After gambling all night at a Connecticut casino, Ren Xiang Yao was headed home on a tour bus when it slid out of control, turned over on its side and was sliced in half by a sign post in the Bronx.
Parts of both arms were missing when rescuers pulled Yao from the twisted wreckage. He was among the survivors. Fifteen people died and others were also badly hurt.
The injury contributed to the breakup of his marriage and left him struggling with a metal hook for a hand. He shows little anger. “Just because I want something doesn’t mean it’ll turn out that way,” he said.
Although Yao remains philosophical, arguments over compensation for his injuries and those of others have dragged on for five years and remain far from resolution. The New York City bus company carried the minimum amount of insurance specified by federal law — $5 million. That will have to cover the claims of 32 passengers or their survivors.
The same scenario is likely to play out for the victims of the Palm Springs bus accident two weeks ago, another pre-dawn wreck on a trip back from a distant casino.
The USA Holiday bus was covered by the same minimum $5 million policy, which will have to cover the needs of 43 passengers and their survivors. They will likely go through a long and frustrating legal process only to face their own grim decision about how the $5 million in insurance funds will be divided, say industry experts.
The $5-million insurance limit was established in 1982 during deregulation of the bus industry under the Reagan administration. Until then, individual bus riders were covered by only a $5,000 limit that was set during the Great Depression.
Decades of inflation — rising medical costs in particular — have eroded what $5 million can cover. It is far less than airline passengers or their survivors can obtain under international accords and less, too, than what Amtrak provides.
While most bus accidents are not serious enough to tap out the $5 million, major crashes can cause so much loss of life and grave injury that the victims and their families are left with what critics say is an inadequate pot of money to compensate.
The Federal Motor Carrier Safety Administration, the agency that regulates the bus industry, has tried to increase the minimum requirement. In an April 2014 report to Congress, the agency said it had “determined that the current financial responsibility minimums are inadequate to fully cover the costs of some crashes in light of increased medical costs and revised value of statistical life.”
The report triggered stiff resistance by the bus operators, trucking companies and the insurance industry.
Peter Pantuso, president of the American Bus Assn., opposes any revision in the limits. “The insurance is there to protect the bus companies,” he said. “It is the same as your home. You insure yourself, not necessarily to pay somebody else.”
Pantuso said insurance costs are significant for small operators, like the single-driver operation of USA Holiday. The minimum $5 million of insurance for a single bus costs $10,000 to $12,000 annually under most circumstances, and as much as $20,000 in a dense city like New York. Higher minimums would sharply increase premiums, though not necessarily by the same percentage increase, he said.
Lawrence Simon, a New York attorney who is active in bus litigation, said if higher insurance costs hit small operators, it may have the beneficial effect of weeding out marginal players who shouldn’t be hauling passengers in the first place. Simon acknowledges higher limits will drive up costs, but asserts it will not significantly affect highly qualified safe companies.
Federal records show that Palm Springs bus driver Teodulo Vides, who operated his bus terminal out of his apartment, would in some years renew his $5 million policy every few months, possibly because he couldn’t afford a full year of coverage.
“Insurers believe that the federally set liability limits remain quite acceptable as a minimum requirement and insurers are not seeking that they be raised at this time,” said Jim Whittle, the group’s assistant general counsel and chief claims counsel. He said buses are safer, asserted most losses are lower than existing limits and suggested that higher minimums could lead to higher fares that would affect consumers.
But engineers and attorneys both dispute the idea that bus safety has improved much. New buses are made to look sleek, but they weigh less and their windshields have been lowered to improve passenger views to the detriment of safety.
“A lot of vehicle safety standards like crumple zones and roof crush don’t apply to buses,” said Katherine Harvey-Lee, an attorney who represents bus crash victims.
The biggest opposition came from the Owner-Operator Independent Drivers Assn., which opposed the related proposal to raise insurance on big rig trucks. A letter writing campaign by the organization led Congress to instruct the safety administration to study the issue further. A spokeswoman said the group has no position on the matter of bus insurance.
Greyhound, the nation’s largest intercity bus operator, supports higher liability limits, said spokeswoman Allison Morrison, though she declined to say how much coverage the company has on its fleet.
A theme of the opposition is that high insurance levels are mainly sought by greedy attorneys, who typically get anywhere from 20% to 40% of recoveries, and that the payout on minor accidents will increase if higher levels are mandated. But those who support a higher insurance requirement say many of the arguments fall apart when it comes to the medical care and survivor claims from large scale bus crashes.
About 40 occupants of buses are killed every year, according to safety administration figures, mostly in small numbers. But nearly every year or every few years, there are crashes like the Bronx or Palm Springs accidents that overwhelm a $5 million pot of money.
The resulting legal disputes drag on for years, and attorneys look for other parties to sue. In the Bronx case, 17 law firms are involved. The bus driver claimed a big rig truck cut him off, and that trucking company is now a defendant. The state was sued over the highway design. The casino, which contracted with the bus company, is owned by an American Indian tribe and any litigation must go through tribal court.
The knot of litigation is a direct result of the inadequate insurance levels, said David Kownacki, Yao’s attorney. Kownacki said he hopes to get enough recovery to get Yao a modern prosthesis instead of his metal hook. Yao dreams of getting a better apartment.
When such cases end up with only $5 million, it leads to a painful legal processes. A meeting is called of the victims and survivors to figure out some moral basis or legal formula to distribute the pool of money. The ongoing medical needs of some victims have to be balanced against the claims of survivors who lost a spouse or parent or a child.
“That is one of the most difficult things I have to do in my job,” said attorney David Harris, who has filed suit on behalf of two of the Palm Spring crash victims.
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Times staff writer Cindy Chang contributed to this report.