By JOAN LOWY and TOM KRISHER
WASHINGTON -- Kenneth Feinberg is prepared to pay out billions of General Motors' money to victims of crashes in GM small cars -- provided they can prove the cars' ignition switches caused the crash.
GM (GM) links 13 deaths to a defective ignition switch in cars such as the Chevrolet Cobalt and Saturn Ion. But trial lawyers and lawmakers say claims of wrongful death and injury could total in the hundreds.
Feinberg, one of the country's top compensation experts, said GM has placed no limit on the total amount he can pay to injured people or relatives of those killed. And he alone -- not GM -- will decide how much they each will get, even though he is being paid by the company and it didn't like some of the program's provisions.
Feinberg wouldn't estimate the ultimate cost for GM, saying he has no idea how many death or injury claims he will get. Based on the methodology he plans to employ, a large amount of claims could mean a sum running into the hundreds of millions of dollars, if not billions.
Paying 'Whatever It Costs'
"GM has basically said whatever it costs to pay any eligible claims under the protocol they will pay it. There is no ceiling," Feinberg said at a Monday news conference in Washington to announce details of the plan.
With the plan, GM is trying to limit its legal liabilities, control the damage to its image and eventually move beyond the crisis caused by its failure to correct the ignition switch problem for more than a decade, even as it learned of fatal crashes. The company recalled 2.6 million older small cars earlier this year to replace the switches.
Only those hurt in crashes caused by the small-car ignition switches are eligible, so the program excludes other GM safety problems. People filing claims will have to prove that the switches caused the crashes. Once their claim is settled, they give up their right to sue the company.
Claims can be filed from Aug. 1 to Dec. 31. Once the filing is completed, Feinberg promises payment in 90 to 180 days in most cases. People who previously settled lawsuits with GM are eligible to apply for more compensation.
Feinberg said he won't consider whether those injured in crashes contributed to the cause by drinking alcohol, speeding, not wearing seat belts or other behavior. But GM could use that as a defense if the cases go to trial, he said.
"We have no interest in evaluating any alleged contributory negligence on the part of the driver," he said.
In many cases, cars have been destroyed and it will be difficult to determine if the switches caused the crash, Feinberg said.
"Unlike the 911 fund or the BP oil spill fund, many of these accidents occurred years ago, decades ago," Feinberg said. He urged those seeking compensation to use police, hospital, insurance and auto repair records to buttress their claims. If the accident vehicle is still available, that's even better, he said.
Legal experts say GM has almost no defenses left in crash lawsuits because it conceded the switches are defective and that its employees were negligent in failing to recall the cars. A GM-funded probe by an outside attorney blamed the delays on a dysfunctional corporate culture and misconduct by some employees. The company has dismissed 15 workers in the case.
'New GM' vs. 'Old GM'
Feinberg said he also won't consider whether a crash happened before GM left bankruptcy protection in July of 2009. Under its bankruptcy deal, "New GM" -- the company that emerged from court protection -- is shielded from claims stemming from crashes that happened before the bankruptcy. Those claims go to "Old GM," the remnants of the company left behind in the bankruptcy, which has few assets.
Crashes that occurred after the bankruptcy could get big judgments in court, so it may take more money for Feinberg to settle them. Lawyers are challenging the bankruptcy shield, and if that fails, pre-bankruptcy claimants may have to settle with Feinberg.
The faulty ignition switches can slip from "run" to "accessory," unexpectedly shutting off the engines. That knocks out power steering and brakes and can cause drivers to lose control. In addition, the air bags won't inflate due to lack of power, so they won't protect people in a crash. Feinberg said if the air bags inflated, that negates a claim because that means the crash wasn't caused by the switch.
If air bag inflation is in doubt, the claims still will be considered, Feinberg said.
Drivers, passengers, pedestrians and occupants of cars hit by GM vehicles are eligible for payment, Feinberg said.
Laura Christian, the mother of an accident victim who attended the news conference, said she had evidence that 165 people have died in accidents caused by the ignition switch problem. She also said there is evidence that in some cases the driver succeeded restarting the vehicle moments before the crash, leading to air bag deployment. She asked if Feinberg would consider such cases.
"I will be glad to consider anything you have," Feinberg said.
Christian, of Harwood, Maryland, said she was undecided on whether to file for compensation or go to court.
"Some of us are going to feel a need to litigate whether it's about finding an answer or making this so expensive that GM and other automakers will never do this again," she said.
Feinberg will limit payments to people with less-serious injuries, based on how long they stayed in the hospital, similar to the way he compensated victims of the Boston Marathon bombings. But there is no cap on potential payments to relatives of those killed and people with catastrophic injuries that caused brain damage, amputation, serious burns or paralysis.
GM said in a statement that Feinberg's plan shows it is taking responsibility for what happened to victims "by treating them with compassion, decency and fairness."
Feinberg acknowledged that some people will question his fairness, given that he was hired by GM.
"The only way you overcome that problem," he said, "is by demonstrating through the awards that the program is fair."
GM Won't Limit Ignition Switch Crash Compensation
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