GM compensation fund completes review with 124 deaths

David Shepardson
Detroit News Washington Bureau

The compensation fund for those hurt or killed as a result of defective ignition switches in General Motors Co. cars said Monday it approved a final injury claim in wrapping up a nearly year-long review of almost 4,400 claims tied to defective switches in 2.6 million recalled vehicles.

The final tally was 124 deaths, nearly 10 times more than the 13 deaths GM executives reported as the controversy unfolded in 2014. The fund also approved claims for 17 serious injuries and 258 less-serious injuries.

In total, the fund run by Washington lawyer Ken Feinberg approved less than 10 percent of all claims. Some of those rejected were because the accidents were in cars not part of the recall. Others were rejected because there was no evidence that the air bags failed to deploy.

The defective ignition switch defect — mostly installed in Chevrolet Cobalts and Saturn Ions — allowed the key to inadvertently turn off the engine in some vehicles, disabling power steering and air bags.

Because accident investigators, for a decade, didn’t know of the flaw and may have attributed wrecks to other factors, it’s impossible to say how many accidents, deaths and injuries were truly the result of the bad part.

The fund’s deputy administrator, Camille Biros, said a final report on the program might not be complete until October. She said the fund has made 398 offers, with one remaining to be made; 325 have been accepted, including 115 of the 124 death claims. To date, eight claims have been rejected and 65 are awaiting a response.

Victims or survivors have 90 days from receipt of an offer to decide if they will accept it. The fund plans to release a final report detailing more about the claims approved and rejected in October.

GM is paying at least $1 million in each death claim and gave Feinberg and his staff the final decision on approving or rejecting all claims. It placed no cap on the amount Feinberg could award, but he is not allowed to assess “punitive damages.”

When all cases are closed, GM expects it will have spent $625 million in compensation to those to whom offers have or will be made; it already has paid out $280 million in claims

GM announced the compensation fund in June 2014 and it began accepting claims Aug. 1, 2014. The claims deadline was Jan. 31, after GM extended the application period by a month.

Clarence Ditlow, executive director of the Center for Auto Safety, said the “burden of proof on the individual consumer was always too high,” and that some may not have pursued claims because they didn’t have supporting documents.

“The entire program was designed to help get Congress and the Justice Department off GM’s back,” Ditlow said. “The one thing is clear that we will never know how many people were killed or injured because it goes back so far.”

Wrapping up the compensation is a major milestone as GM looks to put the ignition switch crisis in its rearview mirror.

The U.S. Justice Department, meanwhile, is nearing a decision on whether to charge GM criminally in connection with a decade-long delay in admitting to the problem and recalling affected cars, even though some within the company were aware of it. GM also could face a fine expected to top $1.2 billion — the amount Toyota Motor Corp. paid last year after it was charged with wire fraud. A decision is now not expected until at least late October.

Several reports have suggested it is unlikely that individual GM employees will be charged — or that the government will seek to charge GM with bankruptcy fraud. GM is most likely to be charged with wire fraud as part of a settlement, though it is unclear if the Justice Department would seek to compel a guilty plea by the Detroit automaker.

GM also faces hundreds of lawsuits stemming from the faulty part, including 100 U.S. class-action lawsuits and 21 in Canada from owners who say the recalls reduced the value of their vehicles.

The automaker also faces 172 U.S. suits and nine in Canada over injury or death claims; those are separate from the compensation claims. There are also suits pending by GM shareholders.

The first trial stemming from the dozens of suits filed against GM and consolidated in front of a federal judge in New York is set to start in January. Lawyers are deposing dozens of current and former GM executives, including CEO Mary Barra set for October and former CEO Rick Wagoner in September.