(The following story by Matt Kempner appeared on The Atlanta Journal-Constitution website on January 24.)
GRANITEVILLE, S.C. — Within hours of one of the worst U.S. train accidents in decades, claims adjusters for Norfolk Southern arrived and began writing thousands of checks to evacuees of this mill town.
People who came to the railroad’s hastily arranged claims center asked for reimbursements for a long list of necessities, including hotel stays, groceries, cribs, rides to stores, clothes, pet food, and eyeglasses and medicine left in evacuated homes.
One of the most frequent requests: money for new underwear.
“I had one lady, that’s all she wanted,” said regional claims manager Rob Fender, who has been with the Norfolk, Va., railroad for 25 years but never worked an accident so large.
And the work is far from done. The railroad giant and its attorneys could be dealing with the financial fallout for years.
News of the Jan. 6 accident near Augusta was virtually lost in coverage of the Indian Ocean tsunamis. But the incident rated as the worst U.S. train accident involving hazardous material in nearly 30 years. Nine people died and more than 5,400 were evacuated when a train slammed into parked rail cars, puncturing a tanker of chlorine gas.
With such a catastrophe, it wouldn’t be surprising to hear locals angry with Norfolk Southern. Instead, the prevailing tone seems to be nearly the opposite.
“They are being more than fair with everything,” said Joanne Smith, a 67-year-old retiree who had living expenses reimbursed after being evacuated for seven days. “They are going above and beyond, I think.”
Taking blame for an accident can put corporations in a delicate legal position, said Robert Hoyt, a University of Georgia professor of insurance and risk management. But businesses are increasingly likely to see the benefits of dealing quickly with accidents, he said.
With a growing percentage of businesses self-insured, there’s more internal motivation to avoid protracted legal battles. And quick action can reduce damage to corporate reputations. One example Hoyt cited: Exxon’s slow response to the Exxon Valdez tanker spill in Alaska in 1989.
Treating people well upfront also reduces the chances that victims will make exorbitant claims later, lawyers say.
“They can probably resolve a lot of claims more quickly, more easily and possibly more cheaply,” said Jamie Holland, a Jacksonville attorney who specializes in cases against railroads, and drove to Graniteville to represent accident victims.
“Happy folks don’t go get lawyers.”
Expenses uncounted
So far, Norfolk Southern has paid some people for lost wages, if they could provide proper documentation. And it is beginning to consider claims for health effects — more than 550 people sought medical aid following the accident.
But other expenses haven’t been tallied. Among them: dead worms at a local bait shop, urine-soaked carpets in a home where cats were left behind and corroded computers that shut down Georgia-based Avondale Mills’ payroll and e-mail systems across three states. Inspectors checked phone lines, electrical wiring and plumbing for damage from the chlorine cloud. Restaurant and store owners tossed spoiled food. Aiken County took on a host of expenses, including fueling vehicles for some of the 109 outside agencies that responded. The county also acquired a grocery’s freezer truck to hold bodies.
Requests for aid vary widely. Many locals had little money to start with. One evacuated woman asked for just $10 a day to meet her expenses. Other residents received two or more checks, often totaling hundreds of dollars each.
The railroad said no to a woman seeking reimbursement after wrecking her car while heading home from a town hall meeting a week after the train accident. A few families made multiple claims for expenses already reimbursed. One man received money for temporary living expenses for himself and three children, then showed up the next day with his children in “very expensive” new coats, asking for grocery money, said Fender, the railroad’s regional claims manager.
Police are investigating at least 60 people for possible fraud after they applied for new driver’s licenses showing home addresses in evacuation areas that qualified for assistance.
So far, the company has had only one major public relations stumble. Evacuees criticized Norfolk Southern early on for issuing checks printed with a statement that advised by cashing or depositing the check, the recipient agreed the payment was a full and final settlement. The railroad eliminated the language within a day, saying it had been a standard part of its check-writing software, but would not be enforced.
The question now: Will the community’s goodwill for Norfolk Southern evaporate as the weeks of recovery wear on and residents submit longer-term claims?
Augusta mill hit hard
For Norfolk Southern workers who responded to the accident, the days have been a blur.
The first 911 call about the accident came at 2:39 a.m. Within 30 minutes, word reached claims officials in Norfolk. Other claims agents were en route at 10 a.m., when Fender and some of his crew boarded a corporate jet bound for the Aiken area.
At 4:15 p.m., the railroad opened a relief assistance center at First Presbyterian Church in downtown Aiken. The next day, Fender was scooping up attorneys’ business cards left on a table in the center. Law firms soon stationed representatives outside the church. Nearly two weeks later, out-of-town law firms still were running full-page ads in the local newspaper.
In all, Norfolk Southern had about 30 claims workers in town — including staffers brought in through a contract with a Tennessee claims adjuster — plus crews to test air quality and begin cleanup of the derailed cars. Accident investigators have focused on an improperly set rail switch.
Residents and business owners still are coming to grips with their losses.
“My lawyer and my accountant are working on it,” said Aminul Haider, who owns a Quick Pantry convenience store in Graniteville.
The railroad said claims for business losses must have documentation attached, including bank statements for three months, three years of income tax returns and a profit-loss statement.
Perhaps hardest hit is Monroe, Ga.-based Avondale Mills, a textile manufacturer with several plants and 2,500 employees in the Graniteville area. Six Avondale workers died from the fumes.
Chlorine damage and the evacuation shuttered Avondale plants in the area, restricting materials to and from the company’s other plants in three states, said Stephen Felker Jr., the company’s manager of corporate development. The accident also knocked out Avondale’s main information services building, located in Graniteville.
“It’s kind of like being hit by a 2-by-4,” Felker said. “Our head is still spinning.”
Norfolk Southern “has been cooperative, thus far,” he said, but he noted that Avondale hasn’t totaled its financial losses.
Railroad OK with claims
Railroad officials decline to speculate on the accident’s overall cost or to disclose how much has already been paid. Still, they say, the company will be able to handle the financial toll.
Norfolk Southern, which has 4,500 employees in Georgia and a regional headquarters in Atlanta, had a net income of $535 million in 2003. Of its $6.4 billion in revenues that same year, $772 million came from transporting chemicals.
The company regularly sets aside money for potential claims. Some Norfolk Southern incidents have sparked lawsuits lasting more than a decade.
In Graniteville, the railroad faces at least two proposed class-action lawsuits. Last week, Norfolk Southern opened a claims office at a former community center in the town, said Bob Wells, the railroad’s general manager of casualty claims. The company expects to need the office for months. “We are not running away.”