(Adds details of new recall, comments by GM spokesman and
By Ben Klayman and Julia Edwards
June 30 The compensation fund for victims of
General Motors Co's defective ignition switch in 2.6
million cars will award families of those who died as a result
at least $1 million, the attorney in charge of the fund said on
Monday. But victims injured in an additional 8.23 million cars
recalled by GM for a similar problem on Monday
will not be eligible.
GM's decade-long delay in recalling faulty ignition switches
in 2.6 million cars has been at the center of congressional
hearings and a Justice Department probe, leading the company to
establish a compensation fund for victims.
Kenneth Feinberg, the lawyer in charge of GM's compensation
fund, said the automaker will award an additional $300,000 for a
spouse and each dependent left behind by a victim who died at
the hands of the faulty part. Extenuating circumstances could
drive the compensation figures higher. There is no cap on what
GM might pay.
Victims who have experienced catastrophic injuries as well
as more minor injuries as a result of the switch malfunctioning
are also eligible for payment.
The number of victims seeking damages as well as the number
of fatalities caused by the faulty part will not be known until
claims are processed, said Feinberg, who was hired by GM to
administer the fund.
Feinberg has extensive experience, having handled
compensation funds for victims of the BP oil spill and the
September 11 attacks, among others.
GM is accused of ignoring for more than a decade signs of
the deadly defective switch, which can be jarred out of the
"run" position and deactivate power steering, power brakes and
air bags. The automaker has acknowledged 54 crashes and 13
fatalities connected to the flaw, and in February began
recalling 2.6 million older-model cars, including Chevrolet
Cobalts and Saturn Ions, to fix the faulty switch.
GM spokesman Jim Cain called the fund "an exceptional
response to a unique set of mistakes that were made over an
extended period of time."
Cain said GM has no plans to compensate victims hurt by the
latest batch of cars recalled on Monday because the
circumstances that led to the company's newest recall were
The fund could ultimately cost GM billions of dollars, but
is seen as critical to help repair the company's tarnished
reputation and to move beyond the outstanding liability claims.
Several plaintiffs' lawyers representing crash victims said
they will be examining the criteria with their clients over the
next few weeks to determine whether to submit a claim.
"Families are going to have decide if they're focused on
just compensation and closure, whether this may be in their best
interest," said lawyer Lance Cooper.
Claims on the fund can be submitted starting on Aug. 1 and
must be sent before Dec. 31 to be considered. That is a time
window that some victims and safety advocates say is too short.
After hearing the details of the fund, Laura Christian, the
birth mother of Amber Marie Rose who was killed in a Chevy
Cobalt crash in 2004, said providing proof that the ignition
switch caused the death is hard for families to do in such a
short time frame, especially on accidents that occurred so long
"I wish we could go back and get ahold of the car. I wish we
could go back and learn about each and every single case, but
time is not on our side. It was certainly on GM's side,"
U.S. Senator Richard Blumenthal, who has been vocal in
Congress about bringing GM to justice for its handling of the
recall, said "the rush to closure on GM's part has to be
stopped" and called the deadline for filing claims "arbitrary."
Senator Claire McCaskill said in a statement that she was
hopeful the fund will bring some closure to victims' families,
but said the congressional scrutiny of the automaker will
continue. She said her consumer protection subcommittee will
hold another hearing in July.
'NOT DESIGNED TO PUNISH GENERAL MOTORS'
Christian presented Feinberg with the names of 165
fatalities submitted by families who believe the faulty ignition
switch is to blame.
Victims and families of the deceased may choose to decline
GM's offer and sue the company in court. There, punitive damages
designed to serve justice to the company for its mistakes could
"This program is designed to help claimants. This program is
not designed to punish General Motors. If people want punitive
damages, if they want to use litigation to go after General
Motors, then voluntarily they should not submit a claim,"
However, GM is waiving many legal defenses in the claims
process to incentivize the claimants from going to court.
Feinberg said driver negligence, such as drunk driving, would
not disqualify someone from the fund. Other factors that would
not prevent the filing of a claim include whether an accident
occurred before GM's 2009 bankruptcy filing and whether people
had previously settled claims with the No. 1 U.S. automaker.
Feinberg declined to estimate how big the ultimate payout
could be. Safety advocates have called on GM to create a fund of
more than $1 billion.
Financial analysts say it is too early to estimate what GM
will have to pay overall for its handling of the faulty part.
"The size of both of these potential legal claims are still
unknown, but it looks like GM has sufficient cash on its balance
sheet to handle it," said Christian Mayes, an analyst with
(Reporting by Ben Klayman in Detroit, Julia Edwards and Richard
Cowan in Washington and Jessica Dye in New York; editing by