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Employee attitudes about railroad injury compensation.

Railroad workers who are injured on the job are covered by the Federal Employers' Liability Act (FELA) rather than by state workers' compensation programs. State workers' compensation programs are strict liability systems where injured workers receive compensation regardless of who is at fault. FELA is a tort, or negligence-based, liability law that entitles injured workers to receive compensation only if the railroad is at fault (wholly or in part) or in violation of safety laws. FELA was legislated in 1908, prior to the development of the state workers' compensation programs. Railroad work was extremely dangerous, and injured workers had little recourse against their employers at that time.(1)

Controversy about FELA emerged shortly after its inception and the development of no-fault state workers' compensation programs.(2) The railroads have rekindled the public policy debate as FELA costs have risen dramatically over the last decade and a half, although the number of workers and job-related injuries have substantially decreased.(3) A number of studies support the railroads' contention that they incur a larger direct cost (i.e., claims payout) under FELA than they would under state workers' compensation.(4) A recent report by the Transportation Research Board (TRB) estimates that FELA injury awards are between two and four times workers' compensation injury payments.(5)

Though there has been no legislative action to date, the federal government has shown a renewed interest in FELA. Congressional hearings were held in 1989,(6) and bills to repeal FELA were introduced in both houses of the 101st Congress in 1990.(7) The federal Department of Transportation recommended the repeal of FELA in its 1990 statement of national transportation policy,(8) as did the Federal Courts Study Committee in its 1990 report.(9) In 1992 the House Appropriations Committee requested the TRB to conduct a comprehensive analysis of FELA.(10) Recently, at least one Congressional committee chairperson has indicated that FELA may come up for discussion in 1995.(11)

The TRB report notes that railroad management and labor hold diametrically opposite views on the merits of FELA, with the railroads vehemently opposed and the unions adamantly in favor of it.(12) These views were also revealed to the authors in interviews with several railroad executives and national representatives of the labor unions.(13) The TRB identifies the major areas of disagreement: worker coverage and benefits; the cost of the systems, including the direct costs of benefits, the time and litigation involved in settling claims, and the incentives for rehabilitation and return to work; and the safety incentives, including accident cause determination and management-labor relations.(14)

While the railroad and union positions have been well documented in the literature, there are no published studies that attempt to ascertain the satisfaction of railroad employees with the FELA system. The primary purpose of this study is to determine railroad employees' attitudes about the impact of the injured employee compensation program on the issues delineated above. Additionally, employee satisfaction with the claim settlement process is assessed. Finally, various factors that may account for attitudinal differences among employees are analyzed.

The article is organized in the following manner: first, a brief review of the key issues concerning FELA is presented; second, the research methodology is described; third, the results are examined; and finally, conclusions and implications are discussed.

THE ISSUES

The key points of contention in the issues delineated in the TRB report are summarized below. Frequently, state workers' compensation is used as the frame of reference for evaluating FELA.

Worker Coverage

Fault-basis, the fundamental difference between FELA and state workers' compensation programs, is at the heart of this issue. If the railroad is not at fault when an employee is injured, the employee is not entitled to compensation. Thus, not all rail employee job-related injuries are guaranteed compensation under FELA. All employees in industries covered by state workers' compensation laws are, theoretically, guaranteed compensation when their injuries occur while on the job regardless of who is at fault.

FELA opponents argue that the prevailing social policy with respect to employees injured on the job favors the no-fault approach. They point out that besides railroad workers only seamen in the marine industry, who are subject to the Jones Act (46 U.S.C. Section 688), are covered by fault-based programs. The no-fault approach is the generally accepted approach by all fifty states, Congress, and most industrialized nations. Subsequent to enacting FELA, the U.S. Congress chose the no-fault approach, first in 1916 for federal employees (i.e., the Federal Employees' Compensation Act), and second in 1927 for longshore and harbor workers (i.e., the Longshore and Harbor Workers' Compensation Act).(15)

Proponents of FELA put forth two arguments pertaining to this issue: (1) a very high percentage of injured railroad employees receive compensation under FELA and (2) some injured workers covered by state workers' compensation receive no compensation.(16) Opponents of FELA acknowledge that the vast majority of FELA claims are for minor injuries (i.e., those resulting in no or very little lost work time), and are settled quickly and directly with the employees. Furthermore, FELA opponents contend that Supreme Court decisions over time have revealed judicial preference for the no-fault approach, and have resulted in the railroad industry confronting the worst of all situations - lower evidentiary requirements to be found negligent and no ceiling on payouts if found negligent.(17) In general, only the more serious injury cases which seek larger compensation amounts end up in court, and not a large percentage of these do. One railroad executive implies that the lack of a cap on FELA payouts and the capriciousness of juries are two key reasons that a small percentage of FELA claims are contested by railroads.(18) However, FELA detractors contend that a significant number of employees who suffer more serious injuries receive no compensation, and cite Association of American Railroad (AAR) data on FELA court decisions to support this contention.(19)

