By: 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.