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Individuals who have suffered a personal injury or died in auto accidents that may have been caused by defective ignition switches in recalled Chevy, Pontiac and Saturn vehicles may qualify for payments from a General Motors (GM) compensation fund that is currently being negotiated.
The General Motors settlement fund is being administered by attorney Kenneth Feinberg, who was hired by GM CEO Mary Barra to resolve injury and death cases that may have been caused by ignition switch problems that have affected millions of vehicles.
During a press conference this morning, Feinberg announced that GM settlements will start at $1 million for families of individuals who died in an accident linked to defective ignition switches. In addition, the company will pay estimated lifetime earnings and $300,000 to a spouse and each dependent. Those who suffered life-altering injuries may receive many times more, including compensation for a life time of medical care, Feinberg announced.
Feinberg said that the fund will be uncapped, meaning that it will have no upper limit, and that GM will offer compensation to all drivers, passengers and bystanders who were injured or died in accidents linked to the defective switches. The fund will even cover accidents that have not yet occurred, and will compensate any individuals involved in GM ignition switch-related accidents through the end of this year.
The cases stem from a GM ignition switch recall first issued in February, which has been expanded several times to ultimately include more than 2.5 million Chevy Cobalt, Chevrolet HHR, Pontiac G5, Pontiac Pursuit, Pontiac Solstice, Saturn Ion and Saturn Sky vehicles.
The automaker has acknowledged that the vehicles may suddenly shut of if heavy key chains were used or if the ignition was jarred, such as may occur in an accident. This may switch off the air bags, causing them to fail to deploy when needed in an accident.
Some have suggested that General Motors hopes that the creation of a settlement fund will alleviate some of the potential legal woes and negative corporate image generated by the controversial recall, as it has been established that GM know about the potential ignition switch problems for years, yet failed to correct the problem or recall the vehicles. Barra called the fund GM’s “civic duty.”
While GM has indicated that it only knows of 13 deaths and about 47 accidents linked to the recall, the federal investigators and independent consumer groups have predicted that those numbers are expected to rise upon deeper analysis of accident records.
Economic Damages Lawsuits Not Included
Barra and other GM officials have said that while the company wants to compensate injury and death victims, it will attempt to fight off any lawsuits involving economic damages. Those lawsuits, including several class actions, have come from both GM vehicle owners who say their vehicles have depreciated in value, and investors who said the company made false statements about the safety of its vehicles, artificially inflating the value of its stock.
GM officials have known about the ignition switch problems since at least 2002, according to investigations by both the National Highway Traffic Safety Administration (NHTSA) and GM’s own internal probe. However, the company failed to act until this year, due to what GM’s own report called a “pattern of incompetence.”
The NHTSA fined GM a record $35 million over their handling of the recall. The automaker also agreed to submit to extensive government oversight as part of a consent agreement designed to change the culture of the company.
At least 15 different GM ignition switch lawsuits have already been filed, and the number of cases is expected to grow.
In early June, the U.S. Judicial Panel on Multidistrict Litigation issued an order consolidating all economic lawsuits against GM under U.S. District Judge Jesse M. Furman in federal court in New York for pretrial proceedings.
GM Recalls Continue
Since the first ignition switch recall was announced, GM has issued numerous recalls for other problems with its vehicles, affecting more than 20 million vehicles in North America this year.
On Friday, GM announced additional recalls affecting more than half a million more vehicles for various reasons.
The largest is a recall of 392,459 model year 2014-2015 Chevrolet Silverado trucks and 2015 Chevrolet Tahoe and Suburban SUVs. Only the four-wheel drive versions of the vehicles are affected by the recall, which may require a dealer to recalibrate software controlling the gears. Vehicles affected by the problem can slip into neutral unexpectedly, the company warns.
Just under 30,000 model year 2013 and 2014 Chevy Cruze vehicles are also being recalled because they may have defective air bags. The air bags were made by Takata Corporation and have resulted in millions of recalled vehicles from more than half a dozen auto makers. The recall came after GM ordered dealers to temporarily halt Chevy Cruze sales.
In some cases, the air bag inflators can launch shrapnel into the passenger’s compartment, putting occupants at risk of injury or death. In other cases, there have been reports of the air bags opening unexpectedly due to humidity.
The Chevy Cruze is GM’s best-selling vehicle.