Worker Benefits

A key argument of FELA advocates is that workers' compensation programs do not provide adequate wage loss benefits, and that higher paid workers, such as railroad employees, are adversely affected since most state programs base the compensation levels on the state average wage rate. They also argue that FELA is a more equitable approach because: (1) FELA awards may also compensate for pain and suffering; (2) FELA settlements are more tailored to the individual's economic situation; and (3) inequities result from the great variation in workers' compensation award levels among the fifty states.(20)

FELA opponents who favor the application of state workers' compensation laws to the railroad industry counter that: (1) workers' compensation benefits are not subject to income tax levies or social security reductions, which is why less than 100 percent of gross lost wages are awarded;(21) (2) FELA awards are often inequitable because injured employees with similar injuries and similar economic situations may receive different awards due to reliance upon jury decisions and because of differences in the bargaining effectiveness among employees and attorneys; (3) employee uncertainty under FELA is higher with respect to whether or not they will receive compensation and, if they are compensated, what level of compensation they will receive;(22) and (4) the net benefits to employees in litigated or attorney represented FELA claims are substantially reduced by very high attorney fees (an issue discussed below).

Time and Litigation Involved in Settlement

FELA opponents contend that the transactions costs (i.e., costs associated with the administration of claims and settlement of disputes for contested claims) incurred under FELA are greater than those incurred under state workers' compensation programs. They maintain that FELA generates more litigation because of its tort nature, and that employees incur much higher attorney fees. Rail employees' attorneys typically receive 25 percent to 33 percent of FELA payout, and it has been estimated that the railroads' total transactions costs exceed 40 percent of the payout.(23) The TRB found that attorneys' fees consumed a much smaller share of benefits paid out under workers' compensation programs in most states.(24)

FELA advocates point out that the vast majority of claims are handled without attorney representation or litigation,(25) and contend there is substantial tort action under state workers' compensation programs.(26) The TRB noted that the litigiousness of workers' compensation seems to be increasing but is far from rampant.(27)

The TRB concluded that there may be significant delays in receiving FELA settlements for some workers, particularly for those having represented or litigated claims. The TRB could not, however, determine whether these delays are too long.(28) It should be noted that workers' compensation pays benefits during the period that a claim remains open, but railroads are under no obligation to do so. However, a number of railroads make cash advances to injured employees or provide wage continuation programs.(29)

Incentives for Rehabilitation and Return to Work

As the TRB notes, FELA provides both incentives and disincentives for the employee to return to work. On the positive side, since nearly all FELA settlements are lump sums, the employee has an incentive to return to work once a settlement has been reached because one need not remain injured or disabled to receive the compensation. On the other hand, until a settlement is reached the employee has an incentive to remain out of work to improve the negotiating position. The TRB could not ascertain the net effect of FELA on rehabilitation and return to work because of limited data.(30) However, the National Commission on State Workmen's Compensation Laws asserted that FELA has built-in disincentives as neither employer nor employee has an incentive to cooperate with rehabilitation services.(31)

Safety Incentives

The key safety issues discussed in the literature include (1) the inherent safety incentives of tort liability and strict liability (i.e., no-fault) systems, (2) the safety performance of the railroad industry relative to other industries, and (3) the impact of the liability system on determining (and correcting) the causes of accidents.

Tort vs. strict liability. The safety incentives under negligence-based systems are relatively straightforward. Oldfather and Babcock succinctly state the position of those who favor a tort liability system for injured railroad employees: "FELA advances the cause of industrial safety by holding railroads financially responsible for their negligent acts. Because injured employees' compensation is reduced by their negligence, FELA also promotes safe practices by workers."(32)

The strict liability system is also viewed as containing safety incentives for both employers and employees. Employers obviously have an incentive to provide safe working conditions since they are liable for all work-related injuries regardless of fault. Employees, too, have an incentive since the state workers' compensation programs in the U.S. are "shared strict liability" systems where the employees bear some of the accident costs (i.e., the governmentally determined compensation is less than the employee's full accident COSTS).(33)

Railroad safety performance. A direct measure of the safety effectiveness of FELA versus workers' compensation would be very difficult since nearly the entire railroad industry has been covered by FELA since 1908 and was subject to common law liability before this time,(34) and there is no exactly comparable industry (e.g., with exact same types of jobs, exact same technology, same injury risk, etc.) covered by workers' compensation.

