GM: $93M paid so far from compensation fund
General Motors Co. has paid $93 million through its compensation program for those killed or injured as a result of defective ignition switches, according to a regulatory filing released Wednesday.
The company also said it can’t predict how much a series of government investigations into its delayed ignition switch recall may cost.
GM previously said it expected the independent program to cost the company $400 million, but that it could be as much as $600 million. The company booked $315 million at the end of 2014 to pay for potential liabilities connected with the compensation program. The payouts so far are for claimants deemed eligible by compensation expert Kenneth Feinberg and do not include payments for his services, a GM spokesman said.
The fund, which ceased taking submissions Jan. 31, has tied at least 51 deaths to the ignition switch defect in older Chevrolet Cobalts, Saturn Ions and other small cars. The key can inadvertently turn off the engine, disabling power steering and air bags.
The deputy administrator of the compensation program, Camille Biros, declined to comment on GM’s disclosure of amounts paid. The fund previously has said it would pay at least $1 million per death claim.
Earlier this week, Feinberg said the program got a surge of claims in its final days, adding more than 1,100 submissions in the final week before the Saturday deadline, bringing the total number to 4,180 — including 455 death claims.
The late surge means it will take until at least “very late spring” before the program can rule on all the claims, Biros said. Feinberg has said it could take as long as six months from the time the program received the final claim for serious injuries or deaths. Hundreds of the final claims were submitted with little or no paperwork, making it difficult to assess how many may be deemed valid.
Biros said the program has made 93 settlement offers; 40 have been paid and 49 accepted; none have been officially rejected. The program has determined that 482 of the claims are ineligible, including one that sought compensation for a dog that died, and another seeking funds for an early 1960s Chevrolet.
The U.S. Attorney’s Office in Manhattan, aided by the FBI and a federal grand jury, has been investigating GM’s delayed recall of 2.6 million vehicles for more than 10 months. The Securities and Exchange Commission and 49 state attorneys are investigating, GM said — one more state than previously disclosed. Canadian officials are also investigating.
“We are currently unable to estimate a range of reasonably possible loss for the lawsuits and investigations because these matters involve significant uncertainties at these early stages. These uncertainties include the legal theory or the nature of the claims as well as the complexity of the facts,” GM said in the filing. “Although we cannot estimate a reasonable range of loss based on currently available information, the resolution of these matters could have a material adverse effect on our financial position, results of operations or cash flows.”
GM Chief Financial Officer Chuck Stevens said Wednesday that legal services tied to the recall totaled about $300 million in 2014 and likely would cost the company about $300 million in 2015. Payments to Feinberg for his service would be included in GM’s legal services related to the recall, a spokesman said.
In May, GM paid a record-setting $35 million fine to NHTSA for the delayed ignition switch recall, and agreed to up to three years of monitoring.
Wall Street analysts think GM may eventually need to pay billions to settle government investigations.
GM in the filing said it faces 108 class-action lawsuits claiming economic harms by one or more of the GM’s recall of more than 30 million vehicles in 84 campaigns last year. GM also faces 20 class-action lawsuits in Canada seeking similar funds.
The carmaker also faces 104 lawsuits alleging injury or death as a result of the defects.