General Motors Co. will pay millions of dollars to victims in crashes caused by faulty ignition switches, the automaker's latest effort to move quickly past a mounting auto safety scandal.
The program, outlined Monday by Kenneth Feinberg, a victims' compensation consultant hired by GM, would offer payments ranging from a few thousand to several million dollars to crash victims or their heirs.
For example, Feinberg said, a paralyzed 10-year-old child might receive $7.8 million based on lost future earnings, while a parent with two children might get $4 million after losing a spouse who earned $46,400 a year.
Victims or their heirs would have to give up the right to sue GM in order to receive the money. The goal is to get checks out quickly once people file claims for compensation starting Aug. 1, said Feinberg, who has administered compensation funds for the Sept. 11, 2001, terrorist attacks, the Deepwater Horizon oil spill in the Gulf of Mexico and other high-profile incidents.
"Individuals who have suffered terribly in this whole experience deserve prompt treatment of their claim, and we will do that," Feinberg said at a Washington news conference.
Also Monday, GM recalled an additional 7.6 million vehicles in the U.S., mostly for ignition switch issues. The company has aggressively recalled cars this year, almost 26 million during the first six months. That's more than the entire industry has recalled in each of the last nine years.
Sen. Richard Blumenthal (D-Conn.), who pushed GM to create the compensation fund, said victims should have the right to wait until the Justice Department completes a criminal investigation before deciding whether to accept GM's settlement offer.
"GM cannot put arbitrary deadlines in the way of justice," Blumenthal said.
People can start filing claims Aug. 1 and must submit them by Dec. 31. Once a claim is ready for review, compensation will be paid in 90 to 180 days, Feinberg said. He said in an interview that he might consider extending the decision period if the Justice Department investigation takes longer to conclude.
The compensation fund will address accidents involving about 2.6 million vehicles recalled for ignition switch failures. In those cases, the faulty switch can suddenly shut down the vehicle, turning off crucial functions such as the power steering and air bags.
GM has acknowledged at least 13 deaths and more than 50 crashes resulting from the defect, but federal safety investigators say the numbers could be higher. Feinberg said GM said it has received about 3,500 inquiries claiming injuries or deaths. The automaker knew about the problem for at least a decade but waited until earlier this year to start to recall the cars.
GM has accepted blame for the problem. An internal investigation cited poor communication and incompetence for the automaker's failure to recall the cars promptly.
GM also faces ongoing investigations by the National Highway Traffic Safety Administration and Congress into why it delayed recalling the defective vehicles.
Feinberg said the program was voluntary and that he would be the sole decision maker on the size of the payments. Under his agreement with the automaker, GM does not have the right to veto an award. Moreover, the program has no cap. GM will pay whatever Feinberg deems is appropriate for each claim.
Laura Christian of Harwood, Md., the mother of 16-year-old Amber Marie Rose, who died in a 2005 accident in which the air bags did not deploy in her vehicle, said she was still processing the information and would discuss the compensation fund details with her attorney.
"It was quite difficult to hear Amber being reduced to a dollar amount," Christian said.
Robert Hilliard, an attorney representing some of the victims, is urging his clients to file claims. They might get more money than they would in a trial because Feinberg doesn't plan to consider contributory negligence, such as impaired driving or failure to wear seat belts.
Further, some states cap awards at amounts that could be less than what the fund might offer, he said.
"There is no downside to filing," Hilliard said. "You don't lose any of your rights."
Generally, those filing claims will have to submit police reports, any computer data captured from the vehicle as part of an accident investigation, a vehicle identification number and other relevant evidence.
But people may have trouble finding the documentation they need to make a claim, said Clarence Ditlow, executive director of the Center for Auto Safety.
The majority of claims probably will involve older vehicles. In many cases, the vehicles are unlikely to be available for investigators to examine, Ditlow said.
Puzzanghera reported from Washington and Hirsch from Los Angeles.Copyright © 2014, Los Angeles Times