FELA advocates often argue that the railroad industry should be subject to a fault-based system (which they contend better promotes safety) because the industry is one of the most dangerous in the country.(35) Bureau of Labor Statistics data, however, show that several other industries, as well as other modes of transportation, have a higher injury rate as measured by lost work days per 100 full-time employees.(36)

Impact upon determining the causes of accidents. FELA opponents maintain that FELA is an impediment to safety because its fault-based nature provides incentives to both employers and employees to withhold information about the causes of accidents. As one railroad representative asserts:

The most effective way to improve safety is to investigate objectively the causes of workplace accidents and injuries, and to evaluate how best to avoid their recurrence.... The economic incentives involved in affixing blame for accidents provide both parties with ample reason to be less than candid during investigations. At best, this situation frequently leads to confusion and uncertainty concerning the causes of workplace accidents, and lessens the likelihood that safety-related improvements will be made.(37)

As evidence of this incentive for employees, a number or articles cite a FELA plaintiff attorney's handbook for rail employees which advises injured workers not to divulge information about the causes of their accidents in order to avoid jeopardizing their potential benefits.(38)

DATA COLLECTION

The primary objective of this research is to determine railroad employees' attitudes on the injury compensation issues. Also, the factors that may lead to differing attitudes among employees are analyzed. The survey methodology is described below.

Survey Instrument

A survey instrument was developed by the authors to investigate railroad employee satisfaction with a number of dimensions of the workplace. Two sections pertain to FELA issues.(39)

A nineteen-item section titled "Safety Attitudes" was based on the major issues pertaining to injured worker compensation programs. Employees' general attitudes about the following aspects of injury compensation were assessed: fault-based nature (4 items), impact upon safety (4 items), worker rehabilitation (3 items), the fairness and timeliness of the financial settlement (4 items and 2 items, respectively), and the impact on labor-management relations (2 items). A 1 (strongly disagree) to 5 (strongly agree) response option framework was used.

Additionally, in a section titled "Safety Experiences" employees who have filed an injury claim were asked to describe their satisfaction with six facets of the claim settlement process as well as their overall assessment of the handling of the claim. A 1 (very dissatisfied) to 5 (very satisfied) response option framework was used. The survey questions in these two sections are provided in the appendix.

In order to determine that the respondents were representative of the total workforce, the survey instrument solicited personal information and work-related personnel data. Information about the respondent's work-related injuries (i.e., extent of medical care required for most serious injury and amount of work missed) and experience with the claim settlement process (i.e., was an attorney used, was a lawsuit filed, was there a trial proceeding, how long did it take to settle the claim) was also collected as it was hypothesized that these experiences might influence employee attitudes.

Sample

Union employees at four (two eastern and two western) of the largest seven Class I railroads comprise the survey population. Employees participating in the study were randomly selected in such a way as to permit conclusions about (1) all sample carriers' employees and (2) employees in each of four occupational (union-based) groupings. Occupational groupings were utilized primarily for two reasons. One, the large number of railroad unions and the variance in their sizes (i.e., number of members) make comparisons across union groups impractical or not meaningful. Two, the work environment (e.g., where the job is performed) and nature of the work (e.g., the inherent danger of the work) may be factors that influence employee attitudes about injury compensation programs. Therefore, it is more meaningful and relevant to segment the sample on the basis of work environment similarity rather than union affiliation, particularly since many unions have similar work environments.

Four occupational groupings were thus identified: shop crafts, train crews, clerks, and maintenance. Union affiliation was used to classify an employee into one of the four categories as follows:

Shop Crafts: International Association of Machinists International Brotherhood of Boilermakers and Blacksmiths International Brotherhood of Electrical Workers International Brotherhood of Firemen and Oilers Sheet Metal Workers International Association Transportation Communication Union (Carmen)

Train Crews: Brotherhood of Locomotive Engineers United Transportation Union

Clerks: Transportation Communication Union (Clerks)

Maintenance: Brotherhood of Maintenance of Way Employees Brotherhood of Railway Signalmen

[TABULAR DATA FOR TABLE 1 OMITTED]

The four railroads reported that there were 107,743 union employees working in the specified four occupational groupings. Table 1 provides population, target sample, and actual sample sizes. Using estimates of the population sizes of these four groups, a random stratefied sampling procedure was employed. That is, the same proportions of each occupational group represented in the overall employee population were used to draw the sample (e.g., approximately 21.4 percent of the union employee population was represented by the category of shop crafts; the target sample consisted of 20.5 percent shop craft employees). Within each occupational grouping, employees were randomly selected to participate in the study. The sampling strategy resulted in a target sample size of 4,250.

Surveys were sent directly to employees' homes, with instructions to return their completed questionnaires to a university address. All responses were therefore anonymous and participation by employees was voluntary. Any survey returned within twelve weeks was accepted for inclusion in the study. Usable questionnaires were received from 1,167 respondents, for an overall response rate of 27.5 percent. Of the 1,167 respondents 126 chose not to report their specific union membership and therefore could not be classified into an occupational group. The distribution of responses by occupational grouping was, however, reasonably consistent with the stratification plan. More specifically, response rates from each group ranged from a low of 21.8 percent in the maintenance group to 27.8 percent in the clerks group. This means that inferences about all employees within an occupational group at the four railroads can be made with reasonable confidence on the basis of sample responses from each group.

RESULTS

First, aggregate sample results are presented for employee attitudes about key FELA issues (i.e., the nature and perceived impacts of the injured employee compensation program) and for employee satisfaction with the claim settlement process. Second, comparisons among [TABULAR DATA FOR TABLE 2 OMITTED] employee groups are made on the basis of occupational group, injury experience, and claim settlement process experience.

