Amicus Curiae Brief — Burlington Northern Inc. v. Anderson

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st No. 85-1544 “A

gi *

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

BURLINGTON NORTHERN, INC.,

Petitioner,

JACK D. ANDERSON,

Respondent.

On Petition for a Writ of Certiorari to the

Supreme Court of the State of Montana

MOTION FOR LEAVE TO FILE A BRIEF AMICI CURIAE

AND

BRIEF OF THE ASSOCIATION OF AMERICAN

RAILROADS, NATIONAL RAILWAY LABOR

CONFERENCE, AND NATIGNAL ASSOCIATION OF

RAILROAD TRIAL COUNSEL AS AMICI CURIAE

IN SUPPORT OF THE PETITION

Davi P. Lee J. THOMAS TIDD

NATIONAL RAILWAY LABOR KENNETH P. KOLSON *

CONFERENCE DANIEL SAPHIRE

1901 L Street, N.W. ASSOCIATION OF AMERICAN

Washington, D.C. 20036 RAILROADS

(202) 862-7218 50 F Street, N.W.

Washington, D.C. 20001

. MOFFAT

Henry M. M (202) 639-2511

NATIONAL ASSOCIATION OF

RAILROAD TRIAL COUNSEL

881 Alma Real Drive, Suite 1034,

Pacific Palisades, CA 90272

(213) 459-7659

May 16, 1286 * Counsel of Record

SE RAE AMOR A AE OIC CAI NO SSE IRR REECE NP

Witeon - Eres Printit:s Co., Ic. - 789-0096 - WasHincToOn, D.C. 20001

‘

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

No. 85-1544 |

BURLINGTON NORTHERN, INC.,

Petitioner,

Vv.

JACK D. ANDERSON,

Respondent.

On Petition for a Writ of Certiorari to the

Supreme Court of the State of Montana

MOTION OF THE ASSOCIATION OF AMERICAN

RAILROADS, NATIONAL RAILWAY LABOR

CONFERENCE, AND NATIONAL ASSOCIATION OF

RAILROAD TRIAL COUNSEL FOR LEAVE

TO FILE A BRIEF AMICI CURIAE

The Association of American Railroads (“AAR”),

National Railway Labor Conference (“NRLC’”), and Na-

tional Association of Railroad Trial Counsel (“NARTC’’)

respectfully move this Court for leave to file the attached

Brief Amici Curiae. The AAR and supporting railroad

organizations have limited such requests to instances

where issues of overriding concern to the industry are

involved and such requests have generally been granted.’

1 Petitioner has consented to the filing of the brief. The letter

signifying this consent has been filed with the Clerk. Respondents

have withheld consent. The brief is timely filed under the Rules of

the Supreme Court which require filing within the time ailowed for |

the filing of the brief in opposition (Rule 36.1). Pursuant to the

extension of time requested by Respondent and granted by this |

Court, respondent’s brief in opposition is due on May 16, 1986.

2See Burlington Northern Inc. v. Herold, No. 85-186 (filed

August 30, 1985): Burlington Northern Railroad Company v.

The Court has generally permitted the participation of

industry associations in cases such as this, which involve

issues of special concern to the industry as a whole.’

The AAR is the trade association for the nation’s rail-

roads. Its members employ approximately ninety-four

percent of the workers, operate approximately ninety-

two percent of the trackage, and account for approxi-

mately ninety-seven percent of the freight revenues of

all railroads in the United States.‘ AAR represents its

members before courts, agencies and the U.S. Congress

when matters of common concern are at issue.

The NRLC, whose members include almost all of the

nation’s Class I railroads, represents the industry both

in nztional collective bargaining pursuant to the Railway

Laber Act and in regard to other labor-management rela-

tions problems that are of concern to the railroads gen-

erally. The NARTC is a voluntary, unincorporated non-

profit organization composed of over 1,200 trial lawyers

who represent all of the significant railroads operating

throughout the United States.

The decision of the Montana Supreme Court in this

case will have a serious adverse effect on the railroad

industry as a whole. In its ruling, the Montana Supreme

Court, based on a misconstruction of Section 5 of the

Federal Employers’ Liability Act (“FELA”) (which

section prohibits a railroad from exempting itself from

Cosby, No. 84-1313 (filed March 18, 1985) ; Southern Pacific Trans-

portation Co. v. Commercial Metals Co., 450 U.S. 336 (1982);

Kassel v. Consolidated Freightways Corp., 449 U.S. 897 (1980);

Raymond Motor Transportation, Inc. v. Rice, 434 U.S. 885 (1977).

3 See, e.g., Western Airlines v. California, 53 U.S.L.W. 3484

(U.S. Jan. 7, 1985) (Motion of Air Transport Association of

America for leave to file brief amicus curiae granted); Peick v.

Pension Benefit Guaranty Corp., 465 U.S. 1098 (1984) (American

Trucking Association).

4A listing of the membership of the Association appears at

Appendix A to the attached brief.

FELA liability), voided a provision of a collective bar-

gaining agreement that specifically provides for an offset

from employee medical expense awards in a FELA action

of medical benefits provided by railroad employers to their

employees pursuant to an employer-funded industry medi-

cal insurance plan covering on-duty employee injuries. In

voiding the collective bargaining agreement and allowing

employees in a FELA action to recover twice for medical

expenses previously paid by their employers, the decision

below both improperly interferes with the collective bar-

gaining process and unnecessarily and unjustifiably im-

poses substantial, duplicative medical expense costs on the

railroad industry for on-duty employee injuries.

The consequences of this decision will be felt by the en-

tire railroad industry, not just by the individual railroad

involved in the litigation below. Because they represent

the railroad industry as a whole, the AAR, NRLC and

NARTC are in a position to convey the industry’s con-

cern with this decision and to present factual information

which will underscore that concern. Thus, the AAR,

NRLC and NARTC respectfully submit that their par-

ticipation as emici curiae will assist the Court in resolv-

ing this case by providing a broad prospective on the

decision below and its impact on the railroad industry.

Respectfully submitted,

DAVID P. LEE J. THOMAS TIDD

NATIONAL RAILWAY LABOR KENNETH P. KOLSON *

CONFERENCE DANIEL SAPHIRE

1901 L Street, N.W. ASSOCIATION OF AMERICAN

Washington, D.C. 20036 RAILROADS

(202) 862-7218 50 F Street, N.W.

Henry M. Morrat Washington, D.C. 20001

NATIONAL ASSOCIATION OF (202) 639-2511

RAILROAD TRIAL COUNSEL

881 Alma Real Drive, Suite 103A

Pacific Palisades, CA 90272

(213) 459-7659

May 16, 1986 * Counsel of Record

TABLE OF CONTENTS

Page

py YF Bi vine | (5 | SRP aRaeen anemia ii

INTEREST OF THE AMICI CURIAE..............0.0000000... 1

SUMMARY OF ARGUMENT ........................... aecdaadatecs 3

I. The Decision Below, that Section 5 of FELA

Invalidates a Collective Bargaining Agreement

Requiring a Set-off of Prior Payments of Medi-

cal Expenses under the Industry’s Health and

Welfare Plan, Seriously Misconstrues Section 5

and Reflects a Recurring Conflict in the Lower

Courts That Should be Resolved by this Court... 5

A. Background—The 1975 Collective Bargaining

Agreement at Issue was Specifically Adopted

to Redress the Double Recovery Problem

Arising from Conflicting Court Decisions...... 5

B. The Longstanding Conflict in the Lower

Courts Permitting Double Recovery of Medi-

cal Expenses Has Not Been Resolved by the

1975 Collective Bargaining Agreement and

Can Only Be Definitively Resolved by this

IIIS wreseitennteeseicecinasonchbientctennddisciacee ddan Meenas 13

NID UD nccncutositatsctercmmncendananaeieacanee 14

D. The Decision of the Court Below Conflicts

with Important Policy Objectives Underly-

ing FELA and the Collective Bargaining

Be itn cicniosssesvntessssnsiresscn-tniliahbtiidbiilelidaceadiagatecaadasaee 18

CT MNT slininetieiskins bite aia dee ace ieee cane cian 20

Appendix A: Members of the Association of

American Railroads ....................------ la

SRE SRE sisclennseismecti cident dobelditnnteecdetiles lla

(i)

il aaa ie

TABLE OF AUTHORITIES

CASES Page "

Banks v. Central of Georgia Railroad Co., Civ. No.

8308 (Muscogee Cty., Ga., Feb. 24, 1981) -........... 13

Blake v. Delaware and Hudson Railway Co., 484

P24 26 G8 Ce. WI oh 9, 10, 11, 13, 17

Chicage & North Western Railway v. United Trans-

portation Union, 402 U.S. 570 (1971) ................... 20

Clark v. Burlington Northern, Inc., 726 F.2d 448

Ce Ce te he reinncncecis ceasesneae eae ies 13, 18, 19

Diaz v. Indiana Harbor Belt Railroad Co., Civ. No.

