A tangled web for America’s subway

Sometimes God truly is in the details. Monday’s Metro crash killed 9 people and injured 76. Because the trains allided in DC rather than in nearby Maryland, no damages caps limit payouts in injured riders’ liability suits. Maryland caps the total damages paid to negligence casualties at $200,000.

The first suit filed in this crash requests nearly five times that amount, for injuries relatively minor compared to the victims crushed in the second car.

The onslaught began Wednesday, when the parents of 15-year-old Davonne Flanagan accused the District of “negligent maintenance” and “negligent operation.” Davonne, who was in the first car of the striking train, broke his leg. His parents are seeking $950,000.

Metro started the post-crash rhetoric with flimsy finger-pointing at Jeanice McMillan, the operator who died in the crash. If McMillan’s negligence hadcaused the crash, Metro would still be liable under agency theory. But the paper trail revealed since Monday provides evidence of a more pervasive, insidious negligence: In plain language, federal officials told Metro these trains were barely fit for passengers in 2004. The feds investigated a crash in Shady Grove in 2004 and another brake failure in Woodley Park a year later and issued an “urgent” warning.

Metro might try to blame the manufacturers who supplied the faulty cars and brake equipment. But the memos alleging over-used cars and too-old equipment mean even that argument is couched in very little credibility. The suits will likely succeed to settlement.

Not so fast. Metro couldn’t replace the uncrashworthy cars. Apparently Metro shares a tax shelter relationship with a private bank, which supplied cars and materials through private companies in return for the tax exempt status Metro itself enjoys as a public utility. Like the incident-requiring nature of the law itself, Metro materials are not ripe for replacing unless the materials themselves are damaged.

Metro has no ability to terminate leasing deals precluding Metro from replacing worn — or even unsafe — cars until the assets themselves are damaged. Metro officials knew in 2004 that their 30-year-old cars were dangerously old. But Metro did not plan to replace those cars until 2015.

The final blow for metro?

Such lawsuits are typically covered by insurance. But Metro’s board learned Thursday the transit system’s insurance policy was set to expire at midnight Tuesday. Normally the agency would have been able to renew the policy with set costs, but Chief Financial Officer Carol Kissal said the crash would end those rates and bring on higher but yet to be determined insurance premiums.

Transparency, once again, is always the best strategy. If the 2004 memos had been public the market — through an editorial-writing, transportation-choosing public — would have insisted that we replace dangerous cars and faulty rail. Costs would have been steep at the time, but cheaper than the increase in premiums after insurers see that Metro clearly does not take steps to protect itself from accident liability they will have to cover.

The market is the best insurance. Keep information transparent and communication free. How many times do we have to learn these obvious lessons before we start changing our behavior?

A more interesting question concerns the incentives this tax structure provides for Metro itself. If WMATA cannot replace the cars it knows are dangerous, does its insurance reflect that? Evidently Metro has reaped huge benefits from its tax-sharing relationships. Its capital gains from this venture will cover new, hiked premiums and settlement fees with crash victims.

What a shame that the dollar-and-cent incentives in place direct the Metro to find and share a tax shelter, rather than to protect the very public whose taxes shelter the Metro’s existence itself.

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One response to “A tangled web for America’s subway

  1. Pingback: Washington Metro: Barely Insured, Still a Hazard « Unkategorized

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