For the first time, Amtrak could face a $200 million payout to train crash victims — the limit set by Congress. But that may be too low to cover the costs of the eight lives lost and more than 200 people injured in last week's derailment in Philadelphia.
That payout cap for a single passenger rail incident was part of a late effort in 1997 to pass a law that would rescue Amtrak from financial ruin and help it one day become independent.
Adjusted for inflation, which the law does not consider, that amount would be just under $300 million now. And Amtrak is still far from independent.
An Associated Press review of past cases found that Amtrak never before has been liable for a $200 million payout for a single passenger rail incident. The Philadelphia crash could be the first time the liability ceiling — designed specifically for Amtrak — would actually apply to the railroad.
It's not known how high the costs of victims' deaths and injuries from Tuesday's crash will run.
The train, which left Washington headed to New York, was moving at more than twice the speed allowed on a curve when it derailed not long after it stopped at Philadelphia's 30th Street Station. Investigators haven't determined why the train was traveling so fast.
On Friday, an Amtrak employee filed the first lawsuit, asking for more than $150,000 in damages. Amtrak employees are not limited by the $200 million cap because it only applies to passengers.
“I don't think Amtrak has ever faced a situation like this, and since they own the Northeast Corridor, they're 100 percent on the hook,” said Frank Wilner, author of the book, “Amtrak: Past, Present, Future.”
Using past passenger rail accidents as a guide, some lawyers expect damages from the crash to be similar to a 2008 accident in Los Angeles, which resulted in a $200 million payout to victims. In that crash, the train's engineer was texting and didn't stop at a red signal when the train collided head-on with a freight train, killing 25 people and injuring more than 100.
The money was paid to victims by Metrolink, which provides commuter rail service in Southern California, and Veolia Environment, a French company that operated the rail service at the time.
A judge divided the $200 million among the victims, with sums between $12,000 and $9 million. In some cases, lawyers said the amounts were far less than the projected costs of medical care needed as a result of the crash.
Paul Kiesel, a Los Angeles attorney who represented victims from the 2008 crash, said $200 million “can be just a drop in a bucket to compensate people who are the victims of passenger rail collisions in America.”
But Kiesel said he is not aware of another passenger rail incident in which the $200 million cap has been a factor.
Amtrak spokesman Marc Magliari said he was unable to say whether Amtrak had ever paid $200 million in damages for a single passenger rail incident.
Among the almost 20 victims from the Philadelphia crash still in the hospital, five are in critical condition.
It's difficult to put a price on a person's life, said Howard Spier, a Miami-based lawyer and former president of the Academy of Rail Labor Attorneys. But the people traveling on the Amtrak train that crashed last week are typically successful, he said.
“The more you've got going on in your life, the more your damages are worth,” Spier said.
Though passenger rail crashes that lead to $200 million victim settlements have been rare in America, liability has long been a concern.
“Limits on liability are essential for our economic future,” former Amtrak president Tom Downs told Congress in 1996.
In 1997, the year the liability cap was passed, Amtrak faced bankruptcy, and Congress had been trying for three years to come up with a plan to turn the struggling rail line into a profitable company without government subsidies.
Among issues challenging Amtrak financially were liability for all accidents involving Amtrak, even if they weren't Amtrak's fault. Establishing a cap on damages would help Amtrak purchase insurance at a reasonable cost.
At the time, Amtrak had about $200 million in liability insurance, government auditors said in a 1995 report. It was facing lawsuits totaling more than $200 million for a range of incidents.
A $200 million limit on liability for passenger rail accidents was added to a compromise bill at the end of the debates.
“That is what we are trying to do, is have some sort of quantifiable limit so we will know what the costs would be in the most extreme circumstances,” then-Sen. Kay Bailey Hutchinson, R-Texas, said on the Senate floor.
Democrats supported the $200 million cap, too.
“Amtrak passengers will have to bear a limit on Amtrak's liability to them, much the same way that the airlines limit their liability to passengers,” said then-Sen. Earnest Hollings, D-S.C.
Airlines do have a cap, but it's not the same as what Congress created for passenger railroads.
An international aviation convention established a per-passenger cap on damages at about $160,000. If an airline is proved negligent in court, victims' families can sue for more, unlike the families of passenger rail victims.
In 2010, some California lawmakers moved to increase the cap to $500 million, but the rail industry successfully lobbied against the measure.
“Now you have people with serious injuries that may not be compensated from Amtrak for all their losses,” said Connecticut attorney George Cahill, who is representing one of the passengers injured in the May 12 crash.