RAILWAY CLAIM SERVICES

ON TRACK WITH RAILWAY CLAIM SERVICES, Inc.

Volume 7 Issue 4 JULY 2002

Railway Claim Services, Inc. (RCSI) extends a special thanks to the Canadian Pacific Railway Company (CPR) for allowing RCSI to assist them following a derailment on January 18, 2002 at Minot , North Dakota . CPR’s 31-car derailment included ten loads of Anhydrous Ammonia tank cars that were damaged and their contents released. The derailment and subsequent release temporarily closed the entire city of Minot and affected 30,000 plus residents, including several hundred personal injuries and one death. Immediately after the derailment the derailment CPR rose to the occasion and is to be commended for their compassionate and fair handling of the Minot residents. CPR is a Class I railroad as well as a first class railroad. RCSI appreciates the courtesies extended to us by CPR and their claims department personnel.

During the claim handling process RCSI provided 27 different claim people with over 600 years of claims experience, most of which occurred on various railroads. RCSI presently has two claims managers still working at the temporary claim center. For me, it was a pleasure having the opportunity to work with and for the CPR claims people and our RCSI folks from all over the country, including Colorado, Montana, Illinois, New York, Georgia, West Virginia, Louisiana, Missouri, Alabama, Minnesota, Washington, Tennessee, Indiana, New Jersey, et al. Most of the claims arising from this accident have been settled.

Another major derailment involving hazardous materials occurred on Canadian National Railway/Grand Trunk Railroad (CNIC) on Monday, May 27, 2002 (Memorial Day) in Potterville , Michigan . Four cars of the derailment contained highly explosive propane gas and the entire 2,200 population of Potterville were evacuated from their homes until Friday, May 31^st. Fortunately, the cars did not erupt, the contents were safely disposed of, or were transferred to trucks and there were no injuries or fatalities. Railway Claim Services, Inc. provided the subsequent claim handling. Almost all the evacuation claims have been settled. Initially, Railway Claim Services, Inc. used 10 claims managers. Again, a Class I railroad stepped forward and extended their assistance and benevolence to the ones affected by this derailment. Both CPR and CN have in-house claim departments but for sound business reasons elected to employ Railway Claim Services, Inc. RCSI considers it a privilege and humbling experience to have the opportunity of working for and with the very capable claim departments of these two railroads. I feel confident in commenting that RCSI employs some of the finest and most experienced claims people in this country.

In recent years Railway Claim Services, Inc. has handled claims arising from a number of high profile train accidents, including accidents in Texas, Illinois, Vermont, Indiana, Nevada, Florida, Wyoming, Alabama, Tennessee, Wisconsin, Montana, North Dakota, Michigan, and at other locations. Personally, I have worked twelve such derailments in my career, as well as three on-site Amtrak derailments. From a fatality and injury standpoint the most serious freight train derailment occurred on the L&N Railroad in Waverly, Tennessee in 1978. As with the CN derailment in Michigan , the Waverly derailment involved two propane gas tank cars. Unfortunately, they unexpectedly erupted causing the death of 16 people, including the police and fire chiefs. There were dozens of personal injuries, most of which consisted of 2^nd and 3^rd degree burns. RCSI is located in Lexington , Tennessee , approximately 40 miles from Waverly. Had RCSI been in existence at that time, L&N sure could have used their help because L&N had to have approximately 15 claims people working on that derailment for several months. There were eight target defendants. Several years later the last case was settled. No case ever went to trial.

The worst Amtrak derailment I worked occurred on the CSX in the mid nineties in Mobile , Alabama when a wayward barge struck a bridge, knocking the track out of alignment and a few minutes later Amtrak plummeted into the bayou waters, killing 47 occupants of the train. There are no words to describe the recovery scene.

Hopefully, no one will ever need Railway Claim Services, Inc.'s catastrophic claims handling services; however, RCSI professional claims managers are on call, ready, and prepared if the need ever arises in the railroad industry.

"I pledge allegiance to the flag of the United States of America and to the Republic for which it stands, one nation, Under God, indivisible, with liberty and justice for all."

I've learned that you can tell a lot about a person by the way he/she handles three things: a rainy day, lost luggage, and tangled Christmas tree lights.

I've learned that you shouldn't go through life with a catcher's mitt on both hands. You need to be able to throw something back.

I've learned that if you pursue happiness, it will elude you. But if you focus on your family, your friends, the needs of others, your work and doing the very best you can, happiness will find you.

