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GM ignition fund: Most claims have no documentation

David Shepardson
Detroit News Washington Bureau

Washington — The decision to extend General Motors independent compensation program to applicants by 30 days to Jan. 31 came under criticism from a senator and an attorney representing hundreds of claimants.


Administrator Ken Feinberg announced late Sunday he is extending eligibility for the program until Jan. 31 — a month later than planned — as GM sends 850,000 letters to newly registered owners and others this week notifying them of the program. The fund was established by GM to provide compensation of those hurt or killed in 2.59 million now-recalled Chevrolet Cobalts, Saturn Ions and other small cars with defective ignition switches that can inadvertently turn the engine off and disable power steering and air bags.

The announcement comes as Feinberg said the number of deaths linked to the problem rose by one to 33, and injuries approved for compensation rose by five to 39.

Sen. Richard Blumenthal, D-Connecticut, said Monday that GM should "reconsider and substantially modify — if not eliminate — these arbitrary compensation fund deadlines. I commend and appreciate the spirit that is reflected in extending the deadline, but the practical effect is inadequate."

He said victims must have a meaningful choice between accepting compensation through the fund and pursuing their claims in court — and said that choice can't be made until the outcomes of the bankruptcy proceeding and the Department of Justice investigation are known.

Attorney Robert Hilliard — who is representing hundreds of cases — wants the deadline extended by a year. "Given the number of vehicles affected, as well as the number of years we are dealing with, the process of making sure all victims have been notified simply cannot happen in five short months — even if GM's notification process was adequate … which it is not," he said. "To close the fund this quickly suggests that GM is more concerned with prematurely moving away from this debacle rather than honestly owning up to its wrongdoing."

Feinberg said it is in only in "rare cases" that people don't know about the program. He said there is no evidence of any "comprehensive failure of the notice program." He thinks it is important to have a final date for claims so the program doesn't drag on "and people can get on with their lives." Setting a final date helps prod procrastinators, he said.

The compensation program says more than half of the 2,100 claims submitted contain no documentation. The figures currently suggest that a majority of the most serious and fatal injury claims are currently on track to be rejected unless additional documents are submitted. So far, 10 percent of claims have been rejected.

In an interview Monday, Feinberg said the majority of the claims submitted without documentation have come from two lawyers — but he has no idea how many of the cases will be followed up with supporting documents.

In the most detailed accounting to date, the office said 2,105 claims have been submitted — including 217 death claims and 128 for very serious injuries — and 1,106 have no documentation. Of the 217 death claims, 31 have been ruled ineligible, 77 deficient and 49 without documentation. Another 27 are currently under review. Overall, Feinberg has ruled 205 ineligible and says 430 are currently deficient. Another 292 are under review.

Of the 13 original victims identified by GM, all but four have submitted claims. Two are planning to do so, Feinberg said. Another is in Canada — and Feinberg hopes they will also submit a claim. The final family was discovered by the New York Times last week.

In May, GM paid a record-setting $35 million fine to the National Highway Traffic Safety Administration for the delayed ignition switch recall, and agreed to up to three years of monitoring. The delayed recall has prompted investigations from the Justice Department, Congress, 48 state attorneys general, the Securities and Exchange Commission and federal regulators.

GM has said it expects to spend $400 million on claims, but has said they could rise as high as $600 million.