H79-13 (N.D. Ind. Dec. 1, 1985)..................2..2.2.---+- 13

Folkestad v. Burlington Northern, Inc., No. CV-

83-84-BLG (D. Mont., Sept. 30, 1985), appeal

pending, Nos. 85-4280 and 4305 (9th Cir.) ......... 13

Hall v. Minnesota Transfer Railway Co., 322 F.

i es } Eee 2,9, 10

Haughton v. Blackship, 462 F.2d 788 (5th Cir.

) |; 5, a: ne Ree ee Ie RH © er ATER tn 9

Herbst v. Burlington Northern Railroad Co., CV-

84-51-BLG (D. Mont., April 22, 1985) ................. 13

Lesinski v. Norfolk & Western Railway Co. and

Conrail, No. H-9307 (Supreme Ct. N.Y., June 11,

ID ssecosscindhibecnnstitnspniisichnieaaiiinicen eaaningettie es eT R RMS PE 13

Lopez v. Southern Pacific Transportation Co., 1 Civ.

Oe Bie ee , ; 3 Rear eny mere 13

Lucht v. Chesapeake & Ohio Railway Co., 489 F.

Supp. 189 (W.D. Mich. 1980) ........0000000200222. ee. 10, 11

Morrison-Knudson Construction Co. v. Director,

OFC, GEE Ue. GRE CIGD hicenccnecnsnccccnccscccecnescxcens 7

Nelson v. Penn Central Railroad Co., 415 F.Supp.

Se Cec ers I I Sis vetcoicbesccscccenimnnannoees 9,10, 18

Patterson v. Norfolk & Western Railway Co., 489

if & Bho | > 3 RAR Reeanenreeemeneumyoacrenorssonnes 9,10

Philadelphia, Baltimore & Washington Railroad v.

Schubert, 224 U.S. 608 (1921) ............................... 15

Rogers v. Chicago & North Western Transportation

Co., 59 Ill. App. 3d 911, 375 N.E. 2d 952 (II.

Be TD ivctenenscctstannibcsiiceaeitientnatadalaae danemarnie 9

Royster Company v. United States, 432 F.Supp. 375

SURLY <WUNs = UPI acco ccoheltcownastocdaebacseaebincencauiid naa taiias 7

iii

TABLE OF AUTHORITIES—Continued

Page

Southern Pacific Transportation Co. v. Allen, 525

S.W. 2d 300 (Tex. Civ. App. 1975) ....................... 11

Thomas v. Humble Oil & Refining Co., 420 F.2d

ee I 13, 18

Thomas v. Penn Central Co., 379 F.Supp. 24 (W.D.

NS Cr eT eS ae 7,9, 10,18

UMWA Health & Retirement Funds v. Robinson,

ge een EIEN 20

Urbaniak v. Erie Lackawanna Railway Co., 424

ye MR yf IE 9, 11,18

Wagner v. Reading Co., 428 F.2d 289 (8rd Cir.

ESS eA EL A ES BAF Pe A IIR eh STO 9

STATUTES

Boiler Inspection Act, 45 U.S.C. §§22 et seq.

a i a 14

Federal Employers’ Liability Act, 45 U.S.C. §§ 51

et seq. (1982), 45 U.S.C. § 55 (1982)... passim

LEGISLATIVE MATERIALS

H.R. Rep. No. 1386, 60th Cong., lst Sess. (1908) .... 15

eT Fe I ion cnistssreminconnicscnnantniinne 16

ee i eG nis cetcrnictiosenicntentsnetes 16

ey PE I aie aeneceinsesencine eiccennondncrepnson 15, 16

5 ae 16

Bp Ce, Fe, Fe COD oir cicrrnnerccccteesscsccnecensnne 6, 16

Ie I onsen cccccssrccwessssctninnmnen 16

I ED os. . iincenncicncbieasomiionenmneomnien 15

MISCELLANEOUS

E.R. Johnson, Railway Departments for the Relief

and Insurance of Employes, 162 Annals of Amer.

Acad. Pol. & Soc. Sci. 424, 429-432 (1895) .......... 5

Fleming, The Collateral Source Rule and Loss Allo-

cation in Tort Law, 54 Calif. L. Rev. 1478

5 ASRERURRGET ERE SER RIMS eee On REN EEO IN 11

McDowell, The Collateral Source Rule—The Ameri-

can Medical Association and Tort Refoim, 24

EE Bi, CD CMD rerirnictcericecnceticss corer 11

TABLE OF AUTHORITIES—Continued

Report of the Tort Policy Working Group on the

Causes, Extent and Policy Implications of the

Current Crisis in Insurance Availability and

Affordability (U.S. Attny. Gen., February

RN AAs oe REPO ALDEN ERS Po OES SE

Schwartz, The Collateral Source Rule, 41 B.U.L.

Be ee I in intinice in cate ilintcntescintepratneniibincaens

Work Injuries in the Railroad Industry, 1938-40

te es cee eR eer On

Page

IN TH

Supreme Comet of the United States

OCTOBER TERM, 1985

No. 85-1544

BURLINGTON NORTHERN, INC.,

Petitioner,

Vv.

JACK D. ANDERSON,

Respondent.

On Petition for a Writ of Certiorari to the

Supreme Court of the State of Montana

BRIEF OF THE ASSOCIATION OF AMERICAN

RAILROADS, NATIONAL RAILWAY LABOR

CONFERENCE, AND NATIONAL ASSOCIATION OF

RAILROAD TRIAL COUNSEL AS AMICI CURIAE

IN SUPPORT OF THE PETITION

INTEREST OF THE AMICI CURIAE?

The Association of American Railroads (“AAR”) is

the trade association for the nation’s railroads. Almost

all of the nation’s Class I railroads are members of the

National Railway Labor Conference and are represented

by the Conference in national collective bargaining pur-

suant to the Railway Labor Act. The National Associa-

tion of Railroad Trial Counsel (“NARTC’’) is a volun-

1 Petitioner has consented to the filing of this brief pursuant to

Rule 36 of supreme Court rules. Respondent withheld consent.

A motion fu «ave to file this brief therefore accompanies the brief.

tary, unincorporated nonprofit organization composed of

over 1,200 trial lawyers who represent all of the signifi-

cant railroads operating throughout the United States.

The decision below represents the most recent of a

recurring series of conflicting state and federal court

decisions construing the applicability of Section 5 of the

Federal Employers’ Liability Act (“FELA”)* in the con-

text of employer-provided medical benefits. In its deci-

sion below, the Montana Supreme Court has interpreted

Section 5 of FELA to invalidate a collective bargaining

agreement providing for a set-off against employee FELA

recoveries of employer-paid medical expenses under a rail-

toad industry Health and Welfare Plan administered by

the Travelers’ Insurance Company (GA-23000). The

Montana Supreme Court held that Section 5 “broadens

application of the collateral source rule’* in FELA

cases involving a medical insurance plan to allow a set-

off only of “the premiums, not what the premiums

bought.” The Court further held that Section 5 does not

permit a railroad employer to “contract away” its FELA

liability for payment of employee medical expenses even

though those expenses have already been paid by the

employer pursuant to the insurance plan.

2 45 U.S.C. § 55 (1982). Section 5 prohibits “[a]ny contract, rule,

regulation, or device whatsoever, the purpose or intent of which

shall be to enable any common carrier to exempt itself from any

liability [under FELA]....” A proviso to Section 5 states that,

notwithstanding this general prohibition, a railroad may set off in

any FELA suit “any sum it has contributed or paid to any insur-

ance, relief benefit, or indemnity that may have been paid to the

injured employee .. . on account of the injury or death for which

said action was brought.”

3 The collateral source rule provides that a tortfeasor cannot

reduce the amount of his liability upon a judgment for an injured

plaintiff by reason of compensation or insurance proceeds paid to

the plaintiff from a collateral source independent of the tortfeasor.

Hall v. Minnesota Transfer Ry. Co., 322 F. Supp. 92, 94-95 (D.

Minn. 1971).

The ruling of the Montana Supreme Court, which is

neither warranted in law, equity, nor logic and which con-

flicts with decisions of other state and federal courts, has

the effect of requiring railroad employers to pay twice

for the medical treatment of employees who are injured

on the job and of voiding an express agreement between

rail management and labor to resolve in a mutually satis-

factory manner a longstanding and recurring “double

recovery” problem created by conflicting court decisions

construing Section 5. As such, the decision below directly

impedes the efforts of amici curiae, on behalf of the rail-

road industry, to prevent the imposition of costly, dupli-:

cative and unnecessary damage awards in FELA cases

and to preserve the sanctity of collective bargaining agree-

ments in defining and qualifying the scope of employee

health and welfare benefits payable by railroad employ-

ers. The AAR, NRLC, and NARTC therefore strongly

support the petition for a writ of certiorari.

SUMMARY OF ARGUMENT

The treatment under Section 5 of FELA of medical

expense payments made by railroad industry employers

to their employees for on-duty injuries pursuant to the

industry’s employer-funded Health and Welfare Plan has

been a longstanding source of conflict in the lower courts.

