Beleaguered General Motors unveiled a compensation plan with no caps Monday for those harmed by crashes stemming from faulty ignition switches in its Chevy Cobalts and multiple other models, even while announcing the costly recall of another 8.4 million cars, the vast majority with similar defects.
The firm’s outside compensation guru, Kenneth Feinberg, told a news conference that its 2009 bankruptcy “will not be a bar” to the filing of claims for accidents that occurred before it sought Chapter 11 protection, assuring that those victims will not be left empty handed.
General Motors has previously fought individual lawsuits on behalf of crash victims and survivors of some of the 13 known fatality victims on grounds that the company was shielded from liability by its 2009 bankruptcy filing.
Feinberg’s announcement represented the automaker’s latest attempt to deal head-on with the fallout from its failure, over more than a decade, to address defects that caused ignition switches to slide to the “auxiliary” or off positions while vehicles were in motion. The engine shutoffs are believed to have disabled air bags, leaving drivers and passengers prone if the cars crashed.
With the Justice Department still conducting a criminal investigation of GM’s failure to act long ago on the ignition switch problem, GM has seemed in a weekly race to air its dirty laundry as it discloses defects in one model after another.
The latest recalls, involving an array of seven Cadillac, Chevy, Oldsmobile and Pontiac models between 1997 and 2014, brought to a staggering 29 million the number of vehicles for which the Detroit automaker has announced it would take responsibility for repairing defects this year.
The company said it is aware of seven crashes, eight injuries and three fatalities in older model, full-size sedans being recalls for inadvertent ignition key rotations, but said there is not conclusive evidence that the defect caused the crashes.
“We undertook what I believe is the most comprehensive safety review in the history of our company, because nothing is more important than the safety of our customers,” GM Chief Executive Officer Mary Barra said of the latest recalls. “Our customers deserve more than we delivered in these vehicles.
“This has hardened my resolve to set a new industry standard for safety, quality and excellence.”
GM has said it would take charges exceeding $2.5 billion for the various recalls, and the compensation program and a Justice Department case could send the total pricetag of the auto safety scandal past $5 billion, not to mention the cost of any long-term impact on the company’s image with consumers.
In hiring Feinberg last spring, Barra said she gave him total discretion in designing the compensation program.
Feinberg set no cap on the amount of compensation in individual cases and said those who’ve already agreed to court settlements without being aware of the ignition switch defect will be eligible to seek higher compensation through the company’s claims program. Nor will there be an aggregate cap for compensation under the program.
Claims will accepted beginning Aug. 1 and may be submitted for any accident until Dec. 31, 2014, and he will aim to distribute compensation within 90 days – 180 days in complicated cases, he said.
Those who file claims will not waive their rights to seek restitution in court unless they are satisfied with the compensation offered by Feinberg.
“This program is designed to provide swift compensation to eligible victims of ignition switch defects in certain GM vehicles,” Feinberg said. “We will work closely with all individual claimants and their lawyers in evaluating individual claims and reaching a determination as to eligibility and value as soon as possible.”
Feinberg may be the nation’s leading expert on victim compensation, after administering funds for victims of the Sept. 11th terror attacks, the explosion of a BP oil-drilling rig in the Gulf of Mexico and last year’s Boston Marathon bombings.
He said that he set no cap on individual claims because that’s an “arbitrary” figure that would be “disingenuous.”
Feinberg said that he and his staff “benefited greatly in the design of this program from the input and constructive advice received from lawyers representing claimants, non-profit public interest groups and GM itself.”
Under the GM program, Feinberg will have sole discretion over the awards, including eligibility and the amounts awarded.
Drivers who were intoxicated, speeding or negligent in other ways will still be eligible for compensation if their faulty ignition switches caused an accident, he said.
A notice of the program will be sent to 3 million people who bought GM cars, Feinberg said.
Barra said in a statement that the company is “pleased that Mr. Feinberg has completed the next step with our ignition switch compensation program to help victims and their families.
“We are taking responsibility for what has happened by treating them with compassion, decency and fairness,” she said. “To that end, we are looking forward to Mr. Feinberg handling claims in a fair and expeditious manner.”