Here’s a rundown on the changes of keenest interest to insurance advisors...
March 25--WASHINGTON -- Two U.S. senators this morning introduced legislation to require automakers to provide more information to federal regulators in fatal crashes, a move prompted by General Motors' recall of some 1.6 million vehicles.
U.S. Sens. Edward J. Markey, D-Mass., and Richard Blumenthal, D-Conn., proposed a measure that would reform the nation's Early Warning Reporting, or EWR, system for auto manufacturers.
It would also require the National Highway Traffic Safety Administration (NHTSA) to make reports it receives from automakers available in "a searchable, user-friendly format" that would allow consumers and independent safety experts to more easily evaluate potential safety defects.
The legislation was unveiled as the fallout from GM's recall last month of 1.6 million 2003-7 Saturn Ions, 2005-7 Chevrolet Cobalts and other vehicles continues to widen. On Monday, Blumenthal, a former state attorney general, urged U.S. Attorney General Eric Holder to require GM to create a victims fund and not be able to use its 2009 bankruptcy shield to protect itself.
"I believe the federal government has a moral, if not legal, obligation to take all necessary steps to protect innocent consumers," Blumenthal wrote, adding his belief that the company engaged in "deliberate concealment" of the condition involving the vehicles and saying that "constituted a fraud on the bankruptcy court that approved its reorganization."
In releasing their legislation this morning, Markey and Blumenthal said GM "has admitted to knowing for at least a decade about the ignition switch defect in Chevy Cobalts and Saturn Ions that have led to the massive recall and NHTSA failed to connect the dots."
As the Free Press has reported, GM documents indicate problems with ignition switches were detected as early as 2001, but it wasn't until late last year when the company gathered enough information to conclude defective ignition switches could be jostled out of position, potentially disabling a vehicle's air bags.
But over the years, NHTSA received hundreds of complaints about stalling or air bags not deploying, a fact the senators said warrants a change in the reporting law. Required under a 2000 law passed in the wake of the Firestone tire safety recall, EWR documents on deaths and injuries from crashes -- as well as potentially related components -- are submitted to NHTSA each quarter.
"A massive information breakdown at NHTSA has led to deadly vehicle breakdowns on our roads," said Markey, a member of Commerce, Science and Transportation Committee. "The Department of Transportation has the authority to require critical safety information be made publicly available, but it has never used its authority."
"NHTSA's job should be to make life-saving information available, not more difficult to access. This up-to-date, accessible database will be a vital tool for drivers and consumer advocates in preventing future harm," added Blumenthal.
Rather than just submitting summary information on crashes, the legislation would require automakers to provide an accident report or other documentation that first alerted it to any fatality. NHTSA would then be forced to make those documents public unless there is a privacy or competitive reason not to do so.
The bill would also require NHTSA to consider EWR data when investigating safety defects and upgrade its online databases to make them easier to search all at once.
GM has linked 12 deaths and 31 crashes to the defective ignition switches.
Gloria Bergquist, vice president of communications for the Alliance of Automobile Manufacturers in Washington, said it's worth noting that since the EWR system was created there have been more than 5,500 recalls and it's too early to tell if the current one warrants changing industrywide rules.
"Multiple investigations are ongoing and no hearings have been held," she said. "While we will review the proposed bill, it seems premature to assume there are systemic problems, much less to identify specific legislative fixes, before investigations are complete and the data necessary for thoughtful decision-making are gathered."
Meanwhile, in his letter to Holder, Blumenthal argued that without the Justice Department's active involvement, people who suffered "financial harm, physical injury and death ... may have no meaningful remedy." GM may be protected from claims on crashes before July 2009, when it was restructured -- in a process guided by Treasury Department officials -- in Bankruptcy Court.
If a case can be made that GM officials knew about the condition and concealed it during bankruptcy proceedings, it could result in the historic 2009 bankruptcy case being reopened. GM spokesman Greg Martin said the company would respond directly to Blumenthal but added more broadly that the company is "focused on ensuring the safety and peace of mind of our customers involved in the recall."
While it is true that the newly reconstituted GM did not assume liability for claims arising from incidents or accidents occurring prior to July 2009, Martin added, "Our principle throughout this process has been to the put the customer first, and that will continue to guide us."
The Justice Department declined comment Tuesday.
Blumenthal, who was Connecticut's attorney general in 2009, led a group of state attorneys general at the time who warned against giving auto companies going through bankruptcy any blanket immunity from product liability claims.
"Tragically, these warnings have proved true -- and consumer victims may now be barred from any just remedy. They have filed various state court actions, which GM has removed to federal court and asked to be transferred to the United States Bankruptcy Court, knowing that the GM reorganization there cannot be reopened under technical procedural rules and recourse will likely be blocked," Blumenthal wrote.
Noting reports that the U.S. Attorney's office in Manhattan has opened a criminal investigation into the GM recall, Blumenthal said the Justice Department should force GM to establish a fund to compensate consumers. He said that could be done through civil court as "an interim step, even before completing your criminal investigation."
He also recommended the Justice Department "intervene in pending civil actions to oppose any action by GM to deny responsibility for consumer damages."
Blumenthal will likely get a chance soon to put his questions directly to GM officials: He is a member of the Subcommittee on Consumer Protection, Product Safety and Insurance, which is expected to schedule a hearing on the recall in early April.
Already this week, that subcommittee's top Republican, U.S. Sen. Dean Heller of Nevada, asked the acting head of the National Highway Traffic Safety Administration to explain its decision-making process and why it did not recommend a safety recall of the GM vehicles. NHTSA had received hundreds of complaints about the vehicles over the years but it was only after GM issued recalls last month that NHTSA opened a "timeliness query" to determine why it did so then.
Last week, Blumenthal asked asked NHTSA Administrator David Friedman for copies off all death inquiry request letters sent to GM regarding ignition and airbag deployment defects.
Today, GM and NHTSA also face a deadline to submit documents to the House Energy and Commerce Committee, which is investigating the recall and has set an April 1 subcommittee hearing to take testimony from GM CEO Mary Barra and Friedman.
Contact TODD SPANGLER at 703-854-8947 or at email@example.com
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