Modesty is the art of encouraging people to find out for themselves how wonderful you are. Anonymous

Experience…is simply the name we give our mistakes. Oscar Wilde (1854-1900), writer

When someone sings his own praises, he always gets the tune too high. Mary H. Waldrop, writer

Life is a compromise of what your ego wants to do, what experience tells you to do, and what your nerves let your do. Bruce Crampton, Professional golfer

At my age and subsequent to two heart surgeries and cancer, if I wake up in the morning it's time to celebrate. Me.

The happiest of people don't necessarily have the best of everything; they just make the most of everything that comes along their way. Author Unknown.

1. Be ye fishers of men. You catch'em, He'll clean'um. 2. Don't wait for 6 strong men to take you to church. 3. Forbidden fruits create many jams. 4. God doesn't call the qualified; He qualifies the called. 5. The task ahead of us is never as great as the Power behind us. 6. We don't change the message. The message changes us. 7. Most people want to serve God, but only in an advisory capacity.

For sale by owner – Complete set of Encyclopedia Britannica, 45 volume, excellent condition, $1,000.00 or best offer. No longer needed. Got married last weekend and wife knows everything.

Benign - What you be after you be eight. Bacteria - Back door to cafeteria. Barium - What you do with dead folks. Cesarean Section - A neighborhood in Rome . Catscan - Searching for the cat.

Parking Class I railroad cars: Entrepreneurial short lines are cashing in on Class I railroads' storage needs during sluggish times. As traditional storage space for idled cars grows scarcer, short lines and some coal producers are creating income by parking rail cars at their location. BNSF (4,000 cars) and GE Capital Rail Services (20,000 cars) are two of the largest clients needing this service.

RailAmerica News: RailAmerica completed three transactions to sell its Georgia Southwestern Railroad. Approximately 102 miles of track and associated real estate were sold to the State of Georgia for approximately $5.4 million. In related transactions, a local, private operator purchased the capital stock of GSWR for $1.0 million as well as 8 locomotives for $0.7 million. The operator will continue to operate the railroad on behalf of the State of Georgia.

Important Truck Legislation: A bill, HR 3132 (the "Safe Highway and Infrastructure Preservation Act"), has been introduced in Congress to freeze the size and weight of trucks on our highways. This important legislation will help save lives and preserve our roads and bridges. The purpose of this bill is to freeze the length of trucks, freeze the weight of trucks, extend the freeze on LCV'S (long double and tripe trailer trucks), and improve enforcement of truck weight laws. If the short lines want to help you can do so by writing your Congressional Representatives urging support for H.R. 3132. Coalition Against Bigger Trucks email address is cabt@earthlink.net.

Drop in serious workplace accidents: The number of serious workplace injuries fell again in 2000, according to data released by the Bureau of Labor Statistics. According to the BLS, there were 1.66 million work related injuries or illnesses that caused workers to miss more than one day of work in 2000, the last year for which BLS has data. Workers suffered 1.70 million such illnesses or injuries in 1999. Strains and sprains constituted the larges single category of injuries, at 728,200, which was down 1.6% from a year earlier. Nonfatal workplace illnesses and injuries have dropped steadily since 1994, when they totaled 2.24 million according to the BLS. Truck driving remains the occupation with the greatest incidence of such injuries.

Pioneer Railcorp News: Keokuk Junction Railway Company, a subsidiary of Pioneer Railcorp, is now operating on the 12.1 mile portion of the former Toledo , Peoria & Western Railroad trackage that it acquired on December 21, 2001 . The track runs from LaHarpe to Lomas in the state of Illinois. The acquirement also includes an additional 15.5 miles of trackage rights across the Burlington Northern Santa Fe's mainline from Lomax to Fort Madison, Iowa. The company expects to move approximately 2,000 loads this year over the new connection. The Pioneer Railcorp is a short line railroad holding company with 16 freight railroads and one tourist railroad operating in ten states, owning and operating over 463 miles of track.

Washington Court Strikes Blocked Crossing Law: The Washington State Supreme Court has killed a Seattle ordinance that allowed the city to fine railroads whose trains idled in highway grade crossings. The decision could be a blow to officials in other localities trying to use the same method in moving the trains over crossings in a more timely fashion. The city argued that federal law regarding railroad operations is focused on economic issues and the local ordinance is a law-enforcement matter; however, the court ruled that the federal Interstate Commerce Commission Termination Act (ICCTA) and the Federal Rail Safety Act "unambiguously" make rail operations a matter of federal regulation.

