By Nick Bunkley, Crain News Service
DETROIT (May 20, 2014) — Any compensation process set up by General Motors Co. for victims of faulty ignition switches is sure to have a scope far beyond the 35 crashes and 13 deaths that the auto maker has linked to the defect.
GM's acknowledgment of the defect, which triggered a recall of 2.6 million small cars, has raised questions about whether a flimsy ignition switch could have played a role in any unexplained crash involving those vehicles over the past decade.
That's likely to complicate the work of Kenneth Feinberg, the victim-compensation expert GM has hired, as he sorts out which of the thousands of crashes that occur every year involving Chevrolet Cobalts, Saturn Ions and other cars covered by the ignition switch recall could be connected to the problem, and which victims are in line for compensation.
Through 2012, the most recent data available, 1,752 people died in crashes involving the cars covered by GM's recall, according to a federal database of traffic fatalities. While only a small fraction of those deaths are likely related to the ignition switch, each could present an opportunity for a victim's family to place some blame on GM and seek compensation.
For a reminder of this risk, Mr. Feinberg need only look back to his time administering the $20 billion BP oil spill fund, when numerous lawsuits accused him of fraudulently delaying or denying claims, while BP complained that his proposed settlements were too generous.
‘Civic and legal obligations'
Texas lawyer Bob Hilliard claims to have linked 53 deaths and 273 injuries to the faulty ignitions. After the recall was announced, the police chief in Lexington, Ala., reopened the investigation into a December 2013 fatal crash that initially had been blamed on driver distraction, and the victim's father, a retired GM employee, filed suit.
Mr. Hilliard says 63 of his clients' injuries were “catastrophic,” and two lawsuits recently filed by other firms blame GM for severe, permanent injuries that will require expensive care for the rest of the victims' lives. The lawyers in those two cases said they sued because they are not confident that any compensation fund would adequately cover the families' needs.
“These children, these families, these lives...they are too important to be lumped up into an underfinanced fund,” Thomas J. Henry, who represents the parents of a paraplegic 6-year-old in Pennsylvania, said in a statement.
Whether most other crash victims and family members choose to seek compensation through Mr. Feinberg or a potentially lengthy lawsuit may depend on the structure and eligibility requirements of any GM plan.
The timing of a crash might also factor in. GM has not indicated that it will claim immunity for accidents that happened before its 2009 emergence from bankruptcy proceedings, which formally shifted liability for those accidents to GM's predecessor company. But lawsuits related to pre-bankruptcy crashes could be more difficult to win.
GM, which announced Mr. Feinberg's hiring April 1, has said it expects to decide by early June how to proceed. GM officials haven't confirmed plans to set up a compensation fund, saying only that the company has “civic and legal obligations as it relates to injuries involving recalled vehicles.”
A big point of contention will be whether the ignition switch caused crashes by cutting power steering and brake assist or just exacerbated injuries by preventing airbag deployment.
“They want to make this a case about airbag non-deployments and not a loss of control,” said Lance Cooper, a Georgia lawyer who sued GM in April on behalf of Haley Van Pelt, who suffered an incapacitating brain injury when her Ion crashed in July 2009. “If it's a loss-of-control issue, there would be many more incidents, so it doesn't want to make loss-of-control cases a part of the problem.”
Mr. Cooper's lawsuit says the ignition switch in Van Pelt's car slipped out of “run,” causing it to lose control and hit a tree and preventing the airbag from deploying. It says medical bills for Van Pelt, who was driving the speed limit and wearing her seat belt, already have surpassed $1 million.
Even in crashes that GM has linked to the defect, it's uncertain whether the company will assume liability for everyone injured or killed.
GM's tally of 13 deaths includes 15-year-old Amy Rademaker, who died in October 2006 when a Cobalt driven by another teen with only a learner's permit crashed in Wisconsin. But it doesn't count 18-year-old Natasha Weigel, another passenger in the car.