Part I, Page 1 

IN RE: Employee Status of Individuals 

Who Performed Service for CSX Real 

Property, Inc. Prior to the Effective 

Date of Board Coverage Decision 07-01 

) 

) 

) 

) 

Before the United States 

Railroad Retirement Board 

Docket No. 09-CO-0017 

This is the report of the Designated Examiner to the Railroad Retirement 

Board, pursuant to section 258.6 of the Board’s regulations (20 C.F.R. §258.6) and 

Board Order 09-66, containing the Examiner’s findings of fact, conclusions of law, 

and recommended decision concerning the following issues:

(a) Whether each individual who made a claim to the Board prior to January

2008 for additional railroad service and compensation based on service

performed for CSX Real Property, Inc. (RPI) made a timely request for the

claimed service and compensation within the meaning of section 9 of the

Railroad Retirement Act and section 211.16 of the regulations of the Railroad

Retirement Board;

(b) Whether each individual who made a written protest to the Board of the

employer status determination issued in Board Coverage Determination 97-

18 shall be considered to have made a timely claim for service and

compensation under section 9 of the Railroad Retirement Act and section

211.16 of the Board’s regulations; and

(c) Whether each individual found to have made a timely claim for service and

compensation under paragraphs (a) and (b) above was for the period in

question in service of an employer under the Railroad Retirement Act (RRA)

(45 U.S.C. §231 et seq.) and Railroad Unemployment Insurance Act (RUIA)

(45 U.S.C. §351 et seq.), as defined in section 1(d)(1) and 1(e) of those

statutes.
Part I, Page 2 

RECOMMENDED DECISION – CSX REAL PROPERTY, INC. 

Based on the findings of fact and conclusions of law set forth in this report, I 

recommend that the members of the Railroad Retirement Board render the 

following decision with respect to the following common issues concerning the 

individuals who performed service for CSX Real Property, Inc. (RPI) prior to 

January 1, 2007:

1. The Board may not correct a report of service and compensation for any

individual claimant in this case for any time period more than four years

before the date the claimant first brought a request for an employee service

determination to the attention of the Board, because RPI did not commit

fraud within the meaning of section 211.16(b)(1) of the Board’s regulations.

2. Letters written to the Board in March 1997 to protest the employer status

determination issued in Board Coverage Determination 97-18 were sufficient

to have brought the individual claims to the attention of the Board within the

meaning of section 9 of the Railroad Retirement Act and section 211.16 of the

Board’s regulations.

3. RPI is not engaged in an independent trade or business from CSX

Transportation because RPI and CSX Transportation are under the common

control of CSX Corporation, and CSX Transportation is a covered employer

under the Railroad Retirement Act and Railroad Unemployment Insurance

Act.

4. Recommended decisions for each individual claim are contained in Part II of

this Report, as explained in the Summary of Examiner’s Report.
Part I, Page 3 

SUMMARY OF EXAMINER’S REPORT 

Because this Report encompasses twenty-three individual employee claims, it 

has been divided into two Parts. Part I contains the Course of Proceedings, as well 

as my Findings of Fact, Conclusions of Law, and Discussion and Analysis applicable 

to RPI and to common elements of all individual employee service claims. Part II 

addresses the individual employee claims in turn, organized by sub-docket. 

Likewise, the administrative record is divided into a general docket that contains 

material common to all individual employee claimant cases, and twenty-three subdockets that each correspond to a single individual claimant. Citations to the record 

will either be labeled as General Docket Exhibits, or will refer to a specific subdocket Exhibit. Each individual employee claimant will receive Part I this Report, 

as well as the section of Part II that includes the sub-docket for his or her individual 

case, but not the sections of Part II that contain sub-dockets for other individual 

employee claimants.

The first segment of Part I, Course of Proceedings, provides a chronology of 

the events leading up to the decision of the Board in Board Coverage Determination 

97-18, the employee service requests following Board Coverage Determination 07-01

which led to my appointment as Designated Examiner in Board Order 09-66, and

the steps I have taken to hold the necessary hearings, collect evidence, and produce

this Report.

The second segment of Part I, Findings of Fact – CSX Real Property, Inc., 

contains numbered paragraphs that summarize my findings as to the evidence of 

record concerning an aspect of the operations of RPI prior to January 1, 2007, and 

any aspects of this matter that are common elements of all individual employee 

service claims. 
Part I, Page 4 

Although each individual employee claimant’s factual situation is unique, the 

binding legal standards that must be used to evaluate each case are constant in all 

of the present cases. The third segment of Part I, Conclusions of Law, states these 

common legal standards, which have been applied to each individual employee 

claimant’s case to reach the recommended decisions in Parts I and II of this Report. 

These legal standards include the definitions of employer and employee under the 

Acts, the statute of limitations on correcting reports of compensation, the test for 

whether a report of compensation was due to fraud on the part of the employer, and 

the standard for an employee being in service to an employer under the Acts.

The fourth segment of Part I of this Report, Discussion and Analysis – CSX 

Real Property, Inc., sets forth my analysis of the statutes, regulations, court cases 

and prior agency decisions from which I derived the forgoing legal standards, and 

applies these standards to the common facts and elements of RPI’s operations prior 

to January 1, 2007, and to any common elements of the individual employee service 

claims.

At the end of Part I, I have incorporated my overall Conclusion, followed by a 

Table of Authorities, which lists the statutes, regulations, court cases, and agency 

decisions cited in both Parts of the Report.

Part II of this Report is sub-divided into twenty-three sections, each devoted 

to a single sub-docket and corresponding individual claim for employee service. 

Each section of Part II is individually paginated and contains a Recommended 

Decision, Findings of Fact, and Discussion and Analysis applicable to the associated 

sub-docket and individual employee service claim.
Part I, Page 5 

COURSE OF PROCEEDINGS 

1997 Board Coverage Determination 

As part of an audit of CSX Transportation Company (CSXT) in September 

1995, the Board’s Audit and Compliance Division (ACD) requested information from 

CSX Corporation (CSX) regarding the operations of RPI and CSX Realty, Inc. 

(Realty) to assist the Board in reaching a determination regarding the entities’ 

employer status under the Acts. CSXT (BA # 1524) has been an employer under the 

Acts since at least July 1, 1967 (under a predecessor name, Seaboard Coast Line 

Railroad Company, see Legal Opinions L-67-155 and L-86-126). CSX itself is the 

corporate parent of CSXT and has never been found to be an employer under the 

Acts. In a letter dated December 7, 1995, CSX’s Tax Counsel, John W. Tissue, 

provided a 21-page response to the information request, asserting that Realty’s 

primary corporate purpose was to sell or develop “non-operating properties” owned 

by CSXT or acquired from other sources, and that neither RPI nor Realty provided 

service in connection with rail transportation (General Docket Exhibit 4). ACD then 

posed additional questions in a letter dated February 1, 1996, and Mr. Tissue 

supplied the requested information and supporting documents on March 22, 1996 

(General Docket Exhibit 5).

In preparing its draft Employer Coverage Investigation Report, ACD also 

sought out information from a representative sample of RPI employees through 

written questionnaires, with CSX’s permission. ACD mailed out 35 questionnaires 

and received 25 responses from RPI employees (General Docket Exhibit 8). CSX was 

provided with a copy of ACD’s draft report on June 19, 1996. On October 17, 1996, 

CSX responded with a 45-page rebuttal signed by new CSX Tax Counsel Scott J. 

Rynearson with outside counsel Thomas P. Gies and Kris D. Meade, disputing 

ACD’s methodology and disagreeing with the draft report’s determination that RPI 

was “simply an entity that serves as [CSXT’s] real estate department” (General 
Part I, Page 6 

Docket Exhibit 6). In a memorandum dated October 30, 1996, ACD explained its 

views regarding CSX’s objections to the report’s methodology and conclusion 

(General Docket Exhibit 7) and the final Employer Coverage Investigation Report 

was issued in November 1996. The Report indicated that 45 of the 66 individuals 

employed by RPI had previously been employed by CSXT and covered under the 

RRA and RUIA, that many of these employees performed the same work functions 

for RPI as they had as employees for CSXT, and that RPI derived 75 percent of its 

revenue from CSXT-owned property (General Docket Exhibit 8).

