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Originally published June 28, 2014 at 6:40 PM | Page modified June 30, 2014 at 11:23 PM

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GM: No limit, no strings on crash-victim payment plan

GM won’t have any say in Kenneth Feinberg’s awards to victims of crashes caused by bad ignition switches in its vehicles.


The Associated Press

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DETROIT — When Kenneth Feinberg announces the terms of General Motors’ plan to pay victims of crashes caused by bad ignition switches, he’ll have an open wallet.

Feinberg, the country’s most well-known compensation expert, is scheduled to reveal the terms Monday, and GM Chief Executive Mary Barra has said there will be no cap on payments.

Also, GM won’t have any say in Feinberg’s awards, she told a U.S. House subcommittee during a hearing this month. “He will have complete independence,” Barra said.

The company says the faulty switches are responsible for at least 54 crashes and more than 13 deaths, but lawyers and lawmakers say the death toll is closer to 100, with hundreds of injuries. That would send GM’s payments into the millions, if not billions, of dollars. GM was sitting on a $27 billion cash stockpile as of March 31.

It has announced or taken charges of $2 billion for recall expenses.

Feinberg, who also administered the government’s $7 billion fund for the 2,977 victims of the Sept. 11, 2001, terrorist attacks, is likely to follow a similar plan in the GM case, with detailed formulas setting payments based on severity of injuries and age. The average award to the 2,880 families who filed death claims from Sept. 11 was $2.1 million. The fund also paid an average of about $400,000 each for the 2,680 accepted claims of injuries; the smallest injury award was $500, the largest $8.6 million.

The Sept. 11 fund was set up to protect financially troubled airlines from thousands of potential lawsuits. It was a success, limiting the number of lawsuits to about 80.

The GM compensation likely will be limited to victims of crashes of older small cars, of which GM recalled 2.6 million this year because the switches can cause engines to stall, shutting off power steering and brakes. That can cause drivers to lose control of their vehicles and it disables the air bags. The cars include the Chevrolet Cobalt and Saturn Ion, both of which are no longer made.

To get a payment, victims would have to agree not to sue GM. The company is vulnerable to legal claims because it has admitted knowing about the switch problem for more than a decade, yet it didn’t recall the cars until this year.

GM has said Feinberg would start taking claims Aug. 1.



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