Although many courts have properly viewed the industry

insurance plan as providing a s‘rce of funds through

which the railroad employer may fully satisfy its FELA

obligations for the payment of employee medical ex-

penses, other courts have considered on-duty medical ex-

penses paid pursuant to the insurance plan as an em-

ployee “fringe benefit” and have allowed an employee in

a FELA action to “recover” such medical expenses a sec-

ond time under the “collateral source” rule.

The 1975 collective bargaining agreement at issue in

the instant case was intended by both rail management

and labor to definitively resolve the longstanding “double

recovery” problem by making clear that medical expense

payments under the industry plan for on-duty injuries

are not intended as an employee fringe benefit and are

provided with the qualification that such payments be

offset from any subsequent award of medical expenses

under FELA. Despite the clear language and intent of

the collective bargaining agreement, however, the lower

courts are still split on the employee’s “right” to 2 dou-

ble recovery under Section 5 of FELA. While most courts

appear to enforce the offset provision of the collective

bargaining agreement, other courts, such as in the deci-

sion below, have instead voided the offset provision as

violative of Section 5. The longstanding, recurring con-

flict in the lower courts over the treatment of employee

medical expenses under FELA requires intervention by

this Court if the railroad industry is not to be subjected

to costly and wholly unwarranted duplicative medical ex-

pense payments in FELA actions.

Moreover, the decision below and those of other courts

voiding the collective bargaining offset provision seri-

ously misconstrue Section 5 of FELA and conflict with

important federal policy objectives. Contrary to the deci-

sion below, the industry medical expense plan is not an

effort to “contract away” FELA liability, but is simply

an effort by the industry to provide employee medical

benefits in addition to those required by FELA for on-

duty injuries (i.e, regardless of employer fault) while

concomitantly ensuring that the railroad employer will be

required to pay only once for medical expenses covered

by FELA. As such, the general prohibition set forth in

Section 5 against an employer “exempting” itself from

FELA liability is not implicated by the industry’s medical

insurance plan, and the proviso to Section 5 relied upon

by the court below to define the permissible employer

set-off allowed by Section 5 is wholly irrelevant to this

ease. Indeed, voluntary employer-paid medical insurance

plans such as GA-23000 serve, rather than impede, the

objectives of FELA by ensuring the provision of medical

expense benefits to employees and should not be discour-

aged or jeopardized by making such plans twice as ex-

pensive to provide as would the decision of the court

below.

Further, by voiding the collective bargaining offset pro-

vision and requiring duplicative payments of medical ex-

penses contrary to the intentions of the parties, the court

below has not only improperly construed the requirements

of FELA, but has also violated the strong federal policy

against judicial intrusion into the collective bargaining

process. Because of the economic significance of this case

to the railroad industry and the serious policy implica-

tions of the decision below, resolution of the longstanding

controversy underlying the administration of Section 5

of FELA is required by this Court.

I. The Decision Below, That Section 5 of FELA Invaili-

dates a Collective Bargaining Agreement Requiring a

Set-Off of Prior Payments of Medical Expenses under

the Industry’s Health and Welfare Plan, Seriously

Misconstrues Section 5 and Refiects a Recurring Con-

flict in the Lower Courts That Should Be Resolved

By This Court

A. Background—T he 1975 Collective Bargaining Agree-

ment at Issue Was Specifically Adopted to Redress

the Double Recovery Problem Arising From Con-

flicting Court Decisions

The railroad industry has traditionally paid for the

medical care of employees who are injured on the job.

Railroad “relief departments” were established as early

as 1880 in order to assist injured employees with medi-

cal expenses and thereby serve the railroads’ interest in

the health and morale of their workforce. As the Peti-

tion relates, one practice of the relief departments did

4 See E.R. Johnson, Railway Departments for the Relief and

Insurance of Employes, 162 Annals of Amer. Acad. Pol. & Soc. Sci.

424, 429-432 (1895).

draw Congress’ disapproval in the enactment of FELA

at the turn of the century: in response to the urging of

the employees’ organizations Congress invalidated in Sec-

tion 5 the use of contracts whose purpose or intent was

to exempt the railroad from liability, such as form con-

tracts releasing the railroad from liability as a condition

of receiving benefits from the relief departments. See

Petition at 16. At the same time, however, the employ-

ees’ organizations acknowledged that the railroads were

providing financial assistance to injured employees and

should receive due credit:

From a moral standpoint, we think it only just

and fair that the carrier should be given credit for

such amounts as it has actually paid to an injured

employee on account of such injury.

Letter from H.R. Fuller to Senator LaFollette (June 2,

1906), reprinted in 40 Cong. Rec. 7919-20 (1906). Asa

result of this statement, Congress included in Section 5

a proviso preserving the railroads’ right to set-off from

FELA awards the portion of benefits paid to injured

employees to which the railroads had contributed. See

Petition at 17 n. 28, 18-19.

In the early plans, both the employees and the railroads

contributed to the cost of medical care. Between the en-

actment of Section 5 in 1906 and the 1950’s, the practice

with respect to medical care had evolved to the point that,

at least with respect to on-duty injuries, the railroads

alone generally were paying the full costs.* This trend

carried over to the health and welfare plan established in

the 1950’s.

Thus, when the modern health and welfare plan was

negotiated in the 1950’s and 60’s, the unions insisted that

on-duty injury coverage for medical expenses not be paid

out of the compensation allocated for each worker for

5 See Work Injuries in the Railroad Industry, 1938-40, 178 (Ra.

Retirement Bd. 1947).

fringe benefits. See, e.g., Thomas v. Penn Central Com-

pany, 379 F. Supp. 24, 26-27 (W.D. Penn. 1974). The

agreements reached between the railroads and their un-

ions therefore expressly provided that, while many of the

benefits of the plan were to be considered “fringe bene-

fits” in lieu of wages, on-duty injury coverage was to be

handled by the railroads separately and would not be

charged against the funds available for employee com-

pensation.®

The majority of the railro:uds presently arrange for the

administration and payment of employee medical ex-

penses for on-duty injuries through Group Policy No.

GA-23000 (“GA-23000”), offered by the Travelers In-

surance Compariy.*’ GA-23000, which has been in effect

® See Agreement of August 19, 1960, Art. V §1(d)(1) (“pre-

mium[s] for the insurance benefit payments resulting from on-

duty injuries ... are not considered as wage equivalenis’”) ; letter

from G.E. Leighty to J.P. Tahney, et. al. (Sept. 16, 1960) (“the

increased cost to all railroads, whether non-hospital or hospital

association railroads, is 810.77 per month per employee, $9.96 of

which is considered to be in lieu of a wage increase in early 1961

and 81¢ for on-duty injury coverage which is considered a carrier

liability”) (Appendix B at Lia) : letter from National Railway

Labor Conference to L.J. Wagner and C. Luna (March 26, 1964)

(“The Carriers shall definitely assume the entire cost of the on-duty

injuries cost factor after the expiration of the initial two-year

Policy.”) (Appendix B at *,

The cost of providing on-duty injury coverage is accordingly a

general labor cost that is not part of an employees’ compensation.

Cf. Morrison-Knudsen Construction Co. v. Director, OWCP, 461

U.S. 624 (1983) (contributions to employee benefit trust funds

not “wages” under Longshoremen’s and Harbor Workers’ Compen-

sation Act); Royster Company v. United States, 342 F.Supp. 375

(E.D. Va. 1972) (reimbursement of expenses incurred by employees

in connection with business travel is not compensation).

7 While a majority of railroad employees are covered by GA-23000

a number of major railroads still utilize employee hospital associa-

tions for treating, or reimbursing the medical expenses associated

with, on-duty injuries. These railroads reimburse the hospital

associations under various arrangements. Other railroads make

since 1955, is financed by employer contributions into a

trust fund of amounts determined to be sufficient to pay

the anticipated cost of employee medical expenses for on-

duty injuries pius additional amounts for claims admin;

istration and the purchase of insurance to cover claims in

excess of that satisfied by the trust fund.* When an em-

ployee incurs an on-duty injury, the railroad either pays

the resulting medical bills in full and seeks reimburse-

ment from Travelers under GA-23000 or forwards the

bills to Travelers for payment. Any medical expenses not

covered by GA-23000 are paid directly by the railroad

employer.

Notwithstanding that employee medical expenses for

on-duty injuries are wholly paid for by the employer un-

der the GA-23000 plan and that the employee in fact

incurs no medical expenses that must be reimbursed in

a FELA action, employees have often sought to recover

as an element of damages in a FELA case the cost of

medica! treatment rendered in conjunction with an on-

duty injury. The issue of whether the employee is en-

titled to “recover” for such medical expenses has been

resolved in conflicting fashion by various state and fed-

eral courts with the outcome generally dependent on con-

flicting application of the collateral source rule to bene-

fits paid under GA-23000 and conflicting interpretations

of the requirements of Section 5 of FELA.

Courts which have permitted FELA plaintiffs to plead

medical expenses as an element of damages (while pro-

direct payments of medical expenses to employees or use an insur-

ance program other than GA-23000. It is a universal practice,

however, for the railroads to pay medica! expenses for on-duty

injuries.

