Attorney Kenneth Feinberg releases a protocol for compensating victims involved in crashes blamed on defective General Motors ignition switches, a financially limitless program and a key step in the automaker’s effort to clean up the safety scandal.
“Money is a poor substitute for loss,” Feinberg says during a press conference today in Washington. “(But) it is the limits of what we can do, unfortunately.”
Shortly ahead of the Feinberg event, GM CEO Mary Barra says in a statement: “We are 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. To that end, we are looking forward to Mr. Feinberg handling claims in a fair and expeditious manner.”
Although Feinberg declines to weigh in on the number of death claims expected, the protocol addresses several other key items of speculation since the depth of the defect emerged earlier this year when GM launched the recall of 2.6 million small cars with the part.
For example, the compensation program will have no financial cap and GM will not use its 2009 bankruptcy as a shield from reimbursing eligible victims and their families. Also, if a claim against the automaker related to the defective ignition switches was previously settled, those people remain eligible for additional compensation.
In addition, the Feinberg program will seek to reimburse any eligible driver or passenger regardless of their seating position in the crash, as well pedestrians or victims in a vehicle struck by a defective GM product.
If the ignition-switch failure occurred amid driver negligence, such as driving while intoxicated and texting while driving or speeding, victims of the crash or their families still will be eligible for compensation.
If the switch failed and the airbags did not deploy, or there is uncertainty of an airbag deployment, victims and their families will be eligible.
“GM basically has said, whatever it costs to pay all eligible claims under the protocol, they will pay it,” Feinberg says of the financial aspect of the program. “There is no ceiling on the aggregate dollars.”
Victims of the safety defect seeking to punish GM through the courts should not apply for compensation, he says.
“I’m here to compensate victims, not punish GM,” he says.
People compensated through Feinberg’s program must sign a release pledging they will not seek additional damages from GM.
In terms of individual compensation levels, the program establishes three categories: eligible death claims, eligible catastrophic-injury claims and less-serious eligible claims involving moderate injuries.
Compensation levels vary within each category and by the individual victim, taking into consideration a complex set of factors such as age, wealth and dependents.
However, one example cited by Feinberg involving the catastrophic injury of 10-year-old would pay $7.8 million, while the death of a single, unemployed 17-year-old would yield $2.2 million.
Feinberg will begin accepting applications to the program Aug. 1 and expects most payouts to occur within 90 days. More complex cases could take 180 days, he says.
A main difficulty of the program will be striking a balance between accurately determining victim compensation levels and quickly settling each case, Feinberg says.
“So many of these accidents occurred years ago,” he says. “The car is gone, and we have to come up with substantial evidence that satisfies proximate cause.”
The protocol lays out avenues for finding evidence, such as an examination of the vehicle if it still exists, so-called “black box” data from the car, information from police reports and crash eyewitnesses, crash scene photos and insurance-company findings.
“Speed is going to be challenged here while people collect information,” says Feinberg, the founder and managing partner of the firm Feinberg Rozen and author of other death and injury compensation protocols such as programs for victims of the Sept. 11 terrorist attacks and the Boston Marathon bombing. “It is going to be a challenge.”
Feinberg’s report has been seen as a final, critical piece to GM rectifying the ignition-switch mess. Up to this point, the automaker has fired employees involved in the scandal, appointed a new safety czar and restructured its global engineering group.
GM says it also has launched the most expansive review of its safety processes in its history and has aggressively begun bringing back other products with safety questions, an initiative that in the first six months of the year has resulted in 48 safety campaigns targeting 20.4 million North American-built vehicles. The recalls have cost GM $2 billion to perform.
