Railroad Management and Labor Differ Over Continued Need for FELA

Railroad management and labor disagree over how well FELA is working and whether it should be replaced or changed. Cost Savings From Replacing FELA With a Nationwide No-Fault Compensation System Depend on Many Factors

Railroad management advocates replacing FELA with a no-fault compensation system, in part because of a belief that a no-fault system would be less costly. Prime among these is the number of railroad workers who are permanently disabled and are unable to return to work at their preinjury wages. Some injured railroad workers leave the railroad after receiving their FELA settlement, but railroad management believes that some of these workers are capable of returning to work and, therefore, would not receive permanent disability payments under a no-fault compensation system. The higher the proportion of this group of injured workers that can return to work at their preinjury wages, the higher the probability that railroads’ injury compensation costs would be reduced under a no-fault system. A no-fault system could reduce railroads’ administrative costs by eliminating the need to investigate negligence and to assess noneconomic damages. 2.1. Other workers’ compensation systems limit attorneys’ fees. Modifying FELA could reduce the amount of compensation they receive or limit the availability of legal counsel. Our survey found that small freight railroads experienced lower FELA costs than the large freight railroads. Data on injuries from the Federal Railroad Administration showed that the passenger and small freight railroads generally average fewer lost workdays per injury than the large freight carriers. Conclusion

FELA does not appear to be any more burdensome for passenger and small freight railroads than it is for the large freight railroads.
Why GAO Did This Study

Pursuant to a congressional request, GAO examined how replacing the Federal Employers' Liability Act (FELA) with a no-fault compensation system would affect the railroad industry.

What GAO Found

GAO found that: (1) the cost of replacing FELA with a nationwide no-fault compensation system depends on the number of injured railroad workers permanently disabled and the number of workers unable to return to work at preinjury wages; (2) the costs under a no-fault compensation system would be the same as or lower than FELA costs; (3) overall injury compensation costs would be lower under a no-fault system if fewer than 70 percent of injured rail workers are able to return to work; (4) railroads would save an average of $100 per employee if injured workers continue to work after receiving settlement; (5) a no-fault compensation system would reduce railroads' administrative costs, but limit the amount of compensation and legal counsel that injured workers receive; (6) small railroads have fewer lost workdays and lower injury rates than large railroads; (7) small railroads have lower FELA costs than large railroads and rely on insurance payments to avoid high FELA payouts; (8) railroads could reduce their administrative costs by placing a cap on compensation for noneconomic losses and limiting plaintiff's legal fees; (9) railroad management and labor disagree over how well FELA is working and whether it should be replaced or changed; and (10) FELA is no more burdensome for passenger and small freight railroads than it is for large freight railroads.