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Massive GM Fine May Mean Little for Accident Victims

Many Tennessee car accidents are the result of manufacturing defects in the vehicles themselves. A single defective part may cause an automobile to crash, killing or seriously injuring its passengers. Although federal and state regulators may subsequently punish a manufacturer for marketing a defective vehicle, the actual victims must often pursue their own litigation in order to receive compensation.

GM Executives Avoid Criminal Prosecution

A good illustration of this is the ongoing backlash against General Motors. Prior to 2006, GM manufactured thousands of vehicles with a defective ignition switch. As GM later acknowledged, there was a risk the defective switch may fall out of position, “resulting in a partial loss of electrical power and turning off the engine,” which in turn would prevent a vehicle’s airbags from deploying if there was a crash. But although GM was aware of the defect no later than 2005, it took no action to recall the affected vehicles for nearly nine years.

This proved a costly decision for many people who rode in the defective vehicles, primarily the Chevrolet Cobalt. At least 125 deaths and 250 injuries have been linked to the defective ignition switches. GM’s delayed recall prompted a number of civil lawsuits and federal investigations.

One such investigation recently ended. On September 17, the U.S. Department of Justice announced it reached a “deferred prosecution agreement” with GM. The automaker agreed to “forfeit” $900 million to the government in exchange for avoiding further criminal charges against GM and its executives. GM admitted it “concealed material facts” from the National Highway Traffic Safety Administration (NHTSA) and committed “wire fraud” by using the Internet to mislead customers about the safety of the defective vehicles. The wire fraud admission allows the government to seize the $900 million from GM, as it represents the “proceeds traceable” to the crime. By turning over the money and agreeing to other conditions imposed by the DOJ, the government will formally dismiss the criminal case against GM after three years.

Unfortunately, the DOJ’s headline-grabbing actions may not mean much for anyone injured in a defective GM vehicle. Shikha Dalmia, a senior analyst with the Los Angeles-based Reason Foundation, noted the $900 million fine will go into a “civil asset forfeiture fund” the DOJ can use for any purpose it chooses, which likely means “the actual victims will not see a dime of the penalty money.” Adding insult to injury, the government granted GM a “liability shield” during its 2009 bankruptcy, which “technically protects it from any liability for crashes prior to the restructuring,” according to Dalmia.

Do Not Count on the Government to Help You

All that said, a number of civil lawsuits remain pending against GM. The lesson here is you cannot rely on government action to compensate you for injuries sustained due to a defective automobile. If you have suffered serious injuries—or even lost a loved one—it is imperative you seek legal advice from an experienced Tennessee product liability attorney. Contact the offices of Fox & Farley, Attorneys at Law, in Clinton or Knoxville today if you need to speak with someone right away.

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