On January 9, 1997, a majority of the Board, Labor Member dissenting, 

issued Board Coverage Determination (B.C.D.) 97-18, which held that RPI and 

Realty were not employers under the Acts (General Docket Exhibit 3). Specifically, 

a majority of the Board, Labor Member dissenting, accepted CSX’s assertion that 

RPI and Realty performed real estate development, sales, and management 

activities for CSX, including those related to surplus or non-operating property of 

CSXT, and found that these services did not constitute services in connection with 

rail transportation. A majority of the Board, Labor Member dissenting, went on to 

find that RPI’s management of CSXT operational property was insubstantial 

enough to fall within the definition of “casual service” under section 202.6 of the 

Board’s regulations.

Seven of the individual claimants in this case wrote letters to the Secretary to 

the Board in March 1997, protesting the Board’s decision that RPI was not a 

covered employer and requesting reconsideration of B.C.D. 97-18. These letters 

alleged that the assumptions of the Board underlying that decision were “in [the 

claimant’s] judgment, based on what appears to be erroneous information.” The 

Board responded to each of these seven claimants with a letter dated April 17, 1997, 

stating that under section 259.3(a) of the Board’s regulations, only a party to an 

initial decision of employer status has the right to request reconsideration of that 

decision. The Board went on to note that under section 259.2(a) of the Board’s 
Part I, Page 7 

regulations, employees of an entity shall not be parties to any determination 

concerning the status of that entity as an employer under the Acts. Therefore, the 

Board declined to honor the claimants’ requests for reconsideration. The letter did 

not include any additional information regarding a protest of their service and 

compensation amounts or annuity amounts upon retirement.

2007 Board Coverage Decision

In a letter dated December 5, 2006, Mr. Gies requested a new employer 

coverage determination for RPI based on significant changes in RPI’s mission and 

business activities (General Docket Exhibit 32). Mr. Gies indicated RPI had 

divested itself of much of its non-railroad commercial real estate property and was 

turning its focus to more substantial support of CSXT operations, including

acquiring right-of-ways for new track construction and potential sales of existing 

CSXT operating rail lines for use by commuter rail lines. As a result, Mr. Gies 

requested that RPI be declared a covered employer under the Acts effective January 

1, 2007. On January 4, 2007, the Board issued B.C.D. 07-01, acknowledging RPI’s 

explanation of its new business focus and finding RPI to be an employer under the 

Acts effective January 1, 2007 (General Docket Exhibit 2). The Labor Member of the 

Board wrote a separate concurring opinion, noting his dissent from B.C.D. 97-18 

and stating his opinion that RPI’s activities had always been substantially 

connected with the management of CSXT property.

The individual claimants in this case all submitted letters to the Board’s 

Jacksonville, Florida District Office in March and April 2007, requesting that the 

Board assign service months and adjust or reinstate employee annuities based on 

service performed for RPI prior to January 1, 2007. These claimants all essentially 

allege that the work they performed for RPI prior to January 1, 2007 was in 

connection with rail transportation and should be considered in service to a covered 

employer under the Acts. The Board has interpreted these letters as requests for 
Part I, Page 8 

employee service determinations in accordance with Part 259 of the Board’s 

regulations. Section 259.1(c) vests the Board with exclusive authority to make 

initial determinations with respect to the status of any person as an employee or 

employer under the Acts (following investigation by the General Counsel or his or 

her designee). Accordingly, the claimants’ requests were transferred to the Board 

for further consideration.

Course of Investigation and Board Order 09-66 

After the claimants’ requests for employee service determinations were 

transferred to the Board, each claimant was sent a questionnaire concerning the 

services performed by the claimant for RPI. In 2008, the Board also requested 

information from RPI regarding the claimants’ service with RPI, a copy of which 

was provided to the individual claimants with an opportunity to submit written 

comments.

In furtherance of its investigation into the pending requests for employee 

service determinations, on October 8, 2009 a majority of the Board, Management 

Member dissenting, issued Board Order 09-66, appointing me as a Designated 

Examiner for the Board pursuant to section 258.1 of the Board’s regulations to 

conduct a hearing with respect to the three issues identified at the beginning of this 

report (General Docket Exhibit 1). The Management Member of the Board wrote a 

separate dissent from Board Order 09-66 in which he stated his belief that the 

claimants had failed to make timely requests for employee coverage determinations 

concerning their work for RPI, and that the Board should not reinterpret the 1997 

requests for reconsideration of the employer coverage determinations as requests 

for employee service. The Management Member emphasized that under section 9 of 

the Railroad Retirement Act, the Board’s records of service and compensation are 

final and conclusive after four years. Therefore, he believed the Board should 
Part I, Page 9 

resolve the individual requests for employee service determinations without the 

need of a hearing or appointing a Designated Examiner.

Proceedings Before the Designated Examiner 

Under the authority granted by Board Order 09-66, I issued a Hearing 

Examiner’s Notice of Commencement of Proceeding on April 27, 2010 to notify all 

involved parties (CSX and the affected claimants) that Docket No. 09-CO-0017 had 

been assigned and that I anticipated holding a hearing pursuant to Part 258 of the 

Board’s regulations over several days’ time in July 2010 (General Docket Exhibit

43). I informed the parties of the issues to be considered under Board Order 09-66, 

and indicated I would provide each party with a copy of the administrative record 

prior to the hearing. Due to the volume and complexity of the administrative record, 

the parties were not served with copies of the administrative record until 

September 3, 2010 (General Docket Exhibit 45). Examiner’s Notice #2, Service of 

the Administrative Record, also assigned a sub-docket number to each individual 

employee claimant, 09-CO-0017-01 through 09-CO 0017-23. CSX received a 

complete copy of all relevant documents in the possession of the Board, while each 

claimant received only those documents pertaining to his or her individual claim for 

service. The parties were given 30 days to submit any additional documents to be 

included in the administrative record.

In a letter dated September 13, 2010, CSX requested an additional 30 days to 

review the complete administrative record and submit any additional documents 

(General Docket Exhibit 46). Examiner’s Notice #3, dated September 24, 2010 

acknowledged that the full administrative record as served on CSX constituted over 

2,100 pages, and I granted all parties an extension of time to submit documentary 

evidence until November 2, 2010 (General Docket Exhibit 47). On November 5, 

2010, I issued Examiner’s Notice #4, setting the date of the hearing to commence on 

December 6, 2010 and continuing for up to four days (General Docket Exhibit 50). 
Part I, Page 10

Notice of this public hearing was published in the Federal Register on November 3, 

2010 (General Docket Exhibit 51). The hearing was convened on December 6, 2010 

at approximately 9:00 AM, and concluded on December 7, 2010 at approximately 

11:05 AM. CSX was represented at the hearing by Mr. Gies, and CSX presented 

testimony from Mr. Rynearson (Tax Counsel for CSX at the time of B.C.D. 97-18) 

and Katherine Hicks (CSX’s Manager of Pension Plans). Ten individual employee 

claimants also testified at the hearing, and testimony was presented on behalf of 

one deceased employee claimant.

Subsequent to the December 6 and December 7, 2010 hearing, I took

testimony by telephone from three individual claimants on December 28, 2010. One 

individual claimant was able to demonstrate good cause for failing to appear and 

testify at the December 6 and 7 hearing, and I took testimony by telephone from 

that individual claimant on January 18, 2011. Finally, I took testimony by 

telephone from one additional individual claimant, as well as Stephen Crosby, 

President of RPI, on February 22, 2011. CSX was represented via telephone by Mr. 

