David Cohen, the lawyer representing Pennsbury's insurance carrier, asked the judge to change the award to $500,000 to comply with the state limit for liability payments by school districts and municipalities.
Days after the trial, Cohen told Zauflik's lawyers that he had just found out about the $10 million umbrella insurance policy.
Cohen could not be reached for comment after Tuesday's hearing.
The judge took the arguments under advisement and did not indicate when he would rule.
Either way, the case probably is headed to the state Supreme Court, which upheld the state cap in 1981 and 1986. That court has not addressed several issues, Kline said, including that the law was not designed to protect insurance companies or "non-core" school district functions such as transportation.
On Jan. 12, 2007, Zauflik and about 16 other students were standing outside Pennsbury High School when an out-of-control school bus hit them. Zauflik, a junior, suffered the most serious injuries, requiring 11 operations, including amputation of her leg.
The accident was caused when the bus driver mistakenly stepped on the gas pedal instead of the brake, Falls Township police and the National Transportation Safety Board determined. The district stipulated liability for the crash the day before jury selection for Zauflik's civil case.
Zauflik and her parents did not attend Tuesday's hearing.
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