Pennsbury says it's illegal for it to pay more than $500,000 for lost leg

It would be illegal for the Pennsbury School District to pay a former student who lost a leg in a bus crash more than the $500,000 dictated by state law, the district said Tuesday.

Payment of last week's $14 million jury award to Ashley Zauflik will be determined by the courts and insurance companies, the district said in a news release.

The release was a response to weekend reports that the district had a $10 million excess-liability policy for the 2006-07 school year, when an out-of-control district bus ran over Zauflik and hit about 15 other students outside Pennsbury High School.

The district's attorney, David Cohen, notified the Fairless Hills woman's law firm Friday - four days after the verdict - that he learned about the $10 million policy Thursday at a school board executive session closed to the public.

"At all times throughout this case, the school district has acted in a forthright manner and has cooperated with all parties throughout the litigation process," the district said in its release. "No information was ever intentionally withheld."

School districts routinely buy excess-liability coverage "to protect assets and the taxpayers," Superintendent Kevin McHugh said Monday.

Cohen represents Pennsbury in this case, but was hired by one of the district's insurance companies. The district was obligated to inform Cohen and the Zauflik family of all insurance coverage in force at the time of the accident, Zauflik's attorney, Thomas Kline, said Saturday.

Cohen has declined to comment on the case during and since the four-day civil trial in Bucks County Court.

After the verdict, Kline called on Pennsbury to pay Zauflik, now 21, an amount between the $14 million award and the $500,000 limit.

Using school funds "above the statutory limit is illegal," the district said, and each school board member who voted for such a payment could be held liable.

A $500,000 payment would be covered by the district's $1 million motor-vehicle insurance coverage, the release said.

The jury awarded Zauflik $2.9 million for past and future medical bills and $11.1 million for pain, suffering, and disfigurement. She was hospitalized for 40 days immediately after the Jan. 12, 2007, accident. Her left leg was amputated six inches above the knee.

Before the trial, Zauflik and her parents reached an out-of-court settlement with the bus manufacturer for a undisclosed amount.

The district is expected to appeal the verdict to Judge Robert Mellon by the Thursday deadline, and Mellon is expected to adjust it to conform to the $500,000 state limit.

The verdict would then be appealed to Superior Court and the state Supreme Court, Kline said during the trial. To collect damages above the $500,000, Zauflik would have to challenge the constitutionality of the limit, which was adopted by the state legislature in 1980 and narrowly upheld by the state Supreme Court in 1986, he said.

The limit is not designed to protect insurance companies, only school districts and municipalities, Kline said after learning about the $10 million policy.

But an insurance company can pay only what it is legally obligated to pay, said Stuart Knade, chief counsel of the Pennsylvania School Boards Association: "If the insured isn't liable for it, insurance doesn't cover it."

Kline responded in an e-mail that the district and the PSBA "are wrong. I agree with Rep. [John] Galloway, a former Pennsbury School District board member, who urges the school district to allocate funds above the cap. That can be done within the existing law."