Aggregate Sample Results on Employee Attitudes on FELA Issues

The mean scores for the nineteen survey items pertaining to the FELA issues are summarized in Table 2. Since a 1 (strongly disagree) to 5 (strongly agree) response option framework was used, scores less than 3.00 can be regarded as disagreeing with the statement while scores greater than 3.00 can be viewed as supporting the statement.

Fault basis. As noted earlier, FELA is a tort liability, or fault-based, system. The fault-based nature of FELA primarily differentiates it from state workers' compensation programs and, according to its detractors, is the root of several problems related to safety and compensation. FELA also embraces the concept of comparative negligence, which holds that an injured employee is not entitled to full compensation if the cause of the injury is determined to be partially due to the negligence of the employee.

Railroad employees are strongly opposed to the concept of no compensation if the injury results from employee negligence or error (M=2.10). Furthermore, they are more inclined to disagree than agree with the statement that the employee's settlement should be reduced if the injury is determined to be partially the fault of the employee (M=2.73). In a similar vein, they believe that an injured worker should be fully compensated regardless of fault (M=3.55).

Safety impacts. Respondents generally concur with the statement that the railroad would not emphasize safety were it not for the possibility of large financial awards (M=3.83), an argument often made by FELA supporters. However, they generally do not believe that the railroad's injury compensation program helps prevent injuries (M=2.49). More specifically, the responding employees tend to agree that the practice of fault determination prevents safety problems from being addressed (M=3.29), and that until a claim is settled the injured employee is reluctant to discuss the causes of the accident because it may impact the amount of compensation (M=3.41).

Rehabilitation. Railroad employees are inclined to agree with the philosophical statement that rehabilitation is a primary objective of injury compensation programs (M=3.34). They do not agree, however, that railroad programs promote quick rehabilitation (M=2.80). They believe that the legal nature of the process sometimes discourages workers from rehabilitating themselves as soon as possible (M=3.30).

Fairness of settlement. The survey respondents believe that a drawback of their injury compensation program is that similar injuries can result in different settlements (M=3.58) and that the program would be more fair if identical injuries received identical settlements (M=3.20). While these sentiments may be viewed as more consistent with the approach taken by state workers' compensation systems, railroad employees also believe that there should be no caps or limits on financial settlements for injury claims (M=3.72). These views are not necessarily contradictory, but they are not practicable under the tort liability system currently in place. Similar to many opponents of FELA, respondents perceive lawyers to benefit more than the injured workers from the railroad's injury compensation program (M=3.66).

Timeliness of settlement. Employees believe that there should be immediate compensation regardless of fault (M=3.86). The survey respondents contend that it takes too long to receive final compensation (M=3.91).

Impact on labor-management relations. FELA detractors assert that the tort liability approach creates an adversarial situation between management and labor which generally hurts overall labor relations. The respondents agree that the process of settling injury claims usually hurts labor-management relations (M=3.52) and usually creates "hard feelings" between the two (M=3.51).

Satisfaction with the Claim Settlement Process

Employees who have filed an injury claim were asked to describe their satisfaction with various facets of the claim settlement process. It should be pointed out that the injuries suffered by responding employees vary widely in a number of ways (e.g., in severity and when they occurred), and that the claim settlement process also varied widely (e.g., direct settlement negotiated between the railroad and the employee, involvement of attorneys, lawsuits filed, case went to trial). Table 3 reports the overall levels of satisfaction with the process.

Employees indicate dissatisfaction (i.e., M [less than] 3.00 "neutral" score) with every attribute or component of the claim settlement process except for the determination of who was at fault (M=3.04), which received a neutral score. The lowest level of satisfaction (M=2.45) was assigned to the concern shown for the employee's well-being by the company. Similarly, the unions are perceived as providing less than satisfactory support for injured [TABULAR DATA FOR TABLE 3 OMITTED] workers (M=2.80). The second lowest level of satisfaction was expressed on the fairness or equity question - the size of settlement relative to those with similar injuries (M=2.58).

Comparison of Employee Groups

To determine the factors that might influence how railroad employees view the injured worker compensation programs and policies, the sample was split in a number of ways and comparative analysis of each of the twenty-six items reported in Tables 2 and 3 was performed. The statistical method used in all of the comparisons is analysis of variance (ANOVA), with the Tukey-HSD test used to evaluate mean differences. Only differences at p [less than or equal to] .05 are considered statistically significant unless otherwise noted.

First, comparisons were made across the four occupational groups described earlier. As one pro-FELA argument is that the fault-based approach is more appropriate than the no-fault approach for industries that have more dangerous jobs, a comparative analysis was also conducted on the basis of respondents' perception of job danger.

