Unlike electric vehicle enthusiasts, I care not one iota about owning a car that can go from zero to 60 in nanoseconds. I live in Los Angeles, where the statistical possibility of me ever accelerating at that speed is almost never. Practically speaking, my Subaru Outback has more than sufficient acceleration prowess to prevent any Tesla driver from leaving me in the dust.
My biggest concern – and I hope I’m not alone here – is safety. Hardly a day goes by when I’m not reminded about the increasing dangers of cars and trucks on U.S. roads and how powerless the U.S. National Highway Traffic Safety Administration (NHTSA) is to do anything about it. Americans are getting killed because of known vehicle defects, but most automotive reporters prefer writing puff pieces about GM CEO Mary Barra and Ford CEO Jim Farley rather than holding them accountable for the potential death traps they market and sell.
Tom Krisher, who has been covering the automotive industry for more than four decades, is an old school reporter who doesn’t look to GM and Ford’s PR departments for direction as to the stories he should cover. Krisher did an impressive job reporting on a class action lawsuit accusing GM, Ford, Volkswagen, and a parts manufacturer of knowingly selling vehicles containing air bags inflators that are at risk of explosions. Two deaths and at least four injuries have already been linked to the explosions.
The air bags in question aren’t the ones manufactured by Takata, which also involved exploding air bag inflators that resulted in 28 deaths worldwide, hundreds of injuries and the largest recall in automotive history. Rather, they were manufactured by ARK Automotive Inc. of Knoxville, Tennessee, which made the inflators and sold them to air bag manufacturers, which in turn sold them to GM, Ford, and Volkswagen.
“It’s not a question of whether it can kill or injure people,” Sean Kane, president of Safety Research & Strategies, told Krisher about the ARK airbag. “It already has.”
‘A Broken System’
Allegations in lawsuits are best taken with grains of salt, but class action attorneys don’t file these sorts of cases unless they’re reasonably confident of winning them. Most spend considerable monies up front researching their cases and the investments are for naught if they don’t win them. Admittedly, their end game is to line their pockets, as too often the only real beneficiaries of class action lawsuits are the law firms that file them.
Krisher didn’t just report the allegations in the lawsuit. He talked to independent experts including David Friedman, a former NHTSA acting director who explained why his former agency has been investigating faulty ARK air bag inflators for seven years and has yet to take any meaningful action.
Friedman, who is now a vice president at Consumer Reports, said automakers are balking at recalling their vehicles because of the cost. He said the NHTSA is chronically underfunded and needs to get every “i” dotted and every “t” crossed before the agency can take on the legal might of the automakers, whose threats and lawsuits have derailed previous recalls.
“That’s one of the things that’s broken in the system,” Friedman admitted.
Underscoring just how impotent the NHTSA really is, Tesla has had repeated run-ins with the agency, including being cited for making software decisions that violated federal safety standards. Michael Brooks, acting executive director for The Center for Auto Safety, says Tesla plays “a little fast and loose” with the safety of its features, yet the NHTSA has yet to mete out any meaningful financial penalties.
“They seem to like to ask for forgiveness rather than permission a lot,” Brooks told Protocol, a tech trade publication.
“Liar, liar, pants on fire“
Readers of this blog know I regard Barra and Farley as BS artists extraordinaire, and Ford’s multi-state settlement for making false claims in advertisements about certain vehicles’ fuel economy and payload capacity further validated my position.
“For years, Ford advertised impressive fuel economy and payload capacity for its cars and trucks,” Iowa Attorney General Tom Miller said in a statement. “Unfortunately, these figures were not based in reality, leaving customers with vehicles that did not meet their standards.”
What was Ford’s penalty for fibbing to consumers?
$19.2 million – and the company wasn’t required to admit any wrongdoing!
That’s not much of a deterrent.
Ford’s Farley is chomping at the bit to relocate Ford’s EV operations out of Michigan. Perhaps Tennessee, where the company has committed to invest more than $6 billion, will get the nod. An ambitious Nashville district attorney charged a nurse for making an honest error that killed an elderly patient. Seems to me it isn’t a reach to criminally charge CEOs who knowingly sold cars with defective airbags that resulted in deaths.
Michigan’s “Do Nothing” Dana
The Detroit Free Press had a big scoop today, but chose to downplay it. The Gannett paper obtained documents under FOIA that made clear the unbelievable ineptitude of Michigan Attorney General Dana Nessel.
In reviewing Grand Rapids-based Spectrum Health’s effective takeover of Detroit area-based Beaumont Health, Nessel concluded the deal didn’t require state approval. How did Nessel, who has no corporate or healthcare legal experience, reach this conclusion?
The hotshot Washington lawyers representing Spectrum and Beaumont told her that was the case!
Let me introduce you to Ohio’s Dave Yost, the rare U.S. regulator with any legal talent and resolve. A year ago, Yost secured a landmark $88.3 million settlement against Centene, one of several pharmacy benefit managers he accused of ripping off Ohioans. Yost didn’t rely on the representations of Centene’s lawyers who no doubt assured him their client was squeaky clean. He hired a top-notch Ohio law firm to represent the state and take the powerful PBM down.
As I’ve previously written, Michigan is home to some of the best law firms and lawyers in the country. The Free Press cited no evidence that Nessel retained a law firm to give her independent advice on a takeover that created far-and-away the biggest hospital system in Michigan, as well as the biggest employer.
Spectrum’s former CFO is on record as saying the takeover could result in a “massive financial loss.” The Free Press cited no evidence that Nessel hired independent financial consultants specializing in healthcare to examine Spectrum’s and Beaumont’s books, nor did it find any evidence of Nessel ensuring that Beaumont’s more than $3 billion cash reserve wouldn’t be used for operations outside the system’s areas of service. The reserve belonged to the residents of southeastern Michigan. As the overseer of Michigan nonprofits, one must imagine that Nessel has some authority in these matters.
FTC’s Khan is a dud
Making matters even more frightening, the Free Press found evidence that the FTC relied on representations from Nessel’s office not to block the merger. FTC chair Linda Khan was supposed to be this thirty something wunderkind who wouldn’t rubber stamp deals, but she allowed Spectrum’s takeover of Beaumont to sail through, despite public pleas from President Biden to curb hospital mergers.
The folks at Advocate Aurora Health and Atrium Health clearly view Khan as a pushover. The two hospital systems recently announced they’ve agreed to merge, creating a six-state, 67-hospital system with more than $27 billion in combined revenues.
Advocate Aurora CEO Jim Skogsbergh is the former chair of the American Hospital Association and from 2019-2021 he served as chairman of the lobbying group’s political action committee. He’s as plugged in as anyone in U.S. healthcare and obviously believes he can ram through one last mega deal before he retires in a year.
The rich get richer
Advocate Aurora this week was hit with a class-action antitrust lawsuit in Wisconsin alleging it used its dominant market strength in eastern Wisconsin to suppress competition and drive “unreasonably high prices.” That should be grounds for further investigation before rubber stamping the Atrium merger but I doubt it will.
At the end of the day, America’s poor regulation is all part of the wealth transfer that’s been accelerating in America. GM’s Barra and Ford’s Farley were respectively paid $29 million and $23 million in 2021 for selling defective cars, class action law firms will likely secure millions in airbag settlements, Nessel will land a lucrative job in Washington, the FTC’s Khan will join a white shoe law firm, and Skogsbergh will pocket mega millions to cushion his golden parachute landing.
Meantime, Americans will have to settle driving defective cars and paying continuously higher health care costs that invariably result from hospital mergers.