GM: Ignition Switch Victim Fund Paid Out Nearly $600 Mi

Total cost for scandal now tops $2 bil.

by on Dec.10, 2015

A replacement for the faulty GM ignition switches.

An independent victims’ fund set up by General Motors paid out nearly $600 million to settle 399 claims related to a faulty ignition switch, bringing to more than $2 billion the total amount of money the maker has spent as a result of a defect linked to more than 100 deaths.

The announcement came Thursday as the special fund began wrapping up operations. It had been set up on orders from Mary Barra, the then-new GM CEO, last year as part of a broader response to the maker’s extensive safety problems. GM has also had to pay out $900 million to settle a Justice Department criminal probe, and millions more in fines levied by the National Highway Traffic Safety Administration.

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But GM’s troubles are far from over. Not all of those offered settlements from the victims’ fund accepted, and they are among a number of others still set to have their day in court, with a series of trials set to begin in U.S. District Court in New York next month.

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In its final report, the fund, officially known as the GM Ignitions Claims Resolution Facility, said it has paid out $594,535,752, adding that “over 90 percent of the offers extended to eligible claimants were accepted.” That includes all 124 death claims and 16 of 18 serious injury claims.

One claimant has yet to decide whether to accept the settlement. Those who do not – as well as those whose claims were rejected – have the right to join in on the many lawsuits that are pending in the ignition switch case.

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Kenneth Feinberg, who was appointed to oversee GM's victims compensation fund.

The GM fund, managed by compensation expert Ken Feinberg – who also oversaw the BP Gulf oil spill and 9/11 victims’ funds – noted that GM legally was not liable to pay 128 of the 399 approved claims because they occurred before the maker’s emergence from bankruptcy in 2009.

It also reported that 74% of approved death claims, as well as 61% of all claims overall, involved at least one form of unsafe behavior by the driver. It said 55% of those killed, for example, were not wearing seatbelts and 57% were speeding. Nearly a third were driving under the influence of drugs or alcohol and four had fallen asleep at the wheel.

While such issues are likely to become a factor in the ignition switch trials, the fund’s closing report emphasized that it, “did not conduct rigorous scientific or technical determinations or engineering analyses as to whether an ignition-switch defect manifested itself in a particular accident or whether a particular death or injury was ‘caused’ by an ignition-switch defect.”

The goal of the fund was to be “fair, compassionate, generous and non-adversarial,” added GM spokesman Jim Cain.

GM CEO Mary Barra testified before Congress four times due to GM's ignition switch scandal.

The fund was established by Barra shortly in June 2014, four months after the maker began recalling 2.6 million older vehicles due to an ignition switch problem that could cause them to unexpectedly shut off while being driven – idling the engine and disabling onboard safety systems, including power brakes and steering, as well as a vehicle’s airbags.

GM quickly acknowledged it had delayed acting on the problem for more than a decade. It subsequently fired 19 employees and ordered a major shift in its safety policies, appointing an in-house czar capable of ordering recalls without going through the traditional chain of command. As a result, GM launched more than 70 recalls in 2014 covering over 30 million vehicles.

That was a major reason why the year saw a record number of such service actions in the U.S., the industry as a whole recalling over 64 million vehicles.

GM’s recall tally has slowed this year – though the industry is nudging another record. The largest of the domestic makers still has had its problems in 2015. It this week announced a new series of steps to try to address a problem that has led to 1,300 engine fires and four previous recalls due to engine oil leaks.

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One Response to “GM: Ignition Switch Victim Fund Paid Out Nearly $600 Mi”

  1. GT101 says:

    Compare GM’s cost for 100+ deaths and a cover up to VW’s trivial exhaust emissions issue and software violation by a small group of rogue engineers and programmers. The outrageous acts of the EPA and now 450+ lawsuits over a software issue is absurd and outrageous. There is absolutely no rationale in the VW case. It shows just how litigious and gold digging the U.S. really is. The damage to so many innocent people who had nothing to do with the bogus VW software is incomprehensible. The question is: WHY? How can anyone justify the damages that have already occurred to VW and anyone associated to VW in both the U.S. and Europe? In the EU all they want is for VW to correct the software so the cars are all 100% compliant. In the U.S. it appears the EPA and other people want to destroy VW without any bases what so ever for the outrageous lawsuits and fines.