Gies during all telephone testimony. All parties were served with a transcript of the 

December 6 and 7 hearing by Examiner’s Notice #5, dated January 26, 2011 

(General Docket Exhibit 58). CSX then submitted additional documents to be 

included in the record by their letter of February 25, 2011 (General Docket Exhibit 

61), with copies of the documents sent to each individual employee claimant. All 

parties were served with transcripts of the telephone hearings and the 

administrative record was closed to additional documentary evidence by Examiner’s 

Notice #6, dated July 20, 2011 (General Docket Exhibit 65A). This Notice also 

informed the parties that written argument was to be submitted to me by August 

29, 2011. However, CSX informed me by electronic message on July 26, 2011 that 

their copies of the telephone transcripts had not been included with their copy of 

Examiner’s Notice #6, and therefore CSX requested an extension of time to submit 

argument. CSX also requested in a separate letter dated July 26, 2011 to 

supplement the record with one additional document (General Docket Exhibit 67). I 
Part I, Page 11

granted these requests in Examiner’s Notice #7, dated August 3, 2011, re-served 

CSX with copies of the telephone transcripts by the same Notice, and informed all 

parties that any written argument was to be submitted by close of business on 

September 12, 2011 (General Docket Exhibit 68). 

Several claimants submitted written argument in response to Examiner’s 

Notice #7 prior to September 12, 2011. These submissions were entered into the 

record under the individual employee claimant sub-docket number corresponding to 

the author of the submission. CSX submitted its brief on September 12, 2011 

(General Docket Exhibit 69). In accordance with Examiner’s Notice #7, the 

administrative record was closed on September 12, 2011.

FINDINGS OF FACT – CSX REAL PROPERTY, INC. 

1. CSXT has been a covered employer under the Acts during all time periods 

relevant to these cases (General Docket Exhibit 2-1, General Docket Exhibit 

3-1). 

2. RPI is a wholly-owned subsidiary of CSX and is under common control with 

CSXT (General Docket Exhibit 3-2, General Docket Exhibit 4-2, General 

Docket Exhibit 10-7). Additionally, RPI does not perform any services for any 

covered employer other than CSXT (General Docket Exhibit 8-6).

3. Realty was established as a subsidiary of CSX on September 30, 1986, after a 

name change from CSX Resources, Inc. (General Docket Exhibit 4-4). For 

purposes of this Report, any reference to employee service with RPI should be 

understood to include employee service with Realty with respect to the 

individual claimants in these cases.
Part I, Page 12

4. RPI was first established as a first-tier subsidiary of CSX in February 1990 

(General Docket Exhibit 6-11), in order to separate the sales function from 

the development function within Realty (General Docket Exhibit 4-5). These 

functions were re-combined in March 1992, with all remaining Realty 

employees being transferred to RPI by December 1992 (General Docket 

Exhibit 4-5).

5. Each individual claimant previously worked in covered railroad employment 

with CSXT before being transferred to RPI or Realty. Twenty of these 

individual claimants were identified by CSX as previously working for CSXT 

(General Docket Exhibit 9, General Docket Exhibit 54), while the remaining 

three claimants provided supplemental evidence to establish their prior 

employment with CSXT. This supplemental evidence is contained in the 

individual sub-dockets for those claimants.

6. In November 1996, the Audit and Compliance Division (ACD) of the Board 

completed an Employer Coverage Investigation Report addressing the status 

of RPI under the Acts (General Docket Exhibit 8). This report noted several 

areas in which the information provided by CSX was in conflict with 

information provided by RPI employees during the preparation of the report

(See, e.g., General Docket Exhibit 8-5). 

7. The property management agreement between CSXT and RPI provided by 

RPI during the ACD investigation instructs that RPI shall, upon the request 

of CSXT, assist in negotiating contract terms for sales and exchanges of 

operational property of CSXT (General Docket Exhibit 10-2). Operational 

property is defined in the agreement as including rights-of-way, rail 

corridors, active track areas, active yards, structures, depots, warehouses and 

buildings used or available for use in rail service (General Docket Exhibit 10-

1 and 10-2).
Part I, Page 13

8. In a letter dated October 17, 1996, CSX raised extensive objections to a draft 

version of the ACD report (General Docket Exhibit 6). In its objections, CSX 

acknowledged that former CSXT employees retained seniority rights to bid on 

CSXT positions and continued to be carried on CSXT’s roster of employees 

(General Docket Exhibit 6-27).

9. During the course of the ACD investigation, CSX and RPI permitted Board 

employees access to CSXT offices and RPI employees (General Docket Exhibit 

8-3). As part of the investigation, ACD mailed questionnaires to thirty-five 

RPI employees requesting information about their work activities (General 

Docket Exhibit 8-8). Twenty-five of these questionnaires were returned to 

ACD (General Docket Exhibit 8-8).

10.Prior to January 9, 1997, the Board had never made a determination as to 

the status of RPI as a covered employer under the Acts. In Board Coverage 

Determination 97-18, dated January 9, 1997, a majority of the Board (with 

the Labor Member dissenting) found that RPI was not a covered employer 

under the Acts (General Docket Exhibit 3).

11. In reaching the decision in Board Coverage Determination 97-18, a majority 

of the Board accepted RPI’s description of the services it provided as 

involving non-operating properties, or surplus properties, or non-rail-related 

property rights (General Docket Exhibit 3-2). Nothing in this Report should 

be viewed as undermining or repudiating that conclusion of the majority of 

the Board.

12. In a letter dated December 6, 2006, RPI informed the Board that “RPI is 

undergoing a major shift in both its mission and the direction of its business” 
Part I, Page 14

and requested the Board declare RPI to be a covered employer under the Acts 

effective January 1, 2007 (General Docket Exhibit 32).

13.At the December 6, 2010 hearing, Scott Rynearson testified on behalf of CSX. 

Mr. Rynearson was tax counsel for CSX in May 1996 and was a signatory on 

CSX’s rebuttal statement of the ACD’s draft Employer Coverage 

Investigative Report on October 17, 1996 (General Docket Exhibit 6). At the 

hearing, Mr. Rynearson testified that he was the lead attorney within CSX’s 

tax division responding to the Board’s coverage audits during that time 

period (Hearing transcript, pg. 17). Mr. Rynearson testified that he did not 

perform any job-by-job analysis of the entire RPI staff, but looked to the 

overall nature of the service provided by RPI as an entity (Hearing 

transcript, pg. 22). Mr. Rynearson testified that he spoke to senior 

management staff at RPI in preparing these responses, who were commercial 

real estate development professionals rather than former railroad workers 

(Hearing transcript, pg. 26). Mr. Rynearson believed that RPI’s senior 

management staff was cooperative in providing him with information he 

requested in responding to the Boards’ investigation (Hearing transcript, pg. 

43). Mr. Rynearson also testified that the rebuttal letter he signed on October 

17, 1996 (General Docket Exhibit 6) was reviewed by RPI senior management 

for completeness and accuracy prior to being submitted to the Board (Hearing 

transcript, pg. 51). 

14.Steven Crosby, President of RPI, testified at the telephone hearing on 

February 22, 2011. Mr. Crosby testified that he was a vice president of RPI in 

1996 and was aware of the Board’s 1996 employer coverage investigation 

(February 22, 2011 hearing transcript, pg. 57). Mr. Crosby indicated that a 

significant portion of RPI’s work prior to 1997 was development of existing 

property for non-railroad purposes, but that after 1997 the amount of 

development decreased substantially and the focus shifted gradually toward 
Part I, Page 15

sales and leasing of property (February 22, 2011 hearing transcript, pg. 61-

62). Mr. Crosby also testified that the group of employees who had 

transferred from CSXT continued to work mostly as a focused group within 

RPI (February 22, 2011 hearing transcript, pg. 63).

15. In Board Coverage Determination 07-01, dated January 4, 2007, the Board 

found that RPI became an employer under the Acts effective January 1, 2007. 

The Board’s Labor Member wrote a separate concurrence, in which he noted 

his disagreement with Board Coverage Determination 97-18 and that he 

believed RPI’s activities had always been directed toward the benefit of CSXT 

(General Docket Exhibit 2).

