Accident victims and their lawyers descended on Capitol Hill on Wednesday, urging Congress and the Obama administration to guarantee their ability to seek medical reimbursement from Chrysler and General Motors. The companies’ Chapter 11 filings treat victims as unsecured creditors who must wait in line to receive their payouts.
“Our tax dollars are now being used to take away our right for compensation,” said Jeremy Warriner of Indianapolis, who lost both of his legs in 2005 after suffering severe burns when his Jeep Wrangler crashed. “I’m here to make certain this is fixed, and other Americans don’t have to fight this fight.”
Bankruptcy Judge Arthur Gonzalez overruled the objections of the Ad Hoc Committee of Consumer-Victims of Chrysler LLC on Monday when he approved the company’s sale to Fiat. The group sought a fund or a retroactive insurance policy to cover the cost of lawsuits and medical treatment. A policy like that would cost $300 million a year, enough to cover the $250 million Chrysler paid last year in medical settlements, according to the group.
“This is an unprecedented use of the bankruptcy system, to not pass on successor liability [to Fiat],” said James Lowe, an attorney for the group. “This filing was obviously prepackaged, pre-engineered and backed by the White House. It went through that judge like butter.”
Mr. Lowe said a rushed bankruptcy could cause a similar loss of rights in GM’s case.
Clarence Ditlow, director of the Center for Auto Safety, said Fiat “was willing to assume the liabilities” of Chrysler.
“When [Chrysler and Fiat] met with the auto task force, that changed,” he told reporters at a Capitol news briefing Wednesday. “The [task force] is guiding this bankruptcy, and it left the consumers out in the cold.”
Victims and their families at the news conference said they were surprised to lose their rights in bankruptcy.
“I want to go to court and plead our case,” said Bob Dinnigan, whose daughter Amanda suffered spinal cord injuries and is now a paraplegic after what Mr. Dinnigan described as a “seat-belt defect” injured her in a February 2007 crash.
A spokesman for Chrysler defended the decisions made by the bankruptcy court.
“The other option - liquidation - would have had far more dire consequences for employees, retirees, dealers, suppliers and creditors - including unsecured tort claimants,” Chrysler spokesman Michael Palese said. “All these people are considered unsecured creditors, and they can bring their complaints to the bankruptcy process.”
Some observers described Wednesday’s media event, in the Rayburn House Office Building, as a publicity stunt staged by trial lawyers who wish to ignore bankruptcy law.
“The Obama administration is abusing bankruptcy process, but the bar on these legal claims is the same whatever type of bankruptcy you use,” said Andrew Grossman, senior legal policy analyst for the Heritage Foundation, a conservative D.C. think tank. “That’s the case in all bankruptcies: It cleanses the company of existing obligations.”
“Those who in fact were injured and can make a plausible case should do so,” said Darren McKinney, director of communications for the American Tort Reform Association, which seeks to reduce the number of lawsuits clogging the civil justice system. “But the bankruptcy judge takes that into account, and that’s the way the cookie crumbles.”