Mary Barra, chief executive officer of General Motors Co., listens while testifying at a House Energy and Commerce Committee hearing in Washington, D.C., U.S., on Tuesday, April 1, 2014. Barra said GM has retained Kenneth Feinberg as a consultant to explore options for families of accident victims whose vehicles are being recalled for possible ignition-switch defects. Photographer: Pete Marovich/Bloomberg *** Local Caption *** Mary Barra Pete Marovich/Bloomberg
The man tasked with handling compensation for victims of faulty General Motors ignition switches says there's no limit to what the company might pay out, or how many victims might come forward.
"GM has basically said 'whatever it costs to fund all the aggregate claims, we'll pay it,'" Kenneth Feinberg said at a press conference on Monday.
One of America's leading compensation experts who stickhandled the $7 billion compensation plan for victims of the 9/11 attacks, Feinberg said he has been given carte blanche to get to the bottom of the company's growing scandal involving the recall of millions of small cars such as Chevrolet Cobalt and Saturn Ion with defective ignition switches that can cause the vehicles to turn off while in motion, and disengage safety features like steering and airbags.
GM said it is aware of at least 54 accidents related to the issue, in which 13 people died. But victims groups claim the true list includes many many more people, suggesting the costs could go into the millions or billions of dollars. Laura Christian, the mother of an accident victim who attended the news conference, said she has evidence that 165 people have died in accidents caused by the ignition switch problem.
Feinberg said he will start processing claims starting Aug. 1 until the end of the year, and he encouraged everyone who thinks they were impacted to participate, whether they have already settled with the company or not.
Even those who got into accidents for additional reasons beyond the ignition switches may be entitled to compensation, he said, and they'll receive it within three months if their claim is found to be valid, regardless of anything else such as speeding, texting or drinking and driving that may have been a factor.
Payouts will only come related to injury or death, not property damage or the cost of replacing a vehicle, Feinberg said.
"Texting [and] speeding [are] irrelevant to this program," he said. "We have no interest in examining any alleged contributory [role] on the part of the driver.
"This is for defective switches, not anybody's driving," he said.
Legal experts say GM has few defences left in crash lawsuits because it conceded the switches are defective and that its employees were negligent in failing to recall the cars, but the company would likely use external factors such as driver error in any lawsuit.
But as much as he opened the floodgates to a wide-ranging investigation of how many defective ignitions there are out there, he stressed that the compensation program will be limited to just that issue and will not include other factors.
"If the airbag deployed, you're ineligible," he said. And crashes that happened before the company's 2009 bankruptcy will also be excluded as per terms of the company's restructuring at the time.
Feinberg will follow the same methodology he used when he handled a $7-billion government fund for victims of the Sept. 11, 2001, terrorist attacks in the U.S. He has detailed formulas setting payments based on a victim's age, earnings potential and severity of injuries.
In that case, the average payment was $2.1 million for 2,880 claims, but the size of claims ranged from $500 all the way to $8.6 million.
Factors such as loss of income and even hospital costs will be considered. The company "cannot challenge my ultimate determination," Feinberg said. "They have no right to appeal."
Under Feinberg's formula, for example, relatives of a deceased 25-year-old earning $75,000 per year who is married with two children would get $5.1 million. But the relatives could build a case to get more, he said. Severely injured people could get more money than some death cases, Feinberg said. For example, a 40-year-old earning $70,000 per year who is married with no children and became a paraplegic in a crash would get $6.6 million under the formula.
In a statement accompanying Feinberg's press conference, GM said it supports the plan.
“We are pleased that Mr. Feinberg has completed the next step with our ignition switch compensation program to help victims and their families," the company said.
"We are taking responsibility for what has happened by treating them with compassion, decency and fairness. To that end, we are looking forward to Mr. Feinberg handling claims in a fair and expeditious manner.”
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