16. During the time period between January 9, 1997, when Board Coverage 

Determination 97-18 was issued, and January 1, 2007, when Board Coverage 

Determination 07-01 found RPI became a covered employer under the Acts, 

RPI was under no obligation to report employee service to the Board because 

they were not a covered employer.

CONCLUSIONS OF LAW 

Based on the statutes, regulations, court cases and authorities discussed 

below, I make the following conclusions of law:

1. To meet the definition of “employee” as defined in section 1(b) of the Railroad 

Retirement Act (RRA) (45 U.S.C. §231(b)(1)) and section 1(d) of the Railroad 

Unemployment Insurance Act (RUIA) (45 U.S.C. §351(d)), an individual must 

be in the service of one or more covered employers for compensation. An 

individual is considered in the service of an employer if the individual is 

subject to the continuing authority of the employer to supervise and direct 

the manner of rendition of his or her service, or if he or she is rendering 
Part I, Page 16 

professional or technical services and is integrated into the staff of the 

employer, or if he or she is rendering, on the property used in the employer’s 

operations, personal services the rendition of which is integrated into the 

employer’s operations. 45 U.S.C. §231(d) and 45 U.S.C. §351(e).

2. Section 9 of the RRA (45 U.S.C. §231h) requires an individual to bring any 

errors or omissions in the individual’s record of compensation to the Board’s

attention within four years of the date on which the erroneous or omitted 

return of compensation was required to be filed. The Board’s records of

employee compensation are conclusive if no request for correction is made 

within the four-year time limit.

3. Board regulation 209.8 (20 C.F.R. §209.8) requires employers to file returns 

of compensation for any given calendar year on or before the last day of 

February of the following calendar year.

4. Board regulation 211.16 (20 C.F.R. §211.16(b)(1)) permits the Board to waive 

the four-year time limit for correction of a return of compensation where the 

compensation was reported or not reported as a result of fraud on the part of 

the employer. “Fraud” is not further defined in the Acts or elsewhere in the 

Board’s regulations.

5. The Internal Revenue Service (IRS) administers the Railroad Retirement Tax 

Act (RRTA) (26 U.S.C. §3201 et seq.) in addition to other federal taxation 

statutes. Internal Revenue Code (IRC) section §6001 (26 U.S.C. §6001) 

requires every person (including corporations) liable for any tax under the 

Internal Revenue Code, including the RRTA, to keep such records and file 

such returns as the Secretary of the Treasury shall require. IRS regulation 

31.6011(a)–2 (26 C.F.R. §31.6011(a)–2(a)) requires employers under the 

RRTA to make returns for any period in which compensation is paid to 
Part I, Page 17

employees. The RRTA defines “employer”, “employee” and “compensation” 

identically to the RRA and RUIA.

6. IRC section 6663 (26 U.S.C. §6663) imposes certain tax penalties resulting 

from underpayment of taxes when the underpayment is due to fraud. Section 

6663 applies to any underpayment of tax required to be shown on a return. 

Because employers under the RRTA are required to file returns by IRS 

regulation 31.6011(a)–2, IRC section 6663 applies to employers under the 

RRTA. Consequently, IRC section 6663 and Board regulation 211.16 are 

analogous in their treatment of fraudulent returns, and the same definition 

and interpretation of fraud is applicable to both IRC section 6663 and Board 

regulation 211.16. 

7. Under Board regulation 211.16 as informed by IRC section 6663, fraud by 

RPI must be demonstrated by affirmative evidence that RPI acted with 

fraudulent intent to avoid making returns of compensation, or that RPI acted 

with fraudulent intent in concealing, omitting, or otherwise providing 

materially false information to the Board.

8. To qualify for a regular annuity under section 2 of the RRA, an individual 

must have completed ten years of service as an employee under the Acts, or 

five years of service that all accrued after December 31, 1995. 45 U.S.C. 

§231a(a)(1).

9. A regular employee annuity under section 2(a)(1) of the RRA is payable only 

if the applicant shall have relinquished such rights as he may have to return 

to the service of an employer. 45 U.S.C. §231a(e)(2).

10. Initial decisions regarding applications for benefits under the RRA are 

governed by Board regulation 260.1 (20 C.F.R. §260.1). If a claimant 
Part I, Page 18

disagrees with the initial decision on an application for an annuity under the 

RRA, the claimant must request reconsideration of such initial decision 

within 60 days from the date on which notice of the initial decision is mailed 

to the claimant. 20 C.F.R. §260.3(b). The right to further review of an initial 

decision shall be forfeited if the request for reconsideration is not filed within 

the 60-day time period, unless the Board finds the claimant has 

demonstrated good cause for failing to file a timely request. 20 C.F.R.

§260.3(c).

11. In order for an individual to request reconsideration of an initial decision by 

the Board, the individual must be a party to the determination. Board 

regulation 259.2(a) (20 C.F.R. §259.2(a)) specifies that with respect to any 

determination concerning the status of a person as an employer under the 

Acts, the employees of such a person may submit written briefs or argument 

to the Board but shall not be considered parties to the determination.

12.Section 6 of the RRA (45 U.S.C. §231e) provides that regular annuities under 

the Act which will have become due an individual but will not have been paid 

at the time of such individual’s death shall be payable to the person, if any, 

who is determined by the Board to be such individual’s widow or widower and 

to have been living with such individual at the time of such individual’s death 

and who will not have died before receiving payment of such annuities.

DISCUSSION AND ANALYSIS 

Timeliness of Claims – Section 9 and 20 C.F.R. §211.16 

 Before considering the merits of any individual claim, and in accordance with 

the direction given to me in Board Order 09-66, I must first determine if the 

individual claims for employee service were timely made within the meaning of 
Part I, Page 19

Section 9 of the RRA and section 211.16 of the Board’s regulations. Section 9 of the 

RRA requires employers under the Acts to file annual returns of compensation of 

employees with the Board. Board regulation 209.8 (20 C.F.R. §209.8) requires that 

the employer file an annual report on or before the last day of February of the 

preceding calendar year’s compensation. The Board then provides each employee 

who performed compensated service with a certificate of service months and 

compensation on Board Form BA-6 (20 C.F.R. §209.12(a)). Section 9 of the RRA also 

states that the Board’s record of compensation shall be conclusive as to the amount 

of compensation paid to an employee during the period covered by the return, 

including periods when no compensation was paid and no return was filed, unless 

the error is called to the attention of the Board within four years after the day on 

which return of the compensation was required to be made. Because RPI was not a 

covered employer under the Acts until January 1, 2007, RPI was not required to 

submit reports of compensation for its employees. However, if the individual claims 

in this case establish that any claimant was actually performing compensated 

service for CSXT, a covered employer, the employer would have been required to 

report service and compensation for that individual.

Federal courts have consistently held that section 9 of the RRA does not limit 

the Board’s authority to re-open a record of compensation on its own motion beyond 

the four-year period specified in section 9. See Jacques v. U.S. Railroad Retirement 

Board, 736 F.2d 34, 42 (2nd Cir. 1984); Taylor v. Finch, 418 F.2d 1232, 1234 (8th 

Cir. 1969); Gerend v. U.S. Railroad Retirement Board, 248 F.2d 357, 360 (9th Cir. 

1957). Instead, section 9 acts as a limitation on the period during which the Board 

is required to modify or correct its records in response to a covered employee’s 

complaint. Gatewood v. U.S. Railroad Retirement Board, 88 F.3d 886, 889 (10th Cir. 

1996); Pawelczak v. United States, 931 F.2d 108, 110 (D.C. Cir. 1991). Nevertheless, 

Board regulation 216.11 (20 C.F.R. §216.11(b)(1)) limits the circumstances under 

which the Board will correct a record of compensation after four years to those 

instances where the erroneous compensation was posted or not posted due to fraud 
Part I, Page 20

on the part of the employer, or other exceptions related to scrivener’s errors that are 

not relevant here. “An agency’s regulation implementing its authorizing statute is 

binding in the courts unless procedurally defective, arbitrary or capricious in 

substance, or manifestly contrary to the statute.” Household Credit Services v. 

