The new highway bill being celebrated on Capitol Hill could cost Amtrak $95 million and may delay the settlement of claims made by victims of a fatal Amtrak derailment in Philadelphia this year.
The new law increases a cap on payments a railroad can make to accident victims from $200 million to $295 million. It makes the higher limit retroactive, a nod to the families of eight people killed and more than 200 injured — 11 of them critically — in the May 12 derailment of an Amtrak train bound from Washington to New York.
“There are two of my clients with medical bills that exceed $1 million already and are approaching or have hit $2 million,” said Robert Mongeluzzi, a lawyer in Philadelphia. He says it’s too early to know for certain, “but based upon the extent of the damage that we know, the number of dead and the number of catastrophically injured, we believe [the claims] will exceed the $295 million cap.”
The crash has resulted in 98 cases filed against Amtrak, with more said to be coming. Some lawyers question whether Amtrak will challenge Congress’s decision to make the cap increase retroactive.
“It would be a bad move on their part, but then again we’re talking about an additional $95 million,” said Sean Quinn, another lawyer in Philadelphia whose client is preparing to file suit. “That’s 95 million reasons to do so.”
Given that the train was going more than 100 mph around a curve where the speed limit was 50 mph, there is little question that Amtrak and the engineer would be found negligent. The passenger rail company acknowledged that in the aftermath, saying it would not contest that it was at fault.
But since Congress approved the $95 million cap increase last week, Amtrak has fallen silent, beyond saying it has sufficient insurance coverage.
The passenger railroad, which will receive more than $8 billion in federal subsidies over the next five years, refused this week to answer questions about its insurance structure, the retroactive increase or whether it plans to challenge it in court.
Amtrak’s insurance is akin to the deductible on an auto insurance policy. The railroad pays a portion on any accident claim, and the rest falls to outside insurance companies. The deductible that Amtrak was required to pay once was $50 million. Amtrak refused to say whether that amount has been increased in recent years.
Those companies presumably wrote policies that covered Amtrak’s losses up to the $200 million cap, suggesting that the perpetually cash-strapped railroad most likely holds the bag for the additional $95 million.
“We don’t have any comment on the pending litigation,” said Amtrak spokeswoman Christina Leeds, who responded in an email that she was “not commenting on the liability cap” increase to $295 million.
Constitutional scholar Bruce Ledewitz, a professor at the Duquesne University School of Law, predicted that Amtrak will challenge the $95 million increase by citing a Fifth Amendment provision known as the Takings Clause. He pointed to a case brought by the coal company Eastern Enterprise in which the Supreme Court ruled that a retroactive act of Congress was unconstitutional.
“In the Eastern Enterprise case you had a company that had a settled liability, and Congress raised it, and that was considered an [unconstitutional] taking,” Ledewitz said. “Even though I think the [case against Amtrak] is quite different, it’s not totally different.”
But if Amtrak mounts that challenge, Ledewitz anticipates it will fail. So does Joanne Doroshow, executive director of the Center for Justice and Democracy at the New York Law School.
“I don’t think there’s much of a legal basis to challenge it,” Doroshow said. “Maybe they’ll try, but the entire liability structure for Amtrak is established by Congress.”
Amtrak’s reluctance to talk about its insurance coverage or plan for handling the Philadelphia lawsuits may stem from its troubled relationship with the companies from which it buys insurance. Last year Amtrak sued a dozen of them, claiming they failed to cover the railroad’s losses after Hurricane Sandy. The case was settled in July after a federal judge dismissed most of the insurance companies.
Asked whether the same companies involved in that case provided coverage for Amtrak in the Philadelphia derailment, Leeds refused to comment.
The degree to which Congress’s well-intended effort to ensure compensation for the crash victims in Philadelphia will delay their receiving it depends on the course chosen by the railroad. The cases have been consolidated and placed in the hands of U.S. District Judge Legrome D. Davis in Philadelphia.
“The next step is some procedure to evaluate the claims to get a sense of whether Amtrak will tender their $295 million,” said Thomas R. Kline, whose law firm represents the families of two people who died on May 12. “At that point there will need to be proceedings to determine how the money will eventually be [divided]. Conversely, we could walk down a path where Amtrak contests the [$295 million] amount, in which case we’ll need to go forward with full-blown litigation.”