When the nation’s top compensation expert announced details of General Motors’ fund for the victims of its massive ignition switch defect crisis, he made one thing clear: It’s about the victims, not about GM.
“Money is a pretty poor substitute for loss,” compensation guru Kenneth Feinberg said. “It’s the limits of what we can do, unfortunately. We can’t bring people back. We can’t restore limbs.”
The appointment puts Mr. Feinberg at the center of the nation’s largest carmaker’s effort to rebuild consumer trust and put behind it one of the biggest safety and regulatory failings in its history. The faulty ignition switch, and the company’s apparent effort to hide it from consumers and the government, rate as the biggest challenge to GM and new CEO Mary Barra since a taxpayer-funded bailout of the company five years ago.
Mr. Feinberg, who has administered compensation to victims of 9/11, the Virginia Tech shootings and the Boston Marathon bombings, said it would be “pure speculation” to estimate a number of victims expected to file claims, but said eligibility is open to any driver, passenger, pedestrian or occupant in another vehicle that was in an accident, opening up the possibility of a much larger pool of claimants.
Mr. Feinberg’s presentation at the National Press Club in Washington came when GM disclosed another recall of 7.6 million vehicles with the ignition switch defect, bringing the year’s total recall to 28 million vehicles. GM’s stock closed Monday at $36.30, down more than 30 cents from the previous close at $36.62. On top of an expected recall-related charge of $1.2 billion in the company’s second quarter, the compensation fund is likely to be a major expense, with no cap on what is given to victims.
But with GM officials already conceding fault in the part’s design and failings in how they handled the news, the company has little choice legally but to try to settle quickly.
“GM has basically said whatever it costs to pay any eligible claims under the protocol, they will pay it. There is no ceiling,” Mr. Feinberg said.
Nothing demonstrated the emotion and difficulty GM faces with the compensation issue more than the exchange of Mr. Feinberg and Laura Christian, the birth mother of Amber Marie Rose, who died in 2005 due to the ignition switch defect in a GM car.
“I’ve personally found 165 deaths. I have this information in my hand. Would you like it? Would you contact them?” said Ms. Christian of Harwood, Maryland.
“I would, indeed,” said Mr. Feinberg. “I would like not only that information Ms. Christian, I would be glad to meet with you or your family members privately, and I would like to know anything you have or anything you think would be helpful in this program.”
The company’s compensation fund, which is voluntary, will begin receiving claims Aug. 1 up until Dec. 31. Mr. Feinberg estimated a 90-day completion rate of simple claims and 180 days for more complicated claims, with all claims decided by the end of 2015.
Victims will go into categories of victims of death, victims of “catastrophic injury” or victims of moderate injury. Those who have suffered the death of a family member and those who have suffered a severe injury like a double amputee will take precedence, Mr. Feinberg said.
The family of those who died or suffered a major injury can choose either a straightforward determination of compensation based on national statistics on earning potential or they can sit down with Mr. Feinberg and talk about their unique circumstances.
“It is easily, without a doubt, the most difficult part of this assignment: meeting privately with family members,” Mr. Feinberg said. “It is very stressful, but it’s essential because there are family members who want to be heard.”
In order to be eligible for a claim, the accident must have taken place because of the ignition switch defect in an eligible vehicle and there must be evidence that the air bag did not deploy or there must be uncertainty regarding the air bag deployment.
Because many of these accidents happened as far back as a decade ago, the evidence to prove eligibility may be scanty for some victims.
Center for Auto Safety Executive Director Clarence Ditlow said in a statement that the requirement for proof of the ignition switch defect in an eligible vehicle is the “800-pound gorilla” in Mr. Feinberg’s announcement
“At the very least, in processing claims Mr. Feinberg must apply a presumption that if there is record of stalling on a vehicle, the claim is valid,” he said. “To do otherwise will be to deny most claims filed by consumers who cannot afford lawyers or experts.”