Pfennig, 541 U.S. 232, 242 (2004). The Board’s regulations bind the Board as well, 

and “the Board cannot ignore its own regulations merely because it finds them 

inequitable under the circumstances of this case.” Weyerhaeuser Co. v. U.S. 

Railroad Retirement Board, 503 F.3d 597, 603 (7th Cir. 2007). In the absence of 

fraud, the court in Weyerhaeuser reversed the Board’s decision to grant employee 

service credit beyond the four-year time period identified in section 211.16 of the 

Board’s regulations. Accordingly, requests for employee service credit may only be 

considered timely under section 9 of the RRA and section 211.16 of the Board’s 

regulations if the request was brought to the Board’s attention within four years 

after the day on which return of the compensation was required to be made, or if the 

error in reporting compensation was the result of fraud on the part of the employer.

“Fraud” as used in section 211.16 of the Board’s regulations is not further 

defined in the Acts or elsewhere in the Board’s regulations. However, employers 

under the Acts are also subject to the Railroad Retirement Tax Act (RRTA) (26 

U.S.C. §3201 et seq .), which is contained within the Internal Revenue Code (IRC) 

and is administered by the Internal Revenue Service (IRS). The RRTA contains 

identical definitions for the critical terms “employer”, “employee” and 

“compensation” as are contained in the RRA and RUIA. 26 U.S.C. §3231(a)-(e). The 

RRTA is administered by the IRS, and IRC section 6001 (26 U.S.C. §6001) requires 

any entity liable for any tax imposed under the IRC to “make such returns... as the 

Secretary [of the Treasury] may from time to time require.” IRS regulation 

31.6011(a)–2(a) in turn requires employers under the RRTA to make returns for any 

period in which compensation taxable under the RRTA is paid to employees.
Part I, Page 21

Because employers under the RRTA are required to make returns under IRC 

section 6001 and IRS regulation 31.6011(a)–2(a), these same employers are liable 

for penalties under IRC section 6663 “if any part of any underpayment of tax 

required to be shown on a return is due to fraud”. 26 U.S.C. §6663(a). Fraud is also 

not further defined in the IRC or in IRS regulations; however, federal courts and 

the IRS have had many occasions to address the meaning of IRC section 6663 in 

opinions and binding memoranda. Since employers under the Acts are subject to 

IRC section 6663 as well as Board regulation 211.16, I find that the body of law 

interpreting fraud under IRC section 6663 may appropriately be applied to evaluate 

the existence of fraud under Board regulation 211.16.

According to case law interpreting IRC section 6663, fraud “is to be construed 

as ordinarily understood.” White v. United States, 20 F. Supp. 623, 625 (W.D. Ky. 

1937). More specifically, “fraud is intentional wrongdoing on the part of the 

taxpayer with the specific intent to avoid a tax known to be owing.” Conforte v. 

Commissioner of Internal Revenue, 692 F.2d 587, 592 (9th Cir. 1982) (citing Powell 

v. Granquist, 252 F.2d 56, 60 (9th Cir. 1958)). Civil fraud under IRC section 6663 

must be shown by clear and convincing evidence. Webb v. Commissioner, 394 F.2d 

366, 377-78 (5th Cir. 1968); Stone v. Commissioner, 56 T.C. 213, 220 (1971). 

Nevertheless, because fraudulent intent is rarely established by direct evidence, an 

adjudicating body may infer intent from various kinds of circumstantial evidence.

Bradford v. Commissioner, 796 F.2d 303, 307 (9th Cir. 1986). Indicia of fraud

include the following factors:

(1) Understatement of income;

(2) Inadequate records;

(3) Failure to file tax returns;

(4) Implausible or inconsistent explanations of behavior;

(5) Concealing assets; and

(6) Failure to cooperate with tax authorities.
Part I, Page 22

Bradford, 796 F.2d at 307-08. This definition of fraud is consistent with the Board’s 

findings regarding Weyerhaeuser Company in Board Coverage Determination 05-

21, wherein the Board found Weyerhaeuser did not commit fraud in failing to report 

service and compensation for an individual despite a management study that 

indicated that some individuals within Weyerhaeuser’s organization were in fact 

working exclusively for a covered railroad employer. See Weyerhaeuser, 503 F.3d at 

601 (quoting Board Coverage Determination 05-21 at *3).

In applying these criteria to RPI’s conduct in this case, it is helpful to 

consider two distinct periods of time. First, did RPI commit fraud in failing to file 

returns of compensation or in providing fraudulent information to the Board prior 

to the issuance of Board Coverage Determination 97-18 on January 9, 1997 

(General Docket Exhibit 3)? Second, did RPI commit fraud in failing to file returns 

of compensation between January 9, 1997, when Board Coverage Determination 97-

18 was issued, and January 1, 2007, when RPI became a covered employer as 

determined in Board Coverage Determination 07-01 issued on January 4, 2007 

(General Docket Exhibit 2)?

With regard to the period of time prior to January 9, 1997, I find that RPI did 

not commit fraud within the meaning of section 211.16 of the Board’s regulations. 

During the investigation leading up to the issuance of Board Coverage 

Determination 97-18, RPI provided extensive documentation to the Board’s Audit 

and Compliance Division (General Docket Exhibits 4 through 6, Exhibits 9 through 

27) and permitted the Board to contact individual RPI employees with 

questionnaires regarding their work with RPI (General Docket Exhibit 27), 

although RPI later argued that these questionnaires were improperly distributed 

and worded, and should be given little weight in the decision process (General 

Docket Exhibit 6-6). Mr. Rynearson testified at the December 6, 2010 hearing that 

RPI senior management had reviewed the information he presented to the Board in 
Part I, Page 23

his rebuttal letter of October 17, 1996 (Hearing transcript, pg. 51). These facts 

demonstrate a willingness to cooperate with the Board and the keeping of adequate 

records, both of which would weigh against a finding of fraud. The record contains 

no evidence of RPI concealing assets or failing to file required returns with the 

Board or another governmental authority. More significantly, the Employer 

Coverage Investigation Report issued by the ACD in November 1996 contained 

significant information provided both by RPI and by RPI employees with RPI’s 

consent that would have supported a finding that RPI was a covered employer 

under the Acts. Had RPI been acting with fraudulent intent to avoid having to file 

returns of compensation with the Board as a covered employer, it is unlikely RPI 

would have provided such an extensive volume of records to the ACD, including 

records unfavorable to RPI’s position, to be incorporated into the report and 

reviewed by the Board.

Looking to the indicia of fraud enumerated in Bradford v. Commissioner, the 

record does reflect that RPI provided explanations of its business model and duties 

of its employees that were inconsistent with the employee-provided information 

gathered through the Board’s questionnaires. In particular, employees alleged that 

RPI understated the proportion of work time and responsibilities for RPI employees 

that was for the benefit of CSXT. A number of claimants allege that the documents 

RPI provided to the Board were fraudulently prepared or altered, including a chart 

dated July 17, 1996 (General Docket Exhibit 54) that purported to list the work 

distribution of RPI employees according to RPI’s definitions of non-operating 

property, operating property, and non-operating use of operating property. 

Understating income (or in this case, understating the amount of work and revenue 

attributable to covered employment) and implausible or inconsistent explanations of 

behavior are both factors weighing in favor or a finding of fraud. Nonetheless, I 

cannot conclude that RPI committed fraud in their submissions to the Board prior 

to January 9, 1997 merely because the information provided by RPI was in conflict 

with the information presented by the employees. This is particularly true in light 
Part I, Page 24

of the Board asserting that “the contention that fraud was committed as a very 

serious accusation...” Weyerhaeuser, 503 F.3d at 601. Instead, fraud by RPI must 

be demonstrated by affirmative evidence that RPI acted with fraudulent intent to 

avoid making returns of compensation, or that RPI acted with fraudulent intent in 

concealing, omitting, or otherwise providing materially false information to the 

Board.

