(FROM THE WALL STREET JOURNAL 2/2/15)
By Jeff Bennett and Mike Spector
The cost of General Motors Co.'s victims-compensation fund isn't
expected to exceed the $400 million to $600 million the auto maker
set aside to pay those killed or injured on account of faulty
ignition switches, but it will take weeks for the fund to sort
through a late rush of claims filed before the deadline passed this
weekend.
GM's victims-compensation fund, administered by Washington
attorney Kenneth Feinberg, stopped taking new claims Sunday morning
after thousands poured in from consumers seeking redress. The fund,
started in August, is one of the several steps being taken by GM in
an attempt to restore credibility and limit legal liability amid a
record pace of safety recalls.
Mr. Feinberg's work, however, will do little to stanch
widespread concern about vehicle safety and leave unanswered many
questions about victim compensation. Intended to compensate those
killed or injured in a batch of small cars built with faulty
ignition switches that prevented air-bag deployment, the fund
received more than 3,350 claims as of Thursday and roughly
quadrupled the death toll from GM's initial estimate of 13, to 50.
Serious injuries receiving compensation totaled at least 75.
The death-toll and injury figures are expected to climb further
as Mr. Feinberg and his lieutenants continue sifting through
claims.
Many are wondering if the actions go far enough.
GM, for instance, covered in its fund only a fraction of
consumers affected by ignition-switch problems ultimately spanning
millions of vehicles and an array of models. Vehicles equipped with
the defective switch can inadvertently jostle from the "on" to
"accessory" or "off" position and cut power to air bags and
electronic steering.
The company faces class-action lawsuits related to alleged
safety lapses, and continuing probes by the Justice Department and
others could cost GM billions of dollars in fines.
In an interview, Mr. Feinberg and his associate, Camille Biros,
said their work should help restore GM's credibility and head off
future lawsuits. Claimants accepting payouts must waive their right
to sue GM.
It could take Mr. Feinberg's team weeks to finish going through
petitions related to a batch of roughly 2.6 million recalled
vehicles. "We are bending over backward to help these individuals
by giving them more than one or two opportunities to provide the
information to us," Ms. Biros said.
Payments span $20,000 to $1 million, but the final tab won't be
disclosed until every claim has been reviewed. Most of the claims
received have lacked required evidence, such as a police report, or
include cars not covered by the fund.
Importantly, said Mr. Feinberg, "of those who have been eligible
for compensation, not one, so far, has rejected a payout offer." As
for GM's role, the auto company has been "cooperative," he
said.
In determining compensation, Mr. Feinberg's team greatly widened
the definition of victim.
"GM took the approach of a strict engineering standard," Ms.
Biros said. "We looked at everything and we were more flexible. We
looked at photographs, police reports and historical maintenance
records. So if there was a history of problems and in the accident
the air bags didn't deploy, we leaned toward paying the
claims."
Most claimants are in their early 20s because many of the
affected vehicles -- older Saturn Ions and Chevrolet Cobalts --
were sold to young people. Many accidents included other potential
causes, such as speeding, drinking or distraction, according to Ms.
Biros.
Under GM's earlier parameters, most of these victims wouldn't
have been offered a settlement.
Still, Mr. Feinberg's work omits anyone involved in crashes tied
to more than eight million vehicles recalled in June with similarly
problematic ignition switches. GM has identified three deaths tied
to two crashes involving older Chevrolet Impalas that are among
those recalled vehicles.
GM says there isn't conclusive evidence linking the three
deaths, all the result of high-speed crashes, to the defect.
"I was hopeful early on Mr. Feinberg and others would convince
GM . . . to broaden the compensation plan to include these other
vehicles. It appears they will not do it," said Lance Cooper, the
Georgia lawyer influential in discovering the root cause of the
ignition-switch problem in smaller vehicles.
Ms. Biros referred any questions about expanding the scope of
the compensation fund to GM. "The facility has no authority to add
other GM model vehicles to the list of eligible vehicles under the
protocol," she said.
"The specific fact patterns are substantively different between
the various recalls," a spokesman for GM said.
With the second large round of recalls in June, "it isn't clear"
whether the switches caused accidents, said David Cole, chairman
emeritus of the Center for Automotive Research, a group that gets
some funding from auto makers. "You can't automatically infer this
is the same thing that went on there," he said.
But he added that GM has to "step up" if the causes of the
crashes are directly linked to the other faulty switches.
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