GM Gets Billions, Says No Money for Crash Victims
BOSTON - U.S. taxpayers have given 50 billion to rescue General Motors, but the company says it should not have to pay a penny to people harmed by known defects in its vehicles.
Despite the billions, the company is in collapse and filed for bankruptcy Jun. 1 to re-work debts and restructure its operations. It will dump the Hummer and Saturn models, lay off 21,000 workers, shutter 3,000 dealerships and start anew as a largely U.S.-owned company with a green edge.
As it negotiates bankruptcy in a New York court, the company is arguing that it should be absolved from paying out money to people who are hurt as a result of known problems in its cars already on the road. Consumer groups are fighting against the plan, and a similar deal already granted to Chrysler.
"If any defect in a GM car causes an accident, or injures someone or kills the occupants, there would be no recourse, no opportunity for compensation or to make a claim in a lawsuit. It would affect every single driver of a GM vehicle," Joanne Doroshow, executive director of the Center for Justice and Democracy, told IPS.
"In restoring GM to health, don't compromise the health and safety of consumers," Clarence Ditlow, executive director of the Center for Auto Safety, told IPS.
The U.S. now owns 72.5 percent of GM and the United Auto Workers health care trust owns 17.5 percent. The union gained a seat on GM's board, and it agreed not to strike through 2015.
GM has one of the very worst safety records among car makers. With 30 million vehicles on the road, the company is sued by the hundreds each year for known defects that result in people being killed, burned and disabled, according to Doroshow's group.
Victims file the lawsuits for help with medical bills, which can be extremely expensive in the U.S. private health care system.
Each year, between 500 and 1,000 people are harmed or killed in GM and Chrysler vehicles, according to the Center for Auto Safety. Chrysler has 10 million vehicles on the road.
Robert Doss, of Arizona, filed a lawsuit on behalf of his eight-year-old son, Shaun. Shaun became a paraplegic after the seatbelt in his father's Chrysler Dodge Durango failed during an accident. Their lawsuit will not go forward now, Doss told reporters Wednesday, while visiting Congress.
Jeremy Warriner, of Indiana, whose legs were burned beyond saving three years ago when brake fluid spilled and ignited during an accident in his Jeep Wrangler, said the personal injury lawsuit he filed against Chrysler also is defunct since the bankruptcy deal.
Chrysler used U.S. bankruptcy law to "sweep the people who have been injured by Chrysler products under the rug and walk away as if it never happened," Warriner said.
The consumer groups have filed an appeal to the bankruptcy court to reverse its decision about Chrysler.
GM filed for bankruptcy after years of bad management and its reputation for poor quality vehicles caught up with it during the recession.
Some of its vehicles have been plagued repeatedly by egregious safety problems, like roofs that collapse during rollover accidents, gas tanks that ignite upon impact and weak seats that give way.
"The government has investigated most of the defects. They conclude that there aren't enough crashes, injuries and fatalities to warrant a recall that could cost hundreds of thousands to the manufacturers," Ditlow said. Instead, the car companies are expected to pay out money to victims who sue.
One such lawsuit was settled in 1995 against General Motors and Chevrolet at that time. The companies built pick-up trucks in the 1970s and 1980s in which the gas tanks were outside of the frame, and vulnerable to impacts. More than 500 of the trucks had exploded and 183 people died. Trucks with a similar design are still on the road, Ditlow said.
GM spent 2.7 billion dollars on product liability losses in 2007, more than any other car company, which relates to its size and its poor safety record, Ditlow said.
"You don't pay that out unless you have serious defects in your cars," Ditlow said.
If the judge in the GM bankruptcy takes away people's right to sue the company, the consumer groups hope Congress will step in and create a fund for victims.
"They could clearly do this, and it's a reasonable thing to do," Doroshow said.
Long-time consumer advocate Joan Claybrook testified to Congress recently and urged lawmakers, after decades of asking, to finally step up safety requirements in vehicles, to prevent harm.
"The unfinished motor vehicle safety agenda is long and deep," Claybrook, the former president of Public Citizen, told the House Judiciary Committee on May 21.
Motor vehicle crashes kill over 40,000 U.S. citizens every year, injure another 2.5 million, and are the leading cause of death for all persons in the United States, ages four to 34, she said.
An injury due to motor vehicle accident occurs every 10 seconds and a motor vehicle fatality occurs every 12 minutes, Claybrook said.
"These manufacturers for the last 40 years have bobbed and weaved to oppose any serious improvements in motor vehicle safety, fuel economy and emissions," Claybrook said.