South Main Street     Lexington , Tennessee   38351


Phone:  800-786-5204, Fax: 731-967-1390 or visit us on the Web at www.railway-claim-services.com


Railway Claim Services , Inc. has offices THROUGHOUT THE UNITED STATES.