June 26, 2014 at 5:07 pm

Feinberg to announce GM compensation plan Monday

Ken Feinberg, the victim compensation expert retained by General Motors Co. to advise the Detroit automaker on how it should compensate victims of crashes linked to defective ignition switches, will announce his proposals on Monday in Washington, he said Thursday.

Feinberg, a Washington lawyer who has overseen a number of victims compensation programs — including the 9/11 hijackings, Boston Marathon bombing and Virginia Tech shooting — will unveil his proposals at 10 a.m. Monday at the National Press Club to compensate the families of those killed and the people injured in crashes linked to defective ignition switches in 2.6 million older Cobalt, Ion and other cars.

Feinberg said in a statement the program’s website will be launched at 10 a.m. Monday.

GM has linked 13 deaths and 54 crashes to the defect. It’s unclear if Feinberg’s proposals will offer compensation to those not directly hurt or injured by airbags that failed to deploy — including those killed or injured in ignition switch crashes who were sitting in the back seats or non frontal-crashes. GM has said the defect caused the power steering to fail in some instances as well when the ignition key moved to the off or accessory position. The automaker has repeatedly said that Feinberg has full autonomy to propose compensation — and that the automaker set no limits on how much he could offer.

Asked if the death total could rise, GM CEO Mary Barra told NBC’s “Today Show” Thursday “I think people have misunderstood: the 13 were when we first looked into this issue and looked at things that could be related to this defect. Our compensation program that we’re doing — we want every single person who either lost or had a serious physical injury to be a part of that program because we want to do the right thing.”

Feinberg began meeting with lawyers representing victims of the crashes in early May. It’s not clear how many victims will accept the offers. They will be required to give up any rights to sue GM if they accept.

Barra disclosed Feinberg’s hiring in April. U.S. Sen. Richard Blumenthal, D-Conn., and safety advocates want GM to create a fund of at least $1 billion. Blumenthal suggested last month it should be $3 billion to $8 billion.

Feinberg, 68, is known for working with compensation funds related to the 9/11 terrorist attacks, the Virginia Tech shootings in 2007, the BP Deepwater Horizon oil spill in 2010 and the Boston Marathon bombing in 2013. He was appointed by the U.S. Treasury to oversee compensation of executives at corporations that received federal bailout assistance, including GM and Chrysler Group LLC in 2009.

“We feel that Mr. Feinberg has had extensive experience, and he will bring his experience and objectivity to assess what are the appropriate next steps,” Barra told a House panel in April. “Because we do understand we have civic responsibilities as well as legal responsibilities.”

GM is fighting efforts in U.S. Bankruptcy Court over suits that want GM to pay claims covering loss of value for the recalled cars. It also is fighting more than 80 suits that want GM to pay penalties because it didn’t tell buyers about the problems when it sold the cars. Feinberg told The Detroit News his proposals will not cover so-called “economic loss” claims — only those tied to injuries.

Feinberg told The Detroit News on June 11 that when he establishes a claims program, “it must have a modest life for the submission of claims. Both eligible claimants and GM are entitled to the certainty of a defined period of time for the submission of claims and the determination of both eligibility and amount.”

Feinberg said then he didn’t yet know “how many deaths, injuries, and crashes will be encompassed by the claims program. It will depend on the eligibility criteria and the number of individuals who submit claims. I’ll know better when the claims program is announced later this month.”

He confirmed that “whatever claims program I establish, will not include economic loss claims for e.g. ‘perceived diminished value.’ ” He said he was concerned only with death and physical injury claims.

As part of its $50 billion government bailout, GM became a new company in July 2009 when it exited bankruptcy. It left behind billions in bad debts and liabilities, including product liability claims for all crashes occurring before that date, as well as toxic waste left behind at abandoned factories. Old GM — formally renamed as Motors Liquidation Corp. in 2009 — was dissolved in December 2011 and converted into a trust that continues to wind down by paying some claims.

Meanwhile, the Justice Department is investigating whether GM committed bankruptcy fraud by failing to disclose the defects at the time of the bankruptcy. GM has been hit with more than 80 lawsuits after it acknowledged it first knew of ignition switch problems in a pre-production Ion in 2001 and didn’t recall the vehicles for more than a decade. It paid a $35 million fine to the National Highway Traffic Safety Administration and admitted it didn’t follow the law by failing to recall the vehicles in a timely fashion.

The company maintains it is not seeking to use the shield to protect itself from crash victims, but only broader economic loss claims, including diminished value of recalled cars.

GM lawyer Arthur Steinberg said in a court hearing in May that additional compensation for some victims is among the issues that Feinberg is analyzing at GM’s request.

Barclays PLC said in April that “GM could set up a trust to pay old claims and government fines while shielding new GM,” and the the company’s total costs from the recall could reach $2.5 billion to $3.5 billion.

dshepardson@detroitnews.com