8 GA-23000 also provides medical benefits to employees for off-

duty injuries as well as certain life insurance and accidental death

and dismemberment benefits. The premiums for these employee

benefits are paid separately from those for on-duty medical expenses

and are subject to a separate experience rating.

hibiting a showing that such expenses were paid by the

railroad) have concluded that the GA-23000 policy is a

fringe benefit provided by the employer in partial consid-

eration for services rendered by the employee. As such the

medical benefits paid on the employee’s behalf pursuant

to the GA-23000 policy have been considered a collateral

source and not allowed as an offset to employee FELA

recoveries.’ Often in these cases provisions of applicable

collective bargaining agreements were either not before

the court, or were deemed insufficient to rebut the view

that payment of medical expenses under the policy con-

stituted a fringe benefit.’

Other courts have found that the GA-23000 policy is

not a collateral source and have prohibited a double re-

covery. In so holding these courts have noted that in ad-

dition to being funded entirely by the railroad employer,

the GA-23000 policy serves the important purpose of pro-

viding the railroad employer with funds with which to

pay its FELA liability pertaining to employee medical

expenses."* As generally noted by the courts, policies of

indemnity do not fall within the collateral source rule.”

® See, e.g., Patterson v. Norfolk & Western Ry. Co., 489 F.2d 303,

308 (6th Cir. 1973); Blake v. Delaware and Hudson Ry. Co., 484

F.2d 204 (2d Cir. 1973); Urbaniak v. Erie Lackawanna Ry. Co..,

424 F.Supp. 981 (W.D. N.Y. 1977); Hall v. Minnesota Transfer

Railway Company, 322 F.Supp. 92, 96 (D. Minn. 1971). See also,

Haughton v. Blackship, 462 F.2d 788 (5th Cir. 1972) (application

of collateral source rule to retirement benefits in Jones Act action).

10 Fee, e.g., Patterson v. Norfolk & Western Ry. Co., supra; Blake

v. Delaware and Hudson Ry. Co., supra; Urbaniak v. Erie Lacka-

wanna Ry. Co., supra.

11 Nelson v. Penn Central R. Co., 415 F.Supp. 225, 227 (N.D. Ohic

1976); Thomas v. Penn Central Company, 379 F. Supp. 24, 27

(W.D. Penn. 1974); cf. Wagner v. Reading Company, 428 F.2d 289

(3rd Cir. 1970); Rogers v. Chicago & North Western Transporta-

tion Co., 59 Til. App. 3d 911, 375 N.E. 2d 952, 957-958 (Ill. App.

1978).

12 Nelson v. Penn Central R. Co., 415 F.Supp. at 227; Thomas v.

Penn Central Company, 379 F.Supp. at 27-28; see also Haughton v.

Blackships, Inc., 462 F.2d 788, 791 (5th Cir. 1972).

In addition, in several of these cases the court had before

it, and gave full effect to, a provision of an applicable

collective bargaining agreement describing premiums paid

by the railroad employer for the GA-23000 policy as “not

considered as wage equivalents.” **

Courts considering the status of medical payments

made pursuant to GA-23000 have conflicted not only with

respect to whether such payments constituted fringe bene-

fits within the scope of the common law collateral source

rule, but also with respect to the requirements of the

proviso to Section 5 of FELA pertaining to permissible

set-offs. Thus the courts, in inconsistent fashion, have

characterized Section 5 as simply incorporating the com-

mon law collateral source rule; ** as modifying the com-

mon law rule to allow set-off of enumerated employer

payments set forth in the proviso “regardless of [their]

status under the common law’, and as codifying the

common law rule “in a FELA setting, the effect of which

is to further broaden what is determined to be a “col-

lateral source.’ ”** The latter viewpoint is epitomized in

the concurring opinion of Circuit Judge Friendly in

Blake v. Delaware and Hudson Railway Company (an

opinion followed by other courts) :

What constrains me to concur [that payments made

under GA-23000 constitute a collateral source] is that

13 See, e.g., Nelson v. Penn Central R. Co., supra; Thomas v. Penn

Central Company, supra (Article V of August 19, 1960 collec-

tive bargaining agreement applicable to non-operating employees).

14 Cf, Nelson v. Penn Central R. Co., 415 F.Supp. at 226; Thomas

v. Penn Central Company, 379 F.Supp. at 25; Patterson v. Norfolk

and Western Railway Company, 489 F.2d at 307-308.

15 Hall v. Minnesota Transfer Railway Company, 322 F.Supp.

at 95.

i6 Jucht v. Chesapeake & Ohio Ry. Co., 489 F.Supp. 189, 190

(W.D. Mich. 1980) (construing Blake v. Delaware and Hudson

Railway Company, 484 F.2d at 207 (concurring opinion of Friendly,

J.))

a ce a eR RET on

here we are governed not by federal common law

but by statute. Under 45 U.S.C. § 55 the railroad is

entitled to set off only the premiums, not what the

premiums bought. ... If the railroads wish to

avoid the harsh result [of employee double recovery

of medical expenses] they can accomplish this by

‘pecific provision in the collective bargaining agree-

nent.

484 F.2d at 207; see also, e.g., Urbaniak v. Erie Lacka-

wanna Ry. Co., 424 F. Supp. at 981 (W.D.N.Y. 1977);

Lucht v. Chesapeake & Ohio Ry. Co., 489 F. Supp. at

190; Southern Pacific Transportation Co. v. Allen, 525

S.W. 2d 300, 307 (Tex. Civ. App. 1975) .*”

Because of the inconsistent treatment by the courts of

GA-23000 with regard to whether it is a “collateral

source” for FELA purposes, and as a result of Judge

Friendly’s suggestion in Blake for resolving the con-

troversy, the railroads entered into a Health and Welfare

iT The wisdom of the coliateral source rule has itself been ques-

tioned. Forcing a defendant to pay full damages even though part

of those alleged expenses have been paid by another source clearly

creates a windfall for plaintiffs. For this reason and others, many

commentators have advocated abolition of the collateral source

rule. See e.g., McDowell, The Coilateral Source Rule—The American

Medical Association and Tort Reform, 24 Washburn L.J. 205

(1985); Fleming, The Collaterul Source Rule and Loss Allocation

in Tort Law, 54 Calif. L. Rev. 1478 (1966); Schwartz, The

Collateral-Source Rule, 41 B.U.L. Rev. 348 (1961).

Most recently, a report prepared by, the Justice Department in

cooperation with other federal agencies concluded that the collateral

scurce rule cannot be justified on policy grounds and that its

elimination would contribute significantly to easing the liability

insurance crisis being felt in many sectors of the economy. See

Report of the Tort Policy Working Group on the causes, Extent

and Policy Implications of the Current Crisis in Insurance Avail-

ability and Affordability, 70-72 (February 1986). Inasmuch as the

measure of damages in FELA cases is a matter of federal law,

and the collateral source rule is judicially created doctrine, this case

provides an opportunity to consider the value and scope of that rule

in tort cases governed by federal law.

Agreement with the major railroad employee unions in

October 1975. App. at 25a. Article III of the agreement

specifically provided, with the stated intent of avoiding

duplicative payments of medical expenses to employees,

that. “[b]enefits provided under the policy contract [GA-

23000] will be offset against the right of recovery the

employee may have against the employing railroad for

hospital, surgical, medical or related expenses of any

kind specified in the policy contract.” The parties also

confirmed the intended operation of their agreement in

several letters, one of which, a March 12, 1975 letter

from Mr. William H. Dempsey of the NRLC to Mr. John

Peterpaul of the International Association of Machinists,

was introduced in the record below.’* That letter con-

tained the following example of the set-off provision:

An employee is injured on duty. He sues the em-

ployer for $10,000 and includes in his claim $1,000

of medical expenses which have already been paid

under GA-23,000. If he wins the suit, he should

collect $9,000, not $10,000, for otherwise he would

be collecting twice for the same thing.

This letter also makes clear that the railroads identified

this set-off, among other provisions, as a condition of

continuing the benefits provided under GA-23,000 and

that without such an assurance the on-duty injury cov-

erage might well have been discontinued.

The 1975 Health and Welfare Agreement accordingly

merely made explicit what had been assumed for decades

—that the on-duty injury coverage was to be provided

wholly at the railroads’\expense and was not part of

employee compensation. Just as in 1906, the unions ac-

knowledged in the 1975 Agreement that the railroads

were entitled to credit for benefits provided at their ex-

pense.

18 See Defendant’s Brief in Opposition to Plaintiff’s Motion in

Limine at 9 (Exhibit attached at Appendix B at, 20a~2le).