In evaluating RPI’s submissions to the Board during the 1996 audit 

investigation, I find that RPI’s explanations were internally consistent throughout 

the investigation process in 1996, only conflicting with the employee reports. In 

issuing Board Coverage Determination 97-18, the Board weighed these conflicting 

explanations and a majority of the Board found that RPI’s positions were more

credible. It is at best unclear if the specific documents alleged to be fraudulently 

prepared or altered were even submitted to the Board as part of its 1996 employer 

coverage investigation, or if the Board relied on those documents in any way in 

issuing Board Coverage Determination 97-18. As a result, the Bradford factors for 

understating the amount or work and revenue attributable to covered employment 

and inconsistent explanations of behavior must be given little weight. Moreover, the 

standard for finding an employer to be covered under the Acts is different from the 

standard necessary to credit employee service under the Acts, in that an employee 

may be on the payroll of a non-covered entity like RPI and yet be sufficiently subject 

to the authority of a covered employer or integrated into the staff or operations of a 

covered employer to qualify as a covered employee under the Acts. Because these 

standards are legally distinct and are defined in different sub-sections of the Acts, 

evidence that is directed toward RPI’s status as a covered entity, its overall mission, 

or its responsibilities for operating, non-operating, or non-operating use of 

operational railroad property is of limited value.

Mr. Rynearson testified at the December 6, 2010 hearing that CSX did not 

perform a job-by-job analysis of RPI in responding to the Board’s 1996 audit because 
Part I, Page 25

CSX focused on the entity analysis (Hearing transcript, pg. 22). Mr. Crosby also 

testified at the February 22, 2011 telephone hearing that RPI’s overall focus prior to 

1997 was on real estate development, although the group of employees transferred 

from CSXT continued to work in a discrete, focused group within RPI (February 22, 

2011 hearing transcript, pg. 61-63). Because of this distinction, the finding in Board 

Coverage Determination 97-18 that RPI was not a covered employer does not 

preclude a finding in these individual employee service cases that some individuals 

may have been subject to the authority of CSXT, or were rendering professional or 

technical services and were integrated into the staff of CSXT. Furthermore, any 

individual employee service determination does not change or undermine the effect 

of Board Coverage Determination 97-18, which addressed only the coverage status 

of RPI as an entity under the Acts. For the forgoing reasons, I find the evidence in 

the record does not support a conclusion that RPI fraudulently provided false 

information to the Board, or that RPI acted with fraudulent intent to avoid making 

returns of compensation for RPI employees, prior to the issuance of Board Coverage 

Determination 97-18.

With regard to the period of time between January 9, 1997 and January 1, 

2007, I find that RPI did not commit fraud within the meaning of section 211.16 of 

the Board’s regulations. Because RPI was found by a majority of the Board to not be 

a covered employer in Board Coverage Determination 97-18, RPI had no legal 

obligation to file returns of compensation with the Board during this period and was 

entitled to rely on Board Coverage Determination 97-18 as authority for not filing 

returns. Therefore, RPI cannot have committed fraud in failing to file returns of 

compensation with the Board between January 9, 1997 and January 1, 2007. 

Because I find RPI did not commit fraud regarding the filing or failure to file 

returns of compensation with respect to any of the individual claimants in this case, 

the four-year time limit for the correction of Board records of compensation in 

section 9 of the RRA and section 211.16 of the Board’s regulations must be applied 

strictly and cannot be waived.
Part I, Page 26

Timeliness of Claims – Presentment of Claim 

As explained above, section 9 of the RRA requires an error in a report of 

compensation to be “called to the attention of the Board within four years after the 

day on which return of the compensation was required to be made.” Board Form G70 has been used by the Board since at least 1992 for employees to protest their 

record of service months and compensation, but use of Board Form G-70 to file a 

protest with the Board is not required by section 9 of the RRA or any section of the 

Board’s regulations. Section 259.1(a) of the Board’s regulations (20 C.F.R. §259.1(a)) 

requires all requests for a determination with respect to employer or employee 

status to be filed with the Secretary to the Board. However, section 260.2 of the 

Board’s regulations (20 C.F.R. §260.2) permits an employee to request an 

amendment of the employee’s number of service months and amount of 

compensation credited by the Board under the Acts. Board Order 09-38 specifies 

that where an individual makes a claim for service for an entity that has been held 

to be an employer under the Acts, such claim shall be adjudicated as a protest of 

service and compensation under section 260.2 of the Board’s regulations, whereas 

where an individual makes a claim for service for an entity that has not been held 

to be an employer, the Board shall issue a coverage decision or decisions addressing 

the status of the entity and claimant as a covered employer and employee under the 

Acts, respectively (General Docket Exhibit 42).

The requests in this case are claims for service as employees of RPI prior to 

2007, which was found to not be an employer under the Acts in Board Coverage 

Determination 97-18 (General Docket Exhibit 3). The specific allegations concern 

the claimants’ service that is alleged to have been rendered to CSXT, a covered 

employer, rather than to RPI as a non-covered entity. Therefore, presentment of the 

claims to the Board must mean a request for an employee service determination 
Part I, Page 27

under part 259 of the Board’s regulations, not a protest of service and compensation 

under section 260.2 of the Board’s regulations.

Seven of the individual claimants in this case wrote letters to the Secretary to 

the Board in March 1997, attempting to protest Board Coverage Determination 97-

18 and requesting reconsideration of that decision. The Board informed these 

claimants that under sections 259.2 and 259.3 of the Board’s regulations, employees 

of an entity are not parties to an employer status determination and may not 

request reconsideration. In those letters, the Board did not explain further how the 

claimants could protest their service and compensation records or offer any 

alternative means to request an employee service determination. These seven 

claimants, in addition to the remaining claimants who did not protest in 1997, then 

wrote letters to the Board’s District Office in Jacksonville, Florida in 2006 and 2007, 

requesting employee service credit for work performed for RPI during the period 

before January 1, 2007 when RPI was not a covered employer. To determine what 

portions of the claims for employee service are within the four-year limit defined by 

section 9 of the RRA and section 211.16 of the Board’s regulations, I must determine 

when each claimant first “called to the attention of the Board” their allegations of 

error in the Board’s records of compensation.

In general, with respect to those claimants who attempted to protest Board 

Coverage Determination 97-18 in 1997, I find that the letters of protest to the Board 

in 1997 were sufficient to “call to the attention of the Board” the alleged errors in 

service and compensation for those claimants. Although the Board properly denied 

the claimants’ requests for reconsideration of Board Coverage Determination 97-18 

for lack of standing in accordance with sections 259.2 and 259.3 of the Board’s 

regulations, the Board’s denial letter did not provide the claimants with the 

necessary information to properly pursue their claims for employee service credit at 

that time. Moreover, the claimants addressed their claims to the Secretary to the 

Board in accordance with section 259.1(a) of the Board’s regulations for an employee 
Part I, Page 28

status determination. Because the Board did not direct the claimants as to the 

procedurally proper method for requesting an employee service determination, and 

the Board’s regulations do not require any specific format or method of filing with 

the Secretary to the Board, I find that for purposes of the four-year time limit in 

section 9 of the RRA and section 211.16 of the Board’s regulations, it is appropriate 

to treat the 1997 letters to the Secretary to the Board as sufficient to call to the 

attention of the Board the allegations of error in the Board’s service and 

compensation records.

As to the claimants who wrote letters to the Board’s District Office in 

Jacksonville, Florida in 2006 and 2007, protesting that their service with RPI prior 

to 2007 should be credited as employee service, I find that the letters of protest in 

2006 and 2007 were sufficient to “call to the attention of the Board” the allegations 

of error in the Board’s service and compensation records. Although the letters were 

addressed to the District Manager, not to the Secretary to the Board as required by 

section 259.1(a) of the Board’s regulations, the Board’s General Counsel 

acknowledged many of the letters on June 28, 2007 and informed the claimants that 

their requests were being considered as requests for employee service by the threemember Board. Because the 2006 and 2007 letters were actually received by the 

Board and forwarded to the Secretary to the Board for adjudication in accordance 

with Board Order 09-38 (General Docket Exhibit 42), I find that for purposes of the 

four-year time limit in section 9 of the RRA and section 211.16 of the Board’s 

regulations, it is appropriate to treat the 2006 and 2007 letters to the Jacksonville, 

Florida District Manager as sufficient to call to the attention of the Board the 

allegations of error in the Board’s service and compensation records.