Additionally, as discussed previously, comparisons were made on the basis of injury and claims experience as it is hypothesized that differences among employees might be more closely related to these factors than their work environments. Thus, employees were divided into two groups on the basis of severity of injury incurred and on the basis of complexity of their injury claim settlement.

By occupational group. The results of the comparative analysis of the four occupational groups reveal three major findings: One, there are a number of items where occupational groups exhibit statistically different mean scores. Two, in nearly every case where there is a difference among or between groups, the mean scores are on the same side of the theoretical midpoint, or neutral score (i.e., M=3.0). Three, there are no statistically significant differences among the four groups on any of the fault-basis items.

Table 4 contains the twelve items where there are differences among the occupational groups. The train crew group exhibits the most differences in mean scores. On three different items it differs with all three other groups. In paired-comparisons it differs with one other group seventeen times on eleven of the twelve items, compared with sixteen times on ten items for the clerks, twelve times on nine items for the maintenance group, and six times on five items for the shop crafts group.

The two groups with the most divergent attitudes from one another are the train crew and clerk groups, who differ from each other on nine separate items. These two groups also have the greatest difference in the perception of how dangerous their jobs are.

By perceived job danger. Respondents were asked to rank how dangerous their jobs are on a 1 (not dangerous at all) to 5 (very dangerous) scale. The train crew group mean of 4.06 was the highest, and the clerks' mean of 1.76 was the lowest. The shop crafts and maintenance groups viewed their jobs as between somewhat and fairly dangerous, with respective means of 3.63 and 3.62. The train crew and clerks groups each were significantly different from the other three occupational groups. The shop crafts and maintenance [TABULAR DATA FOR TABLE 4 OMITTED] groups were not significantly different from each other.

Table 5 indicates the differences in attitudes among employees based on their perceptions of job danger. The "not dangerous" group includes employees who responded with a 1 (not dangerous at all), 2 (could occasionally be dangerous), or 3 (somewhat dangerous). The "dangerous" group responded with a 4 (fairly dangerous) or 5 (very dangerous).

As is true with the occupational groups, for every item where there is a difference between the dangerous and not dangerous groups, the mean scores are on the same side of the theoretical midpoint. There are, however, considerably more items (i.e., seventeen vs. twelve) where differences among employees are observed when perceived job danger is the basis of segmenting the sample.

The employees who consider their jobs to be dangerous tend to lean more toward views that are more consistent with those who oppose or criticize FELA. For instance, they are more strongly opposed to the concept of no compensation if the employee is at fault and to the concept of comparative negligence. They also [TABULAR DATA FOR TABLE 5 OMITTED] agree less with the statements that a primary objective of the injury compensation program is rehabilitation and that the program promotes quick rehabilitation. Furthermore, they more strongly agree that fault determination prevents safety problems from being addressed. Finally, they more strongly agree that the process of settling injury claims has a negative impact on labor-management relations.

On the other hand, the views of the dangerous group are more in line with pro-FELA arguments with respect to the fairness issues that is, they are more in favor of no caps or limits on settlements, less inclined to agree that there should be identical settlements for identical injuries, and less inclined to agree that lawyers benefit more than injured workers. Additionally, they are much more strongly in agreement with the contention that the railroads would not emphasize safety without the risk of large compensation settlements.

By injury severity and complexity of claim settlement. Surveyed employees were asked to consider their most serious job-related injury. The following measures of injury severity were included in the survey: required medical treatment for most severe injury, whether injury resulted in permanent disability, and amount of work missed for most severe injury. Complexity of the claim settlement process was reflected by whether an attorney was used, a lawsuit filed, or case went to trial, and by how much time elapsed until a settlement was reached.

It should be noted that injury severity and complexity of claim settlement are likely to be highly correlated since potentially larger claims are more likely to be legally contested. Larger claims generally result from more serious [TABULAR DATA FOR TABLE 6 OMITTED] injuries. Thus, for example, more seriously injured workers are more likely to seek legal counsel. The need to utilize an attorney and the legal process may also, however, be expected to influence the employees' satisfaction with the claim settlement process because the duration and nature of the process are affected.

With respect to attitudes about the injured employee compensation program, the only injury severity or claims complexity measure that resulted in more than a few differences among employees was whether an attorney was used. As Table 6 indicates, differences (at p [less than or equal to] .10) were observed on nine items. With one exception, the mean scores of both the attorney and no attorney groups were on the same side of the theoretical midpoint. The attorney group slightly disagrees with the contention that identical injuries should receive identical settlements, while the no attorney group slightly agrees with this contention.

Among the more interesting results are the differences on the assertions that lawyers benefit more than the injured workers and that the legal process discourages quick rehabilitation. The attorney group reports less agreement with each assertion, though its mean scores indicate general agreement with them (i.e., 3.26 and 3.04, respectively, for the attorney group and 3.68 and 3.24, respectively, for the no attorney group).

With respect to satisfaction with the claims settlement process for employees who have filed injury claims, four separate measures differentiated more and less satisfied employees on at least five of the seven items (see Table 7). The only item where there were no differences in the four paired-comparisons was the level of support provided by the employee's union.

