General Motor’s Compensation Claims Resolution Fund has made its final report. All but a dozen families whose loved ones perished in accidents linked to General Motors’ defective ignition switches have accepted a final payout from the fund set up last year by GM to compensate victims. This brings total payouts to $595.5 million. According to the report published online last month by the fund’s administrator, of the 4,343 claims received, the fund approved and settled 399.
This is the fund’s final report before winding up operations. The fund run by widely acclaimed compensation fund expert Ken Feinberg said 91 percent of proposed awards were accepted by the victims. That included all 124 death claims, as well as 16 of 18 serious injury claims. At press time only one personal-injury claimant remains undecided about whether to accept GM’s compensation offer. That offer will expire on Jan. 6.
GM set up its fund in June of 2014. Victims who settled claims through the compensation fund waived their right to file lawsuits or seek punitive damages from GM. The total payout from the fund fell just below the $600 million that GM had set aside to resolve the claims. But the automaker’s total costs related to its ignition switch defect is said to have exceeded $2 billion. That number includes the $900-million settlement reached with the U.S. government for its mishandling of the deadly design defect problem, which GM intentionally concealed from federal regulators for a decade.
The defective ignition switches affected 2.6 million vehicles made in the U.S. from 2003 through 2011. GM continually covered up the problem. The automaker even silenced whistleblowers who voiced concerns about the defect for years. The findings in the Melton case in Georgia exposed GM’s massive deceit and that forced GM to finally issue a long-overdue recall on Feb. 13, 2014. As we have written previously, the defect allowed the ignition switch to inadvertently shut the engine off with the vehicle in motion, resulting in a loss of power steering, anti-lock brakes, and airbag protection.
GM’s settlements included 128 claims involving incidents that occurred before the company filed bankruptcy in June 2009, later emerging as a so-called “New GM.” GM contended it was not legally obligated to settle those claims, but it elected to do so and set up the fund. The carmaker’s ethical standards came under close scrutiny and for good reason. Our firm’s experience with the Compensation Fund was generally very good. I have tremendous respect for Ken Feinberg, Camille Biros and their staff.
While the payouts bring the fund to a close, GM still faces hundreds of lawsuits filed by victims and families harmed by the defective ignition switches. Those Plaintiffs opted to pursue their claims through litigation and opted out of the compensation fund. Therefore, GM is far from done with litigation over the faulty ignition switches. Hundreds of personal injury and death lawsuits are pending in U.S. District Court in New York. Our firm has several pending lawsuits that were not submitted to the fund and are in state courts awaiting a trial date.
Sources: General Motors Ignition Compensation Claims Resolution Facility; The Detroit News and Reuters