CSX, insurers battle over health claims

March 05, 1994|By Joel Obermayer | Joel Obermayer,Sun Staff Writer

The battle over who should pay for $110 million in health-related insurance claims began yesterday between CSX

Transportation Inc. and a group of insurance companies, with both sides arguing the other was responsible for the bill.

Neither side disputes the final tab, which stems from more than 20,000 job-related hearing loss claims that have been paid by CSX. The issue, however, is whether the company's insurers should be forced to pay.

The case, which began opening arguments in Baltimore County Circuit Court yesterday, stems from a lawsuit originally filed by Continental Insurance Co. and later joined by 18 other insurers. The insurers allege, among other things, that CSX knew about hearing-related problems for years, but failed to take corrective action.

James E. Gray, an attorney representing Continental and coordinating the trial for all the insurance companies, said in his opening statement that CSX's medical staff had warned about the potential danger of hearing-loss among employees.

Executives "were told that if they continued with their ostrich-like approach they would have a tidal wave of claims," he said. "But every time a memo was written saying 'Do something,' they ignored it."

However, Mark H. Kolman, a lawyer for CSX, disputed that argument. "The evidence will show that statement is absolutely false," he said later, outside the courtroom.

CSX's lead lawyer, Joseph D. Tydings, conceded in his opening argument that CSX had failed to prevent the injuries, but maintained that it should not affect which party pays.

The suit grew out of more than 23,000 claims previously filed by CSX employees, mostly in the late 1980s, that charged the company with negligence for not taking measures to protect employees from hazardous noises that can cause hearing loss after long-term exposure. Many of the employees had worked for the company for 10 years or more.

While the company fought a few of the claims in court, the majority were settled and the company paid out more than $110 million, according to R. Templeton Fitch, director of risk management for CSX.

Mr. Tydings, with Anderson Kill Olick & Oshinsky in Washington, said CSX had expected to be reimbursed by its insurance companies, but the insurers balked at paying the money.

Mr. Gray, a lawyer with Goodell, DeVries, Leech & Gray, said hundreds of policies that the insurance companies sold to CSX over the past 30 years cover major accidents like train derailments. But, he said, they were not meant to cover "occupational diseases" like hearing loss.

CSX was partially self-insured and was required to keep a pool of money available to pay for certain smaller health claims.

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