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Rail Runner damage settlements reach nearly $8M

Published on NewsOK Modified: August 18, 2014 at 2:13 pm •  Published: August 18, 2014

SANTA FE, N.M. (AP) — New Mexico's commuter rail service has received a free ride while taxpayers have shelled out nearly $8 million to settle damage claims against the Rail Runner Express, according to state records.

The Rail Runner, until last month, didn't pay premiums for the state's self-insurance program that provides liability coverage for settlements of lawsuits against government agencies. The insurance arrangement represented a little-known subsidy for the state-owned passenger train.

The taxpayer-financed liability fund has covered about $7.7 million in settlements involving the Rail Runner, including $4.2 million for wrongful death claims for car-train accidents in Valencia County that killed three people in 2007, according to General Services Department records.

Gov. Susana Martinez's administration started assessing an annual insurance premium on the Rail Runner in the budget year that began last month.

The Rail Runner will pay $2 million to cover liability claims up to $3 million. The Rail Runner buys insurance in the private market for claims over that amount.

State agencies typically pay for coverage based on their history of liability losses. But that didn't happen for Rail Runner when it started in 2006 during former Gov. Bill Richardson's administration.

Because the Rail Runner paid nothing into the insurance fund, the rates for other state agencies ended up being higher, according to Risk Management Director A.J. Forte, who discovered the no-premium policy and sought to change it.

He estimates there were uncollected Rail Runner premiums of about $5 million during the past three years. Rail Runner won't be required to retroactively pay any premiums, but will be charged going forward starting with this budget year.

"We felt that it was appropriate to charge the Rail Runner premiums and not have the pool take the hit," Forte said in a recent interview.

Terrence Doyle, director of the Rio Metro Regional Transit District, which manages the Rail Runner, said he learned from the Martinez administration earlier this year that the state hadn't been charging for liability coverage. The rail service had long been paying a private insurer, but it was for coverage beyond what the state provided.

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