GM to pay Millions to switch victims–How it will be distributed
WASHINGTON — Victims of General Motors faulty ignition switch could get as little as a few thousand dollars to millions, according to Kenneth Feinberg, compensation expert hired by GM to administer a fund to pay victims and their families.
In an interview with USA TODAY, Feinberg, a lawyer specializing in dispute resolution, laid out details of how the program will work, who will be eligible and gave some examples of possible payouts. He’ll making the details public this morning in a press conference at the National Press Club.
The fund will begin accepting applications Aug. 1, and the application period will closed Dec. 31 at 11:59 p.m.
Feinberg said the fund probably will finish doling out payments and be dissolved by the middle of next year. He said his goal is to pay valid claims within 90 days — 180 days in complicated cases.
While he has a formula to determine compensation amounts, the is no limit on payments to individuals nor for the total fund, he said. Payments also are not limited to those deaths and injuries directly tied to the recall problem of front airbags not deploying — including, for example, rear seat passengers and occupants of other cars involved in crash with the GM car.
“There’s no aggregate cap. It’s not as if General Motors is putting up X dollars and telling me, ‘Spend it wisely because that’s all there is,’ ” he said.
And Feinberg has the last word on claims. “GM delegated to me, at my full and sole discretion, to decide which claims are eligible, and how much money they should get. There are no appeals (by GM or victims). Once I make the decision, that’s it.”
GM CEO Mary Barra repeatedly has promised that GM will “do the right thing” for victims, and pledged that, effectively, the sky’s the limit on total spending to pay victims of crashes related to the faulty switches.
Though costly in the short term, that approach can save a company from spending years in court defending itself case by case, appearing hard-hearted in the process — and perhaps eventually paying out more than it would funding a generous compensation fund. GM expects about 90% of claims to be settled through the fund.
In February and March, GM recalled 2.6 million 2003-2011 GM small cars worldwide, 2.19 million of those in the U.S. The recall is to replace defective ignition switches that the automaker links 13 deaths in 54 crashes. The switch can inadvertently rotate from the “run” position to “accessory” while the car is underway, shutting off the engine and power steering and brake assist and disabling the airbags.
The critical safety flaw in the recall — and for the compensation fund — is the failure of the airbags to deploy when the should.
If the airbags inflated in a crash, “you’re not eligible. Automatic disqualification” for the compensation fund, Feinberg said.
“But if the airbag didn’t deploy, it could have been the switch,” he said. “If the airbag didn’t deploy, or you don’t know if the airbag deployed, file a claim.”
Feinberg is setting up a website and toll-free phone line for the fund. He’s also sending letters to the current registered owners of the 2.6 million recalled vehicles. A million former owners will get letters, too, a result of suggestions by the Center for Auto Safety.
The only other no-limit, sole-discretion fund run by Feinberg like the one he’s running for GM was the one for victims of the 9/11 terrorist attacks. He said that one paid out $7.1 billion in taxpayer’s money and that 97% of 3,077 claims were settled by the fund. The rest chose to seek better deals in court.
Other high-visibility compensation funds he’s handled include ones for victims of the BP oil spill, Boston Marathon bombing and Virginia Tech campus shootings.
The GM compensation payments, in most cases, will hew to a matrix like the one he designed for the 9/11 fund. “It’s not rocket science,” he said, because it’s based on U.S. Bureau of Labor calculations of economic loss from human tragedy.
Special circumstances will be evaluated individually. One of those he’s expecting involves a woman whose GM car crashed, killing her boyfriend who was a passenger. She was fined for felony reckless driving.
“For 10 years she’s been living with the idea that she recklessly killed her boyfriend. I find that’s a rather extraordinary circumstance,” that should be evaluated outside the fund’s formula, he said.
Three categories of claims will be compensated: Deaths, catastrophic injuries and less-serious injuries.
Most death claims will be based on the Labor formula that uses considers a person’s age and income before the accident. To that amount, Feinberg adds $1 million for pain and suffering, which he said is higher than the average court award of $750,000 for pain and suffering, plus more if the death leaves behind a spouse or children.
Examples of death compensation payments under the Feinberg math:
17-year-old student, no wages, no dependents: $2.2 million.
25-year-old earning $46,000 a year, married, two children: $4 million.
40-year-old, earning $75,000 a year, married, no children: $5.1 million.
Catastrophic injury victims are defined by the fund as those who, as a result of crashes linked to the GM switches, are quadriplegic, double amputees, permanently brain damaged and requiring continuous care or pervasively burned over their entire bodies. Those victims can be paid more than death cases.One example:
10-year-old parapalegic, who will need care for many years: $10.8 million.
Victims who claim lesser injuries will be paid according to how long they were hospitalized, starting at a few thousand dollars. Claimants have to have gotten verified treatment by a doctor or hospital within 48 hours of the accident. “Don’t send me wheelbarrows of medical records. I only need to know you were treated within 48 hours,” he said.
One night in a hospital, up to $20,000.
Two to seven nights, $70,000.
34 days’ hospitalization for extensive treatment of broken bones, head injuries, up to $500,000.
The GM switch fund is open only to claims for injury or death, in any country, involving the 2.6 million 2003- to 2011-model GM small cars recalled earlier this year, including people in other vehicles involved in crashes with those recalled GM models. If the car’s not included in the ignition switch recalls in February and March, “forget it,” he said.
Passenger in these GM can apply for compensation regardless of whether they were in front seats, which should be protected by airbags, or in back, where there may be no airbags.
Carelessness, intoxication or other “contributory negligence” by the driver or passengers will be ignored, Feinberg said. “Intoxication, speeding, texting with your cell phone — irrelevant. This fund will not look in any way, shape or form at the negligence,” he said.
People who’ve already settled claims with GM, before the switch recall, can seek more money, he said. If they qualify, the award to them will be in addition to what GM already paid, but reduced by the amount already paid.
People who accept Feinberg’s compensation agree not to sue GM. But people who already are suing, or considering it, should file a claim for compensation any way, Feinberg said. “It is, in effect, a free preview. File your claim and see what will be done with it, then you can always continue to litigate” if the proposed settlement seems unsatisfactory.
He has set up what he calls a “menu” of ways people can provide evidence the faulty switch caused their crash. They needn’t prove the switch was faulty. “Not absolutely, positively, but more probable than not that the ignition switch failed, then they’ve satisfied the burden” of proving a legitimate claim for compensation, he said.
The plan outlines a number of ways people making claims can use to show the switch was faulty or that air bags did not deploy when they should have, including police reports, accident photos, medical records or “black box” data from the car if still available.
Once the fund closes, Feinberg said, he will provide “a full reckoning, an audit for the public. What claims were approved, what ones denied, and why.”
Feinberg said he will meet, at their request, with any victims or families whose claims involved deaths or catastrophic injuries.
He’s learned from previous fund cases that, “These people do not come to see me to talk about money. They want to vent: ‘Why my daughter, Mr. Feinberg?’ Unless you have a heart of stone, it’s really difficult.
“A law degree in a problem like this is probably irrelevant. A divinity degree, maybe.”