BUSINESS Autos

GM compensation fund will pay millions to switch-defect victims

GM compensation fund will pay millions of dollars to victims of defective ignition switch
GM victims' payouts will range from $20,000 to more than $5 million

A special victims-compensation consultant hired by General Motors announced the details of a sweeping program to pay for the deaths and injuries caused by faulty ignition switches in millions of the automaker’s small cars.

Attorney Kenneth Feinberg said Monday that he will begin evaluating victims claims starting Aug. 1 and will start to pay damages from a GM fund within 90 to 180 days from when a claim is submitted.

The program provides a sliding scale of payments depending on the severity of injuries or whether a person was killed in a crash that is linked to the defective switch. It will range from $20,000 for someone who is slightly hurt to more than $5 million for a 25-year-old who was married with two children and earned $75,000 annually.

The fund won’t pay for property claims and other types of damages, such as the loss of resale value because a car is one of the models linked to the switch problem. It also won’t cover emotional and psychological injury claims.

“We will work closely with all individual claimants and their lawyers in evaluating individual claims and reaching a determination as to eligibility and value as soon as possible,” Feinberg said.

The program is designed to compensate the heirs of people killed and the damages of those injured when the ignition switch suddenly shut down the vehicles, turning off critical functions such as the power steering and airbags. GM recalled about 2.6-million vehicles because of the problem.

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. 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. It commissioned an internal investigation by U.S. Atty. Anton Valukas that blamed poor communication and incompetence for the automaker's failure to recall the cars promptly.

“We are taking responsibility for what has happened by treating them with compassion, decency and fairness,” GM’s CEO Mary Barra said Monday. “To that end, we are looking forward to Mr. Feinberg handling claims in a fair and expeditious manner.”

GM faces ongoing investigations by the National Highway Traffic Safety Administration, the Justice Department and Congress into why it delayed recalling the defective vehicles.

“The fund offers GM a break from its tragically troubled past,” said Sen. Richard Blumenthal (D-Conn.)

 “The strong presumption should be in favor of drivers or others who claim injury, death, or damage, because records may be missing and evidence irretrievable,” Blumenthal said. “GM must also ensure that victims have a real choice between using the fund and pursuing their claims in court.”

Feinberg said the program was voluntary. People could submit claims and would only waive their rights to litigate against GM if they accepted the compensation.

He will 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 does not have a cap. GM will pay whatever Feinberg deems is appropriate for each claim.

Those making claims must prove that the switch was the “proximate” cause of the death or injury in the crash. People will have until Dec. 31 to file their claims.

The program quickly drew criticism from product-liability attorneys representing victims.

Attorney Jere L. Beasley said it would allow GM to escape punitive damages.

“GM’s conduct, based on the incompetence and gross negligence found by the Valukas investigation, deserves punishment,” Beasley said. “It is totally unfair to allow GM to escape being punished for its wrongful conduct over a period of 11 years.”

Follow me on Twitter (@LATimesJerry), Facebook and Google+.

Copyright © 2015, Los Angeles Times
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