Business & Economy

Bus crash victims likely to get little compensation

File: Workers prepare to haul away a tour bus that crashed with semi-truck on Interstate 10 just west of the Indian Canyon Drive off-ramp, in Desert Hot Springs, near Palm Springs, Calif., Sunday, Oct. 23, 2016.
File: Workers prepare to haul away a tour bus that crashed with semi-truck on Interstate 10 just west of the Indian Canyon Drive off-ramp, in Desert Hot Springs, near Palm Springs, Calif., Sunday, Oct. 23, 2016.
Rodrigo Pena/AP

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The families of the 13 people killed and the 31 people injured in last's week bus crash near Palm Springs will have to split a relatively small pool of money if they all decide to sue the tour bus company. 

That company, Alhambra-based USA Holiday carried just $5 million dollars in insurance – that's the legal minimum required of passenger buses carrying more than 16 passengers. (The first lawsuit was filed Friday.) 

Despite inflation and skyrocketing medical costs the limit hasn't changed since the 1980s, even though the agency that regulates buses, the Federal Motor Carrier Safety Administration (FMCSA), issued a report three years ago that found the insurance limits were not high enough and could be leading to lower safety standards.

"At current levels, liability insurance does not appear to be functioning effectively as catastrophe coverage, as evidenced by the small but significant share of crashes that exceed the current limits," the report said. "At higher liability levels, insurers would have more at stake and could be incentivized to make greater efforts to screen out unqualified carriers and adjust insurance rates accordingly."

The report noted that $5 million in 2013 dollars would be $10,825,933, or $21,255,000 if you accounted for the rise in medical costs.

In the three years since the agency's report came out, there appears to be little progress in raising the limits.

"The rulemaking has stalled," said Ben Somberg, press secretary for the American Association for Justice, a nonprofit advocacy group for plaintiff's lawyers. "The agency has not even given a target date for issuing a Notice of Proposed Rulemaking, let alone a final rule."

FMCSA spokesman Duane DeBruyne said he could not comment because the matter is in the midst of the rulemaking process. He added: "FMCSA is currently working to comply with the Fixing America's Surface Transportation Act provisions on minimum levels of financial responsibility."

'Extremely inadequate' settlement for 2013 crash victims

In 2013, eight people were killed and dozens injured when a bus carrying passengers from Big Bear Lake to Tijuana crashed on a narrow mountain road. 

Investigators found “100 percent of the brakes” on the bus were defective and the bus company had a long history of safety violations.

However, the victims and their families not been compensated nearly enough, according to James P. Frantz, a San Diego-based attorney who represents 14 of the victims and their families. 

Frantz filed a civil suit against the bus company, Scapadas Magicas and the driver, Norberto Perez. The two sides later settled, but Frantz said the terms of that settlement prohibit him from disclosing the amount of the settlement.

"I can you that it was extremely inadequate for all the victims, because there were 35 victims in the class," Frantz said. “Most of the injuries were very serious. Most everyone was ejected from the bus.”

Like USA Holiday, Scapadas Magicas was carrying the minimum amount of insurance.

“There’s no logic to a $5 million policy," said Frantz. 

He points out that commercial trucks have to carry between $750,000 and $1 million in coverage, and those vehicles typically have no passengers, while buses can carry up to 75 people.

“If you have 10 people that become quadriplegics, it can cost them as much as $15 to $25 million for their care costs alone over their lifetime,” said Frantz.

Last year, Frantz filed a lawsuit against the FMCSA on behalf of some of the crash victims, alleging the agency failed to follow its own rules for inspecting buses. 

Frantz says he may file a similar suit in last week's crash, if he can find that the agency was negligent.