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GM compensation fund could pay millions to victims, families

July 1, 2014 - 12:05am

Families of those killed in crashes involving General Motors Co.’s defective ignition switches will be offered at least $1 million if they can prove the defect caused the crash.

GM victim compensation director Kenneth Feinberg, who also led the compensation funds for the 9/11 attacks and the BP oil spill, said Monday that people who suffered injuries or families of victims who died because of the defect qualify for settlements and can begin filing claims Aug. 1.

Feinberg said current and former owners of 2.6 million small cars potentially affected by the defect will be notified that they may be eligible for settlements.

GM has identified at least 13 deaths and several dozen injuries connected to the problem, although those figures are expected to rise. Feinberg declined to speculate on how many people might be eligible or how much GM might pay out.

The compensation fund is unlimited, he said. If Feinberg determines that the defect was the “substantial cause” of the accident, he will use actuarial tables and average medical cost data to calculate the size of a payout. The families of people who died will get at least $1 million.

He gave a few examples. The survivors of a 25-year-old deceased driver who was married with three children and earning $46,000 would receive about $4 million.

A 10-year-old passenger who became a paraplegic in an accident would be offered $7.8 million.

Compensation for people who needed outpatient treatment within 48 hours of the crash would be capped at $20,000.

“Money is a pretty poor substitute for loss,” Feinberg said. “It’s the best we can do.”

Victims must submit evidence substantiating their claim — such as police reports, hospital records, vehicle data, insurance information and even the car involved in the accident, if it’s still around.

GM can provide evidence to dispute victims’ claims. But the company has agreed not to challenge the claims after Feinberg makes a determination.

A GM spokesman declined to say whether the company plans to submit evidence to fight any claims.

The automaker has already collected information from about 3,500 people claiming to be victims, but Feinberg said some of those won’t qualify because the people don’t own GM vehicles.

If families accept a settlement, they must agree not to sue GM. If they choose to sue, GM plans to defend itself.

“People are not required to sign away any of their rights to sue until and unless they are satisfied with what the fund offers,” Feinberg said in an interview.

General Motors hired Feinberg for this mission in the wake of its recall this year of Chevrolet Cobalts, Saturn Ions, Chevrolet HHRs, Saturn Skys, and Pontiac G5s and Solstices, mostly from the 2003 through 2007 model years. Those cars were equipped with ignition switches that can slip out of position and cut off power to the engine, steering, air bags and other electrical systems.

Engineers discovered the defect more than a decade ago, but a breakdown in communication, incompetence among engineers, and a lack of urgency failed to fix the problem or order a recall, according to a 325-page investigative report conducted by outside lawyer Anton Valukas on behalf of GM.

No one injured or killed in GM vehicles not included in that recall will be compensated. No claims will be considered if the alleged damage was only economic, Feinberg said.

Feinberg, who outlined details of the fund Monday morning at the National Press Club in Washington, D.C., said he alone will have discretion on whether and by how much a claimant is compensated. No GM executives appeared with him.

Eligible claimants include drivers, passengers, pedestrians, occupants of another car hit by one of the 2.6 million GM vehicles, and their surviving family members in the case of deaths.

Feinberg said he is not required to report the claims payouts to the GM board of directors, but he said he intends to give periodic updates to both GM management and the public. He said he expects payments to be made within 90 to 180 days of when they are filed.

“I suspect I will be sticking around (on this fund) through the first quarter of 2015,” he said.

Victims’ behavior that may have contributed to the accident, including intoxication, speeding or texting while driving, will not be considered, Feinberg said.

Those who settled cases arising from these specific defective ignition switches before the Feb. 13 recall may file either a new lawsuit or a claim to the fund.

Anyone seeking punitive damages against GM should pursue cases in the courts, Feinberg said. But he cautioned victims against suing GM to find out what really happened, saying that victims can trust the U.S. Justice Department and other investigators to deliver trustworthy conclusions.

“I’m here to compensate victims, not to punish General Motors,” he said. “If people want … to use litigation to go after General Motors, then voluntarily they should not submit a claim to me.”