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GM To Compensate Victims Before Recall : News

General Motors Co.’s ignition switch compensation fund will be open to anyone harmed in a crash in which the air bags didn’t deploy — including backseat passengers, pedestrians and those in other vehicles who may have been hit by the now-recalled GM cars — according to a Texas attorney briefed on the plan.

The plan will be made public this morning. Hundreds or thousands of claims could be filed as a result of crashes linked to ignition switch defects in nearly 2.6 million Chevrolet Cobalts, Saturn Ions and other cars sold worldwide, lawyers briefed on the program say.

GM CEO Mary Barra told Congress earlier this month that there would be no monetary cap placed on overall awards. The automaker delayed recalling the cars for more than a decade after some in the company became aware there was a problem; the key can accidentally turn off the engine when bumped or when the car in an accident, disabling power steering, power brakes and front air bags.

The main question to be answered by compensation guidelines is how people will prove they have valid claims — especially for crashes that happened nearly a decade ago, in which records are spotty and the car may have been scrapped.

Bob Hilliard is a Texas attorney who represents families of 80 people who died in crashes allegedly caused by the ignition switch defect — and about 300 others with catastrophic injuries. He said in an interview he expects there will be 100 to 200 deaths eligible for the plan in addition to hundreds, if not more, injuries. GM has said 13 deaths are linked to the ignition switch defect.

Hilliard estimates the cost to GM will be in the billions. Some Wall Street analysts have suggested the cost to GM may be at least $2 billion.

Compensation expert Kenneth Feinberg, who oversaw compensation funds for victims of the Sept. 11 terrorist attacks, the Boston Marathon bombing and the BP oil spill in the Gulf of Mexico, was hired by GM in late March to set up its compensation fund. He will unveil his plan at 10 a.m. in Washington. He will disclose rules for filing claims and other details, he said in a statement last week. Feinberg declined to comment before the program is announced.

Barra has said Feinberg will have the final say on the total amount of individual awards. She said GM plans to begin processing claims on Aug. 1. It’s not clear how long victims will have to file claims. But Feinberg told The Detroit News earlier this month that when he establishes a claims program, “it must have a modest life for the submission of claims.”

Feinberg also has said the program will compensate only death or injury claims — not those whose cars have diminished resale value.

Clarence Ditlow, director of the Center for Auto Safety in Washington, said the fund’s “ultimate success or failure is dependent upon whom the burden of proof is placed. In cases where the air bag didn’t deploy and the consumer had prior stalling events, that’s a presumptive valid claim and the burden has to be placed on GM to disprove. If the burden is on the consumer in such a case, the program is doomed to failure.”

In some cases, Hilliard said proving a valid claim will be hard because nobody bothered to download information from the car’s “black box,” which can indicate the position of the ignition key at the time of the crash.

“I’m pushing hard for a fair interpretation of who is eligible,” he said in a telephone interview Friday.

Hilliard said after talking with Feinberg twice in person and several times on the phone that he believes death cases will be more straightforward than injury claims. In death cases, families who file claims may see a value placed on the life, plus a dollar figure for lost wages, Hilliard said.

'Punitive conduct'

Lawyers said Feinberg is likely to conduct hearings on individual claims similar to hearings conducted related to the Sept. 11 victims fund. Feinberg and his law firm conducted more than 900 hearings to determine awards for deaths and injuries resulting from the 2001 terrorist attacks. In total, Feinberg distributed more than $7 billion to 5,562 victims and families in funds approved by Congress.

Georgia attorney Lance Cooper, who is investigating more than 100 claims related to the defect, said GM has set a benchmark for death cases. The automaker paid $5 million to settle one death claim case mentioned in GM’s internal investigation by Anton Valukas.

“This is a unique situation,” Cooper said in a telephone interview. “It’s not … a 9/11 situation or a Boston bombing. Those are cases where nobody was at fault really, and the governmental entities just decided it was appropriate to compensate.

“Here you not only have fault, you have punitive conduct that the company should be responsible for.”

Cooper said the plan should include payouts for all loss-of-control accidents in which drivers crashed after the ignition turned off and disabled power steering and power brakes. GM’s official toll of 13 deaths includes only front-end crashes in which air bags failed to inflate, and not for side-impact crashes in which the air bags wouldn’t have been expected to inflate.

Cooper said he also hopes Feinberg and GM will allow people who already have agreed to settlements to be to collect the difference between their settlement and what the plan will pay.

Hilliard said with some injury cases, he expects to negotiate with Feinberg. He said cost estimates for lifetime medical benefits for one client, 6-year-old Trenton Buzard, are $31 million.

Trenton was 1 year old in April 2009 when the 2005 Cobalt his great-grandmother Esther Matthews was driving collided with another vehicle head-on; the car’s ignition was found to be in the “accessory” position. Matthews, the boy’s 13-year-old aunt Grace Elliott and the other vehicle’s driver died.

Trenton survived but he had a cervical spinal cord injury, brain hemorrhages and is paralyzed from the waist down. “He deserves the gold standard because this is GM’s fault that he’s in a wheelchair,” Hilliard said.

Hilliard said he believes some cases will go to jury trials — the offers in the compensation plan are not mandatory, and those harmed can pursue cases separately. But he will warn clients that a jury could reduce an award for contributory negligence such as not wearing a seat belt or if the driver was drinking.

Death of 18-year-old

Ken Rimer, whose stepdaughter Natasha Weigel died following an October 2006 crash, said in an email Friday that he and his wife, Jayne, Weigel’s mother, are suing GM “unless something changes drastically next week.”

Weigel, 18, was riding in the back seat of a 2005 Cobalt when it crashed in St. Croix County, Wisconsin.

She died days later and is not counted among the 13 deaths GM has said are linked to the ignition switch defect.

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