G.M. Compensated Some Pre-Bankruptcy Crash Victims


From left, Camille Biros, deputy administrator for the General Motors victim compensation program, Kenneth Feinberg, the lawyer running the program, and Kara Parmelee, a consultant, looking over cases at Mr. Feinberg's office in Washington in October 2014. Credit Drew Angerer for The New York Times

WASHINGTON — As General Motors publicly expressed remorse over its decade-long failure to disclose defective ignition switches, it successfully fought to retain its protection from any lawsuits for crashes that occurred before its 2009 bankruptcy.

Instead, G.M. offered compensation to those victims on its own terms, with a fund run by the lawyer Kenneth R. Feinberg and limited to 2.6 million small cars that were recalled in early 2014.

Now the scope of that toll has become clearer: More than 100, or nearly one-third, of the switch-related death and injury claims approved by Mr. Feinberg were for accidents that happened before the company’s bankruptcy filing. The data was included in the final status report on the G.M. compensation fund issued early Thursday by Mr. Feinberg.

The legal strategy had been part of a broader effort by G.M., the nation’s largest automaker, to move past the biggest safety scandal in its history.

“G.M. stepped up to its responsibility for the ignition switches, but they made a decision to limit their larger financial exposure to pre-bankruptcy cases,” said Cindy Schipani, a law professor at the University of Michigan.

Mr. Feinberg said in his report that 399 death and injury claims — out of 4,343 claims filed — were found eligible for compensation. They include 124 deaths, 18 catastrophic injuries and 257 other types of injuries. He said that 128 of the approved claims — or 32 percent of the total — were for accidents that happened before G.M. went bankrupt.

While Mr. Feinberg declined to comment further on details of the fund, his final report said that G.M.’s potential legal defenses were ignored in the process of determining damages.

The program “did not consider legal defenses that might otherwise be available to G.M. in litigation, such as contributory negligence, statutes of limitations or the bankruptcy shield.”

The report also showed that many claims were settled by the fund despite evidence that the victims were speeding, driving recklessly or under the influence of alcohol or drugs, or not wearing a seatbelt. In all, about 61 percent of the eligible claims involved one or more factors characterized as “contributory negligence” by drivers of the vehicles, the report said.

For example, the report said that 124 of the eligible claims involved a victim who was not wearing a seatbelt. Excessive speeding was cited in 151 cases, and drug or alcohol use was present in 68 cases.

A G.M. spokesman, James Cain, said on Wednesday that the compensation fund was designed to take a “nonadversarial” approach to settling claims in which people were killed or injured because faulty switches had suddenly cut engine power and disabled airbags in affected models.

G.M., he said, decided not to challenge damage awards if other factors, like driver errors, were involved.

“We faced the ignition switch issue with integrity, dignity and clear determination to do the right thing both in the short and long term,” Mr. Cain said. “The settlement facility is just one example.”

Over all, Mr. Feinberg said that he authorized a total of $595 million in payments to the 399 eligible claimants. G.M. had estimated in its second-quarter earnings report that the final total would be about $625 million.

The report said that just over 90 percent of the compensation offers were accepted by the victims or family members who filed the claims and about 9 percent were rejected. None of the offers in a death claim were rejected. At least one offer is still under consideration until a January deadline.

Neither G.M. nor Mr. Feinberg has shared any details on specific accidents.

Before the compensation fund was started in June 2014, the automaker repeatedly said it had identified only 13 deaths in connection with defective switches since it began recalling affected models in February 2014.

But the number of deaths grew steadily as claims poured into the compensation fund, and became public as Mr. Feinberg published monthly tallies of his damage awards.

Some people who filed claims for pre-bankruptcy accidents were aware that the compensation fund might be their only opportunity for a settlement from G.M.

Ken Rimer is the stepfather of Natasha Weigel, an 18-year-old woman who died in 2006 in an ignition-related crash in Wisconsin.

He said on Wednesday that Ms. Weigel’s family had to weigh whether to accept an award from Mr. Feinberg — or possibly receive no compensation if G.M. was ultimately shielded from pre-bankruptcy litigation.

“We wanted to have our day in court with G.M.,” Mr. Rimer said. “But we figured that was never going to happen.”

G.M. has so far avoided lawsuits that predate its bankruptcy, which was aided by a $49 billion bailout by the federal government.

Last April, Judge Robert E. Gerber upheld G.M.’s immunity shield, which forced all litigants to pursue lawsuits against the automaker’s previous corporate entity, commonly referred to as “old G.M.”

That decision has been appealed by plaintiffs to a higher court, with a ruling expected next year. Until the appeal is ruled on, a number of active ignition-switch lawsuits are stalled.

In September, G.M. agreed to pay $575 million to resolve the cases of 1,380 people who had sued the company for accidents involving ignition switches, as well as settle a shareholder suit.

But the lawyer in the cases, Robert C. Hilliard, said that 180 pre-bankruptcy lawsuits were excluded from that settlement.

Those 180 cases are among the outstanding claims against G.M. included in the so-called multidistrict litigation that will be heard in a series of trials next year in New York.

Mr. Hilliard said the claimants in the pre-bankruptcy cases are counting on the federal appeals court to overturn Judge Gerber’s ruling on G.M.’s legal immunity. “Without a favorable ruling, they’ll get nothing,” he said.

Article from:- http://www.nytimes.com

 

 

 

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