By Mike Colias and Gabe Nelson, Crain News Service
DETROIT/WASHINGTON (July 7, 2014) — Attorney Ken Feinberg's plan for compensating victims of General Motors Co.'s ignition-switch defect will include a broader set of criteria than GM has used to determine which crashes are linked to the faulty part, meaning the company's estimate of 54 related accidents and 13 fatalities almost surely will rise.
Mr. Feinberg said in a recent interview that he will consider claims involving any accident in which airbags didn't deploy in the 2.6 million Chevrolet Cobalts, Saturn Ions and other small cars recalled for the defective switch.
The switch is prone to slipping out of the “run” position if bumped or weighed down by a heavy keychain, disabling power steering, power brakes and airbags.
“Airbag deployment means the power is on. Can't be the ignition switch,” said Mr. Feinberg, who later detailed the plan at a June 30 news conference in Washington, D.C.. “If the airbag deployed, don't bother filing a claim.”
A website was set up with further details of the program.
GM's tally of crashes and fatalities includes only front-impact crashes in which airbags didn't deploy. Mr. Feinberg's protocol will include side-impact crashes and other types of accidents caused by the ignition switch slipping out of “run.”
During the news conference, Mr. Feinberg said that he couldn't predict the final tally of deaths and injuries from GM's defective switch but that he would release a summary once all claims have been processed.
He also said he couldn't attach a dollar figure to the program because there will be no limit on the aggregate amount of money that GM will pay under it.
“It's not as if we have to spend money wisely because there's only a set amount set aside by GM,” he told Automotive News, a sister publication of Tire Business, earlier. “Whatever it costs, all eligible claims will be paid.”
Despite the broader eligibility, the onus is on victims to prove that the ignition caused the accident, through police records, warranty logs or other “circumstantial evidence.” Mr. Feinberg acknowledged that it will be a “real challenge” to produce proof from crashes that happened many years ago.
No GM appeal
Mr. Feinberg said he doesn't have an estimate for how many victims will qualify for compensation. He said he has “sole discretion” in deciding eligibility and the amount each victim will receive.
“Once I render a final decision, GM has agreed it will honor that decision,” Mr. Feinberg said. “No appeals. No rejection. It must pay it.”
An internal 2012 GM document released in late June by a House committee investigating GM's handling of the safety defect shows that the company counted more than 800 accidents in which airbags didn't deploy in Cobalts and Ions.
Mr. Feinberg's opening of the criteria to include any accident in which airbags didn't go off not only vastly expands the pool of potentially eligible victims but also makes his job more complex.
Through 2012, the most recent data available from a federal traffic-fatality database show that 1,752 people died in crashes involving the cars being recalled by GM, which also include the Pontiac Solstice and G5, Saturn Sky and Chevy HHR. Only a fraction of those cases are likely related to the defective switch, but each could offer an opportunity for a victim's family to seek compensation.
Mr. Feinberg is under pressure in Washington, where two congressional committees and the U.S. Department of Justice have opened investigations into GM's lapses.
Mr. Feinberg said during the June 30 press conference that he discussed the design of the program with plaintiffs' lawyers, auto-safety advocates and lawmakers such as U.S. Sen. Richard Blumenthal, D-Conn., before unveiling it.
Sen. Blumenthal, who has proposed reforms in auto-safety laws in an effort to prevent future lapses, praised Mr. Feinberg's work. But he said the fund could be more favorable to victims—such as by letting victims wait until the Justice Department investigation concludes to decide whether to take a payout or take their claims to court.
“There needs to be flexibility in the deadlines as well as in the burdens of proof,” Sen. Blumenthal said. “Fairness depends on Mr. Feinberg and GM being responsive to the difficulties that many victims face in presenting evidence, reconstructing police reports and even memories that may have faded.”
Evidence of link to switch
The protocol outlines a process by which claimants can document their eligibility for compensation. Once somebody establishes that the airbag didn't deploy, he or she will be required to show that the ignition-switch defect “was the proximate, substantial cause of the accident,” Mr. Feinberg said.
People bringing claims will be required to file “various examples of circumstantial evidence” that the ignition switch going from “run” to either “accessory” or “off” led to the crash, such as a police report or black-box data, he said.
Other examples of evidence include: insurance or medical reports of the accident; crash-scene photographs; warranty and maintenance records from before the crash that show past instances of stalling; and depositions or expert witness accounts for crashes that already had been litigated.
In a statement, the advocacy group Center for Auto Safety (CAS) said Mr. Feinberg's criteria “appear fair,” but it expressed concern that victims will have trouble providing documentation.
“In crashes before 2010, police reports will likely not be available,” CAS said. “It will be difficult, if not impossible, for a consumer to prove that ignition switch failure caused a crash if all they have is their statement that the ignition switch cut off.”
The group urged Mr. Feinberg to validate any claim in which the victim can show a record of previous stalling.
Compensation will be awarded in three main categories:
• Death of any driver, passenger, pedestrian or occupants of another vehicle involved in a crash.
Mr. Feinberg will calculate payments to the families of these victims using a formula that relies on the national averages for settlement values of economic and non-economic loss, which includes pain and suffering.
Economic losses will be calculated based on the victim's age, salary, historical earnings and dependents. Non-economic payouts will be $1 million for the person who died, and $300,000 each for the surviving spouse and any dependents.
For example, the death of a 17-year-old student, living at home, with no dependents, would be valued at $2.2 million, based on those national settlement averages. The family of a 25-year-old with two kids and an annual salary of $75,000 would be paid $5.1 million, Mr. Feinberg said.
• Catastrophic physical injuries, such as those that resulted in the victim being quadriplegic or paraplegic, or suffering permanent brain damage, double amputations or pervasive burns.