19a

B. The Longstanding Conflict in the Lower Courts Per-

mitting Double Recovery of Medical Expenses Has

Not Been Resolved By the 1975 Collective Bargain-

ing Agreement And Can Only Be Definitively Re-

solved By This Court

Despite the 1975 collective bargaining agreement mak-

ing crystal clear that medical expenses paid by railroad

employers pursuant to GA-23000 are not intended to be

duplicative of FELA awards and must be offset from

any subsequent employee right of recovery under FELA

for medical expenses, the lower courts are still split on

the employee’s “right” to a double recovery under Section

5 of FELA. While most courts that have considered the

issue appear to enforce the collective bargaining agree-

ment pursuant to its terms,’® other courts, as in the in-

stant case. have instead voided the collective bargaining

agreement.*° The rationale of such cases rests in the

popularized dictum of the Blake case (inecrporated as

holdings in various decisions) that Section 5 “broadens

application of the collateral source rule” in FELA cases

to allow set-off only of “the premiums, not what the

premiums bought.” App. at 1la-12a. In the view of these

courts, because the 1975 collective bar; aining agreement

seeks to “contract away” benefits otherwise payable to an

employee under FELA (i.e., employee medicai expenses

19 See, e.g., Diaz v. Indiana Harbor Belt RR Co., Civ. No. H 79-13

(N.D. Ind., Dec. 1, 1985) (Pet.’s App. at 41la-45a); Lesinski v.

Norfolk & Western Ry. Co. and Conrail, No. H-9307 (Supreme

Ct., N.Y.; June 11, 1982); Banks v. Central of Georgia RR Co.,

Civ. No. 8308 (Muscogee Cty. Ct., Ga., Feb. 24, 1981); Cf. Clark

v. Burlington Northern Inc., 726 F.2d 448, 451 (8th Cir. 1984);

Thomas v. Humble Oil & Refining Co., 420 F.2d 798, 794-95 (4th

Cir. 1970).

20 See, e.g., Folkestad v. Burlington Northern, Inc., No. CV-83-

84-BLG (D. Mont., Sept. 30, 1985), appeal pending, Nos. 85-4280

& 4305 (9th Cir.) ; Herbst v. Burlington Northern RR Co., CV-84-

51-BLG (D. Mont., April 22, 1985) (Pet.’s App. at 32a-33a): Lopez

v. Southern Pacific Transp. Co., 1 Civ. No. 40048 (Cal. App. 1977)

(Pet.’s App. at 34a-40a).

paid though “collateral sources”) the agreement is vicla-

tive of the general prohibition of Section 5 and is thus

void to the extent it requires a set-off. App. at ila-12a.

The railroads thus continue to face the same dilemma

they faced prior to the 1975 agreement: Having obli-

gated themselves to pay in full the medical bills of em-

ployees who are injured on the job, they have no assur-

ance that they will not be required to pay those same

expenses twice. Because the lower courts have been

wholly unable te resolve the FELA medica! benefits issue

in consistent fashion in the absence of guidance from this

Court, and because the instant case and other decisions

voiding the 1975 collective bargaining agreement seri-

ously misconstrue the requirements of Section 5 and

otherwise disregard important public policy considera-

tions, review of the decision below is imperative.

C. The Decision Below Seriously Misconstrues Sectien 5

The decision of the court below, and similar decisions

voiding the 1975 collective bargaining agreement, rest

on a wholly erroneous construction of Section 5 of FELA

and do serious damage to the legislative intent under-

lying Section 5. Indeed, the GA-23000 plan and the col-

jective bargaining agreement at issue in the instant case

serve to implement rather than impede the purpose for

which FELA was enacted.

Pursuant to the requirements of FELA, 45 U.S.C.

§§ 51 et seg. (1982), railroad employers are liable in

damages for on-duty injuries sustained by their employ-

ees which are either caused by negligence of the employer

or result from breach of obligations imposed on the em-

ployer by other federal statutes.*. To ensure the rights

of railroad employees under FELA against employer at-

tempts to limit liability, Section 5 of FELA prohibits a

21 See, e.g., 45 U.S.C. §§ 22 et seq. (1982) (Boiler Inspection

Act of 1911).

railroad employer from exempting itself by contract or

other device from liability created by FELA:

Any contract, rule, regulation, or device whatso-

ever, the purpose or intent of which shall be to en-

able any common carrier to exempt itself from any

liability created by this chapter, shall to that extent

be void: Provided, That in any action brought

against any such common carrier under or by vir-

tue of any of the provisions of this chapter, such

common carrier may set off therein any sum it has

contributed or paid to any insurance, relief benefit,

or indemnity that may have been paid to the injured

emplovee or the person entitied thereto on account of

the injury or death for which said action was

brought.

As the legislative history of Section 5 makes clear,

Congress’ intent in prohibiting railroad efforts by con-

tract or other device to exempt themselves from FELA

liability was directed against such turn-of-the-century

railroad practices as requiring employees to sign releases

from personal injury claims as a condition of employ-

ment, requiring employees to join and contribute to

employer-supported “relief associations” as an exclusive

means of obtaining redress for on-duty injuries, as well

as similar devices through which the railroads sought

tc exempt themselves from liability for personal injury

claims of employees.*? As the legislative history of Sec-

tion 5 further establishes, the language of the proviso

was specificaily incorporsted in Section 5 as a protection

to employers to make clear that even if a contract or

device violated the general prohibition, the railroad would

still be entitled to recover, as a set-off from a FELA

recovery, sums it had actually contributed to the em-

ployee on account of his injury through such prohibited

contract or device.*

22 See H.R. Rep. No. 1386, 60th Cong., 1st Sess. 6-9 (1908) ;

see also Phila., Balt. 2 Wash. R.R. v. Schubert, 224 U.S. 603 (1912).

23 See 40 Cong. Rec. 7662 (1906) (remarks of Mr. Gallinger) ;

42 Cong. Rec. 4527 (1908) (remarks of Mr. Dolliver); 40 Cong.

Considered in the light of the language, legislative

history and purpose of Section 5, the decision of the

court below is totally without foundation. First, far

from constituting a device “the purpose or intent” of

which is to exempt the railroad employer from FELA

liability for employee injuries, the GA-23000 plan, which

is fully funded by the railroad employer, is expressly in-

tended to provide funds to employees who are injured on

the job for the payment in full of their medical expenses.

Indeed, medical benefits provided by the GA-23000 pian

go beyond employer obligations under FELA. Railroads

are not obligated by FELA to pay employee medical

expenses in advance of a FELA judgment, nor are they

required by FELA to pay employee medical expenses for

on-duty -injuries in situations where no liability under

FELA is imposed. The GA-23000 plan affords railroad

employees both these additional benefits while concomi-

tantly providing railroad employers with funds to meet

their potential FELA obligations for the payment oz

medical expenses.

Nor does Section 5 of FELA require that railroad em-

ployers pay twice for employee medical expenses for in-

juries covered by FELA. The 1975 collective bargaining

agreement, by expressly qualifying the medical benefits

payable to employees under GA-23000 to specifically re-

quire an offset in a FELA action of medical expenses

previously paid by the policy, merely seeks to provide

a means of ensuring the elimination of duplicative pay-

ments resulting from court decisions construing medical

benefits paid pursuant to GA-23000 as a fringe benefit

to which the employee is unqualifiediy entitled. As the

1975 collective bargaining agreement makes crystal clear,

duplicative payments of employee medical expenses is

Rec. 7662 (1906) (remarks of Mr. Foraker); 42 Cong. Rec. 4427

(1908) (remarks of Mr. Sterling); 40 Cong. Rec. 4607 (1906)

(remarks of Mr. Henry). See also Senate debate regarding pro-

posal to delete the proviso, 40 Cong. Rec. 7661-62, 7696, 7915-20

(1906).

not intended by either railroad management or labor to

be part of the employee’s compensation package under

the GA-23000 plan. Because the 1975 collective bargain-

ing agreement merely defines the extent of the employ-

er’s obligation for the payment of medical expenses un-

der GA-23000 and does not purport to exempt the rail-

road from liability for the payment of medical expenses

under FELA, the Montana Supreme Court’s decision

voiding the collective bargaining agreement as violative

of Section 5 is utterly without foundation in law or logic.

Second, the Court’s construction of the proviso to Sec-

tion 5, premised on the Blake dictum as engrafted onto

the general caselaw, merely compounds the confusion in

existing law regarding the construction of Section 5. As

the language, legislative history and purpose of Section

5 clearly demonstrate, the proviso to Section 5 does not

become relevant unless a particular contract or device

is first found to be violative of Section 5. In that event,

the proviso works to the benefit of the employer by allow-

ing a set-off of payments made by the employer on the

employee’s behalf notwithstanding that the contract or

device is voided to the extent that it seeks to exempt the

employer from liability. The proviso is thus wholly irrel-

evant with respect to employer medical plans, such as

the GA-23000 plan at issue, which construed on their

own merits do not fall within the general prohibition of

Section 5.

Contrary to the decision in the instant case and those

of other courts voiding the collective bargaining agree-

ment, the language of the proviso was never intended to

“broaden application of the collateral source rule” to

define in the first instance as a “collateral source” all

plans for the payment of medical expenses administered

by insurance companies, such as the GA-23000 plan.