The general results indicate, as one would expect, that it is the more serious injuries and [TABULAR DATA FOR TABLE 7 OMITTED] the more protracted cases that create the most dissatisfaction. For five items the mean scores are less than the neutral score of 3.0, indicating general dissatisfaction across the board. For two items, time it took for claim to be settled and determination of who was at fault, the less serious injuries and shorter case duration groups were somewhat satisfied.

CONCLUSIONS

The survey results reveal that, unlike the labor unions that represent them, employees' views are generally consistent with the arguments against FELA. The only views that are consistent with those of FELA advocates are the beliefs that railroads would not emphasize safety without risk of large settlements and that there should be no cap on payouts.

Railroad employees are strongly opposed (M = 2.10) to the fault-based nature of injured worker compensation in the railroad industry, the basic tenet that differentiates FELA from state workers' compensation programs. Workers do not view the injury compensation system as having a favorable impact on safety, and they agree that it impedes determination of the cause of accidents. Furthermore, the current practice is perceived as not promoting rehabilitation. The respondents also generally agreed that there is a fairness or equity problem as they expressed the view that similar injuries should receive similar compensation. Finally, the surveyed workers believe that the injury compensation system adversely affects labor-management relations.

While management may have limited ability to improve labor relations due to the preceding problems, it does have some control over the timeliness of compensation, an issue that workers agree is a problem. Railroad programs that provide some immediate (i.e., before fault is determined) assistance to injured employees should have a positive impact on employee attitudes.

In addition to the time element, employees are generally dissatisfied with all other dimensions of the claim settlement process. They are particularly unhappy about the lack of concern for their well-being demonstrated by the company. This would appear to be another area where management should focus attention to improve employee relations. The unions, too, should examine their services to injured members as there is some dissatisfaction with the current level of union support.

Three factors hypothesized to affect employee attitudes about FELA issues were analyzed: occupational group, perception of job danger, and injury severity and complexity of claim settlement. Generally, the comparison groups displayed similar attitudes about the six FELA issues though there are several items where they differ in strength of agreement or disagreement.

An employee's perception of job danger is the more differentiating factor. Interestingly, those who perceive their jobs to be more dangerous express views more consistent with those who oppose or criticize FELA on the issues of worker coverage (fault-basis), rehabilitation, safety, and labor-management relations. Their views are more pro-FELA on the issue of worker benefits.

Four measures were utilized to investigate the effect of injury severity or complexity of claim settlement on employee satisfaction with the claim settlement process. Not surprisingly, employees involved in more protracted cases and with more serious injuries exhibited greater dissatisfaction, particularly with fault determination and the time element.

This research provides an important perspective that should be considered in the public policy debate on FELA, that of the rank and file employees. The findings suggest that employees perceive a number of problems with the current injury compensation system, and their views on key issues are generally consistent with those opposed to FELA. One should not, however, infer from these results that railroad employees would prefer to be covered by state workers' compensation programs. The respondents' attitudes toward benefit levels run counter to such an inference, and employees were asked only to express their attitudes about the program with which they have experience. Nonetheless, their input is crucial to the formulation of any alternative to FELA.

ENDNOTES

1 Prior to FELA, the doctrines of "assumption of risk" and "contributory negligence" of employee or co-worker barred recovery for most injured workers. FELA introduced the doctrine of comparative negligence and made railroads liable if they violated a safety statute. Amendments to FELA in 1939 eliminated assumption of risk doctrine in all cases. (Daniel Saphire, "FELA and Rail Safety: A Response to Babcock and Oldfather, The Role of The Federal Employers' Liability Act in Railroad Safety," Transportation Law Journal, Volume XIX, No. 2, pp. 401-413.)

2 In 1910 the Sutherland Commission, a committee appointed by Congress, studied the whole problem of liberalizing statutory remedies for injured railroad employees. It recommended federal legislation more in tune with workmen's compensation principles. (There were no-fault state workers' compensation programs in place as early as 1902, but they were declared unconstitutional. The first program upheld by the courts was that of New York in 1914. By 1920 42 of the 48 states, as well as Alaska and Hawaii, had enacted workers' compensation laws.) Bills to that effect were passed by both the House and Senate, but did not get out of conference before adjournment. Over the next twenty-five years a number of attempts were made to replace FELA with a no-fault program. In the late 1930s, the vast majority of railroad unions favored replacing FELA with a no-fault program because of the uncertainty of awards. FELA was not repealed in large part because of the vested interest of the lawyers for the railway labor organizations in its continuation. The amendments passed in 1939 eliminated many of the problems workers had encountered in seeking compensation. (Clarence A. Miller, "The Quest for a Federal Workmen's Compensation Law for Railroad Employees," Law and Contemporary Problems, Vol. 18, No. 2, 1953, pp. 188-207.)

