By Margaret Cronin Fisk and Tim Higgins, Bloomberg News
DETROIT (June 30, 2014) — Kenneth Feinberg, who’s creating a fund to compensate victims of General Motors Co.’s faulty ignition switch, is expected to offer payments for all drivers, passengers and bystanders killed or hurt in collisions related to the defect, according to a lawyer who said he’s spoken to him.
Money is expected to be offered even if the driver was drinking or GM believes the company could block the claim in court by citing its bankruptcy, said attorney Bob Hilliard, who is suing GM over deaths and injuries allegedly due to ignition-switch failures.
“Mr. Feinberg wants to settle all eligible claims,” Mr. Hilliard said June 27 in an interview. The fund will cover all ignition-switch accidents “where the airbag didn’t deploy,” he said.
Amy Weiss, a spokeswoman for Mr. Feinberg, declined to comment on the details of the fund or Mr. Hilliard’s comments.
Mr. Feinberg, hired by GM Chief Executive Officer Mary Barra to administer the company’s compensation fund, is scheduled to announce the details on today.
Ms. Barra turned to him as she tries to contain a growing crisis that has eclipsed her almost six months as CEO. The auto maker is facing investigations from Congress and the U.S. Justice Department into why it took more than a decade to recall Chevrolet Cobalts and other compact cars with faulty switches.
Ms. Barra told members of the U.S. House of Representatives last week that GM has given Mr. Feinberg complete independence and wants to reach “everyone who lost a loved one due to this issue or suffered serious physical injury.”
Jim Cain, a GM spokesman, referred questions about the fund to Mr. Feinberg.
According to Mr. Hilliard and another lawyer who’s talked to Mr. Feinberg, he’s trying to craft a deal that will attract as many claimants as possible. Under the anticipated plan, payments are expected to be offered for drivers, passengers and bystanders injured or killed in other vehicles that were part of collisions involving GM cars, Mr. Hilliard said.
GM will offer money to victims who lack physical evidence such as wrecked cars or black box recorders indicating a loss of power, he said.
GM won’t deny or cap claims even if factors other than the ignition switch contributed to the accident, including alcohol use or another driver’s negligence, he said. There will be no limit on the total amount included in the compensation fund, according to Mr. Hilliard. “That wouldn’t work because you don’t know the number” of potential claimants, he said.
Mr. Feinberg hasn’t told lawyers the final details of the plan or disclosed the amount victims and their families will be offered.
Lawyers have told Mr. Feinberg they’ll advise their clients to reject a deal that reaches too few victims or makes inadequate settlement offers, according to another attorney familiar with the talks who spoke confidentially because they’re private.
Victims can pursue claims through U.S. courts if they’re unsatisfied with Mr. Feinberg’s offers, said Mr. Hilliard, whose firm has filed five lawsuits over seven deaths so far.
Mr. Feinberg, who ran similar funds for victims of the Sept. 11, 2001, terrorist attacks and the 2010 BP Plc oil spill, expects to begin accepting claims by Aug. 1, GM has said.
After he releases the terms of the program, GM will be able to estimate the potential cost. GM last month agreed to pay a $35 million fine as part of the Transportation Department’s investigation into how it handled a February recall of vehicles with defective switches.
The company has added about 35 investigators and recently taken vehicles off the road for a variety of issues.
GM sales have held up despite the publicity surrounding the recalls. The company in May had its best month of U.S. auto sales since August 2008, rising 13 percent to 284,694 vehicles.
GM shares have gained 2.9 percent since Feb. 12, the day before the first batch of ignition-related recalls was formally announced.
Ms. Barra’s appearance before Congress followed an internal GM investigation, led by Anton Valukas, a former U.S. attorney, which found engineers knew about a flawed switch in Cobalts and other cars for more than a decade, though corrective action was stymied by incompetence and neglect.
Ms. Barra has vowed to change the company’s culture to ensure future problems don’t recur.
This report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.
What shape do you think the U.S. infrastructure is in?
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