What constitutes a “collateral source” in the area of

employee fringe benefits is first and foremost determined

by any applicable collective bargaining agreement, not

by the proviso to Section 5.”

D. The Decision of the Court Below Cenflicts With

Important Policy Objectives Underlying FELA and

the Collective Bargaining Process

The decision of the court below voiding the offset pro-

vision of the 1975 collective bargaining agreement has

serious policy implications regarding the application of

FELA and the proper functioning of the collective bar-

gaining process. Moreover, the instant controversy is of

great economic significance to the railroad industry.

Each of these factors requires resolution of the long-

standing controversy underlying the administration of

Section 5 of FELA by this Court.

The railroad industry makes a large annual invest-

ment for the specific purpose of paying the medical bills

of employees who are injured on the job. In each of the

last three years the railroad industry as,a whole has

contributed over $40 million to fund on-duty medical

expense benefits.” The needs of employees are well

24 See, e.g., Urbaniak v. Erie Lackawanna Ry., supra; Nelson v.

Central R.R. Co., supra; Thomas v. Penn Central Co., supra;

see also Clark v. Burlington Northern, Inc., 726 F.2d at 451;

Thomas v. Humble Oil & Refining Co., 420 F.2d at 794-95.

Moreover, even if the proviso to Section 5 were deemed relevant

to this case, the proviso allows a set-off of “any sum [a carrier)

has contributed or paid to any insurance... that may have been

paid to the injured employee... .” Since virtually all monies paid

under GA-23000 to an employee are sums which have been paid by

the carriers to the insurance company, or directly to the employee,

the entire benefit received under the GA-23000 plan must be set-off

under the proviso. The comment of the concurring opinion in the

Blake case that only “premium” payments may be set-off is un-

duly restrictive and unsupported by the language of the proviso

itself. The statute refers to “any sum” paid or contributed to any

insurance relief benefit or indemnity. The payments are described

generically, not in terms of “premiums” to an insurance company.

25 In 1983 this amount was $40,639,703; in 1984, $45,331,839 and

in 1985, $40,437,492. In addition the railroads also pay any balance

not covered by the GA-23000 Policy.

served by this arrangement. It provides for prompt pay-

ment of medical bills for on-duty injuries thus alleviating

the financial strain which the employee would otherwise

have to bear until his FELA claim is either settled or

litigated to judgment—a process which can take months

or even years.”*

The decision of the court below voiding the set-off pro-

vision of the 1975 collective bargaining agreement and

permitting duplicative recoveries of medical expenses by

employees can only serve to jeopardize the continued pro-

vision of these medical expense benefits by making such

programs twice as costly to provide. In addition, dis-

allowance of the collective bargaining agreement set-off

not only needlessly imposes an additional and heavy eco-

nomie burden on the railroad industry, but concomi-

tantly makes it more difficult for the railroad industry

to adequately fund its existing FELA medical expense

obligations if it cannot be assured of using insurance

programs such as GA-23000 as a funding vehicle with-

out incurring duplicative obligations. Any reading of

Section 5 of FELA which both provides a disincentive to

employers to provide voluntary medical expense plans in

excess of FELA requirements and at the same time

lessens the ability of employers to meet their FELA obli-

gations can only serve interests contrary to that which

Section 5 was intended to promote. As succinctly stated

by one court, “(t]he employer’s manifest intent to avoid

double liability in offering disability plans [though spe-

cifie provision for offset of such benefits from FELA

awards] must be respected if the collateral source rule

is not to swallow up 45 U.S.C. § 55 at the ultimate ex-

pense of employees.” Clark v. Burlington Northern, Inc.,

726 at 451.

6 Because railroad employees (and other employees covered by

FELA) are governed by tort Jaw as opposed to workers’ compen-

sation for on-duty injuries, their employers are not legally obligated

to furnish medical care in the absence of an adjudication of liability.

In addition, the court below, by voiding the set-off pro-

vided in the 1975 collective bargaining agreement and re-

quiring duplicative payments of medical expenses in

FELA suits contrary to the intention of the parties,

has improperly intruded itself into the collective bargain-

ing process contrary to federal labor policy. As this

Court has specifically noted, there is “strong federal

labor policy against governmental interference with the

substantive terms of collective-bargaining agreements.”

Chicago & N.W. R.Co. v. United Transportation Union,

402 U.S. 570, 579, n. 11 (1971); see also UMWA Health

and Retirement Funds v. Robinson, 455 U.S. 562, 576

(1982) (“[w]hen neither the collective bargaining proc-

ess nor its end product violates any command of Con-

gress, a federal court has no authority to modify the

substantive terms of a coilective bargaining contract”).

The decision below, and those of other courts voiding the

collective bargaining provision based on their miscon-

struction of Section 5 of FELA, directly contravene this

strong federal policy.

CONCLUSION

For the foregoing reasons, the Court should grant the

petition for certiorari.

Respectfully submitted,

DAVID P. LEE J. THOMAS TIDD

NATIONAL RAILWAY LABOR KENNETH P. KOLSON *

CONFERENCE DANIEL SAPHIRE

1901 L Street, N.W. ASSOCIATION OF AMERICAN

Washington, D.C. 20036 RAILROADS

(202) 862-7218 50 F Street, N.W.

HENRY M. MOFFAT Washington, D.C. 20001

NATIONAL ASSOCIATION OF (202) 689-2511

RAILROAD TRIAL COUNS..L

881 Alma Real Drive, Suite 103A

Pacific Palisades, CA 90272

(213) 459-7659

May 16, 1986 * Counsel of Record

APPENDICES

APPENDIX A

MEMBERS OF THE ASSOCIATION OF

AMERICAN RAILROADS

Full Membership

Alton & Southern Railway

Atchison & Topeka & Santa Fe Ry. Co.

Central California Traction

Sunset Railway Company

Alameda Belt Line RR Co.

Harbor Belt Line RR Co.

Kansas City Terminal Railway

Oakland Terminal Railway

Texas City Terminal Railway

Wichita Union Terminal Ry. Co.

Denver Union Terminal Rwy. Co.

Baltimore & Ohio Railroad Co.

Akron & Barbeton Belt Railroad

Curtis Bay Raiiroad

Monongahela Railway Co.

Terminal RR Assn. Of St. Louis

Baltimore & Ohio Chicago Terminal

Bangor & Aroostook Railroad Ce.

Van Buren Bridge

Bessemer & Lake Erie Railroad Company

Birmingham Southern RR Co.

The Lake Terminal RR Co.

McKeesport Connecting Rwy. Co.

The Newburgh & South Shore Rwy. Co.

Burlington Northern Railroad Co.

Davenport Rock Island & NW

Iowa Transfer Railway

Kansas City Terminal

Minnesota Transfer Rwy.

Lake Superior Terminal & Transfer Railway of

Wiseonsin

Terminal RR Assn. of St. Louis

Portland Terminal RR

Paducah & Illinois

Winona Bridge

Camas Prairie

Burlington Northern Dock Corp.

Burlington Northern (Manitoba LTD)

Denver Union Terminal

Galveston Terminal Rwy.

Longview Switching Co.

Wichita Union Terminal Wy. Co.

Cambria & Indiana RR Co. Z

Canadian National—Line in U.S.:

Lines in New England

Lines in New York

Lines in Michigan

Lines in Vermont

Minnesota & Manitoba RR

Chesapeake & Ohio Railway Co.

Covington & Cin. Elev. RR & Transfer Bridge Co.

Norfolk & Portsmouth Belt Line RR

Toledo Terminal Railroad

Chicago South Shore & South Bend

Nicholas Fayette & Greenbriar

Canadian Pacific—Line In U.S.:

Lines in Maine

Lines in Vermont

Saulte St. Marie Bridge Co.

Chicago Illinois Midland Rwy. Co.

Chicago & North Western Trans. Co.

Lake Superior Term. & Trans. Rwy. Company of

Wisc.

Minnesota Transfer Rwy. Co.

Kansas City Terminal Rwy.

Iowa Transfer Railway

Western Rail Properties

Chicago, Milwaukee, St. Paul & Pac. RR

Davenport Rock Island & NW

Indiana Harbor Belt RR

Kansas City Terminal Rwy.

Consolidated Rail Corp.

Monongahela Rwy. Co.

Pittsburgh, Chartiers & Youghiogheny Rwy.

Akron & Berbeton Belt RR

Calument Western Rwy.

Albany Port Authority

Indiana Harbor Belt RR Co.

Nicholas Fayette & Greenbrier

Denver & Rio Grande Western RR

Denver Union Terminal Rwy. Co.

Detroit & Mackinac Railway Co.

Duluth, Missabe & Iron Range Rwy. Co.

Elgin, Joliet & Eastern Railway

Galveston, Houston & Henderson RR

Grand Trunk Western RR

Central Vermont Railway Co.

Duluth, Winnipeg & Pacific Rwy.

Green Bay & Western RR Co.

Winona Bridge RR

Ahnapee & Western Rwy. Co.

Houston Belt & Terminal Rwy. Co.

Illinois Central Gulf RR

Kansas City Terminal Rwy.

