Claris Law Legal Blogging Community

Editor: Rick Shapiro
Profession: FELA Attorney

Category: FELA News

Railroad management and railroad labor organizations differ on whether the FELA is a "broken system". Generally, railway labor organizations favor the FELA since it strongly promotes rail safety, allows recovery of pain and suffering damages and permits a jury trial. On the other hand, railroad management feels that the FELA is an expensive system and that the railroads should be permitted to go to a no fault worker compensation system like most industries in the United States.

The FELA was enacted in 1908 at a time when railroads were the largest employer in the United States. Rail work was probably the most hazardous job in the country at the time. Prior to passage of FELA, injured railroad workers had difficulty recovering for work place injuries and deaths. Railroads often avoided paying compensation for on the job injuries, for example, by asserting that employees assumed the risk of injury by taking the job itself, or that their injuries were caused by a fellow employee and that the railroad was thus not responsible. During the same period, the first workers compensation statutes were being passed by various states in the United States. In an effort to protect rail workers against losses and to make the railroads more accountable and responsible for work related injuries, the FELA limited railroad defenses against liability and provided railroad workers new and better protection than the typical worker compensation acts being passed at that time.

In 1996 the General Accounting Office completed a comprehensive study of the status of the FELA, and whether it should be abolished in favor of a workers compensation system, or modified under various types of "tort reform" proposals that have been passed in some states. Significant findings included that the railroads paid about 1.2 billion in FELA costs in 1994 and nearly 75% of all FELA injury claims for the large railroads were settled between the railroad and the injured employees without a lawsuit. The total number of annual injury claims has declined since 1990, but the number of lawsuits has remained relatively stable at about 3100 cases per year. During the same period, total railroad industry employment declined from 296,000 to 267,000. The average payout per lawsuit remained relatively stable between 1990 and 1994, while the average pay out per negotiated claim increased from about 24,000 in 1990 to 34,000 in 1994. In the two tables below, these particular statistics are provided in more detail.

Table 1.1: Number of FELA Injury Claims and Suits Settled by Large Freight Railroads and Amtrak, 1990-94
Year Railroad Employment Negotiated Claims Claims with lawsuits Total Claims
1990 296,000 14,269 3,129 17,398
1991 285,000 12,204 3,120 15,324
1992 276,000 11,053 3,178 14,231
1993 271,000 9,613 3,109 12,722
1994 267,000 8,815 3,210 12,025

Note: Excludes the occupational illnesses of hearing loss and asbestosis and those cases where no payments were made.
Source: Association of American Railroads

Table 1.2: Average Payout Per Settled FELA Injury Claim and Lawsuit for Large Freight Railroads and Amtrak, 1990-94

Dollars in constant 1994 dollars
Year Negotiated Claims Claims with lawsuits Average for all Claims
1990 $24,414 $159,356 $48,683
1991 29,163 146,369 53,026
1992 29,536 160,159 58,706
1993 32,713 166,500 65,408
1994 33,919 165,421 69,023

Note: Excludes the occupational illnesses of hearing loss and asbestosis and those cases where no payments were made.
Source: Association of American Railroads

The conclusion of the GAO report was not in favor of abolishing or replacing the FELA. Indeed the bottom line of the 73 page report (including charts) stated the following:

Replacing FELA with a no-fault system with [federal workers compensation type] benefits would reduce the railroads' injury compensation costs only if many of the workers who currently leave a railroad after receiving their FELA settlement are physically capable of returning to work. Under a no-fault compensation system, benefits end or are reduced once an injured worker returns to work or takes another job. If those injured railroad workers who did not return to work under FELA were so severely injured that they could not return to any work, then under the no-fault alternative, they would receive permanent total disability payments as long as their total disability continued. The present value of this amount could be considerably greater than the lump-sum payment that a worker actually accepted under FELA.

The report further concluded that:
On the other hand, if about two-thirds or more of these workers were permanently and totally disabled and unable to return to any work, the cost of no-fault compensation could be the same as or higher than under FELA.

Thus, as of 1996 the FELA system can not said to be prohibitively expensive to railroads as compared to a no-fault system. The issue of abolishing FELA will likely resurface periodically as it has in the past, but the statistical analysis between FELA and a worker compensation statute by no means presents a clear cut choice.