In its post-hearing brief, CSX correctly points out that a party who is aware 

that he received no service credit under the Acts does not benefit from equitable 

tolling of a statute of limitations (General Docket Exhibit 69-42, citing Gatewood v. 

Railroad Retirement Board, 88 F.3d 886, 889-90 (10th Cir. 1996)). This principle is 
Part I, Page 29

entirely consistent with permitting a communication with the Board that “calls to 

the attention of the Board” an alleged error in service and compensation to be 

treated as a request for an employee service determination under the statutory 

language in the Acts. Moreover, the doctrine of laches should not be applied to bar 

claims by individuals when those individuals in fact made written, documented 

requests to the Board to protest the decisions of the Board. Therefore, for the 

reasons given above, I find that for purposes of the four-year time limit in section 9 

of the RRA and section 211.16 of the Board’s regulations, it is appropriate to treat 

the 1997 letters to the Secretary to the Board and the 2006 and 2007 letters to the 

Jacksonville, Florida District Manager as sufficient to call to the attention of the 

Board the allegations of error in the Board’s service and compensation records.

More detailed, individualized analysis of these issues as applied to each 

claimant is contained in Part II of this Report.

Timeliness of Claims – Good Cause for Failure to Request Reconsideration 

 Many of the individual claimants filed for a regular annuity under the RRA

prior to any initial protest of the Board’s service and compensation records. The 

granting of a regular annuity is an initial decision on an application for benefits 

under the RRA as defined in section 260.1(a)(1) of the Board’s regulations (20 C.F.R. 

§260.1(a)(1)). Board Form AA-1, the application summary and certification, requires 

an applicant to review and verify that the information in his or her application is 

true to the best of his or her knowledge. This information includes the employee’s 

dates of railroad service. When granted an annuity, applicants are notified in 

writing of the Board’s initial decision regarding their annuity amount. Section 

260.3(b) of the Board’s regulations (20 C.F.R. §260.3(b)) states that claimants may 

request reconsideration of an initial decision within 60 days of the written notice of 

that decision. The claimant must state the basis for the request for reconsideration 

and provide any supporting evidence. If no request for reconsideration is made 
Part I, Page 30

within the 60-day period, the right to any further review of the initial decision shall 

be forfeited unless the claimant demonstrates good cause for failing to file a timely 

request for reconsideration. 20 C.F.R. §260.3(c). This regulation provides several 

non-exhaustive examples of what would constitute good cause for failing to file a 

timely request, including a serious illness, death in the family, the destruction of 

important and relevant records, failure to be notified of an initial decision, unusual 

or unavoidable circumstances which demonstrated that the claimant would not 

have known of the filing requirement, or if the claimant mistakenly believed that 

his or her representative had in fact requested reconsideration. 20 C.F.R. §260.3(d).

There is no evidence in the record to suggest that any of the enumerated 

examples in section 260.3(d) of the Board’s regulations (20 C.F.R. §260.3(d)) apply 

to the individual claimants in this case. Nevertheless, I find that for those 

individuals who filed annuity applications between January 9, 1997 and January 1, 

2007, the decision of the majority of the Board in Board Coverage Determination 97-

18 was controlling as to the exclusion of the claimants’ RPI work from their 

creditable service totals when determining their annuity amounts. In the case of at 

least one claimant who properly requested reconsideration of his or her annuity 

amount, the reconsideration request only considered the creditable service totals for 

that claimant in the Board’s records, which did not include the claimant’s service for 

RPI. In reviewing a claim for reconsideration of an annuity amount, the 

reconsideration section within the Board has no authority to re-examine the 

character of a claimant’s underlying service to an employer to grant employee 

service credit, as must be done in this case. Although the Board’s reconsideration 

section has authority to examine an employee’s creditable service record after an 

initial decision on a protest of service and compensation, Board Order 09-38 

requires that adjudications of claims involving service to an entity not previously 

found to be an employer must be referred to the Board for a coverage decision prior 

to any consideration as a protest of service and compensation (General Docket 

Exhibit 42). Pursuant to part 259 of the Board’s regulations and Board Order 09-38, 
Part I, Page 31

only a request for an employee service determination is effective to examine the 

nature of a claimant’s employment with RPI and award service credit. Therefore, 

even a timely request for reconsideration would not have resulted in effective relief.

In Bowen v. City of New York, 476 U.S. 467 (1986), the Supreme Court 

considered whether claimants who had been denied Social Security Disability 

Insurance (SSDI) benefits could be properly included as class members in a class 

action in federal district court if those claimants had failed to exhaust their 

administrative remedies before the Social Security Administration. The Court found 

that exhaustion of administrative remedies was not necessary when exhaustion 

would have been futile, because “under these unique circumstances, there was 

nothing to be gained from permitting the compilation of a detailed factual record, or 

from agency expertise.” Id. at 485. The same principles apply with equal force here. 

Because of the reconsideration section’s lack of authority to make an employee 

service determination, no useful information could have been developed and no 

special agency expertise could have been brought to bear during the reconsideration 

process. The futility of the administrative process in these particular cases supports 

a finding of good cause for failing to pursue all available administrative remedies in 

the form of a request for reconsideration. Therefore, I find that claimants who did 

not file requests for reconsideration of their annuity amounts prior to their requests 

for employee service determinations had good cause for not doing so within the 

meaning of section 260.3(c) of the Board’s regulations. 

Additionally, some claimants did not file for an annuity under the RRA until 

after a request for an employee service determination had been made. In those 

instances when an application for an annuity was received after the initial claim for 

employee service, the Board was already on notice of the claim for employee service

at the time of the annuity application. Furthermore, the reconsideration section of 

the Board would still lack the authority to re-examine the character of a claimant’s 

underlying service to an employer to grant employee service credit, and the request 
Part I, Page 32

would simply have been held in abeyance pending the Board’s employee service 

determination. Therefore, I find that claimants who did not file requests for 

reconsideration of their annuity amounts when the application was filed after the 

requests for employee service determinations had good cause for not doing so within 

the meaning of section 260.3(c) of the Board’s regulations.

Employee Status Determinations 

In order to correct the Board’s records to reflect additional employee service 

credit for work undertaken while employed by RPI prior to 2007, the claimants 

must have actually been in the compensated service of a covered employer under 

the Acts. In this case, the individual claimants allege they were actually in the 

service of CSXT. Section 1(d)(1) of the RRA defines an individual as “in the service 

of an employer” under the Acts if he is rendering service for compensation and (A) 

he is subject to the continuing authority of the employer to supervise and direct the 

manner of rendition of his service, (B) if he is integrated into the staff of the 

employer while rendering professional or technical services, or (C) if he is rendering 

personal services on property used in the employer’s operations and the rendition of 

these services is integrated into the employer’s operations. This is an intensely factdriven inquiry that must be undertaken with respect to each period of time 

identified in a timely claim for employee service credit. However, if no timely claim 

was presented for an individual claimant, no individualized employee service 

evaluation is necessary or possible, because the claimant’s reports of compensation 

could not be corrected pursuant to section 9 of the RRA and section 211.216 of the 

Board’s regulations.

In Reynolds v. Northern Pacific Railway, 168 F.2d 934, 942 (8th Cir. 1948), 

the Eighth Circuit held that for purposes of liability for taxes under the analogous 

provision of the RRTA, individuals performing services for a railroad may be 
Part I, Page 33

regarded as railroad employees, even if they are not directly employed or directly 

paid by the covered railroad employer. In considering whether a claimant is subject 

to the continuing authority of the employer pursuant to paragraph (A) above, the 

focus of the test is whether the individual performing the service is subject to the 

control of the service-recipient not only with respect to the outcome of his work, but 

also the way he performs such work. In applying this test, I will consider criteria 

that are derived from the general common law of agency for determining who 

qualifies as an employee. This approach is consistent with the decision of the U.S. 