Terminal RR Assn Of St. Louis

Paducah & Illinois

Kansas City Southern Railway

Arkansas & Western Rwy.

Kansas & Missouri Rwy. & Term. Co.

Kansas City Terminal Rwy.

Fort Smith & Van Buren Rwy. Co.

Lake Superior & Ishpeming RR

Louisiana & Arkansas Railway Co.

McCloud River Railroad Company

Manufacturers Railway Compeny

Missouri-Kansas-Texas RR Co.

Kansas City Terminal Rwy.

Texas City Terminal Rwy.

Terminal RR Assn of St. Louis

Missouri Pacific Railroad Company

Doniphan, Kensett & Searchy

Arkansas & Memphis Rwy. Br. & Term.

Brownsville & Matamoros Br. Term.

Kansas City Terminal Rwy.

Southern Illinois & Missouri Br. Co.

Texas City Terminal Rwy.

Terminal RR Assn of St. Louis

Great Southwest RR Co.

Chicago Heights Term, Trans

Weatherford, Mineral Wells & Northwestern Rwy.

National Railroad Pussenger Corporation

Norfolk & Western Railway Co.

Chesapeake Western Ry

Des Moines Union Ry Co.

Fort Wayne Union Ry Co.

Kansas City Terminal Ry

Norfolk & Portsmouth Belt Line

Akron & Borherton Belt

Fairport, Painesville & Eastern

Terminal RR Assn of St. Louis

Pittsburgh & Lake Erie RR Co.

Monongahela Railway Co.

Pittsburgh, Chartiers & Youghiogheny

Lake Erie & Eastern RR

Youngstown & Southern Ry Co.

Peoria & Pekin Union Railway

Pittsburgh & Shawmut RR Co.

Prescott & Northwestern RR Co.

Richmond, Frederickburgh & Potomac RR Co.

St. Louis-Southwestern Ry Lines

Arkansas & Memphis Ry Br. Term

Southern Illinois & Mo. Br. Co.

Terminal RR Assn of St. Louis

Kansas City Terminal Ry. Co.

Seaboard System Railroad Inc.

Norfolk & Portsmouth Belt Line

Gainesville Midland RR Co.

Paducah & Illinois

Terminal RR Assoc. of St. Louis

Woodstock & Brockton RR

Carrollton RR Co.

Soo Line Railroad Company

Lake Superior Term. & Trans Ry Co. of Wisc.

Minnesota Transfer Ry Co.

Saulte Ste Marie Bridge Co.

Southern Pacific Transportation

Holton Interurban Ry Co.

Northwestern Pacific Railroad

Petaluma & Santa Rosa RR

Visalia Electric RR Co.

Central California Traction Co.

Portland Traction Company

Sunset Railway Co.

Harbor Belt Line RR Co.

Portland Terminal Railroad

Southern Railway Company

Alabama Great Southerr. RR Co.

Woodstock & Blockton RR Co.

Louisiana Southern Railway

New Orleans Terminal Co.

Atlanta & East Carolina Ry

Camp LeJeune RR Co.

Cincinnati, New Orleans & Texas Pacific

Central of Georgia RR Co.

Georgia Northern Ry Co.

Georgia Southern & Florida Ry

Live Oak Perry and South Georgia RR Co.

State University RR Co.

Interstate RR Co.

Norfolk & Portsmouth Belt Line

St. Johns River Terminal

Tennessee, Alabama & Ceorgia Ry

Tennessee Railway Co.

Carolina & Northwestern RR Co.

Algers, Winslow & Western

Terminal RR Assn. of St. Louis

Texas Mexican Railway Company

Union Pacific Railroad Company

Spokane International RR Co.

Portland—Traction Company

Harbor Belt Line

Kansas City Terminal Ry Co.

Portland Terminal RR

Mt. Hood Railway Company

Camas Prairie

Denver Union Terminal

Longview Switching Co.

Union RR Company of Pittsburgh

Vermont Railway Inc.

Western Pacific Railroad Co.

Sacramento Northern RR

Tidewater Southern Ry

ee eer rrr le eee eee

Central California Traction Co.

Alameda Belt Line

Oakland Terminal Ry

Western Railway of Alabama

Atlanta & West Point

Winston-Salem Southbound

High Point, Thomasville & Denton

Chicago & Western Indiana

SPECIAL CANADIAN AND MEXICAN MEMBERS

Canadian Lines (in Canada)

Algoma Central Railway

British Columbia Hydro & Power Authority

British Columbia Railway

Canadian National Railways

Canadian Pacific Limited

Ontario Northland Railway

Toronto, Hamilton & Buffalo Railway

White Pass & Yukon Corporation Ltd.

VIA Rail Canada

Mexican Lines (in Mexico)

Chihuahua Pacific Railway Company

[Direccion General; de Ferrocarriles en

Operacion] :

Ferrocarril Sonara-Baja California, S.A.

de C.V,

Ferrocarriles Unidos del Sureste, S.A. de C.V.

Ferrocarril del Pacifico, S.A. de C.V.

National Railways of Mexico

Associate Members

Alaska Railroad (ALASKA)

American Refrigerator Transit Company

Amko Service Company

Apalachicola Northern Railroad Company

Atlanta & St. Andrews Bay Railway Company

Belfast & Moosehead Lake Railroad Company

Boston & Maine Corporation

California Western Railroad

Centromen Puru Incorporated

Chevron Chemical Company

Chicago South Shore & South Bend Railroad

Chicago Rail Link

Cities Services Company Railroad

Cliffs Western Australian Mining Company Pty. LTD.

(AUSTRALIA)

Colorado & Wyoming Railway Company

Dardanelle & Russellville Railroad Company

Delray Connecting Railroad Company

Deveo Railway (Cape Breton Dev. Corp.—Coal Div.)

(CANADA)

East Erie Commercial! Railroad

East Jersey Railroad and Terminal Company

East St. Louis Junction Railroad Company

Empressa Minera Del Centro Del Peru Railways

(PERU, S.A.)

Essex Terminal Railway (CANADA)

Fepasa-Ferrovia Paulista (BRAZIL, S.A.)

Fruit Growers Express Company

Genesee & Wyoming Railroad Company

Grafton & Upton Railroad Company

Graysonia, Nashville & Ashdown Railroad Company

Great Western Railway Company

Hamersely Iron Pty. Ltd. (WESTERN AUSTRALIA)

Hartford & Slocomb Railroad Company

Hillsdale County Railway Company, Inc.

India, Gov’t of: Ministry of Railways (INDIA)

Japanese National Railways (JAPAN)

Korean National Railroad (KOREA)

Lenawee County Railroad Company, Inc.

Louisiana & North West Railroad Company

Manufacturer’s Junction Railway Company

Maryland & Pennsylvania Railroad Company

Metro North Commuter Railroad Company

Michigan Northern Railway Company, Inc.

Middletown & Hummelstown Railroad Company

MidSouth Rail Corporation

Minnesota, Dakota & Western Railway Company

Monongahela Connecting Railroad Corporation

New Orleans Public Belt Railroad

Northeast Illinois Railroad Corporation

Pacific Fruit Express Company

Pearl River Valley Railroad Company

Pickens Railroad—National Railway Utilization

Corporation

Port Authority of New York & New Jersey (The)

Providence & Worcester Company

Public Transport Commission of New South Wales

(AUSTRALIA)

Rede FERROVIARIA Federal S.A. (BRAZIL)

Roberval & Saguenay Railway Company (CANADA)

Roscoe, Synder & Pacific Railway Company

San Diego & Arizona Eastern Transportation Company

Sierra Railroad Company (CALIFORNIA)

Somerset Railroad Corporation

South African Railways (REPUBLIC OF SOUTH

AFRICA)

10a

Southern Indiana Railway, Inc.

Spanish National Railway, (RNFE) (SPAIN)

Taiwan Railway Administration (REPUBLIC OF

CHINA) :

Texas & Northern Railway Company

Upper Merion & Plymouth Railroad Company

Victoria A Minas Railway (BRAZIL)

Wabush Lake Railway Ltd. (CANADA)

Washington Railroad Company

Yancey Railroad Company

lla

APPENDIX B

THE ORDER OF RAILROAD TELEGRAPHERS

3860 Lindell Boulevard

St. Louis, Mo.

September 16, 1960

Mr. J. P. Tahney, President

The American Railway Supervisors Assn., Inc.

53 West Jackson Blvd.

Chicago 4, Illinois

Mr. R. C. Coutts, President

American Train Dispatchers’ Assn.

19 East Huron Street

Chicago 11, Illinois

Mr. A. Philip Randolph, President

Brotherhood of Sleeping Car Porters

217 W. 125th Street {Room 301)

New York 27, New York

Mr. Eugene E. Frazier, President

United Transport Service Employes

444 East 63rd Street

Chicago 17, Illinois

GROUP POoLicy CONTRACT GA-23000

AS AMENDED AND EXPANDED

Dear Sirs and Brothers:

Your organization has a number of employes covered

by Travelers Group Policy Contract GA-23000, as

amended and expanded.