Arkansas Railroad Obtains First RRIF Loan: Rail Business has reported that the Federal Railroad Administration (FRA) has approved a loan in the amount of $12 million for the Arkansas & Missouri Railroad. Half of this loan is to be used for rehabilitation and half is to be used for refinancing. This is welcome news for the short lines that have been waiting for some time for the implementation of this program. FRA officials advised that loans totaling approximately $600 million are pending to complete and nearly complete applications.

Future ASLRRA Meetings: Central Pacific Region Meeting, August 25 – 27, Westin Tabor Center, Denver, Colorado. Southern Region Meeting, September 29 – October 1, Loews Vanderbilt Hotel, Nashville , Tennessee . Midwestern Regional & Short line Railroad Annual Conference, July 14-1, Holiday Inn, New Ulm, Minnesota. For registration and information call Angela Anderson at 651-228-9757 or email mrra_info@mail.com. Eastern Region Meeting, October 13 – 15, Hyatt Regency Hotel, Baltimore , Maryland . For more information, visit the website at www.aslrra.org.

General Claims Conference: The Association of American Railroads conference will be held in Washington, D.C. October 9-11, 2002 at the Washington Court Hotel. For further information, contact Stephanie Kilfeather, AAR Director Meeting Services, 50 F Street, N.W., Washington, D. C., 20001.

Amtrak News: Amtrak's high-speed Acela Express train appears to be holding its own against Delta and US Airways shuttles along the heavily traveled Boston-to-Washington corridor.

More Amtrak News: Amtrak continues to go through funding woes, but as of this writing the end has been extended. Both Congress and the administration would be involved in helping to fund Amtrak through Sept. 30 under a tentative agreement. The deal would provide an immediate $100 million loan, with Congress coming up with another $100 million later. One reason Amtrak is popular on Capitol Hill is its route structure. Though strongest in the Northeast, California and the Pacific Northwest , Amtrak serves 45 states. There are trains through the states of House Speaker Dennis Hastert, R-Ill., and Senate Commerce Committee chairman Ernest Hollings, D-S.C. Amtrak operates some commuter rail systems itself and lets others use its tracks and tunnels. The railroad continues to run money-losing long-distance trains rather than incur the wrath of powerful lawmakers whose states would lose service.

History: On July 1, 2002 Union Pacific Celebrates its 140^th Anniversary. On July 1, 1862 , President Abraham Lincoln signed into law the Pacific Railway Act, which created the Union Pacific Railroad Company and chartered the company and the Central Pacific Railroad Company to link the country together from Omaha to Sacramento . One hundred and forty years later UP has become one of the most recognized corporations in

America

and continues to build on its rich history. Dick Davidson, chairman, president and chief executive officer of Union Pacific Corporation, said the 140^th anniversary is a time to remember the monumental work of the first employees of UP, who, in four years, built the nation’s greatest transportation system one mile at a time.

Favorable Surveillance Ruling: Earlier this year the Appellate Division of the Superior Court of New Jersey ruled that there was no abuse of discretion in admitting a surveillance tape because it was not available more than 20 days before the end of the discovery period and the defendant could not have amended his discovery responses in the time required by the Court Rules. Additionally, it was within the trial court's discretion to allow the admission of the tape even though plaintiff's counsel was not advised of the tape until "the eve of the trial."

Short Line Safety Winners: ASLRRA announced the winners of various 2001 safety awards. They are as follows:

(250,000 or more employee hours) – Gold – Florida East Coast Railway. Silver – Paducah & Louisville Railway, Inc.

Bronze – Buffalo & Pittsburgh Railroad, Inc. Copper – Wheeling & Lake Erie Railway Co.

(50,001 to 250,000 employee hours) - Gold – Central Oregon & Pacific Railroad, Inc. Silver – Chicago South Shore & South Bend Railroad Co. Bronze – Columbus & Ohio River Rail Road Co. Copper – California Northern Railroad

(10,001 to 50,000 employee hours) – Gold – North Shore Railroad Co. Silver – Morristown & Erie Railway, Inc.

(0 to 10,001 employee hours) – Gold – Carolina Rail Services, Inc. Silver – Missouri Central Railroad Co.

(Switching & Terminal Railroads) – Gold – The Belt Railway Company of Chicago . Silver – The River Terminal Railway Co. Bronze – Terminal Railroad Association of St. Louis . Copper – Indiana Harbor Belt Railroad Co.

General Motors Award: General Motors awarded Union Pacific as its "Supplier of the Year" in 2001, the first time that a railroad has received this award from GM. Last year, GM selected UP to provide all its rail transportation west of the Mississippi River . (ffd. UP Corp.)

