Federal judge halts insurance payouts in fatal bus rollover

McALLEN — Insurance companies involved in a May fatal bus rollover crash near Laredo may not pay out any claims under a temporary restraining order issued by a federal bankruptcy judge yesterday morning.

U.S. Bankruptcy Judge Eduardo Rodriguez issued the temporary restraining order in the case involving San Juan-based OGA Charter LLC, in which 50 people were either injured or killed.

The prohibition against insurance companies from paying any claims will be in effect until a July 26 hearing, said McAllen attorney John David Franz, one of several attorneys who has sued on behalf of people injured or killed in the May 14 accident.

Franz and other attorneys sought to force the charter bus company into bankruptcy to freeze the assets of the company after two attorneys agreed to a $3.5 million settlement with insurance companies.

The settlement would have claimed up to 70 percent of the total amount of $5 million that the bus company’s insurance company is liable for under terms of the insurance.

“It’s a step in the right direction,” Franz said of the bankruptcy judge’s decision. “Hopefully, it will ensure that every victim receives some compensation, rather than a handful taking the vast majority of the insurance proceeds.”

Nine people died and 43 were injured after the OGA Charters bus that originated in Brownsville and was headed to the Kickapoo Lucky Eagle Casino and Hotel rolled over May 14. OGA Charters, owned by Rolando Garza of San Juan, was insured by New York Marine and General Insurance Company under a commercial automobile liability policy that provided a total of $5 million in coverage.