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Railroad’s effort to erode FELA thwarted

September 27th, 2007 by Paul Passanante

A railroad company’s attempt to use an injured worker’s disability payments to reduce a jury award was defeated last week in the Indiana Court of Appeals.

Simon Passanante lawyers Paul J. Passanante and Dawn M. Mefford represented the injured worker and thwarted the industry’s effort to erode FELA protections.

CSX Transportation and the Association of American Railroads argued that it should be allowed reduce a $605,000 verdict obtained for Robert Gardner in a negligence case with the disability payments the worker received pursuant to the Railroad Retirement Act.

But the Indiana Court of Appeals disagreed.

“Although Eichel [v. New York Century Railroad Co.] remains binding and controlling precedent mandating that RRA disability annuities are not setoff from FELA awards, we need not base our decision on Eichel, as we conclude that application of the collateral source doctrine under federal law precludes setoff,” wrote Judge Margret G. Robb for the Court.

Passanante applauded the Sept. 18 decision in CSX Transportation, Inc. v. Gardner and said, “It would have been unjust for CSXT to use the pension and disability fund to shield itself from negligence.”

Work Injury

Robert D. Gardner was a locomotive engineer for CSX Transportation. On May 13, 2003, he was thrown from a train and hurt his neck, back and right knee. Because of his injuries, he was not able to return to work.

Gardner was awarded disability benefits from a disability and retirement fund established by the Railroad Retirement Act. Beginning in December 2003, he began receiving $35,000 per year which will continue until he reaches 62.

Gardner also sued his employer for negligence under the Federal Employers’ Liability Act. A jury concluded CSXT was solely liable for the accident and awarded Gardner $605,000 in damages.

CSXT filed a post-trial motion requesting that the FELA award be reduced by the amount the railroad had contributed to the disability fund. The trial court denied the motion and CSXT appealed. The Association of American Railroads filed an amicus brief as a supporting CSXT’s position.

In an appellate brief filed by Passanante and Mefford, it was noted that the question of whether a railroad is entitled to a setoff for disability payments was put to rest by the United States Supreme Court in the 1963 decision Eichel v. New York Central Railroad, 375 U.S. 253.

In that case, the railroad tried to offer evidence that the worker was receiving a disability annuity to show that he had a motive for not returning to work. The trial court excluded the evidence. The Supreme Court affirmed, reasoning that the benefits received under the RRA are not directly attributable to the employer. Therefore, they can’t be considered in mitigation of damages.

In its brief, Gardner’s attorneys noted, “Ultimately, CSXT cites no cases which hold that a railroad is entitled to a set off for RRA disability for one simple reason:  there are no cases to support CSXT’s argument.”

However, CSXT argued that Eichel no longer controlled because the Railroad Retirement Act has been revised since the case was decided.

Gardner’s attorneys called that argument “misguided.” But even if the Eichel isn’t controlling, the collateral source rule provides that the worker may recover full damages from the employer without any setoffs or credits even if the worker received money from another source, such as insurance.

Under Section 55 of FELA, employers are entitled to a setoff only if the payment amounts to a contribution against possible liability. However, the contributions the railroad makes to the disability and retirement fund are required by law, not voluntary. Nor are the contributions precautions against future liability

The appellate court applied a five-part test to determine whether the payments were fringe benefits, which can’t be setoff, or payments made to indemnify against future liability.

All five factors favored a finding that payments were fringe benefits. They included the fact that both the railroad and the worker contributed to the fund; the contributions were required by federal law; the disability fund covers work and non-work related injuries; the amount of the annuity depends on the length of service; and the statutory language does not reflect a Congressional intent to allow setoff.

Judge Robb wrote, “After considering the five factors as they relate to the nature of the RRA benefits, we conclude that setoff is not allowed under federal common law.”

Simon Passanante lawyer Dawn M. Mefford said she was pleased with the appellate court ruling. “This decision is important for our client and for railroad workers across the country.”

If you or someone you love has been injured in a railroad accident, contact Paul J. Passanante or Dawn M. Mefford toll free at 1-877-767-3108.

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