A short line has several options to consider when an employee is off work due to a personal injury. The employee may be eligible for Railroad Retirement Board benefits and that should be taken into consideration; however, in all probability those benefits may not be sufficient to prevent the employee from undergoing financial difficulties during convalescence.

The first option is to do nothing. The second option is to payroll employees as if they are working, which is commonly referred to as salary continuation. The third option is to make periodic advancements. The fourth and best option is Railway Claim Services, Inc.'s combination of salary continuation and advancements. Two of the main objectives in financial assistance are to attempt to hold the claim in line for a direct conclusion and for humanitarian reasons. If a short line is financially able to assist, I suggest the fourth option.

Receiving full wages will sometimes have a negative effect on an employee. It can prolong rehabilitation by removing an incentive to return to work. Salary continuation should have a positive effect on an employee and a jury; however, sometimes both will draw the conclusion that salary continuation is "owed" to the employee and a part of their negotiated union agreement. Salary continuation cannot be recovered if the claim is litigated. An advancement policy alone is not as effective and thorough as the salary continuation and advancement policies

The salary continuation and advancement policies must be a part of and complimentary to Railway Claim Services, Inc.'s recommended on-the-job policy. This program provides for salary continuation for the first 30 days. After 30 days advancements will take the place of salary continuation.

There are many issues to consider when applying this means of financial assistance and the policies cover those issues in depth. The employee must meet the job injury policy to qualify for the salary continuation/advancement policy and the employee must meet the requirements of the advancement policy. Some of the advancement policy factors to consider are other sources of availability of income or loans, extent of injury, cooperation of the claimant, incentive to return to work and whether in the judgment of the company an advancement is in the best interest of the company and employee. Advancements are generally available only to provide a claimant with additional income, based on a good cause, following on-duty injury. The advancement is not intended to replace salary, nor is it to be continued indefinitely.

Each time the employee receives an advancement, a reimbursement agreement (also provided by RCSI) is executed. This agreement explains that the advancement is a loan that will be included in evaluating the claim at the appropriate time. This also gives the appropriate person handling the claim for the railroad an opportunity to make personal contact with the employee, who should construe it as a goodwill gesture. Advancements will be deducted from any settlement or are deducted from a final verdict should the claim proceed to that end.

The salary continuation and advancement policies are rendered with the employee's willingness to cooperate. If the employee alters that cooperation during the course of their convalescence the railroad is no longer obligated to continue the program.

The salary continuation and advancement policies are only one of many Railway Claim Services, Inc. services provided.

John B. Newberry vs. Burlington Northern Santa Fe Railroad - U.S. District Court of Minnesota grants summary judgment in ADA claim. Machinist Newberry's attempt to have it both ways failed. Plaintiff sued and received a verdict in excess of $250,000, reduced by 70% to $76,000 due to contributory negligence on his part. Testimony from plaintiff entered the case that he was no longer physically capable of performing his job duties even with an assistant doing most of the heavy labor. Plaintiff said so on his application to commence receiving RRB benefits. Subsequently, he claimed through his chiropractor he was able to return to work under the previous conditions of having an assistant. Railroad denied this request. Plaintiff then filed suit under the ADA and Motion for Summary Judgment was granted.

Allan D. Mills vs. River Terminal Railway Co. – Sixth U. S. Circuit Court of Appeals Affirmed $712,000 Indemnification Award for Railroad.. Blast furnace at LTV Steel produces molten iron and slag, causing damages to rail cars and locomotives owned by River Terminal Railway and personal injuries to two railroad employees, who filed suit. Railroad settled FELA suits, after which its indemnification and contribution claims were tried and the jury awarded $712,000 to be paid by LTV's contractor operating the furnace.

Fred Carr, Jr. vs. Union Pacific Railroad Co. - Court of Appeals of Louisiana , Fifth Circuit. Louisiana Appeals Court Affirms Grant of Summary Judgment to Railroad. On August 23, 1999 a lowboy trailer "bottomed out" and became hung up on a crossing and was subsequently struck by a Union Pacific train. Plaintiff sustained a knee injury and filed his FELA suit alleging he was not provided with a safe place to work based on the condition of the crossing and enough warning time to the train to avoid the collision. Defense counsel successfully proved otherwise.

Honas H. Richards vs. Consolidated Rail Corp. -

U.S.

District Court, Southern District of Ohio. Ohio Federal Court Grants Defense Motion For Summary Judgment. While walking a train in an emergency stop plaintiff claimed he lost his balance and twisted his back due to "road ballast having shifted or collapsed" and further stated that "had I been walking on yard ballast, my accident would not have happened." The BIA and SAA claims were not proven and the court granted the summary based on the fact that plaintiff failed to mention his hypothesis in his deposition when he was required to do so.