3 According to the Association of American Railroads, the payout for FELA claims was $399 million in 1981 and $991 million in 1993, a 249 percent increase. During this time the number of employees dropped from about 460,000 to 227,000, a 51 percent decrease. The number of injuries declined from 48,000 to 15,000, a 68 percent decrease. FELA's cost per employee is $4,369. FELA payouts do not include medical costs as these are covered by the employees' health and medical insurance. (Association of American Railroads, Tort Abuse and the Railroad Industry: The Facts About FELA, 1995, p. 2.)

4 Presley and Associates, Report on Estimated Costs to Railroads if State Workers' Compensation Laws Applied Rather than FELA, unpublished report to the Association of American Railroads, August 25, 1989, pp. 60-61; Transportation Research Board, Compensating Injured Railroad Workers Under the Federal Employers' Liability Act, Special Report 241, National Academy Press: Washington, D. C., 1994. pp. 146-147; U.S. General Accounting Office, Amtrak: Comparison of Employee Injury Claims Under Federal and State Laws (GAO/RCED-86-202), August 1986, pp. 2-9; U.S. General Accounting Office, Railroad Competitiveness: Federal Laws and Policies Affect Railroad Competitiveness (GAO/RCED-92-16), November 1991, pp. 18-20.

5 Transportation Research Board, p. 146.

6 Federal Employers' Liability Act, Heating Before the Subcommittee on Transportation and Hazardous Materials of the Committee on Energy and Commerce, House of Representatives, One Hundred First Congress, November 1, 1989.

7 Thomas E. Baker, "Why Congress Should Repeal the Federal Employers' Liability Act of 1908," Harvard Journal on Legislation, Volume 29, No. 1, Winter 1992, p. 80.

8 U.S. Department of Transportation, Moving America - New Directions, New Opportunities, A Statement of National Transportation Policy Strategies for Action, 1990, pp. 70 and 120.

9 Federal Courts Study Committee, Report of the Federal Courts Study Committee, April 2, 1990, pp. 384-385. The committee was created by Congress (as an ad hoc committee within the Judicial Conference of the United States) to examine the current status of the federal courts in order to develop a long-term plan for the judicial branch. One of its charges was to assess the types of disputes that federal courts should resolve.

10 Transportation Research Board, p. v.

11 Jack Burke and David Barnes, "Molinari urges patience as new rail panel delays work on ICC, Amtrak legislation," Traffic World, March 20, 1995, p. 9.

12 Transportation Research Board, p. 19.

13 The authors interviewed executives at seven Class I freight railroads and one commuter railroad, as well as officials at two railroad associations. The authors interviewed national representatives at the five largest railroad labor unions as well as an official at the Railway Labor Executives Association.

14 Transportation Research Board, pp. 19-22.

15 Wiley F. Mitchell, Jr., "The Federal Employers' Liability Act - A Burdensome Anachronism," presented to Rail and Motor Carrier Committee of the Torts and Insurance Practice Section, American Bar Association, August 13, 1991, p. 9.

16 Transportation Research Board, p. 161.

17 Saphire, p. 403; and Transportation Research Board, pp. 53, 69, and 159.

18 Prepared Statement of W. Graham Claytor, Jr., President and Chairman of the Board, Amtrak, Federal Employers' Liability Act Hearing before the Subcommittee on Transportation and Hazardous Materials of the Committee on Energy and Commerce, House of Representatives, November 1, 1989, pp. 6-7.

19 Data supplied by the AAR show that from 1984 to 1990 1,458 FELA cases were tried of which 407 (27.9 percent) resulted in defense verdicts and no payout to the employees. An additional 217 (14.9 percent) resulted in verdicts that were equal to or less than the railroads' settlement offers. (Association of American Railroads, 1990 Report of Claim & Litigation Experience (Personal Injury & Death), Association of American Railroads: Washington, D.C., May 1991, p. 2-4.) Also, a sample survey of FELA cases involving claims of $500,000 or more that went to trial from 1984 to 1987 showed that slightly more than 20 percent of the injured employees were awarded no compensation by the courts. (Testimony in 1988 Senate hearings on FELA in relation to Amtrak, as cited in Baker, p. 100.)

20 Michael Oldfather and Michael W. Babcock, The Federal Employers' Liability Act: No Need for Change, United Transportation Union: Cleveland, Ohio, April 1989, pp. 9-10.

21 Presley and Associates, p. 39.

22 Mitchell, pp. 11-12.

23 Baker, pp. 107-108.

24 Transportation Research Board, p. 115.

25 The TRB reported that from 1988-1991 the average percentage of claims that were represented or litigated was about 23 percent (Transportation Research Board, p. 146).

26 Jerry J. Phillips, "An Evaluation of the Federal Employers' Liability Act," San Diego Law Review, Vol. 25:49, 1988, p. 61.

27 Transportation Research Board, p. 115.

28 Transportation Research Board, p. 143. The TRB reported the following settlement patterns and delays: direct claims (i.e., those settled directly between railroad and worker) - over half settled within six months, 90 percent within two years; represented claims - about half remain unsettled after 20 months, 90 percent settlement is not reached until the three-year point; litigated claims - only half are settled in first three years, 30 percent take more than four years to settle (p. 139).