At the present time under that Group Policy Contract

the carriers on non-hospital association railroads are pay-

12a

ing $11.05 per month per employe for employe and de-

pendent coverage while the premium cost for such cover-

age is $13.17 per month per employe, the difference being

paid from our Special Account which has been built up

over the years primarily through retroactive premium

credits. On the hospital association railroads the carriers

are paying not to exceed $6.80 per month per employe to

the Hospital Association on that carrier for employe cov-

erage; they also pay $4.25 per month per employe for

dependent coverage while the premium on that coverage

is $6.10 per month per employe, the balance being paid

from our Special Account. There are sufficient funds in

the Special Account to meet these payments until the

close of this policy year, March 1, 1961.

In the agreement entered into on August 19, 1960 by

the Eleven Co-operating Railway Labor Organizations

with the Carriers’ Conference Committees, the Health

and Welfare Program is improved, effective March 1,

1961, to provide the same benefits for dependents as the

employes receive except for home and office calls, and it

also provides coverage for furloughed employes and their

dependents for an additional three months. It further

provides for a Group Life Insurance Policy for each cov-

ered employe of $4,000, effective as of March 1, 1961.

The agreement with the Carriers provides that our policy

with The Travelers Insurance Company will be amended

accordingly.

The new premiums to be paid by the railroads begin-

ning with February 1961 (premiums are paid in one

month for benefits in the following month) are as follows:

On non-hospital railroads the new rate will be $20.31

plus 81¢ for on-duty injuries, plus 70¢ for the addi-

tional coverage for furloughed employes and their

dependents, or a total of $21.82 per month per em-

ploye instead of the $11.05 per month per employe

which they are now paying.

aa Ne aed hari Ra NR pedi ra Ns

13a

The hospital association railroads will pay Travelers

$12.73 for dependent coverage and group life insur-

ance for the employe, plus 38¢ for coverage of de-

pendents of furloughed employees for the additional

period, or a total of $13.11 per month per employe

instead of the $4.25 per month per employe which

they are now paying. In addition the hospital asso-

ciation railroads are required to pay up to $7.58 for

employe coverage, plus up to 81¢ for on-duty injuries,

or a total of $8.39 per month per employe. The hos-

pital association railroad is also required to make

arrangements with the Hospital Association on its

railroad to take care of the furloughed employes f-r

the additional period of three months.

In other words, the increased cost to all railroads,

whether non-hospital or hospital association railroads, is

$10.77 per month per employe, $9.96 of which is consid-

ered to be in lieu of a wage increase in early 1961 and

81¢ for on-duty injury coverage which is considered a

carrier liability.

I am attaching hereto a copy of the agreement of Au-

gust 19, 1960 which details these changes.

This information is furnished you so that it will be

available to you in your current negotiations with the

carriers. It will be necessary for all organizations repre-

senting employes covered by GA-23000, as amended and

expanded, to make similar arrangements for these in-

creased premiums beginning with the month of February

1961 (for benefits beginning March 1, 1961) which are

necessary to carry this insurance.

Our Special Account will be so reduced at the end of

this policy year that we will be unable to pay any portion

of the premiums from that account after January 1961.

14a

Please acknowledge receipt and advise your under-

standing.

Fraternally yours,

/s/ G. E. Leighty

Chairman

Employes’ National Conference

Committee Cooperating

Railway Labor Organizations

Enclosure

ee eee

we Ue Sabin yl l Bnteas) a, Wee

15a

NATIONAL RAILWAY LABOR CONFERENCE

Washington, D.C.

March 26, 1964

Mr. Louis J. Wagner, President

Order of Railway Conductors and Brakemen

O.R.C. & B. Building

Cedar Rapids, Iowa

Mr. Charles Luna, President

Brotherhood of Railroad Trainmen

Standard Building

Cleveland 13, Ohio

Gentlemen:

This confirms the understanding we have reached with

your representatives, in negotiations on a health and wel-

fare plan to cover employees your organizations repre-

sent, as to the handling of on-duty injuries matters.

We understand that the cost of the on-duty injuries

factor «vill be paid from the monies which have been set

aside by the Carriers as result of compensated service

rendered during the months of January and February,

1964. The “on-duty injuries cost factor” is the amount

bid by the insurance companies. We do not anticipate

that it will exceed $1.00 per employee per month, but the

factor cannot be definitely fixed until insurance rro-

posals are received.

(a) “The above shall apply for a 24-month period

commencing on the date the Policy becomes effective.”

This is stated in paragraph 2(d) of the Memorandum

of March 26, 1964.

(b) “The entire $23.00 shall be paid into the escrow

fund for the months of January, February and

March, 1964.” This is stated in paragraphs 2(d)

and 2(e) of the Memorandum of March 26, 1964.

16a

an accounting of the monies paid in escrow by the

carriers for the months of January, February and

March, 1964.” We understand that the reports which

the insurance company is to furnish will meet this

specification.

(d) “The Carriers shail definitely assume the entire

cost of the on-duty injuries cost factor after the ex-

piration of the initial two-year Policy.” This is in

accordance with our understanding.

(e) “A separate accounting shall be kept of the ex-

perience of the on-duty injuries cost factor, also,

the amount of credit to the fund in the form of

interest and other accruals.” This is in accordance

with our understanding, as set forth in paragraph

2(d) of the Memorandum.

(f) “In the event the on-duty injuries cost factor

does not consume the entire amount of the monies

which was set aside during the months of January

and February, 1964, the monies remaining in that

fund shall remain a part of the basic reserve of the

Health and Welfare Program.” This is in accord-

ance with our understanding.

(g) “All of the above shall be reduced to writing.”

This letter carries out this portion of our under-

standing.

“Any understanding reached in connection with the

above shall in no way relieve the carriers of their

responsibility as set forth in the Federal Employers’

Liability Act.” This is in accordance with our un-

derstanding.

Will you please acknowledge receipt of this letter and

its correctness as an expression of our understanding.

etd Ere bud eet ate de

/3/

17a

/s/ [{Ilegible]

Chairman

National Railway Labor

Conference

/s/ [Illegible]

Chairman

Eastern Carriers’ Conference

Committee

/s/ [Illegible]

Chairman

Western Carriers’ Conference

Committee

/s/ [Mlegible]

Chairman

Southeastern Carriers’

Conference Committee

ACCEPTED:

ORDER OF RAILWAY

CONDUCTOR & BRAKEMEN

L. J. Wagner

President

G. H. Harris

Senior Vice President

C. H. Anderson

General Secretary and Treasurer

T. M. Walters

Vice President

[Tllegible]

Chairman, Executive Committee

18a

BROTHERHOOD OF

RAILROAD TRAINMEN

/s/ C. Luna

President

/s/ R. E. Severt

Chairman, H. & W. Committee

/s/ R. E. Carroll

Secretary, H. & W. Committee

/s/ R. C. Jordan

Member, H. & W. Committee

/s/ John L. Penderson

Member, H. & W. Committee

19a

NATIONAL RAILWAY LABOR CONFERENCE

1225 Connecticut Avenue, N.W.

Washington, D.C. 20036

Area Code: 202-659-9320

March 12, 1975

Mr. John Peterpaul

General Vice President

International Association of Machinists

and Aerospace Workers

Room 814, Machinists Building

1300 Connecticut Avenue, N. W.

Washington, D.C. 20036

Dear Mr. Peterpaul:

As I indicated during our recent discussions respect-

ing health and welfare and related matters, while the

carriers are prepared to continue the present benefits

provided under Group Policy Contract GA-23000 for a

three-year period commencing January 1, 1975, that

willingness is conditioned upon the policyholder labor

organizations’ agreeing to certain changes designed to

avoid unnecessary expense without affecting the benefits

to the employees or participation of the organizations in

the administration of this program.

The changes are:

1. Agreement by the organizations to expeditious

use of the amounts in the Special Account to

offset premium payments, with the objective of

maintaining the necessary balance in the Account

consistent with the assurance of continued Medi-

care premium payments.

Agreement in principle to adoption of a premium-

plus-aceount approach to funding GA-23000, pro-

vided that further thorough exploration confirms

the advice given us jointly by Travelers that the

20a

interests of the Policyholder will not be adversely

affected.

3. Inclusion of a subrogation provision similar to

that included in the supplemental sickness bene-

fits agreement between the carriers and the Ma-

chinists’ and certain other organizations.

What we have in mind, as a typical case, is this:

An employee is injured on duty. He sues the em-

ployer for $19,000, and includes in his claim $1,000

of medical expenses which have already been paid

under GA-23000. If he wins the suit, he should

collect $9,000, not $10,000, for otherwise he would

be collecting twice for the same thing.

Our understanding is that, in light of the terms agreed

to by the carrier, on behalf of your organization you do

not object to these changes, but that you do not purport

to speak for any other organizations.

If you concur, would you please sign below.

WILLIAM H. DEMPSEY

Yours very truly,

/s/ W. H. Dempsey

/s/ John Peterpaul

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.