Thomas L. Staley vs. Iowa Interstate Railroad, Ltd. -

U. S.

District Court, Southern District of Iowa. Jury returns a defense verdict against an electrician who slipped on an accumulation of crater grease, fell and injured his shoulder. Four charges of negligence were alleged, all involving the grease on the surface and testified that it was extremely slippery. Fellow employees disputed this allegation. Plaintiff attorney's motion said the weight of the evidence and inaccurate jury instructions should have resulted in a verdict for the plaintiff. The court concluded that plaintiff's own testimony regarding the incident was not fully credible and also found that the jury instructions were proper. Defense verdict upheld.

Patrick Clark vs. National Railroad Passenger Corp. - St. Louis City , Mo. , Circuit Court. Defense verdict for failure to disclose prior back dysfunction at time of employment. While employed by Amtrak as a carman and welder, plaintiff injured his back in March 2000 while he and another co-worker moved a tub containing brake parts. Plaintiff claimed aggravation of prior disc ruptures at L5-S1 and L4-5, anterior lumbar discectomy with fusions at those levels and L3-4. Disabled from industrial employment. Amtrak presented evidence of back problems as far back as 1980, the fact that plaintiff failed to inform Amtrak of these problems when he applied for employment and, had they been privy to this information plaintiff would not have been hired.

Anthony Thompson vs. Union Pacific - St. Louis , Mo. Circuit Court. Verdict for FELA plaintiff in the amount of $185,000.00. Plaintiff was assisting co-worker in moving and stacking concrete crossing panels when the co-worker lowered a panel before plaintiff was ready to step away, causing plaintiff to sustain a jerking motion to get out of the way. Shoulder surgery. Method in which the work was being done was contested as unsafe with better means available. Railroad argued that eight previous knee surgeries were the primary reason plaintiff did not return to work. High/low agreement of $300,000/$100,000 made while jury was deliberating. Verdict was $185,000.00.

Curtis Pearman v. Union Pacific Railroad Co., St. Louis City (MO) Circuit, Case No. 982-10018 – The plaintiff, age forty-three at the time of the injury, alleged he worked for the defendant as a locomotive engineer and was in the bathroom of the train when the vestibule door slammed shut. The plaintiff claimed that vibrations from the slamming door traveled through the plaintiff’s arm, causing an adverse pressure change in his inner hear. This resulted in total hearing loss in the left ear, tinnitus or ringing in the ear, loss of balance, inability to perform normal daily tasks and vocational disability. The defendant denied the plaintiff was injured by the slamming of the door, disputing that such vibrations could travel through the body and cause hearing damage. The defendant also contended the plaintiff failed to mitigate his economic damages, because he could have, and should have returned to work. The jury returned a verdict for the plaintiff of $2,500,000.

Anthony Scarpello vs. Consolidated Rail Corp. - New Jersey City , N.J. . FELA verdict for $52.4 million. Conductor was attempting to back up a train. He dismounted and began walking away. The engineer backed the train into the wrong track, the one on which plaintiff was walking. A protrusion from the train snared plaintiff's coat, dragged him along, causing him to first lost his left arm and then throwing him under the wheels severing him in half resulting in his demise. The jury found Conrail 98% negligent and the plaintiff 2% negligent. Verdict was reduced from $53.5 million to $52.43 million. Included was $50 million for pain and suffering, or approximately $2.5 million for each of the 20 seconds plaintiff's attorneys alleged Scarpello was conscious.

Raymond Boren vs. Burlington Northern & Santa Fe Railway Co. - Nebraska Appeals Court Affirms $500,000 Verdict in exposure to solvents suit. Plaintiff began work for the BN in 1977, which included removing and cleaning the eight "journals" on each rail car and cleaning them with solvent. Plaintiff was not provided with protective breathing apparatus, specialty gloves or education regarding the use of the solvents, (aerosol propellant, liquid graphite product, trichloroethane, petroleum distillates, toluene and xylene). The jury returned a verdict of $500,000 and it was affirmed.

The Buffalo News reported that a leg amputee trespasser lawsuit against the Canadian Pacific/Delaware & Hudson settled for $1.7 million. The trespasser admitted he had 4 or 5 beers before falling asleep on the track, but the train crew failed to sound the whistle once they saw the trespasser, apparently as state law and operating rules required.

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.

Editor's 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

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