Plaintiff, a sheet metal worker, employed by Defendant CSX
Transportation, Inc. ("CSX"), injured his back while attempting to remove a
damaged valve. Plaintiff applied for and received disability benefits under the
RRA, codified at 45 U.S.C. § 231, et seq., and sued for negligence under FELA,
codified at 45 U.S.C. § 51, et seq. The jury returned a verdict in Plaintiff's
favor.
CSX filed a Motion to Alter or Amend the judgment
pursuant to Federal Rule of Civil Procedure Rule 59(e) and argued that CSX
was entitled to a setoff against the judgment equal to the amount of
disability payments received by Plaintiff from the RRA. CSX argued that
without a setoff, it would pay twice for the same injury – once by virtue of
its mandatory contribution to the RRA and again through the judgment.
The district court denied CSX's Motion to Alter or
Amend, prompting CSX's appeal. The Court of Appeals reviewed the district
court's denial on an abuse of discretion standard, which required reversal
if the lower court made an error of law. The "collateral source" rule aided
the appellate court's analysis. This rule provides that compensation to an
injured party from a collateral source should be disregarded in assessing
tort damages. Accordingly, if the RRA benefits are a collateral source, then
the court need not consider RRA benefits in calculating the FELA judgment
amount.
Determining whether a payment is a collateral source
required the Fourth Circuit to analyze the purpose of the payment. Even
though a benefit may be paid by the tortfeasor to the injured, the payment
will not automatically be deemed a non-collateral source such that it will
offset a tort judgment. If the tortfeasor provided the benefit specifically
to compensate for the injury or to indemnify itself from liability, then the
injury is not a collateral source, and should be considered to offset a
judgment. With this rule of law in mind, the court explored the purpose of
the RRA.
CSX argued that the benefits which Plaintiff received
from RRA are known as "Tier II" and are analogous to a private employer paid
pension and "are in substantial part directly attributable to the
contributions of the employer." Tier II operates like a "‘private pension'
tied to an employee's ‘earnings and career service.'" According to CSX's
economic expert, Plaintiff was paid disability benefits in an amount of
$2,107.49 pursuant to RRA Tier II.
The administration of the RRA is assigned to a federal
agency known as the Railroad Retirement Board. This agency determines an
employee's eligibility for benefits and the amount, if any, to be paid. The
benefits are funded through the Railroad Retirement Tax Act, which requires
employers to withhold taxes from paychecks.
Like any scheme of social insurance, the amount of
taxes paid on behalf of a particular employee does not necessarily correlate
with the amount of benefits to which the employee may become entitled. In
fact, not all employees become eligible for benefits. But neither the
employee nor the carrier is entitled to a refund of ... taxes paid on
behalf of an employee who never qualifies for benefits.
See Sloas v. CSX Transportation, No. 09-1249, at p. 15.
Accordingly, the Fourth Circuit concluded that CSX's
employer contributions are not made voluntarily to indemnify itself against
possible liabilities under FELA. Instead, CSX made mandatory tax
contributions to administer a social welfare program. These facts support a
finding that the RRA benefits are a collateral source. Thus, the RRA
benefits may not be considered when determining a FELA award. The Fourth
Circuit affirmed the lower court.
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