By Gina Passarella, From The Legal Intelligencer

Lingering over the liability claims expected to be raised by victims of the Amtrak 188 derailment is a 1997 federal law that creates a $200 million damages cap to be paid out for any single railroad accident.

The law, which has come under fire over the years for not adequately covering victims’ damages from serious train accidents, mandates Amtrak have $200 million in liability coverage for a single incident. That law exempts claims by Amtrak employees who are separately covered by the 1908 Federal Employers’ Liability Act.

Assuming Amtrak and any other potential defendants would collectively tender the full $200 million to the families of those who died—which by press time was confirmed at eight people—and the more than 200 on board train 188, questions then turn to who will value victims’ claims and how they will go about doing that.

“You could have one lawyer trying to minimize one person’s suffering and comparative worth compared to someone else,” said plaintiff railroad attorney James McEldrew III of McEldrew Young. “It’s going to be terrible.”

McEldrew said the $200 million cap is outdated in that inflation and health care costs have gone up considerably since the law was passed nearly 20 years ago. And those with medical liens may see further reductions in potential payouts, McEldrew said.

He said the setup, which would pit victims against one another, would also impact attorneys’ choices in taking on clients. One solution, McEldrew said, would be to have an independent person evaluate the claims.

“I would think that would almost be a necessity … in this case,” McEldrew said.

Kenneth R. Feinberg of Feinberg Rozen has no shortage of experience in that type of role, overseeing compensation funds for litigation stemming from the 9/11 terrorist attacks, the BP oil spill and the GM ignition switch cases, to name a few. Those funds were largely handled out of court with little or no judicial oversight.

The first question in these cases, Feinberg said, is how large any potential settlement fund might be. He said it is a “big if” as to whether the full $200 million would be tendered or whether, as in the case of the Boston Marathon bombing litigation or the Virginia Tech shootings, the amount goes up from individual donations.

The next question is who will distribute it. Amtrak may feel its personnel or insurance carrier is perfectly capable of handling the task, Feinberg said.

Who can file claims becomes another issue, and not an easy one at that, he said. Could a person who walked away unscathed, albeit shaken up, seek compensation from the limited fund, Feinberg asked. Will more be set aside for the dead than the injured? What formula will be used for determining the value of each case?

“Are you going to say a dead stockbroker should get more of the $200 million than a dead waiter or a busboy?” Feinberg asked.

That is the tort system approach, he said, whereas the Boston Marathon fund operated under the assumption all lives are equal.

Settlement funds like the ones Feinberg often oversees are voluntary and if a party disagrees they can go to the courts, but in a case where there is a $200 million cap, there may be no money left by the time they get through the court system, Feinberg said. He said the bulk of people go through the funds once created, citing a 97 percent participant rate in the 9/11 fund and a 92 percent rate in the BP cases.

These funds could be set up before any litigation is filed, or Amtrak could wait and see how litigation starts to unfold, Feinberg said.

A 2008 train crash between a Metrolink commuter train and a Union Pacific freight train in the Los Angeles area that resulted in 25 dead and more than 100 injured was one of the few train disasters to test the $200 million damages cap. The attorneys for the victims told the Los Angeles County Superior Court judge overseeing the cases that the value of the claims was between $320 million and $350 million. And while the judge largely agreed, according to media reports, he said he was bound by the $200 million federal cap and doled out awards ranging from $12,000 to $9 million.

“This court knew for a certainty that there was simply not going to be enough money to award the relief requested by counsel,” the judge had written in his 2011 decision, according to The Santa Clarita Valley Signal.

William L. Myers of MyersLafferty Law Offices in Philadelphia represents victims of railroad-related accidents. He said $200 million may sound like a lot, but with the number injured and the potential for punitive damages if there was engineer error or equipment failure on Amtrak’s part, actual damages could well exceed that amount.

“Amtrak has a decision to make here,” Myers said. “Does Amtrak say to itself and say to the public, ‘We messed up here, we made terrible mistakes, we have $200 million to pay you people, here it is, we will interplead it into court and we will allow the court and the attorneys to divide it up for the benefit of everyone,’ or does Amtrak try to fight and dig its heels in and nickle and dime and try to save itself a few bucks down the line?”

Saving parties the expensive costs of discovery could also mean that attorneys cut their fees back from say 40 percent of recovery to something lower, Myers said.

If the money is interpleaded into the court, Myers said, there will likely be some third party named to assist the court in the large task of valuing cases.

A federal lawsuit has already been filed stemming from Tuesday’s Amtrak disaster. Michael J. Olley of Coffey Kaye Myers & Olley confirmed that his firm filed a suit Thursday in the Eastern District of Pennsylvania on behalf of Amtrak employee Bruce Phillips. Phillips was not part of the crew working that night, but rather was being transported back to New York, Olley said.

According to the complaint, he is filing as an employee under FELA.

Olley’s firm has long represented railroad employees in FELA actions. He said the firm has received a number of calls from victims, but so far has only filed the one suit.

He said they waited to file the suit until all of the passengers were accounted for.

According to the complaint, Phillips suffered traumatic brain injury, contusions and lacerations, orthopedic and neurological injuries, and emotional trauma.

NBC 10 first confirmed the existence of the suit.

A message left with Amtrak’s communication department was not returned by press time.

IMAGE: Emergency personnel work at the scene of a deadly train derailment May 13 in Philadelphia. AP photo by Patrick Semansky

For more on this story go to: http://www.thelegalintelligencer.com/id=1202726483799/Valuing-Damages-in-Amtrak-Crash-Made-Trickier-by-200M-Cap#ixzz3aGKq2ey8