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Personal Injury Blog

  • GM Sets Aside $400 Million to Settle Claims Relating to Defective Ignition Switches

    Posted By Chaikin, Sherman, Cammarata & Siegel, P.C. || 2-Apr-2015

    General Motors SettlementBy: Allan M. Siegel

    General Motors has reached a settlement agreement for the claims arising from the defective switches in its cars that had been the subject of recalls starting last year. The defect, which caused vehicles to slip out of the run position, resulted in drivers losing control and often crashing the vehicles. GM has already paid out 172 claims relating to the defect.

    In exchange for withdrawing a lawsuit that was brought by the family of a young woman in Georgia, Brooke Melton, who died as a result of the defect, GM agreed to create a compensation program to handle the claims. The original lawsuit brought by Ms. Melton's family is what first exposed the fact that GM had been aware of the defect since at least 2005 but failed to publicly announce the defect or recall any vehicles until years later.

    The compensation program will allow accident victims and their families to file claims even if they had previously settled with the company. The program will be administered by Kenneth R. Feinberg, who previously administered the September 11 th Victim Compensation Fund and the BP Deepwater Horizon Disaster Victim Compensation Fund. In exchange for compensation through the program, the victims or their families give up their ability to file a lawsuit against GM. The compensation fund will include at least $400 million and as much as $600 million to pay out victims or their families. Ultimately though, Mr. Feinberg has stated GM will not limit how much money the program pays, and he will begin accepting claims on August 1, 2015.

    Although $400 million is a substantial amount, many people believe the set aside is well below the actual amount that will be necessary to compensate all the vehicles, particularly those who survived the defect-caused crashes but were left with permanent and catastrophic injuries. The true cost to compensate the victims could greatly exceed $1 billion, and some fear that setting only $400 million is designed to prevent Mr. Feinberg from granting compensation awards that adequately compensate all the victims out of fear of using up the available funds. The $400 million is even well below what many investors expected GM to set aside, as some were estimating as much as $1.5 billion to fund the compensation program.

    While establishment of the compensation fund is hopefully a step in the right direction in helping resolve the defective ignition switch problem, GM still has a long way to go. The personal injury attorneys have years of experience representing people who have been injured as a result of negligent design and manufacture of products by careless and reckless corporations. If you or someone you love has been injured as a result of GM's or another companies negligence, do not hesitate to call us for a free consultation.

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