29 Ibid., pp. 64-66.

30 Transportation Research Board, p. 72.

31 As cited in Baker, p. 102.

32 Oldfather and Babcock, p. 8.

33 James R. Chelius, "Liability for Industrial Accidents: A Comparison of Negligence and Strict Liability Systems," The Journal of Legal Studies, Vol. 5, 1976, pp. 300-301.

34 There is one railroad that has been governed by no-fault workers' compensation legislation. The Alaska Railroad was owned by the federal government and governed by the no-fault Federal Employees' Compensation Act until its sale to the state of Alaska in 1985. Since then, its employees are covered by the Alaska Workers' Compensation Act, a no-fault system. The Alaska Railroad is among the top one-third of railroads in its class for safety. (Baker, p. 111.)

35 Oldfather and Babcock, pp. 16-21.

36 Because there were some problems in how the Bureau of Labor Statistics (BLS) interpreted Federal Railroad Administration injury data prior to 1989 (generally underestimating railroad lost-workdays), the authors reviewed BLS data since that time. On the basis of lost-workdays (due to work-related injuries and illnesses) per 100 full-time workers, the railroads have a lower injury rate than both trucking and water transportation. Furthermore, several industries in the agricultural, manufacturing, and mining sectors have higher injury rates than the railroads.

37 Mitchell, pp. 17-18. (The author is General Counsel - Litigation, Norfolk Southern Corporation.)

38 Baker, p. 97; Mitchell, pp. 16-17; and Saphire, p. 412.

39 Standard instruments comprise most sections of the survey, such as sections on attitudes toward the job (e.g., work, promotions, supervisor, co-workers, pay), opinions about the job, perceptions of work environment (e.g., structure, reward, support, identity, standards, stress), and opinions about the company and the employee's union. However, a search of the organizational behavior and human resource management literature revealed the lack of any pre-established instruments or measures related to compensation program attitudes. This is not surprising since the compensation program issues being investigated in this study are unique to the railroad industry; that is, the workers in nearly all other industries are covered by state workers' compensation programs that are similarly structured.

APPENDIX

Respondents indicated their agreement or disagreement (1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, and 5=strongly agree) with the following statements included in a section titled "Safety Attitudes."

1. Employees who are injured on the job should not be compensated if the injury results from employee negligence or error.

2. The railroad would not emphasize safety if the possibility for large financial awards did not exist.

3. Until a claim is settled, injured workers are discouraged from talking openly about the causes of their accidents.

4. A drawback of our injury compensation system is that similar injuries can result in quite different financial settlements.

5. Who is responsible for an injury should be determined before any payouts are made.

6. Railroad injury compensation programs promote quick rehabilitation of injured workers.

7. No "caps" or limits should be placed on financial settlements for injury claims.

8. The railroad's injury compensation program helps prevent injuries.

9. If an injury is determined to be partially the fault of the employee, the employee's settlement should be reduced.

10. Few injury claims are settled without "hard feelings" between labor and management.

11. Lawyers benefit more from injury compensation programs than the people who are injured.

12. It would be more fair if identical injuries received identical financial settlements.

13. It is important for injured employees to receive immediate compensation, regardless of fault.

14. Rehabilitation is a primary objective of injury compensation programs.

15. The process of settling injury claims usually hurts labor-management relations.

16. Employees should be fully compensated for their injuries regardless of who was at fault.

17. The legal nature of the injury compensation process sometimes discourages workers from rehabilitating themselves as soon as possible.

18. The practice of fault determination prevents safety problems from being addressed.

19. It takes too long for an employee to receive final compensation for an injury.

Respondents were asked to indicate their level of satisfaction (1 = very dissatisfied, 2 = dissatisfied, 3 = neutral, 4 = satisfied, and 5 = very satisfied) with the following aspects of the claim settlement process for their most serious injury in a section titled "Safety Experiences."

1. Time it took for claim to be settled

2. Size of financial settlement

3. Size of financial settlement relative to those with similar injuries

4. Determination of who was at fault

5. Concern for your physical well-being demonstrated by (railroad company by name)

6. Level of support provided by union

7. All in all, the handling of your claim

Mr. Crum, EM-AST&L, is associate professor of transportation and logistics, Iowa State University, Ames, Iowa 50011-2063; Mr. Dooley is assistant professor of agricultural economics, North Dakota State University, Fargo, North Dakota 58105; and Ms. Morrow is professor of management and director, Industrial Relations Center, Iowa State University.

The data used in this study were generated from a survey used in a research project funded through the U.S. Department of Transportation University Centers Program. The results and conclusions reported herein do no necessarily reflect the views of the funding agency.
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Author:Crum, Michael R.; Dooley, Frank J.; Morrow, Paula C.
Publication:Transportation Journal
Date:Sep 22, 1995
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