Supreme Court in Nationwide Mutual Insurance Company v. Darden, 503 U.S. 318, 

117 L.Ed. 2d 581 (1992), which considered the issue of whether an insurance agent 

qualified as an “employee” under the Employee Retirement Income Security Act of 

1974 (ERISA). In that case, the Court explained:

In determining whether a hired party is an employee under the 

general common law of agency, we consider the hiring party’s right to 

control the manner and means by which the product is accomplished. 

Among the other factors relevant to this inquiry are the skill required; 

the source of the instrumentalities and tools; the location of the work; 

the duration of the relationship between the parties; whether the 

hiring party has the right to assign additional projects to the hired 

party; the extent of the hired party’s discretion over when and how 

long to work; the method of payment; the hired party’s role in hiring 

and paying assistants; whether the work is part of the regular business 

of the hiring party; whether the hiring party is in business; the 

provision of employee benefits; and the tax treatment of the hired 

party.

503 U.S. at 323-24.
Part I, Page 34

In addition the control test under paragraph (A), I will consider whether a 

claimant is integrated into the employer’s operations as required by paragraph (B) 

and (C) above. I must note that the tests set forth in paragraphs (B) and (C) go 

beyond the test contained in paragraph (A), in that an individual may be found to 

be an employee under the Acts if he is integrated into the operations of a covered 

employer even if the control test is not met. In its post-hearing brief (General 

Docket Exhibit 69-45), CSX argues that the Board should not apply the tests under 

paragraphs (B) and (C) based on the Eighth Circuit decision in Kelm v. Chicago, St. 

Paul, Minneapolis and Omaha Railway Company, 206 F.2d 831, 835 (8th Cir. 1953). 

CSX is correct that the Board does not apply the paragraph (B) and (C) tests to 

independent contractors who are engaged in an independent trade or business from 

the covered employer, in accordance with the Kelm decision. However, RPI and 

CSXT are both owned by the same corporate parent, CSX (General Docket Exhibit 

3-2, General Docket Exhibit 4-2, General Docket Exhibit 10-7). There is no evidence 

that RPI provided any services to any entity outside the CSX corporate family 

(General Docket Exhibit 8-6). CSX also acknowledged at the time of the Board’s 

employer coverage investigation that Michael Ward served both as the Senior Vice 

President – Finance of CSXT and as a director of RPI (General Docket Exhibit 4-

15). The existence of a management services agreement between RPI and CSXT 

under these circumstances does not demonstrate an arm’s-length commercial 

transaction or true independence for purposes of the Kelm analysis. As a result, I 

find that RPI as a subsidiary of CSX and a corporate sibling of CSXT is not engaged

in an independent trade or business, and individual claimants in these cases may 

qualify as employees under the Acts pursuant to paragraph (B) or (C) above if the 

evidence in the record supports a finding that the claimant was integrated into the 

staff of CSXT while rendering professional or technical services, or rendered 

personal services on CSXT property which were integrated into CSXT’s operations.
Part I, Page 35

At the December 6, 2010 hearing, Katherine Hicks testified on behalf of CSX 

(Hearing transcript, pp. 51-72) regarding the operation of the CSX Pension Plan. 

Selected terms of the pension plan are also recounted in CSX’s post-hearing brief 

(General Docket Exhibit 69-25). I must note that the specific terms and operations 

of the CSX Pension Plan, including the calculation of offsets related to benefits 

under the Acts rather than benefits under the Social Security Act, are beyond the 

scope of Board Order 09-66 and this Examiner’s Report. More importantly, I must 

evaluate the individual claims for employee service determinations in this case 

based on the statutory requirements in the Acts and the legal standards I have 

identified above, without regard to any obligations that CSX or its pension plan 

administrator may have under other statutes or bodies of law. The individualized 

analysis of these issues as applied to each claimant is contained in Part II of this 

report.

At the time of the December 6, 2010 hearing, one of the individual employee 

claimants was deceased (Hearing transcript, pg. 287). As a result, another 

individual employee claimant testified on behalf of the deceased employee. Claims 

by deceased employee claimants are not moot, because section 6 of the RRA (45 

U.S.C. §231e) provides that annuities that become due an individual but which are 

not paid at the time of the individual’s death shall be payable to the individual’s 

widow or widower (or other person identified by the statute if the individual has no 

living widow or widower). A finding in favor of a deceased employee claimant on a 

timely claim for employee service could result in an annuity amount due to the 

deceased employee claimant, which would then be payable to the claimant’s widow 

or widower under section 6 of the RRA. Therefore, timely claims by deceased 

employee claimants must be fully evaluated and cannot be dismissed as moot. 
Part I, Page 36

CONCLUSION 

The Board directed I prepare this Report in response to the requests made by 

individuals formerly employed by RPI for a determination that the service 

performed by these individuals for RPI prior to 2007 was service to a covered 

employer under the RRA and RUIA. Because RPI was found not to be a covered 

employer in Board Coverage Determination 97-18, the individual claimants’ service 

may only be found to be service to a covered employer under the Acts if the 

claimants were in fact employees of CSXT during that period. Because these claims 

reach back many years (as early as 1987 in some instances), I was also directed to 

consider the timeliness of the claims for employee service, and whether the time 

limits imposed by section 9 of the RRA and section 211.16 of the Board’s regulations 

could be waived.

The employee claimants in this case have argued at length that RPI has 

always been engaged in providing services in connection with rail transportation. 

That is not the critical issue in this case, and it is not within the scope of the 

authority granted to me by the Board to re-examine whether Board Coverage 

Determination 97-18 was correctly decided. Moreover, the different legal standards 

involved in determining covered status of an entity as an employer as opposed to 

covered status of an individual employee mean that it is possible for RPI as a whole 

not to be engaged in providing services in connection with rail transportation, even 

if some individuals within the RPI organization were in fact rendering covered 

employee service to CSXT. This is the conclusion I must reach based on application 

of the law.

Despite the conflicting evidence in the record regarding the information 

submitted by CSX and RPI leading up to the issuance of Board Coverage

Determination 97-18, I cannot conclude that RPI intended to commit fraud on the
Part I, Page 37

Board. Because fraud requires intent, simply identifying inconsistencies in the 

record or presenting conflicting evidence is not sufficient to prove fraud. In the 

absence of fraud, the time limits on claims imposed by section 211.16 of the Board’s 

regulations must be observed by the Board. While the recommendations for 

individual cases are varied, the principles applied to reach those recommendations 

must be consistent and unyielding, even if the result appears inequitable from 

certain points of view.

Because RPI did not commit fraud within the meaning of section 211.16 of 

the Board’s regulations, the Report must recommend that the Board cannot correct 

any report of service and compensation for an individual claimant for any time 

period more than four years before the date the claimant first brought a request for 

an employee service determination to the attention of the Board. However, in view 

of this limitation, the Board should view requests for employee service 

determinations broadly, to permit adjudication of claims on the merits rather than 

barring claims for procedural reasons. Therefore, the Report recommends that 

letters written to the Board in March 1997 to protest the employer status 

determination issued in Board Coverage Determination 97-18 were sufficient to 

have brought the individual claims to the attention of the Board within the meaning 

of section 9 of the Railroad Retirement Act and section 211.16 of the Board’s 

regulations.

Finally, the Report recommends that RPI was not engaged in an independent 

trade or business from CSXT, due to the common ownership and control of the two 

entities by CSX. As a result, the individual employee service recommendations 

contained in Part II of the Report analyze whether the claimants were integrated 

into the staff or operations of CSXT while rendering professional or technical 

services, or personal services on the property of CSXT, in addition to the control test 
Part I, Page 38

of whether CSXT had the continuing authority to direct and supervise the manner 

of the employee’s service.

Respectfully submitted,

____________________________________ 

Karl T. Blank

Hearing Examiner

July 20, 2015