GM puts forth plan for restitution

McClatchy Washington BureauJune 30, 2014 

— General Motors’ outside compensation guru announced a long-awaited plan for providing financial restitution to those harmed by crashes stemming from faulty ignition switches in Chevy Cobalts and five other models, setting no ceiling on how much money will be awarded.The firm’s 2009 bankruptcy “will not be a bar” to the filing of claims for accidents that occurred before it sought Chapter 11 protection, Kenneth Feinberg told a news conference at the National Press Club.

General Motors has fought individual lawsuits on behalf of crash victims, including 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 a span exceeding a decade, to deal with defects that caused ignition switches to slide to the off position while vehicles were in motion. The engine shutoffs are believed to have disabled air bags, leaving drivers and passengers prone if the cars crashed.

In hiring Feinberg last spring, GM Chief Executive Officer Mary 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.”

Email: ggordon@mcclatchydc.com; Twitter: @greggordon2.

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